Arkema Sa · EURONEXT:AKE
Arkema Sa — ODDO BHF Forum 2018
38 slides from Arkema Sa's conference presentation, Jan 11, 2018
Slide 1: ODDO BHF Forum, Lyon, 11 & 12 January 2018
ODDO BHF FORUM Lyon, 11 & 12 January, 2018 Third quarter 2017 results and 2017 outlook Key elements from July 2017 Capital Markets Day
Slide 2: Third quarter 2017 results and 2017 outlook
Third quarter 2017 results and 2017 outlook
Slide 3: 3Q'17 financial highlights
3Q’17 financial highlights +9.8% up YoY +10.5% at constant scope and FX €2,019 m sales +8% volume growth in High Performance Materials supported by successful innovation in major sustainability trends +17.2% up on 3Q’16 (€303 m) €355 m EBITDA Strong YoY growth in the three divisions 16.5% in 3Q’16 1
Slide 4: Main announcements since 30 June 2017
Main announcements since 30 June 2017 Bostik Bostik Technical Polymers Acquisition of XL Brands Opening of a new site in Gujarat, +20% PVDF production capacity India increase in North America A leader in floor covering adhesives in the New manufacturing facility in addition to Will meet strong deman
Slide 5: A very strong quarterly performance
A very strong quarterly performance EBITDA Adjusted EPS Net debt Sales by division In €m In € In €m +17.2% +43.4% 27% 30% gearing 355 1,471 47% 2.08 303 1,194 23% 1.45 High Performance Materials Industrial Specialties Coating Solutions 3Q'16 3Q'17 3Q'16 3Q'17 30/06/17 30/09/17 5 2017 MORGAN STANLEY
Slide 6: 3Q'17 key figures
3Q’17 key figures In €m (except EPS) 3Q’16 3Q’17 CHANGE Sales 1,838 2,019 +9.8% EBITDA 303 355 +17.2% EBITDA margin 16.5% 17.6% Recurring operating income (REBIT) 190 247 +30.0% REBIT margin 10.3% 12.2% Adjusted net income 110 158 +43.6% Net income – Group share 96 142 +47.9% Adjusted EPS (in euros)
Slide 7: 3Q'17 sales bridge
3Q’17 sales bridge Sales In €m Scope Volumes Price of business Currency +3.3% +7.2% +3.2% (3.9)% +8.2% volumes in Price increases to Integration of Mainly strengthening High Performance offset higher raw Den Braven of the euro against Materials driven material costs in and CMP within US dollar by in
Slide 8: High Performance Materials (47% of Group sales)
High Performance Materials (47% of Group sales) 3Q’17 key figures 3Q’17 sales development 3Q’17 sales by Business Line In €m 3Q’16 3Q’17 Change Volumes +8.2% Sales 836 955 +14.2% 26% 23% Bostik Prices +2.2% EBITDA 140 161 +15.0% Performance Additives Currency (4.1)% EBITDA margin 16.7% 16.9% 51% Tec
Slide 9: Industrial Specialties (30% of Group sales)
Industrial Specialties (30% of Group sales) 3Q’17 key figures 3Q’17 sales development 3Q’17 sales by Business Line In €m 3Q’16 3Q’17 Change Volumes (0.3)% 13% PMMA Sales 553 594 +7.4% Prices +11.5% 33% Thiochemicals EBITDA 123 149 +21.1% 29% Currency (4.0)% Fluorogases EBITDA margin 22.2% 25.1% 25%
Slide 10: Coating Solutions (23% of Group sales)
Coating Solutions (23% of Group sales) 3Q’17 key figures 3Q’17 sales development 3Q’17 sales by Business Line In €m 3Q’16 3Q’17 Change Volumes (1.3)% Sales 442 463 +4.8% Prices +11.4% Coating Resins 41% and Additives EBITDA 54 62 +14.8% 59% Currency (3.4)% EBITDA margin 12.2% 13.4% Acrylics Rec. ope
Slide 11: Excellent cash flow in 3Q'17
Excellent cash flow in 3Q’17 In €m 3Q’17 EBITDA 355 Change in working capital (1) 94 • Reflects tight control and usual seasonality of working capital Change in fixed assets payables (1) 4 • 15.5% working capital to annualized sales ratio versus 16.8% end of September 2016 Current taxes (50) Cost of
Slide 12: 2017 outlook
2017 outlook Focus on internal drivers ● Bostik expansion with the integration of Den Braven ● New high value-added applications in advanced materials notably related to major sustainability trends ● Limited improvement expected in 4Q versus last year in Fluorogases given this activity’s seasonality
Slide 13: Key elements from July 2017 Capital Markets Day
Key elements from July 2017 Capital Markets Day
Slide 14: A strong track record...
A strong track record... Share of specialties Sales outside Europe EBITDA Free cash flow In % of sales In % of sales In €m In % of EBITDA 72% 64% 1,189 36% 43% 44% 355 20% 2006 2016 2016 2006 2016 2016 2006 2016 2016 2006 2016 Arkema 14 2017 MORGAN STANLEY CONFERENCE
Slide 15: ... including a significant step-up in financials
... including a significant step-up in financials Sales EBITDA REBIT margin Free cash flow In €m In €m In % In €m 7.5 +426 +27% 1,189 +220bp 9.7% 6.0 +52% x3 7.5% 784 +145 2014 2016 2016 2014 2016 2016 2014 2016 2016 2014 2016 2016 15 2017 MORGAN STANLEY CONFERENCE
Slide 16: Significant achievements since last Capital Markets Day
Significant achievements since last Capital Markets Day... Malaysia New step in the attractive Further streamlining Expansion in Globalization of the adhesives and sealants market of the portfolio PVDF Kynar® Thiochemicals footprint Development of Bostik Divestments of activated carbons +25% product
Slide 17: Main levers of transformation
Main levers of transformation Organic growth Portfolio management Innovation, partnerships €3.7 bn sales acquired and geographic expansion €2.2 bn sales divested Productivity plans Lower capital intensity Reduction of working capital Offset 1/2 to 2/3 of inflation 5.6% of sales in 2016 14.5% in 2016
Slide 18: Arkema at a glance (2016)
Arkema at a glance (2016) A strong portfolio of businesses A global and balanced footprint €7.5 bn sales Specialties 72% 19,700 employees 24% 34% 36% 46% Present in 50 countries 30% 30% 133 industrial sites High Performance Materials Europe 25% Advanced Materials 21% Adhesives North America €222 m R
Slide 19: Our portfolio of businesses
Our portfolio of businesses High Performance Materials Industrial Specialties Coating Solutions Advanced Materials Fluorogases Acrylic Monomers Upstream of PVDF Upstream of PMMA Performance Coatings 46% Adhesives 30% Engineering plastic 24% of sales of sales of sales Performance Coatings Thiochemica
Slide 20: 2016 sales by end markets
2016 sales by end markets Emerging Home 24% Lightweighting Design 19% Regulations Low-VOC 19% countries Megatrends 11% efficiency and insulation Consumer Coatings Chemicals & Building & Goods Plastics Construction 7% Access 5% Lightweighting Mobility 7% 8% to clean water New energies Others Automoti
Slide 21: Leading positions on all key product lines
Leading positions on all key product lines Rank Business Lines Main peers #3 Bostik (adhesives and sealants) Henkel, Sika, H.B. Fuller #1 Specialty Polyamides Evonik, Ems-Chemie, Ube #1 PVDF (fluoropolymers) Solvay, Kureha #1 Sartomer (UV curing resins) Allnex, Miwon #1 Thiochemicals Chevron Phillip
Slide 22: Our vision
Our vision A global specialty chemical group strongly focused on adhesives and advanced materials, fostering customers innovation in megatrends and sustainability, and delivering best-in-class financial, operational and CSR performance. 22 2017 MORGAN STANLEY CONFERENCE
Slide 23: Long-term financial objectives (2023)
Long-term financial objectives (2023) REBIT margin EBITDA to free cash conversion 11.5% to 12.5% 35% Under strict financial discipline ROCE Net debt Rating at least 10% <2x EBITDA Solid investment grade Defined in normalized market conditions and under current IFRS rules 23 2017 MORGAN STANLEY CONFE
Slide 24: Maintain disciplined capital allocation policy
Maintain disciplined capital allocation policy Organic growth M&A Dividend Support development Reinforce A key element of of main growth pillars current portfolio shareholder return policy Bolt-on acquisitions with Stable to growing significant synergies and divestments Targeted capex dividend every
Slide 25: Our strategic priorities
Our strategic priorities Innovation Acquisitions Emerging countries Commercial excellence Operational excellence Corporate social responsibility Digitalization 25 2017 MORGAN STANLEY CONFERENCE
Slide 26: Accelerate growth of Advanced Materials and Adhesives
Accelerate growth of Advanced Materials and Adhesives 2016 2023 Specialties Specialties 72% >80% High Performance Materials Industrial Specialties Coating Solutions Advanced Materials + Adhesives 26 2017 MORGAN STANLEY CONFERENCE
Slide 27: Reinforce footprint in higher growth countries
Reinforce footprint in higher growth countries 30% 33% 33% 36% 2016 2023 34% 33% Europe North America Asia and RoW 27 2017 MORGAN STANLEY CONFERENCE
Slide 28: 3 major growth pillars
3 major growth pillars Adhesives Advanced Materials Thiochemicals 28 2017 MORGAN STANLEY CONFERENCE
Slide 29: A wave of significant projects supporting our objectives
A wave of significant projects supporting our objectives Adhesives Advanced Materials Thiochemicals Further organic growth and cost Build and start the PEKK plant in Mobile Double site capacity at Kerteh optimization of Bostik “legacy” (Alabama, USA) (Malaysia) Development of Den Braven and CMP Cont
Slide 30: Planned calendar of these projects
Planned calendar of these projects Start-up Ramp-up Development of Den Braven and CMP PEKK plant in Mobile Series of PVDF expansions Significant polyamide 11 expansion in Asia Molecular sieves in Honfleur +30% Sartomer capacity in Asia Doubling of Kerteh in Thiochemicals Announced today 2016 2017 20
Slide 31: Adhesives
Adhesives Market Fragmented market and ongoing consolidation by the leaders Barriers to entry, resilience and low capital intensity Substitution of mechanical fasteners by adhesives Increasing needs for home efficiency and insulation Arkema / Bostik Participate in the consolidation of the market Foc
Slide 32: Adhesives long-term ambition
Adhesives long-term ambition Exceed 1/3 of Group sales More than double sales versus 2016 in completing GDP+ organic growth by an ambitious bolt-on acquisition program 12.5% to 13% REBIT margin Maintain capex level below 3% of sales 32 2017 MORGAN STANLEY CONFERENCE
Slide 33: Advanced Materials
Advanced Materials Ranking of polymers pricing and performance Arkema’s products Market Bio-based PEKK Consolidated market with limited number of players Significant opportunities from megatrends Lightweighting, clean water, new energies, 3D printing PVDF High-performance Rilsan® HT polymers Pebax®
Slide 34: Advanced Materials long-term ambition
Advanced Materials long-term ambition Exceed 25% of Group sales 14% to 15% REBIT margin Support long-term growth of bio-based polyamide 11 with ~€300 m exceptional capex in Asia R&D expenses at 4% of sales, up to 8% in certain applications 34 2017 MORGAN STANLEY CONFERENCE
Slide 35: Targeting excellence is our driver
Targeting excellence is our driver Commercial excellence Operational excellence Accelerate our long-term growth Objective: €30 m to €40 m gain /year Program to be launched at the To offset at least 1/2 of inflation on fixed costs 2017 worldwide Senior Management convention Key account management Peo
Slide 36: A strong and balanced debt structure
A strong and balanced debt structure €3.8 bn of financial resources €2.6 bn of financial resources with maturity beyond 3 years In €m In €m 1.5% 1.5% 4.75% 700 900 3.85% 900 900 2,230 700 480 3.125% 700 150 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Mid- and LT bonds Credit line Hybrid b
Slide 37: Dividend policy
Dividend policy Dividend In € per share Arkema confirms its policy 2.05 aiming to pay a stable 1.8 1.85 1.85 1.9 to growing dividend each year 1.3 The dividend has grown 1 at 13% per year on average since 2010 37% payout in 2016 2010 2011 2012 2013 2014 2015 2016 2016 A key element of shareholder re
Slide 38: 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