STRATEGY AND LONG-TERM AMBITION Thierry LE HÉNAFF Chairman and CEO
MAJOR MILESTONES 2005-2014
INCREASED PRESENCE IN EMERGING MARKETS 1.7 1.0 S ales in EM 2005 2014* PVDF, FLUOROGASES, THIOCHEMICALS ACRYLICS COATEX, COATING RESINS NEW R&D CENTRE Kerteh Taixing Changshu CAPEX: CAPEX: INVESTMENT: €200 M €250 M US$240 M** * 2014 proforma sales including Bostik ** Access to a production capacity of 160kt of acrylic acid per year 3 CAPITAL MARKETS DAY 2015
CREATION OF AN INTEGRATED AND GLOBAL ACRYLICS VALUE CHAIN 1.9 S ales 0.7 in CS 2005* 2014* 2007 2010 2011 2011-2014 2014 Acquisition Acquisition Acquisition Investment plan Acquisition of acrylics of Coatex of Cray Valley / in the US of a stake and emulsion assets Sartomer in Sunke in China * 2014 proforma sales including Bostik and using new reporting; 2005 using new reporting 4 CAPITAL MARKETS DAY 2015
STRONG DEVELOPMENT OF HIGH PERFORMANCE MATERIALS 3.3 1.6 S ales in HPM 2005* 2014* 2007 2011 2012 2012 2015 New molecular New PVDF Acquisition 50% increase Acquisition sieves production production unit of Hipro Polymers in PVDF of Bostik line in Inowroclaw in Changshu (China) PA10 and Casda production #3 worldwide (Poland) and Biomaterials capacities in adhesives Honfleur (France) in Changshu (China) * 2014 proforma sales including Bostik and using new reporting; 2005 using new reporting 5 CAPITAL MARKETS DAY 2015
A MORE BALANCED GLOBAL FOOTPRINT SALES BY REGION 2005 2014* 25% 18% €5.7 bn €7.5 bn 43% 57% sales sales 25% 32% Europe North America Asia and RoW * 2014 proforma sales including Bostik 6 CAPITAL MARKETS DAY 2015
MORE FOCUSED AND HIGHER QUALITY PORTFOLIO SALES BY SEGMENT 2005* 2014** 26% 24% 28% €5.7 bn €7.5 bn 44% sales sales 13% 35% 30% High Performance Industrial Coating Solutions Vinyls Materials Specialties * Using new reporting ** 2014 proforma sales including Bostik and using new reporting 7 CAPITAL MARKETS DAY 2015
CHANGE OF SCALE IN PROFITABILITY EBITDA MARGIN 13.2% 13% 6.2% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014 Spin-off: 2014: GDP: 4.9% GDP: 3.4% Acrylics: peak cycle Acrylics: close to low cycle €/ US $: 1.24 €/ US $: 1.33 Share price: €26.54 Share price (25/ 06/ 2015) €66.16 +149% in 9 years CAC40 +2% over the same period 8 CAPITAL MARKETS DAY 2015
ARKEMA TODAY
ARKEMA TODAY 3 R&D 19,200 A presence in € 7.5 bn* 137 and innovation 50 countries employees sales production sites geographical worldwide hubs Entrepreneurial culture Strong focus on partnerships and relations with customers Balanced global footprint Competitive world-scale units on 3 continents Technology leaderships Highly skilled and committed management team Strong innovation pipeline Leading positions by segment (#1 to #3 WW) * 2014 proforma sales including Bostik 10 CAPITAL MARKETS DAY 2015
MARKETS AND CUSTOMERS ARE AT THE HEART OF THE COMPANY 11 CAPITAL MARKETS DAY 2015
OUR PORTFOLIO HIGH PERFORMANCE INDUSTRIAL COATING MATERIALS SPECIALTIES SOLUTIONS Acrylics (upstream) Specialty Adhesives (Bostik) Thiochemicals Technical Polymers PMMA Coating Resins and Additives (downstream) Performance Additives Fluorogases Hydrogen Peroxide CYCLICALITY CYCLICALITY CYCLICALITY HIGH ( upstream) QUITE LIMITED MODERATE Business with growth above GDP attracting more investments Business primarily focused on cash generation 12 CAPITAL MARKETS DAY 2015
YOUR MAIN CURRENT QUESTIONS ANSWERED S ynergies starting to ramp up Bostik Promising performance in the first months S uccessful start-up completed Thiochemicals in Malaysia S trong contribution expected from 2Q’ 15 Challenging market conditions Acrylics Mid-cycle conditions still assumed in 2017 S tabilization of market conditions confirmed Specialty polyamides Better first semester versus last year with good margin % level S hort-term: confirmation of progressive improvement of pricing Fluorogases Mid- and long-term: recovery action plan in progress Proj ect to divest S unclear* (€180 m sales, €105 m EV) announced Disposal program on 18 June 2015 €50 m achieved in 2013-2014 Operational excellence * S ubj ect to the information - consultat ion process of works councils in France 13 CAPITAL MARKETS DAY 2015
LONG-TERM AMBITION
OUR LONG-TERM AMBITION SALES CAPEX INTENSITY EBITDA MARGIN IN €BN (CAPEX/ S ALES ) IN % Including ~10 Close to 1-1.5 €bn 17% coming from new acquisitions post 2017* ~8% ~5.5% 6.0 13% 2014 LT 2014 LT 2014 LT (2020e) (2020e) (2020e) Defined in normalized market conditions (Acrylics in mid-cycle, €/ US $ at 1.15, brent at US $70/ b,… ) Net debt / EBITDA ~1.5x * Beyond Bostik and Jurong acquisitions 15 CAPITAL MARKETS DAY 2015
MAIN STRATEGIC DIRECTIONS 3 1 2 ACCELERATE GROWTH REINFORCE ACRYLICS SELECTIVE GROWTH IN OF HIGH PERFORMANCE INDUSTRIAL SPECIALTIES DOWNSTREAM MATERIALS 4 5 6 MAINTAIN EMPHASIS FINALIZE THE FULL DISPOSAL OF NON-CORE GEOGRAPHICAL ON OPERATIONAL ASSETS BALANCING EXCELLENCE 16 CAPITAL MARKETS DAY 2015
A DIFFERENTIATED STRATEGY BY SEGMENT EBITDA margin Segment 2005 – 2014 2015 – long-term potential* Accelerate growth HIGH PERFORMANCE - 17% 18% Reposition in adhesives and MATERIALS from megatrends INDUSTRIAL Extend footprint Grow - 17% 19% SPECIALTIES in Asia selectively Build a whole COATING Reinforce - and global 12% 18% SOLUTIONS acrylics downtream value chain Low Peak Normalized conditions * Corporate costs = 0.6% of sales to be deducted from sum of the part 17 CAPITAL MARKETS DAY 2015
ACCELERATE GROWTH OF HIGH PERFORMANCE MATERIALS 50% 44% High Performance 28% Materials 25% Industrial 35% 30% Specialties Coating 13% Solutions 25% 26% 24% Vinyls 2005* Proforma 2014* LT New reporting (2020e) * 2014 proforma sales including Bostik; 2005 using new reporting 18 CAPITAL MARKETS DAY 2015
TOWARDS A FULLY BALANCED GLOBAL FOOTPRINT Sales close to x2 33% in “emerging countries” 25% 18% Asia and RoW 33% 32% 25% North America 57% 33% 43% Europe 2005 2014* LT (2020e) * 2014 proforma sales including Bostik 19 CAPITAL MARKETS DAY 2015
2017 EBITDA OBJECTIVE CONFIRMED EBITDA €1.3 bn Environment +150 M&A +190 Organic growth €784 m +180 2014 2017e Defined in normalized market conditions (Acrylics in mid-cycle, €/ US $ at 1.15, brent at US $70/ b,… ) Gearing at ~40% 20 CAPITAL MARKETS DAY 2015
MAIN ELEMENTS SUPPORTING 2017 OBJECTIVE ORGANIC GROWTH M&A EXTERNAL ENVIRONMENT NORMALIZED MAIN DRIVERS ACQUISITIONS Thiochemicals in Malaysia Bostik (initial €158 m) Acrylics in mid-cycle 1 st step of S (currently low-cycle) Bostik growth: +€50 m unke acquisition Fluorogases : +€40 m 2 nd step of S Internal measures unke acquisition from better pricing environment in Fluorogases: +€40 m with S unke contribution defined (currently gradually improving) O&G in filtration and adsorption in mid-cycle conditions FX rate: €/ US $ at 1.15 Acrylics in the US (currently ~1.12) PMMA : normalization of market DIVESTMENTS OTHER DRIVERS conditions €700 m sales to be divested (currently close to high-cycle) Other organic Proj ect to divest S unclear in PMMA Brent : US $70/ b Operational excellence gains (€180 m sales)* (currently ~US $64/ b) Inflation on fixed costs 3 elements offsetting each other * S ubj ect to the information – consultat ion process of works councils in France 21 CAPITAL MARKETS DAY 2015
A STRONG AMBITION FOR BOSTIK Smooth integration EBITDA IN €M In a very positive spirit Highly committed teams S ynergies well on track with short-term focus on costs ~300 Promising start of the year S trict benchmarking of competition x2 2017 objective confirmed +30% EBITDA versus 2014 (excluding acquisitions) 158 Long-term ambition broadened 14 to 15% EBITDA margin ambition confirmed x2 EBITDA versus 2014 3 main levers Accelerate implementation of strategy focused on emerging countries, global branding, focused innovation, operational 2014 LT excellence (2020e) Bolt-on acquisitions S ynergies with Arkema in the longer run (acrylics value chain, structural bonding) 22 CAPITAL MARKETS DAY 2015
SOME MAJOR GROWTH DRIVERS 1/2 THIOCHEMICALS ACRYLICS COMPOSITE MATERIALS Kerteh Taixing US$120 M SALES €70 M EBITDA* MID-TERM €100 TO €200 M MID-TERM NEW SALES FURTHER in mid-cycle LONG-TERM THOUGHTS conditions UNDERWAY * S ubj ect to the exercise of the option to increase our share in S unke and access a total production capacity of 320kt of acrylic acid per year 23 CAPITAL MARKETS DAY 2015
SOME MAJOR GROWTH DRIVERS 2/2 MOLECULAR SIEVES FLUOROGASES DEVELOPMENT FOR OIL & GAS IMPROVEMENT IN MIDDLE EAST X2 +€100 M X2 VOLUMES SOLD EBITDA SALES MID-TERM MID-TERM LONG-TERM (Honfleur expansion (Action plan) ~€60 m CAPEX) Announced today 24 CAPITAL MARKETS DAY 2015
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