(AOF) – Arkema today successfully completed the placement of indefinite hybrid bonds in the amount of 400 million euros, with a coupon of 4.8% and a first early redemption option at the discretion of the group after 5 years. The chemical group thus anticipates the refinancing of one of its two existing hybrid bond strains, for an amount of 400 million euros and whose first repayment option date is September 17, 2024.
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Key points
– Leading French chemist and major player in specialty materials;
– Turnover of €11.5 billion, distributed between adhesives for 25%, advanced materials for 38%, coating solutions for 28% and intermediate chemicals for 9%, with world leading positions in 9/10ths of the portfolio;
– Balanced turnover between North America (35% of sales), Europe (33%) and Asia (28%) – the United States, China and Southeast Asia being the group’s three key markets;
– 3-point business model: accelerate organic growth and innovation, strengthen specialty materials through acquisitions, aim for operational and commercial excellence;
– Open capital with a strong presence of the FSP (7.9% of shares and 13% of voting rights) and employees (7.6% and 11.1%), Thierry Le Hénaff being chairman and CEO of the board of directors. administration of 14 members;
– Healthy balance sheet with €2.6 billion in net debt and leverage of 1.3 at the end of June.
Challenges
– 2024 ambitions confirmed:
– expansion of global leadership positions and reduction of cyclical bias,
– sales of €10 to €11 billion, operating margin around 17% and free cash flow generation of +40%;
– Innovation strategy serving sustainable development with R&D representing 2.3% of revenues and a portfolio of +10,500 patents:
– 4 focuses: 9% for cross-cutting themes (batteries, recycling, biomaterials, etc.), 40% in advanced materials, 24% in adhesives, 21% in coatings and 6% in intermediate chemistry,
– in specialty materials: €1.4 billion in turnover from products less than 5 years old;
– incubation structure, digital laboratory focused on artificial intelligence, scientific and industrial partnerships;
– 2030 environmental strategy with objectives identified and validated by the SBTi:
– reduction of 48.5%, compared to 2019, of its CO2 emissions in scopes 1 and 2 and of 54% for the entire value chain, via €400 million in dedicated investments,
– increase to 65% of the sustainable offer (53% of sales in 2022) and to 80% in 2025 of the share of sustainable purchases,
– deployment of the circular economy, from design to recycling of customer products (target of 50% of revenues made from recycled materials vs. 41% in 2022),
– 9/10ths of new patents dedicated to sustainable development and 5 sustainable innovation platforms for €1.5 billion in cumulative additional sales;
– Proactive investments in lithium-ion batteries, elastomers for sports and 3D printing and numerous industrial expansion projects (polyamide 11 in Singapore, Nutrien in the United States, PVDF in France and China, Pebax in France …) which will contribute €50 to €70 million to the 2023 operating profit;
– Continued portfolio rotation to be a pure player in specialty materials in 2024, compared to 91% at the end of June 2023.
Challenges
– Continued weakness in demand, excluding automobiles, batteries and energy;
– Inflation of raw materials and shortages in the coatings activity, offset by the increase in sales prices;
– Completion of the acquisition, for $728, of 54% of the Korean PI Advanced Material which will strengthen the specialty materials division (adhesives, advanced materials and coating solutions) in electronics and batteries;
– After a 23% decline in revenue but an increase in operating margin at the end of June, 2023 forecast of a decline in gross operating profit, between €1.5 and €1.6 billion.
Learn more about the chemicals sector
Nothing is going well for German chemistry
German chemicals, very dependent on Russian gas, are in difficulty. Following sluggish sales in the automotive sector and falling demand in construction, production is down 8.5% in 2022, with overall turnover down 1.6% to 63.1 Billions of Euro’s. Specialty chemistry is doing better. On the other hand, the rate of utilization of production capacities in basic chemicals has slowed significantly to reach less than 80%. The third German industrial sector is tempted by relocation to the United States, where energy costs are much lower. With the Inflation Reduction Act, the United States has established an environment appropriate to current challenges.