Arkema’s Q4 EBITDA remains stable

The divestment of PMMA is expected to close in mid-year.

In a context strongly marked by the pandemic, Arkema’s EBITDA margin remained robust at 15%, supported by the resilience of its Specialty Materials and by the rebound in volumes in the fourth quarter (+5% vs Q4’19).

Arkema is well positioned to take advantage of the recovery in 2021 and beyond, thanks to the benefits of its strong balance sheet and its focus on sustainable and high performance Specialty Materials, the company said in a statement.

During Q4 FY20, the French chemical major witnessed sales growth of 2.1% at constant scope and currency, driven by a significant improvement in volumes (+5.2% vs Q4’19). EBITDA broadly stable at €289 million (€295 million in Q4’19), supported by the strong increase of Adhesive Solutions (+15%) and Coating Solutions (+19%).

For 2020, the company registered €7.9 billion in sales, representing a limited decline of 8% year on year at constant currency, reflecting the impact of the pandemic on global demand. EBITDA in 2020 of €1,182 million (-18.9%) and EBITDA margin of 15.0%. Good resilience of Specialty Materials (12% decrease in EBITDA and a 100 bp contraction in EBITDA margin to 15.8%.

Commenting on the year’s results, Thierry Le Hénaff, Chairman and CEO, Arkema, said:  “Last year we faced the challenging context of the pandemic and first and foremost, I would like to thank the responsiveness and mobilization of our employees across the world. Their unwavering commitment, as well as Arkema’s geographic and technological positioning, enabled the Group to deliver a robust financial performance in 2020, be highly efficient in managing operations to quickly adapt to the context, record a strong rebound in sales and earnings in the fourth quarter, and look confidently ahead to 2021.

“2020 was ultimately a year of major qualitative progress for Arkema. Progress in refocusing the Group’s profile toward Specialty Materials with the divestment of Functional Polyolefins to SK and the proposed divestment of PMMA to Trinseo. Progress in our innovation programs, in particular with the acceleration in our high-performance adhesives, cutting-edge solutions for mobility and natural resources management. Progress in CSR with the admission to the DJSI World index, the strengthening of our environmental and diversity targets, and the continued assessment of our solutions portfolio based on sustainability criteria.

“Despite the ongoing uncertainty of the health context, 2021 should be a year of good growth for Arkema. In addition, we will continue to accelerate our high value-added developments in the 3 segments, Adhesive Solutions, Coating Solutions and Advanced Materials, as well as the execution of our strongly value-creative strategy to refocus entirely on Specialty Materials.”

According to the company, the start of the year 2021 is marked by an increase in the level of global demand, in the continuity of fourth-quarter 2020. EBITDA for first-quarter 2021 could thus rise by around 10% relative to first-quarter 2020, including a negative currency impact estimated at €15 million.

Moreover, the growth of Arkema’s EBITDA during the year should be concentrated in Specialty Materials (82% of Group sales in 2020). Excluding a significant resumption of the pandemic, Arkema aims at constant currency for Specialty Materials EBITDA to grow by around 10% in 2021 relative to 2020.

Bostik, in line with its 2024 trajectory, is aiming for 14% EBITDA margin in 2021, thanks to the benefits of its positioning in the construction and high-performance industrial adhesives markets, and its operational excellence initiatives, as well as its acquisition strategy.

The Advanced Materials segment should record a significant rebound, driven in particular by its innovations in batteries, electronics, lightweight materials, sporting goods and filtration, as well as by higher demand in certain industrial markets, animal nutrition and crop protection.

Finally, earnings of Coating Solutions should be supported by the growth momentum and sustainable innovation in the paints, electronics and 3D printing markets.

EBITDA for the Intermediates segment in 2021 is expected to be at a comparable level to 2020 at constant currency and scope. The divestment of PMMA is expected to close in mid-year.

Moreover, in 2021 the Group will continue to execute its mid-term strategy presented at the Capital Markets Day in April 2020, in line with its ambition to become a pure Specialty Materials player by 2024. In this respect, the two major industrial projects – the bio-based polyamides plant in Singapore and hydrofluoric acid plant in the United States – will progress as expected and come on stream mid-2022. Arkema will pursue its bolt-on acquisition strategy in Specialty Materials, particularly in Adhesive Solutions, and will accelerate the strategic review of Fluorogases. Lastly, the Group will reinforce its innovation for sustainable development given the opportunities arising from governments’ stimulus plans in the fields of new mobility, home comfort and management of natural resources.