Arkema Sa · EURONEXT:AKE
Arkema Sa — Shareholder Meeting (June 2010)
55 slides from Arkema Sa's shareholder meeting presentation, Jun 1, 2010
Slide 1: Annual General Meeting
Annual General Meeting June 1st, 2010
Slide 2: 2009 highlights
2009 highlights Emerging stronger
Slide 3: Arkema in 2009
Arkema in 2009 EBITDA Sales Gearing €310 m below 20% €4.4 bn Capital Employees expenditure R&D expenses 13,800 6% of sales 3% of sales
Slide 4: Quickly adapt with two priorities
Quickly adapt with two priorities Free cash flow* (€m) Fixed cost savings (€m) +228 171 110 >0 Initial Initial Achieved Achieved target target Largely exceeded targets * Free cash flow = cash flow including non-recurring items and excluding impact from M&A
Slide 5: Continue to prepare for the future
Continue to prepare for the future Increased manufacturing presence in Asia A strengthened acrylic value chain Expansion: Acquisition: H2O2, Shanghai, China Acrylic acid, Clear Lake, USA Accelerated green innovation Innovation: Green bitumen Photovoltaic
Slide 6: 2009: an unprecedented downturn…
2009: an unprecedented downturn… YoY volume development +2.3% +0.8% 2005 2008 2009 2006 2007 -1.5% - 5.9% -13.9% 2H’09 substantially better than 1H’09
Slide 7: Uneven regional situations
Uneven regional situations North America Asia 24% of total sales 18% of total sales 20 sites 10 sites Excellent financial performance Strong demand despite low volumes recovery Europe / France 54% of total sales 50 sites Contrasted financial performances 7 * 2009 figures
Slide 8: 2009 results
2009 results A quick adaptation to an unprecedented crisis 8
Slide 9: Summarized P&L
Summarized P&L In €m 2008 2009 Variation Sales 5,633 4,444 (21.1)% EBITDA 498 310 (37.8)% EBITDA margin 8.8% 7.0% Recurring operating income 250 40 (84.0)% Non-recurring items (53) (109) - Net income (group share) 100 (172) - 9
Slide 10: Sales analysis
Sales analysis Sales (€m) Price - 21% Volume FX rate – translation Scope of vs 2008 (7.7)% effect business (13.9)% +1.1% (0.7)% 5,633 4,444 2008 2009 10
Slide 11: Fixed cost savings partly offset volume drop from challenging markets
Fixed cost savings partly offset volume drop from challenging markets EBITDA (€m) Inflation & Fixed cost volume New savings loss* businesses Environment (39) +36 +171 (343) Others (13) Internal progresses 498 310 2008 2009 +€207m from internal progresses 11 * Inflation on fixed costs and volume loss
Slide 12: Results by business segments
Results by business segments Sales (€m) EBITDA (€m) Vinyl Products 1,443 • Trough market conditions 1,005 14 2009 • Benefits from restructuring plans in downstream PVC 2008 2009 2008 (31) Industrial Chemicals 2,582 • Record EBITDA margin since spin-off at 14.5% 2,109 341 306 • Benefits from expansio
Slide 13: Strong cash generation, largely above the initial target
Strong cash generation, largely above the initial target Raw materials and finished goods inventories (€m) In €m 943 EBITDA 310 660 Working capital reduction +384 - 30% Recurring capex (262) Tax & cost of debt (82) 2008 2009 Restructuring outflows (78) Others (44) Recurring capex (€m) 301 Free cash
Slide 14: A very strong balance sheet
A very strong balance sheet Long term Share- assets holder’s equity 2,097 1,791 • 30% net debt reduction vs end 2008 • Gearing <20% Provisions • Secured financing until March 2013 Working 16.2% working 685 • €1.1bn syndicated capital / sales capital credit line vs 18.7% end 2008 Net debt 720 341 Sim
Slide 15: 2009 dividend
2009 dividend • Dividend of €0.60 per share • Maintained at the same level as previous year • Reflecting confidence in the Group’s outlook and strong balance sheet Continue to enable our shareholders to take part in the Group’s transformation 15
Slide 16: A reshaped Arkema
2005-2009 A reshaped Arkema
Slide 17: Improve competitiveness
Improve competitiveness Cumulated fixed cost Spin off target savings since 2005 (€m) €500m in 2010 508 337 230 120 2005 2006 2007 2008 2009
Slide 18: Optimize cash generation
Optimize cash generation Working capital Spin off target as % of sales 18% end 2010 23.6% 16.2% 2005 2009
Slide 19: Keep a very strong balance sheet
Keep a very strong balance sheet Spin off target Net debt as % of shareholders’ equity below 40% 31%* 19% 2005 2009 * Net debt computed as 12/31/2005 proforma net debt after €532m capital increase + €580m NR pre spin off items
Slide 20: Reinforce the business portfolio
Reinforce the business portfolio Spin off targets Acquisitions: €500m to €800m sales Acquisitions €550m Divestments: €300m to €400m sales • Coatex • Ethacryl • Winkelmann Mineraria • Organic peroxides from Geo • Oxford Performance Materials Divestments €480m • Acrylic assets from Dow • Cerexagri • U
Slide 21: Better positioned on growing regions & products
Better positioned on growing regions & products Asia Innovation €130m capex spent since spin off Focus on sustainable development and high performance polymers Bio-based Range for photovoltaic Spin off target polymers 20% of sales in 2012 % of total sales achieved in Asia Acquisition 13% 18% of OPM
Slide 22: Our responsibility as a chemical player
Our responsibility as a chemical player Safety: a top priority Improve our environmental footprint 5.3 23 2.7 2.7 4.5 <2 <4 2.3 Mid 2009 Mid 2005 2008 2009 1990 2008 term term Lost time injury rate Greenhouse gas emissions Mt CO2-eq Be a responsible global chemical player
Slide 23: Share performance
Share performance ARKEMA 50 Performance since spin off + 11.3% 30.04€ - 30.8% 27€ 30 since SBF 120 12/31/2009 Spin off + 15.5% - 11.0% 10 05/18/06 12/31/06 12/31/07 12/31/08 12/ 31/09 05/ 21/2010 23
Slide 24: 2010 outlook
2010 outlook Very significant increase of sales and profitability 24
Slide 25: A strong improvement at the start of 2010
A strong improvement at the start of 2010 Sales (€m) Strong rebound in volumes and profitability in 1Q’10 1,308 +20% 10.5% EBITDA margin vs 1Q’09 1,092 versus 5.2% in 1Q’09 Gearing maintained below 20% 1Q’09 1Q’10 EBITDA (€m) Net result, Group share (€m) +137 X2.4 +40 vs 1Q’09 1Q’09 57 1Q’10 (35) 1Q
Slide 26: Other 1Q'10 highlights
Other 1Q’10 highlights • Closing of the acquisition and integration of certain acrylic assets purchased from Dow in North America • Presentation of Arkema’s comprehensive product offering for the Coatings market at the American Coatings Show (ACS) held in Charlotte (US) • Successful start-up of fluo
Slide 27: 2010 outlook
2010 outlook • 2Q’10 outlook • 1Q’10 market conditions expected to continue in 2Q’10 • 2Q’10 EBITDA will be above 1Q’10 level • 2010 outlook • Confidence in Arkema’s ability to generate in 2010 an EBITDA very significantly above 2009 • In a still volatile economic environment, continue to focus on s
Slide 28: Acrylics
Acrylics Become a worldwide integrated player 28
Slide 29: An integrated value chain
An integrated value chain Raw materials Monomers Polymers End markets Plastics Impact modifiers Water treatment Acrylates Emulsions Coatings Acrylic Dispersants, Propylene thickeners Paper acid Super absorbents Hygiene Adhesives Arkema’s products 29
Slide 30: Our ambition in acrylics
Our ambition in acrylics Develop world-scale competitive Increase downstream integration monomer production sites Carling site, France Coatex site in Genay, France From a European acrylic upstream player to a worldwide integrated player 30
Slide 31: Key milestones in our development
Key milestones in our development 2007 2008 2009 2010 2011 2012 Acquisition of Coatex (€150m of sales) Acquisition of Ethacryl (€4m of sales) Expansion of AE2H in Carling for pressure sensitive adhesives Integration of the Clear Assets acquired from Dow early 2010 Lake site, TX (USA) ($450m of sales
Slide 32: A major achievement: the acquisition of certain acrylic assets from Dow
A major achievement: the acquisition of certain acrylic assets from Dow • Acquisition and integration early 2010 • $450m of sales in 2009 • $50m enterprise value • Perfect fit with Arkema’s strategy in Acrylics • Build a strong position in the US in monomers (Clear Lake) • Develop downstream positio
Slide 33: World-scale sites in Europe and North America
World-scale sites in Europe and North America Acrylic monomer sites Coatex sites Impact modifier sites Emulsion sites 33
Slide 34: Among the worldwide leaders in acrylics
Among the worlwide leaders in acrylics #3 worldwide #2 in the US #2 in the US in acrylic acid in acrylic acid in coating latex Nippon BASF Dow Arkema Dow Arkema BASF StoHaas Dow Arkema Wacker BASF Shokubai Chemie 34 Source: CMAI, SRI et estimations Arkema
Slide 35: A new roadmap
2010 - 2014 A new roadmap 35
Slide 36: A gradual portfolio enhancement
A gradual portfolio enhancement 2005 2009 5-year proforma* target Strategy 14% Cost and partnerships Vinyl 24% 21% Products 20% Emergence of a global integrated player Acrylics & Coatex 17% Industrial 42% 4 first-class growth platforms Chemicals Industrial 36% Chemicals (w/o 34% • Thiochemicals • Me
Slide 37: Balanced geographic position
Balanced geographic position 2005 2009 proforma* 5-year target 5% 4% 5% 13% 17% 22% 57% 50% 41% 25% 29% 32% Europe North America Asia Rest of world Sales by region 37 * Including the acrylic assets acquired from Dow
Slide 38: Accelerate product innovation
Accelerate product innovation Outlook for rechargeable battery • 3% of Group’s sales dedicated market worldwide in US$m to R&D 25,000 • 7 research centers 20,000 15,000 • 1,100 researchers 10,000 • 15% of R&D efforts allocated to 5,000 long-term breakthrough projects 2010 2015 2020 €400m sales from
Slide 39: 4 R&D priorities
4 R&D priorities Composites New energies Water treatment Bio-resourced polymers 39
Slide 40: Reinforce our presence in Asia
Reinforce our presence in Asia • Successfully achieve current projects in China HFC-125 • Partnership with Daikin in new fluorogas blends Kynar (PVDF)® • On-going construction of 2 new production units: Kynar® PVDF and Coatex Coatex 2010 2011 2012 • Longer-term thoughts in Asia • Acrylic monomers •
Slide 41: Our development in China
Our development in China Hydrogen peroxide in Shanghai HFC-125 fluorogas in Changshu Two new units under construction in Changshu for fluoro-polymers (Kynar®) and acrylic polymers (Coatex®) 41
Slide 42: 5-year (2014) mid-cycle targets
5-year (2014) mid-cycle targets 5-year (2014) EBITDA margin mid-cycle target* Performance Products 15% Industrial Chemicals w/o Acrylics 17% Acrylics 14 to 15% Vinyls 8 to 9% Corporate (1)% Arkema >13,5% 42 * In a normalized environment
Slide 43: Conclusion
Conclusion • A Group that emerged stronger from 2009 crisis • 2010 EBITDA should be very significantly above 2009 • High potential for growth and profitability improvement in the coming years • Continue the strategy to grow in Asia and through innovation on emerging technologies and bolt-on acquisit
Slide 44: Governance
Governance 44
Slide 45: 2009 highlights
2009 highlights 2009 General Meeting : implementation of the staggered renewal of the terms of office of directors and appointment of Mr. Marc Pandraud as director. Implementation of the principles of the AFEP/MEDEF corporate governance code Co-option of Ms. Isabelle Kocher in place of Mr Tidjane Th
Slide 46: Development of the employee share ownership
Development of the employee share ownership 2010 Share capital increase 2009 824,424 shares 5.08% Incentive 420,000 shares 2008 Share capital 3.52% 3.64% 3.36% 3.47% increase 618,000 shares 2.58% 2.25% 1.26% 1.05% 0.70% Dec-06 Dec-07 Mar-08 Jun-08 Dec-08 Apr-09 Jun-09 Sept-09 Dec-09 Apr-10 46
Slide 47: A suitable governance
A suitable governance 11 directors appointed by the General Meeting 9 independent directors 1 director representing the employee shareholders Competency Complementarity Independence Transparency 47
Slide 48: 3 specialized committees
3 specialized committees The nominating and The audit and accounts compensation committee committee Thierry Morin, Chairman Philippe Vassor, Chairman François Enaud Laurent Mignon Bernard Kasriel Jean-Pierre Seeuws All independent All independent Board of directors The strategic committee Jean-Pierr
Slide 49: Board of Directors' compensation
Board of Directors’ compensation • Chairman and Chief Executive Officer • 2010 fixed compensation unchanged at €610,000 • Variable compensation for 2009 : €660,813 i.e. 72.2 % of maximum amount according to the performance criteria • No attendance fee • Directors • Current maximum annual overall amo
Slide 50: Performance shares and stock options
Performance shares and stock options Performance shares 2008 2009 2010 Number of beneficiaries Performance 646 1,009 Number of allocated shares criteria have 184,850 204,500 not been Allocation has Including Chairman and CEO 18,800 achieved been declined (the executive committee has also declined th
Slide 51: Combined General Meeting of June 2010 Proposed resolutions
Combined General Meeting of 1 June 2010 Proposed resolutions Resolution proposed to the ordinary General Meeting 1st and 2nd resolutions Approval of the annual and consolidated financial statements for the financial year ended 31 December 2009 3rd resolution Allocation of income for the financial ye
Slide 52: Combined General Meeting of June 2010 Proposed resolutions
Combined General Meeting of 1 June 2010 Proposed resolutions 6th resolution Ratification of the co-option of Ms. Isabelle Kocher as director 7th resolution Appointment of Ms. Claire Pedini as director 8th and 9th resolutions Appointment of a director representing the employee shareholders 10th resol
Slide 53: Combined General Meeting of June 2010 Proposed resolutions
Combined General Meeting of 1 June 2010 Proposed resolutions Resolutions proposed to the extraordinary General Meeting 11th resolution Delegation of authority granted to the Board of Directors in order to issue securities with preferential subscription rights. Duration of the authorization: 26 month
Slide 54: Combined General Meeting of June 2010 Proposed resolutions
Combined General Meeting of 1 June 2010 Proposed resolutions 13th resolution Increase of the number of shares to be issued pursuant to the 11th or 12th resolution, by up to a maximum of 15% of the initial issuance, in the event that such issuances should be the subject of excess demand by the invest
Slide 55: Combined General Meeting of June 2010 Proposed resolutions
Combined General Meeting of 1 June 2010 Proposed resolutions 15th resolution Delegation of authority granted to the Board of Directors to conduct capital increases reserved for employees participating in a company savings plan Duration of authorization: 26 months Maximum nominal amount: €20 million