Arkema SA · EURONEXT:AKE
Arkema SA — Exane BNP Paribas 21st European CEO Conference 2019
29 slides from Arkema SA's conference presentation, Jun 12, 2019
Slide 1: Arkema – Exane BNP Paribas 21st European CEO Conference
ARKEMA THIERRY LE HÉNAFF, CHAIRMAN AND CEO EXANE BNP PARIBAS 21ST EUROPEAN CEO CONFERENCE PARIS, FRANCE - 12 JUNE 2019
Slide 2: An Excellent 2018 Performance
AN EXCELLENT 2018 PERFORMANCE
Slide 3: Arkema in a Snapshot
ARKEMA IN A SNAPSHOT Ambition to become a leader in specialty chemicals and in advanced materials €8.8 bn €237 m sales R&D expenditure 11.6 % 3 REBIT margin regional R&D hubs 20,000 €561 m €2.50 employees capital expenditure(1) dividend per share 55 136 +12%/y countries production sites since 2007 (
Slide 4: Significant Increase After an Already Excellent 2017
SIGNIFICANT INCREASE AFTER AN ALREADY EXCELLENT 2017 EBITDA REBIT MARGIN +6% In €m 0.7x EBITDA +6% +30 bps Sales Net debt € 8.8 billion € 1 billion 1,474 1,391 11.3% 11.6% +22.5% +100 bps Adjusted net ROACE* income 15.1% € 725 million 2017 2018 2017 2018 * Return on average capital employed EXANE BN
Slide 5: Transformation on Track
TRANSFORMATION ON TRACK FY’18 SALES BY DIVISION FY’18 SALES BY REGION Specialties 70% 24% 31% 38% 45% Intermediates 30% 31% 31% High Performance Materials Europe 23% Adhesives 22% Advanced Materials (1) North America Industrial Specialties Asia and RoW Coating Solutions (1) Technical Polymers and Pe
Slide 6: Steady Growth in Different Macro-Economic Environments
STEADY GROWTH IN DIFFERENT MACRO-ECONOMIC ENVIRONMENTS EBITDA AND EBITDA MARGIN Adjusted EPS In €m In € 1,474 1,391 9.51 1,189 7.82 1,057 5.56 15.8% 16.7% 16.7% 13.8% 4.23 2015 2016 2017 2018 2015 2016 2017 2018 EXANE BNP PARIBAS 21st EUROPEAN CEO CONFERENCE – 12 June 2019 6
Slide 7: Best-in-Class Cash Generation
BEST-IN-CLASS CASH GENERATION Free cash flow and EBITDA to cash conversion rate NET DEBT excluding €700m hybrid bond In €m In €m 1,482 1,379 565 499 1,056 1,006 442 426 Gearing 35% 35% 24% 20% Cash conversion 42% 36% 41% 38% Net debt / EBITDA 1.3x 1.2x 0.8x 0.7x 2015 2016 2017 2018 2015 2016 2017 20
Slide 8: First Quarter 2019 Results
FIRST QUARTER 2019 RESULTS
Slide 9: 1Q'19 Financial Highlights
1Q’19 FINANCIAL HIGHLIGHTS +2.0% up YoY €2,215m sales +4.7% prices in High Performance Materials Close to 1Q’18 record performance (€383m) in a more challenging economic environment €370m EBITDA EBITDA up in specialties (71% of Group sales) despite softer volumes Lower performance of intermediates (
Slide 10: High Performance Materials (46% of Group Sales)
HIGH PERFORMANCE MATERIALS (46% OF GROUP SALES) 1Q’19 KEY FIGURES 1Q’19 SALES DEVELOPMENT 1Q’19 SALES BY BUSINESS LINE In €m 1Q’18 1Q’19 Change Volumes (6.7)% Sales 998 1,008 +1.0% 27% 22% Bostik Prices +4.7% EBITDA 176 162 (8.0)% Performance Additives Currency +2.2% EBITDA margin 17.6% 16.1% 51% Te
Slide 11: Industrial Specialties (29% of Group Sales)
INDUSTRIAL SPECIALTIES (29% OF GROUP SALES) 1Q’19 KEY FIGURES 1Q’19 SALES DEVELOPMENT 1Q’19 SALES BY BUSINESS LINE In €m 1Q’18 1Q’19 Change Volumes (3.4)% 12% PMMA Sales 661 642 (2.9)% Prices (2.4)% 32% Thiochemicals EBITDA 162 157 (3.1)% 26% Currency +3.0% Fluorogases EBITDA margin 24.5% 24.5% 30%
Slide 12: Coating Solutions (25% of Group Sales)
COATING SOLUTIONS (25% OF GROUP SALES) 1Q’19 KEY FIGURES 1Q’19 SALES DEVELOPMENT 1Q’19 SALES BY BUSINESS LINE In €m 1Q’18 1Q’19 Change Volumes +6.9% Sales 507 558 +10.1% Prices (0.5)% Coating Resins 46% and Additives EBITDA 66 76 +15.2% 54% Currency +3.7% EBITDA margin 13.0% 13.6% Acrylics Rec. oper
Slide 13: Excellent Cash Generation
EXCELLENT CASH GENERATION RECONCILIATION OF EBITDA TO NET CASH FLOW 1Q’19 HIGHLIGHTS In €m 1Q’18 1Q’19 EBITDA 383 370 Tax rate: 21% of REBIT (excl. exceptional items) Current taxes (53) (46) ● Resulting from geographic mix of earnings ● 2019e tax rate: ~21% of REBIT Cost of debt (20) (24) Change in
Slide 14: 2019 Priorities
2019 PRIORITIES NEW UNITS INNOVATION M&A Ramp up PEKK plant (US) and coating Leverage partnerships in composites Implementation of acquisition synergies resins unit (India) started early 2019 Continued strong emphasis on EV, in adhesives Start up capacity expansions in lightweighting, water treatmen
Slide 15: 2019 Outlook
2019 OUTLOOK In continuity with the start of the year, the macro-economic environment should remain volatile, marked by geopolitical uncertainties that are weighing on global demand Continued focus on internal momentum and implementation of our long term strategy Following a 2Q performance which sho
Slide 16: Some Selected Priorities Going Forward
SOME SELECTED PRIORITIES GOING FORWARD
Slide 17: Our Strategic Priorities
OUR STRATEGIC PRIORITIES Innovation Acquisitions High-growth countries Commercial excellence Operational excellence Corporate social responsibility Digitalization EXANE BNP PARIBAS 21st EUROPEAN CEO CONFERENCE – 12 June 2019 17
Slide 18: Reminder of 2023 Long-Term Objectives
REMINDER OF 2023 LONG-TERM OBJECTIVES A global specialty player focused on Delivering strong margins and adhesives and advanced materials (1) cash generation Bostik 2023 objectives Exceed 1/3 of Group sales REBIT margin EBITDA to free cash More than double sales vs 2016 conversion 11.5% to 12.5% 12.
Slide 19: Invest in Future Growth
INVEST IN FUTURE GROWTH CAPEX PLAN STRONG CAPEX DISCIPLINE In €m ~5.5% recurring capex as a % of Group sales ~€610m ~€500m exceptional capex over 2018-2021 €561m Exceptional capex €430m x2 thiochemicals Specialty polyamides Recurring expansion plan in Asia capex capacities in Malaysia (incl +50% glo
Slide 20: Ambitious Investment Plan in Advanced Materials
AMBITIOUS INVESTMENT PLAN IN ADVANCED MATERIALS 2019 2020 2021 Start-up +30% Sartomer +50% global specialty +25% global PA12 +50% global PA11 photocure resins polyamides powders production production capacities production capacities capacities capacities (monomer + polymer) Markets : coatings, Marke
Slide 21: Deliver Profitable Growth in Adhesives
DELIVER PROFITABLE GROWTH IN ADHESIVES SALES GROWTH EBITDA MARGIN 15% In €bn > +30% Raw material in 4 years 13 % impact 12.5 % 10 % 2.0 1.5 2014 2016 2018 2019e MT target 2014 2018 (pre-acquisition (pre-acquisition level) level) Create value through M&A Expand organically Strengthen operational exce
Slide 22: Proposed Acquisition of ArrMaz
PROPOSED ACQUISITION OF ARRMAZ ANOTHER MILESTONE IN GROWING OUR SPECIALTY BUSINESSES Specialties 70% HIGH PERFORMANCE MATERIALS 31% Adhesives Arkema 45% 2018 sales Technical Polymers Advanced Materials 24% Performance Additives High Performance Materials ARRMAZ Industrial Specialties Coating Solutio
Slide 23: Proposed Acquisition of ArrMaz – Executive Summary
PROPOSED ACQUISITION OF ARRMAZ EXECUTIVE SUMMARY Proposed acquisition of US-based ArrMaz, a global leader in specialty surfactants for crop nutrition, mining and infrastructure with US$290m sales and 18% EBITDA margin Acquisition reinforces our Performance Additives business, one of the 3 strong pil
Slide 24: ArrMaz at a Glance
PROPOSED ACQUISITION OF ARRMAZ ARRMAZ AT A GLANCE KEY STRENGTHS KEY FIGURES (LTM) Leading positions in specialty surfactants for crop nutrition, Sales US$ 290m mining and infrastructure Strong expertise in designing tailor-made formulations with EBITDA margin 18% 6 laboratories dedicated to product
Slide 25: Transaction Overview
PROPOSED ACQUISITION OF ARRMAZ TRANSACTION OVERVIEW US$570m enterprise value Transaction highlights 10.8x EV/ LTM EBITDA ~7x EV/ 2023e EBITDA including synergies EPS and cash accretive from first year Financial impact US$15m synergies, fully achieved within 4 years 100 % cash Financing Post acquisit
Slide 26: Building a New Leader in Specialty Surfactants
PROPOSED ACQUISITION OF ARRMAZ BUILDING A NEW LEADER IN SPECIALTY SURFACTANTS ARRMAZ ARKEMA’S SPECIALTY SURFACTANTS US$290m sales US$205m sales Leadership positions in crop nutrition, mining and infrastructure + Strong chemistry expertise in specialty surfactants Extensive formulation know-how (adhe
Slide 27: Superior Value Creation
PROPOSED ACQUISITION OF ARRMAZ SUPERIOR VALUE CREATION EBITDA KEY DRIVERS TO DELIVER SUPERIOR VALUE In US$m Above GDP growth driven by: +10% CAGR ● Sustainable trends and fast-growing countries ~80 ● New developments (for nutrients, lithium and oil & gas process aids) Well-identified synergies estim
Slide 28: Growth in Specialties: An Ongoing Momentum
GROWTH IN SPECIALTIES: AN ONGOING MOMENTUM SHARE OF SPECIALTIES As a % of total sales > 80% PORTFOLIO RESHUFFLING TARGETED EXPANSION M&A 70% Innovation ● Acquisition in adhesives: ● Composites, 3D, lightweighting, Bostik, Den Braven, XL Brands water treatment, batteries… ● Acquisition in other speci
Slide 29: 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
Arkema — Exane BNP Paribas 21st European CEO Conference 2019 on 6ix