Arkema Sa · EURONEXT:AKE
Arkema Sa — Merrill Lynch presentation, London (November 2006)
29 slides from Arkema Sa's conference presentation, Nov 29, 2006
Slide 1: Arkema: Six months after spin off
Arkema Six months after spin off London, November 29, 2006
Slide 2: Build step by step a strong company
Build step by step a strong company Creation of Arkema Spin off Next step October May 2006 2008 2004 Prepare for Restore Establish a independence profitability competitive 10 to 15% EBITDA growth and growing per year* Negotiate a strong chemical player balance sheet Strong emphasis on productivity L
Slide 3: Company overview
Company overview ARKeEMA
Slide 4: Arkema 2005 overview
Arkema 2005 overview Worldwide presence Sales: €5.7 bn Europe 57% of sales Asia North America EBITDA*: €355m 25% of sales 20 plants 60 plants 4 R&D centers 13% of sales 10 plants 76% of the 1 R&D center 1 R&D center workforce 7% of the workforce 16% of the workforce EBITDA margin*: 6.2% 2005 Main co
Slide 5: A differentiated strategy by segment
A differentiated strategy by segment Sales by segment Vinyl Products Vinyl • A well integrated sector from Performance Products Products chlorine production to PVC converting. 24% 34% “Strong emphasis on productivity” 42% Industrial Chemicals Industrial Chemicals • Intermediates for a large number o
Slide 6: A strong balance sheet negotiated with Total
A strong balance sheet negotiated with Total Commitments by Total Initial gearing at 30% as of spin off End of 2005 balance sheet Indemnities • €35m financial debt* • Antitrust • €580m pre-spin off non-recurring • US former industrial sites items** Liabilities transferred Gearing at 30% before spin
Slide 7: Six months after spin off
Six months after spin off
Slide 8: 6 major plans launched before spin off
6 major plans launched before spin off 2004 2005 2006 PMMA Sheet Europe Chlorochemicals Urea Formaldehyde Resins 165 positions 523 positions 132 positions 106 p. as of 06/30/06 223 p. as of 06/30/06 31 p. as of 06/30/06 COMPLETE 4Q’06 COMPLETE 4Q’07 COMPLETE 2Q’07 Thiochemicals France Thiochemicals
Slide 9: New steps since May 18th
New steps since May 18th Specialty Chemicals*: 23 positions July 5th Pierrefitte-Nestalas (France) Technical Polymers*: 37 positions July 5th Serquigny (France) Additives: July 5th Mobile (Alabama), 31 positions Carrollton (Kentucky) Merger*: €5m savings September 13th Organic Peroxides + Additives
Slide 10: Evolution of headcount since creation
Evolution of headcount since creation 19,167 Asia and ROW 17,713 North America (107) employees Europe (excl. France) (219) employees France (1,096) employees 12/31/2004 06/30/2006 “Nearly half related to the 6 major plans” 10
Slide 11: Vinyl Products: competitive assets at end of plan
Vinyl Products: competitive assets at end of plan VCM sites* General Purpose PVC sites* Balan/Saint-Fons Berre/Fos/Lavéra • 525 Kt capacity • 325 Kt capacity Lavéra • 3rd largest site in Europe Balan • 5th largest site in Europe Martorell • 415 Kt capacity • 290 Kt capacity Fos** • 5th largest site
Slide 12: Selective growth
Selective growth Specialty chemicals Specialty chemicals Inowroclaw Fluorochemicals Honfleur Technical Polymers Organic Peroxides Becancour Jinhae Calvert-City Carling Changshu PMMA H2O2 Fluorochemicals Acrylics Technical Polymers Shanghai Mourenx Mont H2O2 Beaumont Thiochemicals Technical Polymers
Slide 13: Reshape the Performance Products segment
Reshape the Performance Products segment PERFORMANCE PRODUCTS UREA TECHNICAL SPECIALTY ORGANIC ADDITIVES AGROCHEMICALS FORMALDEHYDE POLYMERS CHEMICALS PEROXIDES RESINS New business Combination Divestment Plan to divest development and and restructuring* Project to sell Process started Asia to United
Slide 14: Tangible outcome from R&D
Tangible outcome from R&D New development in Debottlenecking molecular sieves: of our assets hydrocarbons filtration in Poland and France and medical oxygen €11m capex Polyamide ultrafine Increase by 40% powders (Orgasol®): our production new development capacity in Mont for laser sintering Partners
Slide 15: Financial performance of nine months 2006
Financial performance of nine months 2006
Slide 16: 9 months 2006 highlights
9 months 2006 highlights EBITDA by quarter Sales up 4.7%* fuelled by In €m 5% +1 price increases 355 Positive net income: €59m Positive cash flow before NR pre-spin off items: €38m 134 117 126 131 87 100 Improvement of Performance Products segment results: 9% EBITDA margin (6.5%-9m05) First Second T
Slide 17: High impact of productivity measures
High impact of productivity measures* €39m €(19)m €32m €(34)m Fixed cost Other productivity savings initiatives Volume loss Inflation Major plans +€20m 17 * Impact calculated on 1st nine months 2006
Slide 18: Cash flow
Cash flow 9m 06 Recurring Cash Flow 281 Recurring Capex (192) In line with forecast Operating Free Cash Flow 89 Working Capital (29) Raw materials and seasonality Other items (22) NR items and cost of debt Cash Flow before pre-spin off NR items 38 Pre Spin-off NR items cash out (303) Included in net
Slide 19: Outlook
Outlook
Slide 20: 2006 outlook
2006 outlook 2006 EBITDA in the higher range of the target (+15% above 2005) Seasonal pattern Positive net income Capex in line with the €350m forecast (out of which €50m for Vinyl consolidation plan) 20
Slide 21: Mid-term target
Mid-term target Confirmation of 10 to 15% recurring EBITDA growth • Calculated as an average annual growth for the next 3 years (06-08)* • Despite a less favorable environment in acrylics compared to 2005 Positive free cash-flows from 2007 (before pre-spin off non-recurring items) Reduce working cap
Slide 22: EBITDA bridge over three years
EBITDA bridge over three years* €540m End 2006 €475m +15% €355m +€80m Additional Inflation Other productivity plans measures 6 major plans Significant growth Projects 1/3 growth 2/3 productivity EBITDA EBITDA 2005 2008 “A balanced approach” 22 * Calculated as an average annual growth for the next th
Slide 23: Impact of ongoing productivity initiatives
Impact of ongoing productivity initiatives In €m 2006 2007 2008 6 major plans 25 65 80 6 projects announced after spin off 0 10 30 Total 25 75 110 Beyond, other actions to compensate for most of inflation* “Full EBITDA impact in 2008: +€110m” 23 * Inflation on fixed costs
Slide 24: A strong dynamic of change
A strong dynamic of change
Slide 25: Accelerate the transformation process
Accelerate the transformation process Further cost reduction initiatives Entrepreneurial culture Selective portfolio management New businesses Working capital optimization 25
Slide 26: Main actions since September presentation
Main actions since September presentation November 14th Divestment of Cerexagri* Very limited synergies November 10th Sale price expected to be €111m Closing Q1’07 Headquarters* Positive impact on accounts Streamline COMPLETE 1Q’07 support functions October 12th Transfer headquarters Organic Peroxid
Slide 27: Selective portfolio management
Selective portfolio management DIVESTMENTS – Disposals of non-core assets €300 to €400m of sales within the next three years Plan to divest UF Resins (German plant of Leuna): €90m of sales Divestment of Cerexagri to United Phosphorus Limited*: €200m of sales ACQUISITIONS Bolt-on acquisitions in our
Slide 28: Q & A Session
Q & A Session
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
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