Arkema Sa · EURONEXT:AKE
Arkema Sa — Shareholder Meeting (May 2008)
41 slides from Arkema Sa's shareholder meeting presentation, May 20, 2008
Slide 1: Annual General Meeting 2008
Assemblée Annual General GénéraleMeeting 2008 2008 20 mai th 2008 May 20 2008 - Palais des Congrès, Paris Palais des Congrès de Paris
Slide 2: Results and Outlook
Results and Outlook
Slide 3: 2007 Highlights
2007 Highlights ARKEMA = \
Slide 4: Already a very different Group
Already a very different Group 2010 A new face Modern, competitive, 2007 long-term growth potential First milestones cleared with success 2005 Competitiveness restored, and speeding-up of the Group’s Transform profitable growth the company Many competitive advantages but weaknesses to be addressed A
Slide 5: 2007 economic environment
2007 economic environment Satisfactory demand in Europe Strong growth in Asia Balanced supply & demand in Vinyl Products Weak US dollar Cost of energy and raw materials Economic slowdown in the United States
Slide 6: Performance exceeding targets
Performance exceeding targets Results Targets 2007 2007 EBITDA +26% +10 to 15% € 518 M Net income € 122 M >0 x 2.7 vs 2006 Cash flow* € 128 M >0 + 62% vs 2006 *adjusted for non-recurring pre-spin off items and impact of portfolio management
Slide 7: Significant growth of EBITDA
Significant growth of EBITDA 9.1% 7.3% 518 EBITDA margin (%) 6.3% 411 +26% Initial objective EBITDA (€M) 347 +18% of 10 to 15% Initial objective of 10 to 15% 2005 2006 2007
Slide 8: Major projects for the future
Major projects for the future Colombes (France) New Headquarters Changshu (China) Announcement of Kynar® plant Calvert City (USA) Startup of new China – Asia Pacific HFC plant Industrial and commercial France partnership with Daikin First acquisition: Coatex in refrigerant gases
Slide 9: Vinyl Products
Vinyl Products Well integrated sector from chlorine to PVC converting N°3 in Europe 2007: sustained demand and fixed costs reduction Ongoing implementation of Chlorochemicals plan Reorganizations in downstream PVC Development of higher added value products 6.3% Focus on industrial reliability EBITDA
Slide 10: Industrial Chemicals
Industrial Chemicals 5 major chemical intermediates Leading world rankings 2007: results held up well Partnerships with Daikin European reorganization of Fluorochemicals Targeted acquisitions in downstream EBITDA margin (%) 10.7% 11.4% activities: Coatex, PMMA from Repsol Extension of existing plant
Slide 11: Performance Products
Performance Products Application-driven high-tech specialties Internationally recognized brands 2007: EBITDA margin > 10% Renewable raw materials at the heart of R&D drive EBITDA margin (%) 10.7% Improving competitiveness 8.7% Launch of new high added value EBITDA (€M) 156 184 products Divestment of
Slide 12: Stock market performance
Stock market performance Share price in € € 27.50 € 47.78 € 43.16 Evolution 50 since May 18 2006 40 Arkema 57% BASF 46% 30 Solvay (0%) Lanxess (3%) Rhodia (28%) 20 Ciba (50%) Clariant (35%) 18/05/06 18/05/07 16/05/08 10 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 SBF 120 + 3%
Slide 13: 2007 Annual Results
2007 Annual Results Above the objectives
Slide 14: Major improvement in financial performance
Major improvement in financial performance Variation 2006 2007 (in millions of euros) 06-07 Sales 5,664 5,675 +0.2% EBITDA 411 518 +26% EBITDA margin 7.3% 9.1% Recurring operating income 200 293 +47% Net income 45 122 x2.7 (Group share) EPS 0.75 2.02 x2.7
Slide 15: Organic growth of sales: +4%
Organic growth of sales: +4% +2.3% (1.2)% (2.6)% +1.7% Scope Volumes € 5,664 M € 5,675 M Prices Change +4% growth given constant business scope and exchange rates 2007 2006
Slide 16: EBITDA growth: +26%
EBITDA growth: +26% + € 17 M +€7M € 518 M + € 83 M Other Environment € 411 M Internal progress +26% 2006 2007 Major contribution of internal progress
Slide 17: Recurring cash flow of €201 M
Recurring cash flow of € 201 M € 518 M € (281) M € (93) M € 201 M € 47 M € 10 M Recurring CAPEX* Others Taxes ∆ WC and cost of debt Recurring cash flow EBITDA * Excluding capital expenditure relating to Chlorochemicals plan included in non-recurring pre-spin off items
Slide 18: Very sound financial structure
Very sound financial structure Net financial debt: € 459 M Gearing: 24% Equity capital: € 1,914 M WC: 19.6% of sales Limited contingent liabilities Credit line of € 1 bn until 2013
Slide 19: Strategy and outlook
Strategy and outlook A Group undergoing a deep transformation
Slide 20: The world is our inspiration
The world is our inspiration Chemistry is changing… Increasing stature of Asia Rising cost of oil-based raw materials Challenges of sustainable development … Arkema has the necessary assets to address these changes Very sound balance sheet structure Over 20 years’ presence in Asia Strength of innova
Slide 21: Our responsibility as a chemical player
Our responsibility as a chemical player Successfully implement Reach Minimize our greenhouse gas Improve our safety records* emissions (Mt eq CO2) 23 5.3 Divided by 2.5 3.6 2.4 9.4 2.0 <2 <4 2005 2006 2007 2008 (e) 2010 (e) 1990 2007 2010 (e) Keep on integrating our activities within their local con
Slide 22: Implementing a winning strategy
Implementing a winning strategy 3 strategic vectors: Major cost reduction Growth in Asia Innovation Accelerator: dynamic portfolio management
Slide 23: Improving the cost base
Improving the cost base € 230 M savings over 2 years Evolution of headcount Reduction in G&A costs Energy savings in processes 500 330 230 120 Cumulative fixed cost reductions in €M 2006 2007 2008(e) 2010(e)
Slide 24: Speeding up development in Asia
Speeding up development in Asia World-scale facilities Over € 50 M capital expenditure per year Development of Changshu industrial platform (China) Beijing (China) Debottlenecking tin stabilizers 20% 13% Shanghai (China) 80kt H2O2 Changshu (China) • Kynar® • F125 and fluorinated blends with Daikin •
Slide 25: Already the first fruits from innovation
Already the first fruits from innovation R&D budget: close to 3% of sales 60% of budget allocated to development 19% of Performance Products sales generated by products developed in last 5 years (vs 13% in 2006) 15% 40% Long term breakthrough 33% New products New processes 12% Product and process de
Slide 26: Innovation at the service of strategy
Innovation at the service of strategy Innovative materials Growing use of renewable raw materials Energy savings and new forms of energy Nanostructured materials Process intensification Produce more with less energy
Slide 27: Energy savings and new forms of energy
Energy savings and new forms of energy PRODUCE STORE SAVE Photovoltaics: Batteries, Glass tailored to climatic clean and renewable supercapacitors, conditions electricity fuel cells
Slide 28: Arkema, a player in the photovoltaic sector
Arkema, a player in the photovoltaic sector Today, Arkema materials: Protect the silicon and electrical circuits Arkema and future photovoltaic generations: Technologies concentrating light Toward thin amorphous silicon layers In the longer term, organic photovoltaic Light concentrator (Altuglas®) S
Slide 29: Nanostructured materials
Nanostructured materials < 1970 1970 - 2000 > 2000 Polymers Alloys Nanostructures 2 µm 2 µm 240 nm A + B 10 µm 500 nm
Slide 30: Nanostructured PMMA (Altuglas) in cars
Nanostructured PMMA (Altuglas®) in cars 300 nm 30 nm Weight saving = Energy saving
Slide 31: Dynamic portfolio management
Dynamic portfolio management Objectives Achieved Product lines Cerexagri (Agrochemicals) € 300 M to € 400 M Divestments of revenues ~ € 380 M Urea formaldehyde resins Specialty amines (Thiochemicals) Coatex € 500 M to € 800 M (Specialty acrylic polymers) Acquisitions of revenues ~ € 180 M Repsol’s P
Slide 32: 2008: Target sustained by internal progress
2008: Target sustained by internal progress Taking account of uneasy economic environment Moderate growth of sales Target built on internal progress Impact of internal projects on EBITDA in 2008 Productivity + € 42 M Growth + € 23 M Portfolio + € 15 M Confirmation of 10% EBITDA margin target
Slide 33: Ambitious 2010 targets
Ambitious 2010 targets EBITDA margin at 12% Organic growth in Industrial Chemicals and Performance Gearing < 40% Products of 4 to 5% per year WC = 18% of sales 12%* Variable costs Portfolio 9.1% Growth Productivity Productivity Growth Portfolio Variable costs 2007 2010(e) * EBITDA margin in mid-cycl
Slide 34: First proposed dividend of €0.75 per share
A transformed, competitive and value- creating chemical player Confirmation of EBITDA margin targets of 10% in 2008 and 12% in 2010 Very sound financial structure Increased presence in Asia Sustainable development at the heart of innovation Unique progress potential in the medium to long term First
Slide 35: Governance
Governance
Slide 36: Nominating and compensation committee
Nominating and compensation committee 3 members 3 meetings in 2007 89% attendance rate Activity in 2007: Remuneration of directors and executive committee members Stock option and free share allocation plans
Slide 37: Stock options and free shares
Stock options and free shares 2006 2007 Stock options 540,000 600,000 Free shares 150,000 125,000 600 beneficiaries Obligation to keep the shares: Chairman-CEO and executive committee members
Slide 38: Attendance fees
Attendance fees 2006 2007 Attendance fees (€) 225,000 291,000 Number of directors 6 7 Number of Board meetings 9 7 Average attendance rate 94% 93%
Slide 39: Audit and Accounts Committee
Audit and Accounts Committee 3 members 5 meetings in 2007 87% attendance rate Systematic meetings with auditors, with no Senior Management present Activity in 2007: Quarterly, semester and full-year results Internal control Internal and external audit work schedules
Slide 40: Voting of resolutions
Voting of resolutions (see separate file available on the website)
Slide 41: 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