Arkema Sa · EURONEXT:AKE
Arkema Sa — FY2010 Earnings Presentation
31 slides from Arkema Sa's earnings presentation, Mar 2, 2011
Slide 1: FY 2010 results
FY 2010 results Thierry Le Hénaff Chairman and CEO Paris, March 2nd 2011
Slide 2: FY'10 results: Five year transformation drives record performance
FY’10 results: Five year transformation drives record performance
Slide 3: Excellent set of figures
Excellent set of figures Sales (€m) EBITDA (€m) & EBITDA margin (%) 13.4% +33% 5,905 790 x2.5 4,444 7.0% 310 2009 2010 2009 2010 Adjusted EPS (€) Free cash flow* (€m) 5.93 276 228 2009 2010 2009 2010 (0.81) * Free cash flow = cash flow including non-recurring items and excluding impact from M&A 3 -
Slide 4: Well oriented market conditions
Well oriented market conditions +11% volumes supported by Asia and YoY volume variation (%) emerging technologies +11.1% Mixed picture by region Strong demand in Asia 2008 2009 Improved market conditions in North America 2010 Slower pace of recovery in Europe -5.9% Fast growing emerging applications
Slide 5: Several key milestones
Several key milestones Clear Lake site acquired Successful acquisition and integration of beginning of 2010 (USA) acrylic assets in North America Quick ramp-up of new HFC-125 fluorogas production unit in China 19% of total sales achieved in Asia in 4Q’10 Fast-growing contribution from developments i
Slide 6: Quick and successful integration of newly acquired acrylic assets
Quick and successful integration of newly acquired acrylic assets Acrylic monomers (Clear Lake site) Closing with Dow on January 25th, 2010 Acquisition price based on a US$50m EV Performance well above initial expectations US$559m sales in 11m’10 (versus US$450m in FY’09*) Significant contribution t
Slide 7: Full year 2010 key figures
Full year 2010 key figures in €m (except EPS) 2009 2010 Variation Peer average* Sales 4,444 5,905 +32.9% +21% EBITDA 310 790 x 2.5 x 1.7 EBITDA margin 7.0% 13.4% 13.6% Recurring operating income 40 503 x 12.6 - Net income (group share) (172) 347 - - Adjusted EPS (diluted) (0.81) 5.92 - - Excellent t
Slide 8: +33% sales vs 2009
+33% sales vs 2009 Sales (€bn) FX rate - Scope of translation effect business Price +3.5% Volumes +8.9% +9.4% +11.1% 5.9 Stronger 1.0 Mainly acrylic US dollar Better product assets acquired in versus euro 4.4 mix and price North America +14% in Industrial increases above Chemicals and raw material P
Slide 9: Industrial Chemicals: excellent growth and profitability
Industrial Chemicals: excellent growth and profitability Sales (€m) EBITDA (€m) & % of segment sales by BU EBITDA margin (%) H2O2 Acrylics 18.3% 8% +47.0% Fluorochemicals 3,101 14.5% 27% 17% 567 2010 2,109 sales €3.1bn 5% Coatex 306 15% 7% Thiochemicals 21% Emulsion 2009 2010 2009 2010 PMMA All busi
Slide 10: Performance Products: EBITDA margin doubled at 15.4% supported by innovation and Asia
Performance Products: EBITDA margin doubled at 15.4% supported by innovation and Asia Sales (€m) EBITDA (€m) & % of segment sales by region EBITDA margin (%) RoW 8% Asia 28% North +27.5% 15.4% America 25% 2010 7.7% sales 1,680 €1.7bn 1,318 259 102 39% Europe 2009 2010 2009 2010 Innovation and market
Slide 11: Vinyl Products: slight improvements in still challenging market conditions
Vinyl Products: slight improvements in still challenging market conditions Sales (€m) EBITDA (€m) Caustic soda prices (in €/t) 600 +10.0% 200 1,005 1,106 2009 2010 2009 2010 Jan- Jul- Jan- Jul- (31) (14) 09 09 10 10 Volumes slightly above 2009 but construction market still challenging in Europe PVC
Slide 12: +€276m free cash flow
+€276m free cash flow* 2009 2010 in €m Net cash flow (€m) EBITDA 310 790 Working capital variation (excl. M&A) +384 (43) 230 Recurring capex (262) (293) Tax & cost of debt (82) (142) 202 Restructuring outflows (78) (73) Others (44) +37 Free cash flow* +228 +276 M&A (26) (46) Net cash flow 202 230 20
Slide 13: Working capital and capex
Working capital and capex Working capital as % of sales* Recurring capex (€m) 18.7% 16.2% 301 262 293 13.3% 12/31/08 12/31/09 12/31/10 2008 2009 2010 Further improvement of working Capex increased back to pre-crisis level capital on sales ratio Projects in Asia represented 2011 and beyond target: 44
Slide 14: Significantly reduced net debt at year end
Significantly reduced net debt at year end Net debt reduced at €94m, representing 0.1x EBITDA Net debt (€m) Diversification of debt sources Bond issue in October 2010 Amount: €500m 341 Interest rate: 4% per year Maturity: October 2017 Securitization program Amount: €240m 94 Maturity: June 2015 Net d
Slide 15: Strong balance sheet
Strong balance sheet 31 Dec. 31 Dec. in €m 2009 2010 Net debt 341 94 Provisions include: Shareholders’ equity 1,813 2,240 € 100 m restructuring € 239m pensions (stable amount) € 136m environment Net provisions 685 702 €411m unrecognized deferred tax Non-current assets* 2,257 2,379 assets including €
Slide 16: Dividend
Dividend Dividend (€/share) 1.0 Proposed significant increase 0.75 versus 2009 to reflect 2010 performance 0.6 0.6 Payout: 18% of net income 1.9% dividend yield (based on share price at year end) 2007 2008 2009 2010* Dividend policy: Arkema intends to pay each year a stable to reasonably rising divi
Slide 17: Strong growth in revenues and profitability in 4Q'10
Strong growth in revenues and profitability in 4Q’10 +32% sales versus 4Q’09 Sales (€m) Significant price increases reflecting Arkema’s ability to +32% pass-on higher raw material costs 1,433 Market conditions remained well oriented 1,082 EBITDA x2 versus 4Q’09 at €166m By far the best EBITDA in a 4
Slide 18: 4Q'10 results by segment
4Q’10 results by segment EBITDA (€m) Sales (€m) & EBITDA margin (%) 786 17.3% Industrial Chemicals: strong contribution from all lines 136 529 • Benefits from internal achievements: acquisition in Acrylics, 14.6% 77 new fluorogas unit in Asia, MMA/PMMA restructuring in Europe • Recovery of acrylic m
Slide 19: 2005-2010: Successful reposition
2005-2010: Successful reposition
Slide 20: EBITDA x2.2 since spin off
EBITDA x2.2 since spin off 13.4% Spin off EBITDA (€m) and EBITDA margin (%) target 790 12.0% 9.1% 8.8% 7.3% 7.0% 6.2% 518 498 worldwide 411 crisis 355 310 2005 2006 2007 2008 2009 2010 Spin off target 615* Net debt (€m) 94 31% Gearing (%) 4% <40% Oil price 54.4 65.1 72.5 97.0 61.5 79.4 ($/bbl) * Net
Slide 21: Evolution of profitability by BU
Evolution of profitability by BU Breakdown of sales with EBITDA margin above/below Arkema margin 2005 2010 Arkema Arkema 9 EBITDA 5 6 EBITDA 8 BUs margin BUs BUs margin BUs 6.2% 13.4% Below Arkema Above Arkema EBITDA margin EBITDA margin 21 - PARIS-FRANCE - March 2, 2011
Slide 22: Performance turnaround driven by transformation
Performance turnaround driven by transformation 15 EBITDA (€m) Others Organic growth and net productivity 440 790 (55) +90 (55) Internal Vinyls improvements 355 cycle Acrylics M&A cycle Structural gains 2005 2010 Spread PVC Acrylic unit margin Max Max Mid Mid Low Low 2005 2010 2005 2010 Negative imp
Slide 23: Gap filled with the industry in 5 years
Gap filled with the industry in 5 years 2005 2010 EBITDA margin (%) 15 PEER AVERAGE 13.6% ARKEMA 13.4% PEER AVERAGE 10 12.6% ARKEMA 5 6.2% Peers : Akzo Nobel (Specialty Chemicals), BASF (excl. Oil & Gas), Celanese, Chemtura (consensus), Clariant, Dow, Dupont, Lanxess (consensus), Rhodia (excl. CER),
Slide 24: Constantly delivering on our targets
Constantly delivering on our targets Spin off target 2010 2005-2010 EBITDA margin 12% in 2010 13.4% Fixed cost savings €500m €540m Working capital / sales 18% 13.3% Gearing <40% 4% Acquisitions €500m to €800m sales €650m Portfolio management Divestments €300m to €400m sales €480m 24 - PARIS-FRANCE -
Slide 25: Outlook
ARKEMA The world is our inspiration
Slide 26: Assumptions for 2011
Assumptions for 2011 Continuing positive economic climate: Strong Asia, improved USA, slower recovery in Europe Strong pull from sustainable trends High raw material and energy costs Remain attentive to changes in the macro environment In Vinyls, higher energy cost but slowly improving market condit
Slide 27: Our priorities for 2011
Our priorities for 2011 Continue to actively increase our presence in Asia 2011 start-ups in Changshu (China): PVDF Kynar® new unit in March and Coatex plant mid-2011 Build up new emulsions plant and capacity expansion in polyamides and PVDF Kynar® Prepare longer term projects in Asia: Thiochemicals
Slide 28: Project to acquire resin businesses from Total
Project to acquire resin businesses from Total 2010 A new milestone €850m FY sales (€750m once consolidated within Arkema) €550m enterprise value * Closing by mid-2011* Perfect fit with strategy in the acrylic value chain Increase downstream integration in acrylics from 30% to 40% Build an integrate
Slide 29: Fully on track to achieve 2015 objectives
Fully on track to achieve 2015 objectives Sales bridge (€bn) Sales by segment Acquisitions 8% EBITDA Organic Divestments 1.0 12% margin in 2015(e) 0.9 (0.3) 7.5 2015(e) 5.9 1. €0.7bn 16% EBITDA 0 contribution net 88% margin in 2015(e) from M&A Vinyls Industrial Chemicals + Performance Products 2010
Slide 30: Conclusion
Conclusion 2010 performance well above pre-crisis levels (adjusted net income of € 362m in 2010 versus € 186m in 2007) Confidence for 2011 outlook. 1st quarter 2011 EBITDA expected to be significantly above 1st quarter 2010 EBITDA Seasonality back to more traditional pattern Confirm ability to pass
Slide 31: 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