Release Date: August 01, 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 5% volume growth compared to last year, reflecting the end of most destocking and good performance in Asia.
- The company reported an 8% progression in EBITDA, with a robust EBITDA margin reaching nearly 18%.
- All segments recorded EBITDA growth in the quarter, with Asia leading the way with a 15% increase.
- The polyamide 11 plant in Singapore is now fully operational, with significant technical progress achieved.
- Arkema SA (ARKAF) maintained its annual guidance, projecting higher EBITDA year-on-year, ranging from EUR1.53 to EUR1.63 billion.
Negative Points
- The macroeconomic environment remains challenging, with no real global recovery in demand.
- The raw materials environment remains fairly stable, with some tightness linked to specific issues such as the Red Sea situation and Hurricane Barry.
- The company experienced an exceptional flooding at one of its plants in Germany, leading to a three-month shutdown and an estimated EUR15 million impact on Q3 EBITDA.
- The price effect stood at a negative 2.4%, reflecting lower raw material prices.
- The depreciation of the Chinese yuan and the Argentinian peso relative to the euro had a negative impact of 0.8% on sales.
Q & A Highlights
Q: Can you talk about the price elasticity in the intermediate segments and the development for refrigerant gases?
A: Thierry Le HĂ©naff, CEO: The intermediate segments showed strong performance in Q2, with seasonality playing a role. We expect robust delivery in Q3, but Q1 and Q4 are typically weaker due to seasonality. Pricing dynamics remain positive, but volume growth is weighed down by lower volumes. The market in China remains challenging.
Q: Can you shed some light on the growth in battery materials, particularly automotive versus other types of batteries?
A: Thierry Le HĂ©naff, CEO: We are targeting quality growth rather than volume, focusing on high profitability. The momentum in Asia is good, while Europe and the U.S. are experiencing delays. We are well-positioned in PVDF technology, which is expected to be the winning technology in the coming years.
Q: What is your visibility on customer inventories and real consumer demand?
A: Thierry Le HĂ©naff, CEO: The destocking phase is mostly over, and we are seeing some pickup in demand. However, there is no significant restocking. We rely on new business development and the end of destocking to drive growth.
Q: Are there any product lines where you export globally rather than producing locally?
A: Thierry Le HĂ©naff, CEO: Our strategy is to supply in the region from the region, minimizing the impact of tariffs. We have invested significantly in the U.S. and Asia to support this strategy.
Q: Are the maintenance turnarounds in your chemicals segment now behind you?
A: Thierry Le HĂ©naff, CEO: Yes, the planned maintenance turnarounds are behind us, and all plants are now running.
Q: What is the status of the start-up costs for the polyamide plant in Singapore?
A: Thierry Le HĂ©naff, CEO: The plant is now fully operational, but start-up costs will continue to diminish. There will be some verification steps in August, which were planned two years ago.
Q: Could you give us some color about the China quota situation for refrigerant gases?
A: Thierry Le HĂ©naff, CEO: Our exposure to China is not material, and we do not see any specific concerns regarding quotas.
Q: What is the expected run rate EBITDA for Advanced Materials once PA 11 and other projects are up and running?
A: Thierry Le HĂ©naff, CEO: We expect significant contributions from our organic and M&A projects, with a material impact on EBITDA by 2025. We will provide more specific guidance in six months.
Q: What are the end market dynamics for adhesives, particularly industrial versus construction?
A: Thierry Le HĂ©naff, CEO: We expect industrial markets to improve in 2025, while construction remains challenging. We continue to grow through new business development and underlying demand.
Q: Could you update us on the PFAS issues in France and Europe?
A: Thierry Le HĂ©naff, CEO: There is nothing new to report. We continue to follow regulations and maintain transparency with authorities. The broader PFAS issue in Europe is beyond Arkema's scope.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
