Arkema Confirms its High Profitability Level
Arkema increased its sales in the 2nd quarter 2012 significantly (+15%) to €1.72 billion compared with the 2nd quarter 2011. This increase includes the contribution of the acquisition of specialty resins (Cray Valley and Sartomer), alkoxylates, and Chinese companies Hipro Polymers and Casda Biomaterials (+17% scope of business effect). Volumes decreased by 4% compared to 2nd quarter 2011 when the level of activity was particularly high and reflect the impact of the maintenance turnarounds in Thiochemicals, Acrylics and specialty polyamides. Prices are slightly lower (-3%), reflecting mostly a return to normalized market conditions in acrylic acid and the expected adjustment of HFC-125 prices in China. In Performance Products, the price effect was positive thanks to the favorable change of the product mix towards higher added value products. The currency translation effect, mainly related to the strengthening of the US dollar versus the euro, was positive (+5%).
EBITDA reached €306 million, close to the record level of last year (€321 million). It reflects the solid performance of the Group's activities and the contribution from the acquisitions and the organic growth projects. The results of both segments are satisfying, with a special mention for Performance Products which reported €109 million EBITDA against €99 million in 2nd quarter 2011. EBITDA margin at 17.8% (21.6% in 2nd quarter 2011 and 15.6% in 1st quarter 2012).
In the 1st half 2012 sales grew similarly (+14.7% compared with 1st half 2011) and reached €3.34 billion. However, EBITDA dropped to €559 million (-8.4%) and the EBITDA margin sank from 20.9% one year ago to 16.7%.
Thierry Le Hénaff, Chairman and CEO of Arkema, stated: "Arkema achieved an EBITDA above €300 m in 2nd quarter 2012, an increase of more than 20% on 1st quarter. This excellent performance confirms the quality of the Group's specialties portfolio, and demonstrates its strength in a volatile and uncertain global economic environment. Announced on November 23rd 2011, the divestment of the Vinyl activities was completed on 3rd July. The divestment process has enable to include a number of items negotiated with the workers councils, while providing the new entity, headquartered in Lyon in France, with a very strong balance sheet and positive cash. In the future Arkema will continue to develop its high added value product lines. I am convinced that the quality of our activities, the spirit of innovation that is driving us, and the partnerships we are developing with our customers are key drivers of our success, now and in the future."
Segment Performance in 2nd Quarter 2012
Industrial Chemicals sales rose by 16% to €1,141 million against €980 million in 2nd quarter 2011. This increase mainly reflects the contribution of specialty resins which joined the Group on July 1st 2011. Compared to the peak of the 2nd quarter 2011 marked by restocking and exceptional demand in Asia, volumes in Industrial Chemicals declined, impacted by several maintenance turnarounds. Prices decreased compared to the peaks reached in 2nd quarter 2011, reflecting the return of acrylic acid to mid-cycle conditions and more standard prices in Fluorochemicals. Finally, the strengthening of the US dollar versus the euro had a positive effect.
EBITDA reached €208 million, close to the particularly high level of 2nd quarter 2011. Specialty acrylics (Sartomer, Coatex) confirmed their excellent performance thanks to their positioning in growing niche applications. Demand for decorative paints remained disappointing in Europe and in North America.Fluorogases generated good results despite more normalized margins in HFC-125 in China and moderate volumes. Demand remained favorable in Thiochemicals, e.g. in animal feed, although the BU's performance was impacted by the maintenance turnarounds at the Beaumont (USA) and Lacq (France) sites. PMMA benefited from a healthy automotive market in the United States. The 18.2% EBITDA margin confirms the strength of the segment's results.
Performance Products sales rose to €572 million, 13.5% up on 2nd quarter 2011. This significant improvement mainly results from acquisitions (alkoxylates from Seppic and bio-sourced PA10.10 business from Hipro and Casda). The price effect was positive, reflecting the positioning of Technical Polymers in higher added value applications and a favorable product mix in Specialty Chemicals. Volumes slightly decreased compared to last year's peak. The currency translation effect was positive due to the strengthening of the US dollar versus the euro.
EBITDA rose to a record €109 million (€99 million in 2nd quarter 2011), and the EBITDA margin stood at 19.1%. This excellent performance reflects the successful strategy of positioning the segment's activities on high added value niche applications such as deep offshore oil exploration and biopolymers. The activities acquired recently made a noticeable contribution to the segment's performance.
Vinyl activities divested early July
On July 3rd, Arkema completed the divestment of the Vinyl business, which generated annual sales of €1 billion. Net income for these activities stood at -€141 million in 2nd quarter.
Arkema will continue to carefully monitor the changes in the macro-economic environment which remains uncertain, marked by the challenging situation in a number of countries, in particular in Europe, and by high volatility, e.g. in raw materials and exchange rates. In this environment, Arkema will continue to give priority to its internal dynamics, to reinforcing its positioning in specialty niches, and to industrial capital expenditure in higher growth product lines and countries. While remaining cautious about changes in the macro-economic environment, and assuming continuity with the first half of the year, Arkema confirms its confidence in its ability to deliver a very solid year in 2012, and should achieve an EBITDA close to €1 billion. Beyond, Arkema aims to achieve €8 billion sales and €1,250 million EBITDA by 2016.