Arkema Sa · EURONEXT:AKE
Arkema Sa — ODDO BHF Forum January 2022
43 slides from Arkema Sa's conference presentation, January 2022
Slide 1: ODDO BHF Forum January 2022
ARKEMA iq ODDO BHF Forum January 2022
Slide 2: Arkema in a snapshot
Arkema in a snapshot ODDO BHF Forum - January 2022 2
Slide 3: Arkema at a glance
24.5% Arkema at a glance 17% 33% 32% 4% 18% Specialty Materials 24.5% 17% 27% 82% Segments End-markets Regions 89% pro forma 2020* 36% 36% 25.5% 8% 27% 18% 18%27% 7% 6% 4% 17% 17% Adhesive Solutions Coating Solutions General Industry Nutrition & Water Europe Asia Advanced Materials Intermediates Bui
Slide 4: Robust and resilient financial performance, also in the Covid context
Robust and resilient financial performance, also in the Covid context Relative to 2019 Specialty Materials -12% Intermediates -39% Relative to 2019 Volumes -4.3% ~1,600 1,474 1,457 1,391 8.8 8.7 8.3 7.9 1,189 1,182 667 651 7.5 565 16.7% 499 16.7% 16.7% 15.8% 426 15.0% 2016 2017 2018 2019 2020 2016 2
Slide 5: Well established financial resources
Well established financial resources in €m 1,000 900 1.5% 700 1.5% 500 400 0.75% 300 300 2.75% 0.125% 1.5% 150 3.125% 2023 2024 2025 2026 2027 2028 2029 Senior bond Green bond Hybrid bond RCF ODDO BHF Forum - January 2022 5
Slide 6: Shareholder return
Shareholder return → Return to pre-Covid level in 2020 2.30 2.50 2.50 €2.50 / share 2.20 → Payout ratio 49% → Yield (as a % of the share price at 31/12/2020) 2.7% 2017 2018 2019 2020 Dividend (euros / share) Share buybacks in 2021 per financial year1 €300m share buyback program over a 6 months perio
Slide 7: Our long term ambition
Our long term ambition ODDO BHF Forum - January 2022 7
Slide 8: A unique combination of expertise in sustainable materials
A unique combination of expertise in sustainable materials A SPECIALTY MATERIALS LEADER offering the most innovative and sustainable solutions to address our customers’ current and future challenges ODDO BHF Forum - January 2022 8
Slide 9: Our ambition by 2024
Our ambition by 2024 Become a sustainable and high-performance Specialty Materials leader Sales of €10 to €11bn Cash generation > 40% Deconsolidation of EBITDA margin of 17% the Intermediates segment Strict financial discipline Organic growth 3 to 3.5% / year ODDO BHF Forum - January 2022 9
Slide 10: 4 levers underpin our strategy
4 levers underpin our strategy Strengthen Achieve Specialty Materials best-in-class through CSR performance acquisitions among chemical players Take action Accelerate in commercial organic growth and operational and sustainable excellence innovation initiatives ODDO BHF Forum - January 2022 10
Slide 11: Cash allocation priorities
Cash allocation priorities Estimated cash to allocate over the Subject to market conditions 5 year plan ~€3.5bn at constant leverage3 (~1.6x) Reiterating our progressive dividend policy, targeting +25% 40% payout ratio by 2024 40-45% Return to Opportunistic share buy-back program shareholders Employ
Slide 12: Strict financial discipline
Strict financial discipline ROCE Net debt to EBITDA Solid ratio <2x investment >10% (Incl. hybrid bonds) grade rating Recurring Capex Controlled working capital ~5.5% ~14% of sales of sales ODDO BHF Forum - January 2022 12
Slide 13: Accelerate organic growth and sustainable innovation
Accelerate organic growth and sustainable innovation ODDO BHF Forum - January 2022 13
Slide 14: Accelerating demand for new materials driven by megatrends
Accelerating demand for new materials driven by megatrends GLOBAL MEGATRENDS 65% of our sales should significantly contribute to UN SDGs by 2030 KEY CHALLENGES ADDRESSED INCREASING BY ARKEMA RESOURCE SCARCITY CLIMATE CHANGE NEW TECHNOLOGIES URBANIZATION Boost new energies and low carbon mobility Dev
Slide 15: Significant opportunities in clean mobility
Significant opportunities in clean mobility Bio-based HYDROGEN Recyclable Rilsan® PA11 composites & liners for tanks PVDF membranes for fuel cells & Kynar® electrolyzers CHASSIS Rilsan® 100% recyclable Elium® composites €1bn MEGATRENDS sales in batteries by 2030 BATTERY Kynar® High-performance and s
Slide 16: Extended range of products for living comfort and home efficiency
Extended range of products for living comfort and home efficiency Bio-based Low VOC Kynar Aquatec® Cool roofs, eco-friendly alternative to air-conditioning Siliporite® High thermal insulation double gazing for windows Forane® Highly insulated 1233zd foam panels MEGATRENDS Bostik solutions “Free from
Slide 17: Increased demand for high-performance bio-based lifestyle products
Increased demand for high-performance bio-based lifestyle products Bio-based CONSUMER GOODS Recyclable Design, customizable & bio- Rilsan® based glass frames Durable dishwasher baskets CONSUMER ELECTRONICS Bio-based, recyclable toys Rilsan® Durable components Rilsan® Sartomer solutions for smartphon
Slide 18: Investments to capture sustainable growth
Investments to capture sustainable growth PVDF PA11 powders +50% capacity for 2023 New capacity batteries (2020) in Changshu, CN +35% capacity (2022) 2023 PVDF in Changshu, CN Fluorinated specialties +50% capacity Polyamide 12 2023 2020/22 in Pierre-Bénite, FR 1233zd capacity (15 kt/yr) +25% global
Slide 19: Progress of our 2 major capex
Progress of our 2 major capex Final phase of our new integrated bio-factory Innovative partnership to supply AHF in Singapore on track to start mid-2022 +50% PA11 capacity in Asia (100% bio-based) Use of co-product from Nutrien to produce AHF Start-up of Singapore plant expected in 2022 CO2 emission
Slide 20: Strengthen Specialty Materials through acquisitions
Strengthen Specialty Materials through acquisitions ODDO BHF Forum - January 2022 20
Slide 21: Strong M&A execution in 2021
Strong M&A execution in 2021 Two major steps to refocus our portfolio towards Specialty Materials ASHLAND PERFORMANCE ADHESIVES PMMA Acquisition project - 31 August 2021 Divestment to Trinseo – closing 3 May 2021 Other M&A operations EPOXIDES BUSINESS Brazilian leader in Offering expansion in A lead
Slide 22: Ashland Performance Adhesives
Ashland Performance Adhesives A strongly value-creative acquisition project Transaction highlights Financial impact Financing & leverage EPS accretive within the Financed through Arkema’s first year, and expected to excess cash and existing US$1.65bn enterprise value, add €1 in EPS by 2026 debt faci
Slide 23: Ashland Performance Adhesives
Ashland Performance Adhesives Overview 2021e key figures * Main segments Leading technologies Pressure Structural Laminating ~US$360m 81% NA Sensitive Assembly Adhesives 12% 13% EU Adhesives Adhesives & Coatings sales 6% AP+RoW 3% 27% 9% Sales by segment (2020) ~US$95m 23% 24% EBITDA Labels Healthca
Slide 24: Ashland Performance Adhesives
Ashland Performance Adhesives Consolidating Bostik’s long term growth ambition → Becoming strong global player in Pressure Sensitive Adhesives, with one of the most complete offerings NEW TARGET > 17% 14% 16% → Strengthening Bostik’s presence in the US 13.1% → Reinforcing high value added industrial
Slide 25: Achieve best-in-class CSR performance
Achieve best-in-class CSR performance ODDO BHF Forum - January 2022 25
Slide 26: Arkema Corporate Social Responsibility policy
Arkema Corporate Social Responsibility policy Our 3 commitments Deliver sustainable Manage our activities Cultivate an open dialogue solutions driven by as a responsible and close relations innovation manufacturer with our stakeholders → Responsible product stewardship → Safety of people and → Ethic
Slide 27: Strong CSR recognition
Strong CSR recognition 2021 82 Improved ranking to 3rd in DJSI (CSA by S&P Global) World 2021 vs 6th in 2020 A (Climate) B CAC40® ESG Top 1% (2020 assessment) Integration in a new index (2021) Includes the 40 companies that have demonstrated ESG best practices on the Paris Stock Other ratings 1st de
Slide 28: 3 structuring programs supporting sustainable growth
3 structuring programs supporting sustainable growth Archimedes program Circular Economy Climate Plan Moving toward higher positive impact A sustainable resource management Contain global warming Commitment to Paris Agreement Maximize the use of Science Based Target wb 2°C renewable and/or recycled
Slide 29: Commitment to sustainability reinforced with a solid foundation
Commitment to sustainability reinforced with a solid foundation Environment 1 Safety 1.6 1.4 Energy VOC COD 1.3 1.0 < 1.0 -10% -20% -42% -65% -55% -60% 2012 2019 2020 2030 2017 2018 2019 2020 2025 2012 2019 2020 2030 2012 2019 2020 2030 TRIR (Number of accidents per million hours worked) Diversity R
Slide 30: Detailed Q3'21 results and outlook
Detailed Q3’21 results and outlook ODDO BHF Forum - January 2022 30
Slide 31: Excellent Q3'21 results in a challenging operational context
Excellent Q3’21 results in a challenging operational context in €m EBITDA REBIT Adj. Net Income Net Debt (incl. hybrid bonds) 474 385 343 1,910 258 307 250 1,255 166 171 109 Q3'19 Q3'20 Q3'21 Q3'19 Q3'20 Q3'21 Q3'19 Q3'20 Q3'21 31/12/20 30/09/21 Margin 19.8% x2.0 vs Q3’20 Adj. EPS €3.44 0.8x LTM EBI
Slide 32: Specialty Materials performance significantly above 2019
Specialty Materials performance significantly above 2019 Q3’21 sales split Specialty Materials’ EBITDA 421 32.5% Exceeding +35% pre-Covid level Specialty +57% Materials 31% 87.5% €2,398m 312 268 24% 12.5% Q3’19 Q3’20 Q3’21 → Volumes up YoY, particularly in High Performance Polymers and Coating Solut
Slide 33: Q3'21 financial highlights
Q3’21 financial highlights → Up nearly 30% vs Q3'20 and 17% vs Q3’19, at constant scope and currency • Accelerating demand for cutting-edge and sustainable solutions • Volumes up by a solid 5.3% YoY, in an operational context marked by the shortage €2,398m sales of an increasing number of raw materi
Slide 34: Key figures
Key figures in €m Q3’21 Q3’20 Change Sales 2,398 1,909 +25.6% EBITDA 474 307 +54.4% Specialty Materials 421 268 +57.1% Intermediates 74 55 +34.5% Corporate -21 -16 EBITDA margin 19.8% 16.1% Specialty Materials 20.1% 16.9% Intermediates 24.7% 17.5% Recurring operating income (REBIT) 343 171 +100.6% R
Slide 35: Strong organic sales growth
Strong organic sales growth Sales in €m +23.8% +1.1% -4.6% Stronger US dollar against Integration of Fixatti, euro Ideal Work, Poliplas, +5.3% Edge Adhesives Texas, and Agiplast Ongoing price PMMA disposal on increase initiatives Continued strong 3 May 2021 in all product lines growth in batteries,
Slide 36: Adhesive Solutions (24% of Group sales)
Adhesive Solutions (24% of Group sales) Key figures Highlights in €m Q3’21 Q3’20 Change → +6.6% price effect, reflecting the Group's Sales 568 516 +10.1% actions to pass on sustained raw materials inflation EBITDA 79 73 +8.2% EBITDA margin 13.9% 14.1% → Volumes down 2.3% from Q3’20 high comparison b
Slide 37: Advanced Materials (32.5% of Group sales)
Advanced Materials (32.5% of Group sales) Key figures Highlights in €m Q3’21 Q3’20 Change → Volumes up 13.3% YoY Sales 781 603 +29.5% • Strong increase in High Performance Polymers volumes, in particular in batteries, sports and EBITDA 174 127 +37.0% bio-based consumer goods • Automotive (excluding
Slide 38: Coating Solutions (31% of Group sales)
Coating Solutions (31% of Group sales) Key figures Highlights in €m Q3’21 Q3’20 Change → Prices up 52.4% YoY Sales 742 469 +58.2% • Price actions in downstream product lines to offset high raw materials inflation EBITDA 168 68 +147.1% • Relative tightness of the acrylics market EBITDA margin 22.6% 1
Slide 39: Intermediates (12.5% of Group sales)
Intermediates (12.5% of Group sales) Key figures Highlights in €m Q3’21 Q3’20 Change → Scope effect of -37.5% related to PMMA Sales 300 315 -4.8% divestment EBITDA 74 55 +34.5% EBITDA margin 24.7% 17.5% → Prices up by a significant 27.6% YoY, reflecting more favorable market conditions REBIT 53 27 +
Slide 40: Q3'21 Cash flow
Q3’21 Cash flow in €m Reconciliation of EBITDA to net cash flow Q3’21 Q3’20 → Q3’21 tax rate EBITDA 474 307 20% of REBIT (excl. exceptional items) Current taxes -60 -31 Cost of debt -13 -19 → Working capital tightly controlled 12.3% of annualized sales at Change in working capital and fixed assets p
Slide 41: Net debt evolution (including hybrid bonds)
Net debt evolution (including hybrid bonds) in €m 0.8x LTM EBITDA 1,281 -236 1,255 162 10 11 27 Exceptional capex(1): €64m Tax on PMMA disposal: €99m 30/06/2021 Rec. cash Exceptional M&A Dividends & FX and 30/09/2021 flow items Hybrid bonds others 1. PA11 expansion in Asia and Nutrien project ODDO B
Slide 42: Outlook
Outlook → Activity in Q4’21 should be in line with the past few months. Operational performance will continue to be impacted by the unavailability of certain raw materials, logistical difficulties, and rising input costs, which will guide the Group's selling price policy. The automotive sector will
Slide 43: 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. In the current context, where the Covid-19 epidemic persists across the world, and the evolution of the situat