FULL YEAR 2016 RESULTS AND OUTLOOK THIERRY LE HENAFF CHAIRMAN AND CEO
A STRONG GROUP’S PROFILE
ARKEMA’S INVESTMENT HIGHLIGHTS 1 2 3 ATTRACTIVE PORTFOLIO WELL BALANCED SUPERIOR OF SPECIALTY BUSINESSES GEOGRAPHIC CASH GENERATION PRESENCE 4 5 OPERATIONAL FOUNDATIONS STRONG TRACK RECORD AND LONG TERM CATALYSTS OF THE MANAGEMENT WELL IN PLACE Perfectly positioned to further create value in the future 3 2016 FULL YEAR RESULTS
SIGNIFICANT STEP-UP IN GROUP’S PROFILE SIGNIFICANT SHARE OF SPECIALTIES GEOGRAPHICALLY REBALANCED % of sales % of sales “More cyclical” Asia and RoW 23% 30% businesses (1) North America 29% 34% 72% Specialty Europe businesses 48% 44% 36% 2010 2016 2010 2016 (1) Fluorogases, Acrylics, PMMA 4 2016 FULL YEAR RESULTS
STRONG AND RESILIENT PROFITABILITY OF SPECIALTY BUSINESSES SPECIALTY BUSINESSES 2010 TO 2016 “More cyclical” EBITDA margin businesses 28% Despite Bostik’s dilutive impact € 7.5 bn 16.5% 15% sales 72% 2010 2011 2012 2013 2014 2015 2016 Specialty businesses EBITDA margin 15% up to 16.5% 5 2016 FULL YEAR RESULTS
WELL-BALANCED GEOGRAPHIC FOOTPRINT 36% Europe 11,000 employees 4% of Group sales in the UK 34% North America 2016 3,700 employees sales 30% of Group sales in the US 30% Asia and RoW 5,000 employees 10% of Group sales in China 6 2016 FULL YEAR RESULTS
EXCELLENT FREE CASH GENERATION HIGHER CASH GENERATION Free cash flow (1) / EBITDA 42% Objective to deliver constantly an EBITDA to 36% cash conversion of 35% over the mid-term Mid-term 35% objective Significantly reduced capital intensity at ~5.5% of Group sales 25% Average ● 5.6% average in 2015-2016 ● 7.5% average in 2012-2014 14% to 15% working capital to sales 2012 2013 2014 2015 2016 (1) Free cash flow excluding M&A, exceptional capex, dividend and cost of hybrid 7 2016 FULL YEAR RESULTS
SHARE PRICE EVOLUTION REFLECTS SUCCESSFUL COMPANY TRANSFORMATION 2016 SHARE PRICE EVOLUTION 105,00 10-year performance: 95,00 +44% Arkema +250% 85,00 +13% Peer (1) average +68% 75,00 +4% CAC40 -1% 65,00 55,00 45,00 31-Dec 1-Jan 1-Mar 1-May 1-Jul 1-Sep 1-Nov (1) AkzoNobel, BASF, Clariant, DSM, Evonik, Lanxess, Solvay 8 2016 FULL YEAR RESULTS
FIVE MAJOR PILLARS FOR FUTURE GROWTH SPECIALTY ADHESIVES INNOVATIVE MATERIALS MOLECULAR SIEVES DOWNSTREAM ACRYLICS THIOCHEMICALS Innovation Integration of Den Braven Organic growth Ramp up new capacities Build on strong partnerships at Honfleur (France) in animal nutrition 3D printing New polyester powder Further expansion resin facility to start up x2 production Above average Lighter materials of Bostik in 2018 in India capacities market growth New energies Product innovation 2 nd phase to start in Innovation Innovation in specialty New plants in 2017 Capacity expansions markets 3D printing emerging countries PVDF in China Support strong growth Soil fumigation Low-VOC resins (+25% capacity) Bolt-on acquisitions in Asia and Middle East Gas odorant Weathering Specialty polyamides under consideration for synthetic textiles performance in China in 2017e Sulfiding agents and PET bottles PEKK in the US in 2018e Superior tailor-made and high value added services to customers 9 2016 FULL YEAR RESULTS
A STRONG AMBITION FOR BOSTIK BOSTIK EBITDA (in € m) Initial target of +30% EBITDA growth over 3 years achieved in two years EBITDA margin in % 300 ● Swift and smooth integration ● 6 new plant openings since acquisition ● Short term synergies already achieved +33% ● EV/EBITDA down to ~8x after only two years vs 2014 15% 210 Long term synergies now developing ● Cross-selling and technology exchange 13.1% 158 ● 2 nd wave of raw material optimization R&D developments ● R&D spending up +15% in last two years 10.3% Acquisition of Den Braven on 1 st December 2016: a new step in Adhesives development ● € 30 m synergies planned over 5 years 2020 2014 2016 target Bolt-on acquisitions under consideration Confirmation of strong potential of our Adhesives platform 10 2016 FULL YEAR RESULTS
ARKEMA’S CORPORATE SOCIAL RESPONSIBILITY 2025 targets GHG emissions * -50% vs 2012 VOC emissions * -33% vs 2012 ARKEMA’S CSR TARGETS 5 CSR PILLARS COD emissions * -20% vs 2012 Net energy purchases -15% vs 2012 Be a top quartile safety performer Occupational safety TRIR below 1.2 (3.4 in 2012 and 1.5 in 2016) in the chemical industry Reduce the environmental % women executives Between 23% and 25% (18% in 2016) footprint of activities % non-French executives Between 42% and 45% (39% in 2016) Place sustainable development solutions at the heart of innovation and product range Promote the individual and collective development of all employees and teams Encourage open dialogue RECOGNITION AMBITION with all stakeholders * Relative indicators 11 2016 FULL YEAR RESULTS
FULL YEAR 2016 RESULTS
AN EXCELLENT 2016 FINANCIAL PERFORMANCE EBITDA ADJUSTED EPS FREE CASH FLOW* NET DEBT In € m In € In € m In € m 36% 35% Stable despite +12.5% +31% Den Braven acquisition of EBITDA GEARING 1,482 5.56 +442 1,379 +426 1,189 1,057 4.23 2015 2016 2015 2016 2015 2016 2015 2016 * Cash flow from operations and investments excluding the impact of portfolio management 13 2016 FULL YEAR RESULTS
A STRONG EBITDA PERFORMANCE +12.5% versus 2015 Significant progression of the 3 divisions € 1,189 m 15.8% Historical high EBITDA margin EBITDA ~75% of EBITDA growth coming from major internal projects Bostik development, growth in Technical Polymers and downstream acrylics, Fluorogases 14 2016 FULL YEAR RESULTS
2016 KEY FIGURES 2015 2016 VARIATION In € m (except EPS) Sales 7,683 7,535 -1.9% EBITDA 1,057 1,189 +12.5% EBITDA margin 13.8% 15.8% Recurring operating income (REBIT) 604 734 +21.5% REBIT margin 7.9% 9.7% Adjusted net income 312 418 +34.0% Net income – Group share 285 427 +49.8% Adjusted EPS (in euros) 4.23 5.56 +31.4% 15 2016 FULL YEAR RESULTS
2016 SALES BY END MARKETS 19% 11% 22% 19% CHEMICALS BUILDING & CONSUMER COATINGS & PLASTICS CONSTRUCTION GOODS 7% 5% 10% 7% AUTOMOTIVE & TRANSPORTATION INDUSTRY ENERGY OTHERS 4% NUTRITION 3% WATER 2% ELECTRICS & ELECTRONICS 1% OTHERS 16 2016 FULL YEAR RESULTS
SIMPLIFIED PORTFOLIO WITH 9 BUSINESS LINES 10% Acrylics Performance 14% Additives COATING Coating Resins 14% and Additives SOLUTIONS Technical 11% 24% Polymers 2016 SALES HIGH PERFORMANCE INDUSTRIAL € 7,535 m MATERIALS SPECIALTIES 9% PMMA 30% 46% Specialty 21% Adhesives 9% Thiochemicals (Bostik) 8% Fluorogases Hydrogen 4% Peroxide 17 2016 FULL YEAR RESULTS
2016 SALES BRIDGE SALES In € m Scope Volumes Price of business Currency +3.2% (3.7)% (0.1)% (1.3)% Up in Mainly lower One additional all 3 divisions raw materials month of Bostik in January Innovation in +0.8% in 4Q’16 Technical Polymers Divestment of Sunclear Geographic 7,683 7,535 expansion Divestment of in Adhesives activated carbon and filter aid Good demand in business acrylic monomers 2015 2016 18 2016 FULL YEAR RESULTS
HIGH PERFORMANCE MATERIALS 2016 KEY FIGURES 2016 SALES DEVELOPMENT 2016 SALES BY BUSINESS LINE In € m 2015 2016 Variation Volumes +2.6% Bostik 24% Sales 3,358 3,422 +1.9%* 29% Prices (1.4)% Performance EBITDA 506 570 +12.6% Additives Currency (1.8)% EBITDA margin 15.1% 16.7% 47% Technical Scope +3.5% Polymers Rec. operating income 354 416 +17.5% 2016 HIGHLIGHTS Strong contribution from Bostik on successful integration ● € 210 m EBITDA, significantly up YoY supported by geographic expansion, synergies, lower costs and one additional month ● 13.1% EBITDA margin (11.2% in FY’15) progressively catching up with peers On the rest of the division, EBITDA significantly up YoY ● Successful innovation in Technical Polymers in lighter materials and new energies ● Divestment of activated carbon and filter aid business completed in November 2016 ● Very good EBITDA margin close to 20%, at historical high * At 1 st January 2016, a business was transferred from Performance Additives to Industrial Specialties. YoY sales variation includes the impact of this transfer 19 2016 FULL YEAR RESULTS
INDUSTRIAL SPECIALTIES 2016 KEY FIGURES 2016 SALES DEVELOPMENT 2016 SALES BY BUSINESS LINE In € m 2015 2016 Variation Volumes +2.2% PMMA 13% Sales 2,450 2,316 (5.5)%* 32% Prices (3.2)% Thiochemicals EBITDA 418 473 +13.2% 27% Fluorogases Currency (0.7)% EBITDA margin 17.1% 20.4% 28% Hydrogen Scope (5.0)% Peroxide Rec. operating income 237 300 +26.6% 2016 HIGHLIGHTS Strong performance across all business lines with 20.4% EBITDA margin, Further improvement of Fluorogases close to historical high ● Mainly supported by higher prices of certain gases Very robust performance of Thiochemicals ● Back to good level of results ● Contribution of one additional quarter of Kerteh complex (Malaysia) ● In line with improvement plan (+ € 80 m EBITDA in 2017 vs 2014) partially offset by regulatory maintenance turnaround in 3Q’16 Continuing favorable market conditions in PMMA ● Divestment of Sunclear in November 2015 Benefits from developments in specialties in Hydrogen Peroxide * At 1 st January 2016, a business was transferred from Performance Additives to Industrial Specialties. YoY sales variation includes the impact of this transfer 20 2016 FULL YEAR RESULTS
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