Arkema SA · EURONEXT:AKE
Arkema SA — Citigroup European Chemicals Tour 2006
34 slides from Arkema SA's conference presentation, Jun 23, 2006
Slide 1: Arkema Presentation - Citigroup European Chemicals Tour
Arkema Presentation The The Citigroup Citigroup European European Chemicals Chemicals Tour Tour Friday 23rd Friday 23 rd Brussel Brussel
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements. All statements other than statements of historical fact included in this presentation, including, without limitation, those regarding the financial position, business strategy, management plans and objectives for future operations of
Slide 3: Creation of Arkema in October 2004
Creation of Arkema in October 2004 2004 2005 2006 Decision Organization Launch of AMF visa on on spin-off put in place key restructuring and the prospectus Feb 19 development projects Apr 5 Total shareholders’ Presentation approval Finalize of Arkema Creation of to analysts spin-off process and spin
Slide 4: Arkema 2005 overview
Arkema 2005 overview Presence world-wide Sales: €5.7 bn Europe 57% of sales 60 plants 4 R&D centers 76% of the workforce EBITDA*: €355 m North America 25% of sales Asia 20 plants 13% of sales 1 R&D center 10 plants 16% of the Capital employed**: €3.1 bn workforce 1 R&D center 7% of the workforce 200
Slide 5: Integrated and coherent portfolio
Integrated and coherent portfolio Sales by segment Vinyl Products Vinyl A well integrated sector from chlorine production Performance Products Products 24% to PVC converting 34% Mature and cyclical market 3 business units 42% Industrial Chemicals Industrial Chemicals 2005* Intermediates for a large
Slide 6: Wide range of end-markets
Wide range of end-markets Automotive Sport & leisure Packaging Vinyl Compounds, Vinyl compounds, PVC, PMMA, Fluorochemicals, PMMA, Technical Polymers, Technical Polymers, Technical Polymers Additives, Additives, Organic Peroxides Organic Peroxides Chemical industry Hygiene & beauty Chlorochemicals,
Slide 7: Strong improvement of results in 2005
Strong improvement of results in 2005 (€ m) 2003 2004 2005 Uneven level of profitability by segment Sales 5,047 5,318 5,710 15% Sales growth +5.4% +7.4% Industrial Chemicals EBITDA (recurring) 249 301 355 10% Rec. EBITDA margin 4.9% 5.7% 6.2% Performance Operating income (recurring) (48) 11 128 5% P
Slide 8: Investment Highlights
ARKEeEMA Investment Highlights
Slide 9: A strategy to create shareholder value
A strategy to create shareholder value A clear path forward Shape a profitable Clear strategy chemical player Strong emphasis with strong Unique strengths foundations on productivity Focus on profitable Leading global market growth positions Solid asset base and Insufficient Build on technical exper
Slide 10: Leading global market positions
Leading global market positions Position Europe America Asia PVC No3 Europe Vinyl Compounds No1 Europe Acrylics No 5 PMMA No 1 Thiochemicals No 1 Fluorochemicals No 2 Hydrogen Peroxide No 3 Speciality Polyamides No 1 PVDF No 1 Molecular Sieves No 2 Organic Peroxides No 2 PVC Tin Stabilizer No 2 Busi
Slide 11: Solid asset base and technical expertise
Solid asset base and technical expertise Production assets in each region Track record of complex industrial start-ups Proprietary knowledge and know-how 33% of R&D budget for process improvement Loyalty and professionalism of teams Organic Peroxides Thiochemicals Technical Polymers Changshu (China)
Slide 12: Strong balance sheet
Strong balance sheet Balance sheet €678 m write-offs of fixed assets (cumulated 2004-2005) Working Capital Equity Equity after €1,348 m €1,463 m €532 m capital increase Significant level of liabilities Non current Net Debt €567 m retained by Total before spin-off Assets* €1,768 m Provisions €1,086 m
Slide 13: Commitments by Total
Commitments by Total Operating contracts: securing LT key raw materials supplies Olefins contracts: LT Ethylene contract for Chlorochemicals and Technical Polymers LT Propylene contract for Acrylics Platform agreements (Carling and Lavéra) Warranties: protection from potential liabilities Antitrust:
Slide 14: Corporate governance
Corporate governance Board of Directors Executive committee T. Le Hénaff Thierry Le Hénaff – Chairman CEO François Enaud Bernard Kasriel B. Boyer (Strategy) M. Delaborde (HR & Communication) Laurent Mignon A. Devic (Manufacturing and HSE) Thierry Morin P. Goebel (Performance Products) Jean-Pierre Se
Slide 15: A clear strategy
A clear strategy Strong emphasis on productivity Focus on profitable growth Improve profitability Accelerate product innovation Improve free cash generation 10 to 15% recurring EBITDA growth per year* *Calculated as an average annual growth for the next three years compared to 2005 15
Slide 16: Strong emphasis on productivity
Strong emphasis on productivity Optimize manufacturing assets 6 main restructuring plans - 1,000 positions Shutdown loss-making operations Chlorochemicals [France] 523 p. Transfer production to most Thiochemicals [ France] 74 p. efficient plants Thiochemicals [USA] 60 p. Further cost reduction progr
Slide 17: Focus on profitable growth
Focus on profitable growth Developments with high return in Extension projects Europe and North America Average unit CAPEX new site = base 100 100 Products with sustained growth Mont (Technical Polymers) Careful consideration of 40-60 Calvert City (Fluorochemicals) supply/demand balance Becancour (H
Slide 18: Accelerate product innovation
Accelerate product innovation Overview (2005) R&DPatents by segment 3.3% of sales Breakthrough 1,400 researchers Approximately Vinyl 130 12% new inventions filed perProducts year 12% Near 100 joint projects with universities 51% Performance Products Significant know-how (non-patented) 6 R&D centers
Slide 19: Improve free cash generation
Improve free cash generation Improve cash generation from CAPEX by segment* operations Average 2003-2005 Medium Term 15% Very low gearing at spin-off in order 35% 21% 35% to cover cash requirements from non- recurring items 44% 50% CAPEX to be kept at €300 m per year Vinyl Products Industrial Chemic
Slide 20: Adapted strategy for each segment
Adapted strategy for each segment VINYL PRODUCTS INDUSTRIAL CHEMICALS PERFORMANCE PRODUCTS BREAK EVEN REINFORCE IMPROVE IN LOW CYCLE GLOBAL PROFITABILITY CONDITION LEADERSHIP Implement Vinyl Extension of best sites in Productivity and price restructuring plan Europe & North America optimization Enla
Slide 21: Q1 2006 results
ARKEeEMA Q1 2006 results
Slide 22: Results in line with forecasts given before spin-off
Results in line with forecasts given before spin-off Sales increase by 8.7% (€ m) Q1 ‘05 Q1 ‘06 Sales 1,421 1,525 Recurring operating income of Sales growth +8.7% €61m exceeding the €55m forecast EBITDA (recurring) 134 117 given in the prospectus Rec. EBITDA margin 9.4% 7.6% Impact of Acrylics and O
Slide 23: Highlights and outlook
Highlights and outlook Vinyl Products Industrial Chemicals Performance Products Implementation of the Launch of key growth Closure of Villers-Saint- Chlorochemicals projects : Paul plant : restructuring plan Acrylics in Carling End of consultation of (France) labor representatives Shutdown of units
Slide 24: Conclusion
ARKEeEMA Conclusion
Slide 25: Appendix
ARKEeEMA Appendix
Slide 26: Vinyl Products: An integrated chain from chlorine to PVC conversion
Vinyl Products : An integrated chain from chlorine to PVC conversion Chlorochemicals & PVC Business Units Vinyl Compounds Pipes & Profiles (Alphacan) Cyclical and commodity Mature Western European market Business drivers Large number of players Cost driven No3 in Europe in PVC Assets Integrated chai
Slide 27: Insufficient profitability prior to restructuring plan
Insufficient profitability prior to restructuring plan (€m) 2003 2004 2005 Sales by business units Sales 1,219 1,367 1,387 In € m , 1500 1,387 Sales growth 12% 1.5% 1,367 1,219 EBITDA (recurring) 1 44 20 1000 , Rec. EBITDA margin - 3.2% 1.4% Operating income (recurring) (59) (16) 8 Other expenses an
Slide 28: Vinyl Products Q1 '06 results
Vinyl Products Q1 ’06 results (€ m) Q1 ‘05 Q1 ‘06 Sales increase by 2.3% taking Sales 360 361 into account the same scope Sales growth +0.3% of business* EBITDA (recurring) 30 11 Rec. EBITDA margin 8.3% 2.8% Satisfactory volumes Operating income (rec.) 25 7 Operating income (94) 7 Higher natural gas
Slide 29: Industrial Chemicals: Leadership positions on growing markets
Industrial Chemicals : Leadership positions on growing markets Acrylics PMMA Business Units Thiochemicals Fluorochemicals Hydrogen peroxide Attractive growth potential Business drivers Opportunities in Asia Each business driven by specific cycles Product lines ranking among the world leaders Assets
Slide 30: Solid EBITDA growth
Solid EBITDA growth (€m) 2003 2004 2005 Sales by business units Sales 2,020 2,143 2,406 In € m 2 ,500 2,406 Sales growth 6% 12% 2,143 2,020 EBITDA (recurring) 191 220 316 2,000 Rec. EBITDA margin 9.5% 10.3% 13.1% 1,500 Operating income (recurring) 72 106 204 1,000 Other expenses and income (42) (47)
Slide 31: Industrial Chemicals Q1 '06 results
Industrial Chemicals Q1 ’06 results (€ m) Q1 ‘05 Q1 ‘06 Sales increase due to : 590 661 Sales Higher volumes Sales growth +12.0% Positive foreign currency effect EBITDA (recurring) 90 80 Price increases in Thiochemicals, Rec. EBITDA margin 15.3% 12.1% Fluorochemicals and Hydrogen Operating income (r
Slide 32: Performance Products: Application driven, broad spectrum of end markets
Performance Products : Application driven, broad spectrum of end markets Technical Polymers Specialty Chemicals (Ceca) Organic Peroxides Business Units Additives Urea Formaldehyde Resins Agrochemicals (Cerexagri) Broad spectrum of end-markets Business drivers New applications / usages Asian growth S
Slide 33: Starting to restore profitability in 2005
Starting to restore profitability in 2005 (€m) 2003 2004 Sales by business units 2005 Sales 1,802 1,800 1,907 €m 1,907 2, 000 1,802 1,800 Sales growth 0% 6% EBITDA (recurring) 132 99 109 1,500 Rec. EBITDA margin 7.3% 5.5% 5.7% 1,000 Operating income (recurring) 27 (4) 19 Other expenses and income (9
Slide 34: Performance Products Q1 '06 results
Performance Products Q1 ’06 results Sales increase due to : (€ m) Q1 ‘05 Q1 ‘06 Higher volumes in Technical Sales 474 521 Polymers and Specialty Chemicals Sales growth +9.9% Pricing initiatives notably in EBITDA (recurring) 33 45 Rec. EBITDA margin 7.0% 8.6% Additives Operating income (rec.) 11 22 P