Arkema Sa · EURONEXT:AKE
Arkema Sa — Shareholder Meeting (June 2013)
49 slides from Arkema Sa's shareholder meeting presentation, Jun 4, 2013
Slide 1: 2013 Annual General Meeting
2013 Annual General Meeting June 4th, 2013
Slide 2: 2012 Highlights
2012 Highlights
Slide 3: Arkema in 2012
Arkema in 2012 13,925 1,200 € 6.4 bn employees researchers sales 91 10 € 996 m production sites R&D centers EBITDA Presence 151 € 438 m in 40 countries patent applications capex 3
Slide 4: Three specialty segments
Three specialty segments High Performance Materials Coating Solutions Sales by segment World of high value and Solutions for decorative paints, innovative solutions industrial coatings and high-growth acrylic applications 33 % 34 % 33 % Industrial Specialties Global and integrated industrial niches
Slide 5: New corporate image
New corporate image Targeted growth focused on specialties Innovation at the heart of Arkema’s strategy A new signature : « Innovative chemistry » 5
Slide 6: Among top players on 90% of sales
Among top players on 90 % of sales POSITION % of sales Specialty Polyamides (10, 11 and 12) #1 14% Fluoropolymer (PVDF) #1 Organic Peroxides #2 9% Thiochemicals #1 9% Fluorogases #2 10% PMMA #2 10% Hydrogen Peroxide #3 4% Acrylic monomers #4 13% Coating Resins #3 13% UV-curing Resins #2 5% 6 High Pe
Slide 7: Balanced geographical presence
Balanced geographical presence Europe 47 production sites 34% of sales 6 R&D centers North America 40% of sales 26 production sites 2 R&D centers 5% of sales 21% of sales Rest of the World Asia 5 production sites 13 production sites 2 R&D centers HIGH GROWTH COUNTRIES 7
Slide 8: A strong footprint in France
A strong footprint in France Capex: € 208 m in 2012 (47% of Group’s capex) Workforce: 48% of Group’s employees 75% of Group’s R&D effort • 6 R&D centers, 900 researchers • Research partnerships with Aquitaine region, CNRS, CEA and competitiveness clusters (Axelera, etc.) 23 production sites in Franc
Slide 9: Diversified end markets
Diversified end markets Others 8% 22% Consumer goods Health, hygiene and beauty, wellness, sports and leasure, packaging, textile, etc. 16% Chemical and plastic industry Water 3% Electronics 3% 13% Nutrition 4% Industrial coatings 6% Construction 6% 12% Energy 7% Decorative paints Transportation 9
Slide 10: Innovation at the heart of the strategy
Innovation at the heart of the strategy 10 R&D centers 1,200 researchers ~€ 150 m budget 2.3 % of sales Unique technology expertise New R&D center in Changshu (China) opened beginning 2013 Close proximity with customers Long-term breakthrough projects supported by corporate R&D 10
Slide 11: Safety and environmental performance
Safety and environmental performance Total recordable injury rate Greenhouse Gas Emissions (million working hours) (mT CO2 eq.) 13.3 8.3 5.1 3.4 2005 2012 2005 2012 Our ambition: be a top quartile Our ambition: reduce environmental performer in safety in the chemical footprint of our activities indu
Slide 12: Thiochemical platform in Malaysia
Thiochemical platform in Malaysia Kerteh Project in partnership with South Korean company CJ CheilJedang Ground breaking ceremony in October 2012 Capex for Arkema’s Thiochemical plant of Arkema: around US$220m Mechanical completion expected beginning of 2014 12
Slide 13: Structure of Thiochemicals project in Malaysia
Structure of Thiochemicals project in Malaysia CheilJedang 86% 14% 14% 86% Sucrose, starch, Sulfur Thiochemicals JV Bio-methionine JV glycerol Oil, gas, petrochemicals Animal nutrition 13
Slide 14: Capex program in Acrylics in North America
Capex program in Acrylics in North America Capex: US$ 110 m Two units already started: • 2EHA: new unit started in 2012 in Bayport • Acrylic Acid: capacity increase in Clear Lake started end of May 2013 (+60 kT with half of production for methyl acrylate) Under construction in Clear Lake (unit acqui
Slide 15: Integration of Hipro and Casda
Integration of Hipro and Casda Companies acquired in February 2012 (specialized in sebacic acid and polyamide 10) Unique range of specialty polyamides 10, 11 and 12 Global leader for bio-sourced polyamides Trebling polyamide 10 capacity of Hipro (started in 1st quarter 2013) Hengshui (Casda) Zhangji
Slide 16: Divestment of vinyl activities
Divestment of vinyl activities Divestment of vinyl activities to Klesch group Transaction highlights ● Divestment of a whole coherent portfolio of activities including upstream activities (electrolysis of chlorine, caustic soda and PVC) and downstream activities (compounds, pipes and profiles) ● Aro
Slide 17: Start up of ADAME unit in Carling
Start up of ADAME™ unit in Carling ADAME™: an acrylic acid derivative End market: water treatment Total capex for Carling modernization: € 40 m 17
Slide 18: New superabsorbent unit in Carling
New superabsorbent unit in Carling A Sumitomo Seika unit on Arkema’s platform (near 50 kT) Start up expected in 1st half 2013 Superabsorbents: acrylic acid derivatives Project strengthens Carling site End market: diapers 18
Slide 19: Lacq Cluster Chimie 2030 project
Lacq Cluster Chimie 2030 project Purpose: extend and secure sulfur supply for next 30 years Major turnaround in 4th quarter 2013 Total capex in Lacq for Arkema: € 50 m (including DMDS capacity expansion and large turnaround) 19
Slide 20: Investments in Jarrie
Investments in Jarrie Conversion of electrolysis to new membrane technology Implementation of Technological Risk Prevention Plan (« PPRT ») Total capex for Jarrie modernization: € 100 m (€ 60 m net with subsidies) 20
Slide 21: PVDF Kynar capacity expansion in Changshu
PVDF Kynar® capacity expansion in Changshu 50% capacity expansion in July 2012 Following start up of Kynar® PVDF unit in China in 2nd quarter 2011 End markets: new energies, water filtration 21
Slide 22: Acquisition of an industrial site in Brazil
Acquisition of an industrial site in Brazil Acquisition of an acrylic additives and emulsions site Strengthen Group’s presence in Latin America Combined sales with Coatex in Brazil: US$20 m Araçariguama Rio de Janeiro São Paulo 22
Slide 23: Innovation success
Innovation success Arkema in the « Top 100 Global Innovator Award 2012 » (Thomson Reuters) • Among the 13 French companies mentioned Pierre Potier prize for Altuglas® ShieldUp • New nano-structured acrylic glass sheet (PMMA) • Outstanding properties: glass replacement • Lightweight material for auto
Slide 24: Financial results
Financial results
Slide 25: 2012 Key figures
2012 Key figures In €m (except Earnings Per Share) 2011 2012 variation Sales 5,900 6,395 + 8.4 % EBITDA 1,034 996 - 3.7 % EBITDA margin 17.5 % 15.6 % Recurring operating income 762 678 - 11.0 % Adjusted net income (continuing operations) 574 441 - 23.2 % Adjusted net income (discontinued operations)
Slide 26: +8.4% sales versus 2011
+ 8.4 % sales versus 2011 Sales (€m) FX rate – Scope of translation effect business 6,395 Volume Price + 3.6 % 5,900 + 9.4 % (2.0) % (2.6) % Mainly US$ vs € High basis of Mainly acrylics comparison and fluorogases ● Specialty resins in of 1H’11 1H’12 ● Hipro/Casda (China) ● Alkoxylates ● Divestment
Slide 27: Performance of segments
Performance of segments Sales (€m) EBITDA (€m) EBITDA margin (%) High Performance Materials 17.2% EBITDA margin, maintained at historical high 2,101 15.3 17.3 17.2 1,952 Strong performance of Technical Polymers 1,680 337 despite slowdown in 4th quarter specifically in Europe 337 361 361 257 2010 201
Slide 28: Capex
Capex Capex (€m) Strong pipeline of new projects 500 ● Thiochemicals in Malaysia 438 ● Acrylics in the US 365 ● Modernization of Jarrie (France) 265 € 208 m invested in France en 2012 52% of capex dedicated to maintenance, environment and safety 2010 2011 2012 2013e 28
Slide 29: Balance sheet and financing
Balance sheet and financing Shareholders’ equity € 2.3 bn Rating Net debt € 900 m Standard & Poor’s BBB stable outlook Gearing 39 % Moody’s Baa2 stable outlook Net debt / EBITDA 0.9x € 1.9 bn financing sources (€m) Average maturity > 4 years (€m) 700 500 480 Credit lines 700 980 Bonds 120 Others 100
Slide 30: 1st quarter 2013: a solid start of the year
1st quarter 2013: a solid start of the year Sales (€m) EBITDA (€m) 1,623 1,563 253 234 Volumes: - 1 % 3rd best performance in a 1st quarter Positive price effect (+ 0.4 %) Significantly above 4th quarter 2012 EBITDA (€ 171 m) 1Q’12 1Q’13 1Q’12 1Q’13 EBITDA (€m) and EBITDA margin (%) by segment 19.1%
Slide 31: Outlook
Outlook Market conditions remain globally contrasted depending on the regions ● Solid environment in North America ● Continuing challenging environment in Europe, particularly in France and Southern Europe ● Slower than expected growth in Asia but some signs of improvement Priority given to organic
Slide 32: Dividend
Dividend 1.80 Payout ratio: 25% of adjusted net income 1.3 2.3% dividend yield (based on share price at year end) 1.0 Arkema confirms its target 0.75 announced in September 2012 to 0.6 0.6 reach a 30% payout ratio on adjusted net income. 2007 2008 2009 2010 2011 2012* 32 * Dividend proposed to the S
Slide 33: Corporate Governance
Corporate Governance
Slide 34: Board of Directors
Board of Directors Composition ● 11 members ● 9 independent members (82%) in accordance with AFEP-Medef criteria adopted in the internal regulations ● 2 women (18%) • Recommendations issued by Nominating, Compensation and Corporate Governance Committee to reach in 2014 the 20% target set by the 27 J
Slide 35: Renewal of the Board of Directors
Renewal of the Board of Directors Bernard Kasriel Philippe Vassor Thierry Morin Independent Director Independent Director Independent Director Member of Nominating, Compensation and Chairman of the Audit and Accounts Committee Chairman of Nominating, Compensation Corporate Governance Committee and S
Slide 36: Compensation of Corporate Officers
Compensation of Corporate Officers Compensation of the Chairman and Chief Executive Officer • 2013 fixed annual compensation: €750,000 • Variable compensation: €1,042,726 due for 2012 • Criteria for variable compensation: • Quantitative targets: 55% EBITDA, 27.5% recurring cash flow and 27.5% margin
Slide 37: Performance shares
Performance shares Principles of capital-based compensation policy detailed at the beginning of 2013 ● Involve closely the senior managers and certain employees of the Group to its development and its share performance in the medium term ● Gain loyalty and motivate some 700 employees (5% of Group’s
Slide 38: Employees share ownership
Employees share ownership Objective: associate our employees to the development of the Group Dynamic policy of employees share ownership ● Plans proposed every two years ● To employees of some 20 countries in the world (95% of Group’s employees) 3 plans implemented since spin-off in 2006 ● 2008 shar
Slide 39: Ambition 2016
Ambition 2016
Slide 40: Our roadmap to 2016
Our roadmap to 2016 « Become a world leader in specialty chemicals and advanced materials » Deliver profitable growth and solid cash flow Accelerate development of High Performance Materials Intensify our presence in high growth countries (China, India, Brazil, Middle East) Increase downstream integ
Slide 41: 2016 financial targets
2016 financial targets € 8 bn 16 % Sales EBITDA margin EBITDA (€m) 1,280 996 + 140 + 144 Acquisitions and < 40 % Organic growth divestments Gearing 2012 2016e 41
Slide 42: Accelerate expansion in High Performance Materials
Accelerate expansion in High Performance Materials Polymers pyramid Sales by segment Arkema well positioned on high end € 8 bn PEKK (under technical development) € 6.4 bn PVDF 38% + € 0.9 bn Polyamide 11 Polyamide 10 Polyamide 12 High Performance 33% Materials PMMA composite PMMA Industrial 30% Spec
Slide 43: Development in high growth countries
Development in high growth countries Sales by region (€bn) North America Europe € 8 bn Asia and RoW 2.5 2.8 € 6.4 bn 2.8 2.4 30% 2.2 1.7 Asia and RoW 26% North America 35% 34% 2012 2016e 2012 2016e 2012 2016e Europe 40% 35% 2012 2016e 43
Slide 44: 2016 targets by segment
2016 targets by segment High Performance Materials 38% of total sales 18% EBITDA margin Industrial Specialties 30% of total sales 17% EBITDA margin Coating Solutions 32% of total sales 15% EBITDA margin 44
Slide 45: Start up of industrial projects
Start up of industrial projects 2012 2013 2014 ● 2EHA ● Acrylic acid and esters ● Thiochemical platform (United States) (United States) (Malaysia) ● PVDF expansion ● Hipro expansion (x3) (China) (China) ● HFC125 expansion ● Coating resins (China) (China) Several projects ● ADAME ● Superabsorbents *
Slide 46: A promising R&D projects pipeline
A promising R&D projects pipeline Today Short-medium term Longer term PVDF for Electrolytes for Li-sulfur batteries Li-ion batteries Li-ion batteries (Oxis) New energies PVDF film for LGWP Thin layer solar panel Fluorogases photovoltaic Metathesis process Renewable PMMA RNew® PA11/ PA10 Acrylic acid
Slide 47: Cash allocation over 2013-2016
Cash allocation over 2013-2016 € 3.6 bn cash resources available Capex Cumulative cash Borrowing flow from capacity € 1.7 bn operations M&A, dividends and others € 1.9 bn M&A Dividends Others 47
Slide 48: 2020 targets
2020 targets Sales (€bn) EBITDA and EBITDA margin (%) Close to 16% 17% 15.6% 10 8 6.4 6% 5.7 2005 2012 2016e 2020e 2005 2012 2016e 2020e Gearing < 40% 48
Slide 49: Disclaimer
Disclaimer The information disclosed in this document may contain forward-looking statements with respect to the financial condition. results of operations. business and strategy of Arkema. Such statements are based on management’s current views and assumptions that could ultimately prove inaccurate