11.10.16
The Board of Directors of Arkema met on Nov. 9, 2016 to review the Group’s consolidated accounts for third quarter 2016.
Sales reached €1,838 million, down 5.5% on third quarter 2015 (€1,946 million). Volumes, +2.0% up, improved across all three divisions. The -4.5% price effect reflects the impact on sales prices of raw material variations. The -2.0% business scope effect results from the Sunclear divestment in 4th quarter 2015. The translation effect was negative at -1.0%.
At €303 million, EBITDA reached an all-time high for a third quarter. It rose by +5.9% compared to third quarter 2015 (€286 million), driven by growth in the High Performance Materials and Industrial Specialties divisions. Bostik continued to improve in line with its ambition.
EBITDA margin rose to 16.5% from 14.7% in third quarter 2015, supported by the growing share of higher added value activities and an improvement in Bostik’s margin compared to last year.
“Arkema has achieved, in a volatile environment with moderate growth, a very good financial performance with EBITDA and EBITDA margin progressing well compared to last year’s already high levels, as well as excellent cash generation. These achievements reward the change in the Group’s profile and the strong development of resilient and high added value niches in our business portfolio,” said Thierry Le Hénaff, chairman and CEO. “We are fully benefiting from our growth strategy, in particular in new materials, adhesives, and in Asia with our recent investments.
“These elements will continue to sustain the Group’s momentum over the next few years, while, in the shorter term, reinforcing our confidence in our ability to achieve a very good year in 2016,” he added.
Net income Group share, up by +57.4%, stood at €96 million against €61 million in third quarter 2015. Excluding the impact after tax of non-recurring items, adjusted net income stood at €110 million (€95 million in third quarter 2015), i.e. €1.45 per share.
High Performance Materials sales stood at €836 million, 3.5% down on third quarter 2015 (€866 million). Volumes grew by +1.2% driven by innovation in Technical Polymers and by geographic expansion at Bostik. EBITDA stood at €140 million, +6.9% up on third quarter 2015 (€131 million). At 16.7% against 15.1% in third quarter 2015, the improvement in the EBITDA margin continued to reflect Bostik’s progress and the very good performance of the division’s other activities.
Industrial Specialties again achieved a very good performance, with EBITDA +7.9% up on third quarter 2015, and an EBITDA margin which stayed at an excellent level at 22.2%.Sales amounted to €553 million, 9% down on third quarter 2015 (€608 million), given in particular a -6.4% business scope effect related to the divestment of Sunclear in fourth quarter 2015. EBITDA rose to €123 million against €114 million in third quarter 2015.
At €442 million, Coating Solutions sales were down 4.9% compared to third quarter 2015 (€465 million). The +4.6% year-on-year increase in volumes, driven by acrylic monomers, partly offset the -8.9% price effect which continued to reflect the level of raw materials and which softened compared to the previous quarters. With €54 million EBITDA, slightly up on last year (€53 million in third quarter 2015) and a 12.2% EBITDA margin (11.4% in third quarter 2015), the division’s performance resisted well with market conditions in acrylic monomers stabilized at a low point. These results also confirm the benefits of innovation in downstream acrylics in a moderate growth environment.
In third quarter 2016, Arkema generated very high free cash flow at +€245 million (+€172 million in third quarter 2015), its best-ever performance. Net debt stood at €1,201 million, significantly down on June 30, 2016 (€1,406 million).
Outlook
Over the end of the year, the macro-economic environment should remain characterized by moderate world growth, different dynamics by region, and volatility in energy prices, raw materials and currencies.
In this environment, Arkema will continue to focus on its internal drivers and will benefit in particular from the further development of Bostik and new materials and from its operational excellence initiatives aimed at offsetting part of the inflation on fixed costs. The improvement in fluorogases should be limited over the last quarter given the traditional seasonality of this activity at year-end.
Taking into account these elements and the very good results achieved over the first nine months of the year, Arkema adjusts its target upwards. Assuming an energy, raw material and currency environment in the continuity of the third quarter, and taking account of the traditional year-end seasonality, Arkema now aims to achieve a significant EBITDA growth of 9% to 10% over the year compared to 2015.
Sales reached €1,838 million, down 5.5% on third quarter 2015 (€1,946 million). Volumes, +2.0% up, improved across all three divisions. The -4.5% price effect reflects the impact on sales prices of raw material variations. The -2.0% business scope effect results from the Sunclear divestment in 4th quarter 2015. The translation effect was negative at -1.0%.
At €303 million, EBITDA reached an all-time high for a third quarter. It rose by +5.9% compared to third quarter 2015 (€286 million), driven by growth in the High Performance Materials and Industrial Specialties divisions. Bostik continued to improve in line with its ambition.
EBITDA margin rose to 16.5% from 14.7% in third quarter 2015, supported by the growing share of higher added value activities and an improvement in Bostik’s margin compared to last year.
“Arkema has achieved, in a volatile environment with moderate growth, a very good financial performance with EBITDA and EBITDA margin progressing well compared to last year’s already high levels, as well as excellent cash generation. These achievements reward the change in the Group’s profile and the strong development of resilient and high added value niches in our business portfolio,” said Thierry Le Hénaff, chairman and CEO. “We are fully benefiting from our growth strategy, in particular in new materials, adhesives, and in Asia with our recent investments.
“These elements will continue to sustain the Group’s momentum over the next few years, while, in the shorter term, reinforcing our confidence in our ability to achieve a very good year in 2016,” he added.
Net income Group share, up by +57.4%, stood at €96 million against €61 million in third quarter 2015. Excluding the impact after tax of non-recurring items, adjusted net income stood at €110 million (€95 million in third quarter 2015), i.e. €1.45 per share.
High Performance Materials sales stood at €836 million, 3.5% down on third quarter 2015 (€866 million). Volumes grew by +1.2% driven by innovation in Technical Polymers and by geographic expansion at Bostik. EBITDA stood at €140 million, +6.9% up on third quarter 2015 (€131 million). At 16.7% against 15.1% in third quarter 2015, the improvement in the EBITDA margin continued to reflect Bostik’s progress and the very good performance of the division’s other activities.
Industrial Specialties again achieved a very good performance, with EBITDA +7.9% up on third quarter 2015, and an EBITDA margin which stayed at an excellent level at 22.2%.Sales amounted to €553 million, 9% down on third quarter 2015 (€608 million), given in particular a -6.4% business scope effect related to the divestment of Sunclear in fourth quarter 2015. EBITDA rose to €123 million against €114 million in third quarter 2015.
At €442 million, Coating Solutions sales were down 4.9% compared to third quarter 2015 (€465 million). The +4.6% year-on-year increase in volumes, driven by acrylic monomers, partly offset the -8.9% price effect which continued to reflect the level of raw materials and which softened compared to the previous quarters. With €54 million EBITDA, slightly up on last year (€53 million in third quarter 2015) and a 12.2% EBITDA margin (11.4% in third quarter 2015), the division’s performance resisted well with market conditions in acrylic monomers stabilized at a low point. These results also confirm the benefits of innovation in downstream acrylics in a moderate growth environment.
In third quarter 2016, Arkema generated very high free cash flow at +€245 million (+€172 million in third quarter 2015), its best-ever performance. Net debt stood at €1,201 million, significantly down on June 30, 2016 (€1,406 million).
Outlook
Over the end of the year, the macro-economic environment should remain characterized by moderate world growth, different dynamics by region, and volatility in energy prices, raw materials and currencies.
In this environment, Arkema will continue to focus on its internal drivers and will benefit in particular from the further development of Bostik and new materials and from its operational excellence initiatives aimed at offsetting part of the inflation on fixed costs. The improvement in fluorogases should be limited over the last quarter given the traditional seasonality of this activity at year-end.
Taking into account these elements and the very good results achieved over the first nine months of the year, Arkema adjusts its target upwards. Assuming an energy, raw material and currency environment in the continuity of the third quarter, and taking account of the traditional year-end seasonality, Arkema now aims to achieve a significant EBITDA growth of 9% to 10% over the year compared to 2015.