Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Arkema SA (ARKAF, Financial) achieved a solid sales growth of 2.9% year-on-year in Q3, driven by specialty materials in Asia and the US.
- The company increased its EBITDA by more than 5%, reaching an elevated EBITDA margin of 17%.
- Adhesive solutions delivered a strong quarter with a 9% EBITDA growth and a record high EBITDA margin of 15.7%.
- Advanced materials saw a significant 10% year-on-year EBITDA growth, driven by high-performance polymers.
- Arkema SA (ARKAF) has made significant progress on its CSR roadmap, reducing the carbon footprint of its bio-based polyamide 11 by 80% compared to fossil-based alternatives.
Negative Points
- The macroeconomic environment remains challenging with no signs of a rebound, particularly affecting the automotive sector in Europe.
- Volumes in intermediates were down due to quota enforcement in refrigerants in Europe and the US.
- Currency fluctuations had an adverse effect of 1.4% on sales, reflecting the depreciation of the US dollar and several Latin American currencies.
- The automotive sector, especially the EV market in Europe, is growing more slowly than expected.
- Arkema SA (ARKAF) expects to achieve 2024 EBITDA at the lower end of the guidance range due to the challenging macroeconomic environment.
Q & A Highlights
Q: Can you expand on the expected EUR100 million EBITDA growth for 2025 and the impact of the German outage?
A: Thierry Le HĂ©naff, CEO, explained that the EUR100 million EBITDA growth is expected from 12 major projects, nearly fully financed by the end of 2024. The German outage is not expected to repeat in 2025, and cost pressures are being balanced with cost savings. The growth is not linked to macroeconomic factors but rather to strategic projects and acquisitions.
Q: Why is Q4 EBITDA expected to be slightly down despite challenging conditions in Q2 and Q3?
A: Thierry Le HĂ©naff noted that Q4 is expected to be solid but slightly down due to a strong Q4 last year in refrigerants, which was atypical. Additionally, there are some ongoing impacts from the German site outage. The automotive sector's slowdown is not a major factor as Arkema is not heavily exposed to it.
Q: How do you explain the strong volatility per quarter for intermediates?
A: Thierry Le HĂ©naff stated that intermediates are inherently volatile, but Arkema has managed to maintain relative stability year over year. The volatility is more pronounced on a quarterly basis, but the annual performance remains stable.
Q: What is the outlook for PVDF given new capacity coming online from competitors?
A: Thierry Le HĂ©naff explained that Arkema's strategy is to focus on high-end PVDF applications, maintaining a 7% growth rate. Incremental investments will be made as needed, potentially in the US, Asia, or Europe, to support this growth.
Q: Can you discuss the impact of potential tax changes in France on Arkema's tax rate?
A: Marie-José Donsion, CFO, indicated that the proposed tax changes in France are not expected to significantly impact Arkema's corporate tax rate due to existing tax losses and limited profitability in France. The potential impact on social charges is estimated to be around EUR3-4 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
