Arkema Sa · EURONEXT:AKE
Arkema Sa — Citi's Chemicals Conference 2018
30 slides from Arkema Sa's conference presentation, Jun 21, 2018
Slide 1: Arkema Citi's Chemicals Conference
ARKEMA CITI’S CHEMICALS CONFERENCE LONDON, 21ST JUNE 2018
Slide 2: Arkema in a Nutshell
ARKEMA IN A NUTSHELL 2017 KEY FIGURES €8.3 sales bn 19,800 employees worldwide Worldwide presence in 55 countries 136industrial sites 3 R&D & innovation geographical hubs BALANCED PORTFOLIO OF BUSINESSES AND GEOGRAPHIC FOOTPRINT Coating 23% Solutions 38% Europe 24% Bostik High North Performance 46%
Slide 3: Ahead of Our 2017 Financial Targets
AHEAD OF OUR 2017 FINANCIAL TARGETS 2017 TARGETS SET 3 YEARS AGO ACHIEVED IN 2017 DURING OUR 2015 CAPITAL MARKETS DAY EBITDA €1.3 bn €1,391 m from €784 m in 2014 Net cash flow* x3 x4 vs 2014 EBITDA to free cash conversion 35% 41% from 18% in 2014 Capital intensity (recurring capex to sales) 5.5% 5.2
Slide 4: Bostik: Fully on Track with Significant Growth Potential Ahead
BOSTIK FULLY ON TRACK WITH SIGNIFICANT POTENTIAL AHEAD INNOVATION GROWTH EBITDA GROWTH +53% driven by lightweighting and home efficiency BOLT-ON ACQUISITIONS in a still very fragmented market 3 DRIVERS in only 3 years EMERGING COUNTRIES speed-up development Malaysia Vivid® BrillianceTM Bangalore Mex
Slide 5: Advanced Materials: Sustained Growth Supported by Innovation in Megatrends
ADVANCED MATERIALS SUSTAINED GROWTH SUPPORTED BY INNOVATION IN MEGATRENDS EBITDA GROWTH +7.5% per year Lightweight Water New energies Electronics 3D printing Sports materials treatment Specialty polyamides compounding lines (US & China) Sartomer Partnership NextDimensionTM with EOS in 2014 2017 Rils
Slide 6: Best-in Class Cash Conversion
BEST-IN CLASS CASH CONVERSION €2.7 BN FREE CASH BEFORE CAPEX STRONG FREE CASH FLOW GENERATION* GENERATED OVER 2015-2017 In €m Use of cash CAPEX M&A Dividend 575 442 426 €1.3 bn €2 bn net €0.4 bn Acquisitions Bostik, Den Braven and CMP % of EBITDA 18% 42% 36% 41% Divestments 145 Sunclear, activated c
Slide 7: Significant Increase in Dividend
SIGNIFICANT INCREASE IN DIVIDEND DIVIDEND in €/share Reflects the strong confidence of +12% CAGR 2.30 the Board in the current level of 2.05 profitability and long-term growth 1.90 prospects 1.80 1.85 1.85 ~30% payout ratio 1.30 Dividend to be paid fully in cash 1.00 from 29 May 2018 0.75 0.60 0.60
Slide 8: 3-Year Share Price Evolution
3-YEAR SHARE PRICE EVOLUTION Performance 115,00 since spin-off 105,00 +84% Arkema +283% 95,00 85,00 +39% Peer average (1) +97% 75,00 +24% CAC40 +8% 65,00 55,00 45,00 01/01/2015 01/07/2015 01/01/2016 01/07/2016 01/01/2017 01/07/2017 31/12/2017 (1) AkzoNobel, BASF, Clariant, DSM, Evonik, Lanxess, Solv
Slide 9: Reminder of 2023 Long-Term Objectives from 2017 Capital Markets Day
REMINDER OF 2023 LONG-TERM OBJECTIVES PRESENTED AT 2017 CAPITAL MARKETS DAY A global specialty player focused on Delivering strong margins and adhesives and advanced materials cash generation Bostik 2023 objectives Exceed 1/3 of Group sales REBIT margin EBITDA to free cash More than double sales vs
Slide 10: Long Term Growth Supported by a New Wave of Significant Projects
LONG TERM GROWTH SUPPORTED BY A NEW WAVE OF SIGNIFICANT PROJECTS Start-up 2018 2019 2020 2021 +20% PVDF Kynar® production 90kt acrylic acid reactor at Doubling of thiochemicals capacities at Calvert City (US) Clear Lake (US) capacities in Malaysia Markets Markets +50% global PA11 monomer Markets New
Slide 11: Major Step Supporting the Growth of Our High Performance Polymers
MAJOR STEP SUPPORTING THE GROWTH OF OUR HIGH PERFORMANCE POLYMERS Planned expansions Arkema’s products Polymers not produced by Arkema 2018 PEKK New plant (US) PEEK PEI April 2018 PVDF High-performance +20% US production capacities polymers Rilsan® HT PPS Pebax® Rnew ® PA11 Rilsan® Clear 2021 Orgaso
Slide 12: Corporate Social Responsibility at the Heart of Our Strategy
CORPORATE SOCIAL RESPONSIBILITY AT THE HEART OF OUR STRATEGY OCCUPATIONAL GREENHOUSE GAS VOLATILE ORGANIC CHEMICAL OXYGEN NET ENERGY Safety SAFETY (TRIR) Environment EMISSIONS COMPOUND DEMAND PURCHASED A RESPONSIBLE Be a top quartile Reduce the safety performer 2025 <1.2 environmental 2025 -50% -33%
Slide 13: Financial Results
INNOVATIVE “@& CHEMISTRY
Slide 14: FY'17 Results Key Take-Aways
FY’17 RESULTS KEY TAKE-AWAYS +10.5% up YoY €8,326 m sales +8.9% at constant scope and FX +17% up on 2016 good performance €1,391 m EBITDA Driven by all 3 business divisions 15.8% in 2016 16.7% EBITDA margin Despite a context of higher raw material costs and stronger euro vs the US dollar With the US
Slide 15: Delivering an Excellent 2017 Performance
DELIVERING AN EXCELLENT 2017 PERFORMANCE EBITDA EBITDA MARGIN FREE CASH FLOW* NET DEBT In €m In % In €m In €m +17.0% +90 bp 41% 24% of EBITDA GEARING 1,391 16.7 565 1,482 15.8 1,189 426 1,056 2016 2017 2016 2017 2016 2017 31/12/16 31/12/2017 * Cash flow from operations and investments excluding the
Slide 16: 2017 Highlights
2017 HIGHLIGHTS Adhesives Adhesives Acquisition of Integration of Den Braven XL Brands Divestment Oxo-alcohol business Adhesives New industrial adhesives plant in Gujarat Advanced materials +25% PVDF capacity Adhesives increase Acquisition of CMP assets Advanced materials Ramp-up of new specialty mo
Slide 17: 2017 Key Figures
2017 KEY FIGURES In €m (except EPS) 2016 2017 CHANGE Sales 7,535 8,326 +10.5% EBITDA 1,189 1,391 +17.0% EBITDA margin 15.8% 16.7% Recurring operating income (REBIT) 734 942 +28.3% REBIT margin 9.7% 11.3% Adjusted net income 418 592 +41.6% Net income – Group share 427 576 +34.9% Adjusted EPS (in euro
Slide 18: 2017 Sales Bridge
2017 SALES BRIDGE SALES In €m Scope Volumes Price of business Currency +2.4% +6.5% +3.3% (1.7)% +4.4% in High Price increases to Integration of Mainly Performance pass through Den Braven strengthening of Materials driven by higher raw and CMP the euro against Asia, innovation material costs in US do
Slide 19: Superior Cash Generation
SUPERIOR CASH GENERATION In €m FY 2016 FY 2017 EBITDA 1,189 1,391 Change in working capital (1) 2 (48) 13.1% working capital to sales ratio versus 14.5% (excluding Den Braven) in 2016 Change in fixed assets payables (1) 14 2 Excluding exceptional items, tax rate at 26% of REBIT (29% in 2016) Taxes (
Slide 20: Net Debt
NET DEBT NET DEBT in €m – excluding €700 m hybrid bond Refinancing in 2017 1,482 ● €500 m bond at 4% / year redeemed in October 2017 1,379 ● €900 m bond at 1.5% / year issued in 2Q’17 ⇒ Positive impact on FY’18 cost of debt: ~€(12) m versus 1,056 2017 Including 50% of the €700 m hybrid bond (same as
Slide 21: 1Q'18 Financial Highlights
1Q’18 FINANCIAL HIGHLIGHTS +0.9% up YoY €2,172m sales +7.3% at constant scope and FX +8% up on high 1Q’17 performance (€355m) and despite stronger euro €383m EBITDA (-€26m impact from translation) Driven by Industrial Specialties and High Performance Materials 16.5% in 1Q’17 17.6% EBITDA margin Demo
Slide 22: Excellent Performance in 1Q'18
EXCELLENT PERFORMANCE IN 1Q’18 EBITDA REBIT ADJUSTED EPS NET DEBT In €m In €m In € In €m +7.9% +13.5% +32.5% 27% GEARING Including XL Brands acquisition 383 2.57 355 277 1,227 244 1.94 1,056 1Q'17 1Q'18 1Q'17 1Q'18 1Q'17 1Q'18 31/12/17 31/03/18 22 ARKEMA – ROADSHOW - JUNE 2018
Slide 23: 1Q'18 Key Figures
1Q’18 KEY FIGURES In €m (except EPS) 1Q’17 1Q’18 CHANGE Sales 2,152 2,172 +0.9% EBITDA 355 383 +7.9% EBITDA margin 16.5% 17.6% Recurring operating income (REBIT) 244 277 +13.5% REBIT margin 11.3% 12.8% Adjusted net income 147 195 +32.7% Net income – Group share 137 188 +37.2% Adjusted EPS (in euros)
Slide 24: 1Q'18 Sales Bridge
1Q’18 SALES BRIDGE SALES In €m Scope Volumes Price of business Currency +1.9% +5.4% +0.3% (6.6)% +7.3% volumes in Higher selling Integration of Stronger euro High Performance prices in XL Brands against Materials driven specialties to US dollar Divestment of by specialty reflect raw oxo-alcohol 2,15
Slide 25: High Performance Materials (46% of Group Sales)
HIGH PERFORMANCE MATERIALS (46% OF GROUP SALES) 1Q’18 KEY FIGURES 1Q’18 SALES DEVELOPMENT 1Q’18 SALES BY BUSINESS LINE In €m 1Q’17 1Q’18 Change Volumes +7.3% Sales 976 998 +2.3% 22% Bostik 29% Prices (0.4)% EBITDA 166 176 +6.0% Performance Additives Currency (6.1)% EBITDA margin 17.0% 17.6% 49% Tech
Slide 26: Industrial Specialties (31% of Group Sales)
INDUSTRIAL SPECIALTIES (31% OF GROUP SALES) 1Q’18 KEY FIGURES 1Q’18 SALES DEVELOPMENT 1Q’18 SALES BY BUSINESS LINE In €m 1Q’17 1Q’18 Change Volumes (4.0)% 12% PMMA Sales 644 661 +2.6% Prices +13.6% 33% Thiochemicals EBITDA 140 162 +15.7% 27% Currency (7.0)% Fluorogases EBITDA margin 21.7% 24.5% 28%
Slide 27: Coating Solutions (23% of Group Sales)
COATING SOLUTIONS (23% OF GROUP SALES) 1Q’18 KEY FIGURES 1Q’18 SALES DEVELOPMENT 1Q’18 SALES BY BUSINESS LINE In €m 1Q’17 1Q’18 Change Volumes (0.8)% Sales 525 507 (3.4)% Prices +6.0% Coating Resins 45% and Additives EBITDA 74 66 (10.8)% 55% Currency (7.2)% EBITDA margin 14.1% 13.0% Acrylics Rec. op
Slide 28: 1Q'18 Cash Flow
1Q’18 CASH FLOW In €m 1Q’17 1Q’18 1Q’18 highlights EBITDA 355 383 Usual seasonality of working capital and higher raw material prices Change in working capital (1) (195) (221) 15.3% working capital to annualized sales ratio (15.6% end of March 2017) Change in fixed assets payables (1) (54) (29) Bene
Slide 29: 2018 Outlook
2018 OUTLOOK External environment ● Well-oriented demand in all three main regions ● Stronger euro versus the US dollar * ● Higher raw material costs Arkema will continue to benefit from: ● Strong innovation drive in advanced materials ● Integration of XL Brands within Bostik ● Globally robust marke
Slide 30: 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