(AOF) – “Arkema has successfully completed today the placement of a bond issue of 400 million euros with an 8-year maturity bearing an annual coupon of 3.50%”, announces the French chemical group. He specifies that this issue, which “is part of the group’s financing policy” “allows it to extend the average maturity of its financing” and to “undertake the refinancing of its closest bond maturities”. Arkema adds that it is rated BBB+ by Standard & Poor’s and Baa1 by Moody’s, with a stable outlook.
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Key points
– Leading French chemist and major player in specialty materials, former subsidiary of Total;
– Turnover of €9.5 billion, split between specialty materials (adhesives, advanced materials and coatings) for 85% and intermediate chemicals (fluorinated gases, acylics) and coating solutions, with world leading positions on the 9/10
th
of the portfolio;
– Turnover balanced between Europe (36% of sales), North America (31%) and the rest of the world – the United States, China and Southeast Asia being the three the group’s key markets;
– 3-point business model: accelerate organic growth and innovation, strengthen specialty materials through acquisitions, aim for operational and commercial excellence;
– Open capital (6% for employees), Thierry Le Hénaff being Chairman and Chief Executive Officer of the 14-member Board of Directors;
– Healthy balance sheet with €2.8 billion in net debt and a leverage effect of 1.3 at the end of June 2022.
Challenges
– 2024 ambitions, raised: expansion of world leadership positions and reduction of the cyclical bias / sales from €10 to €11 billion, operating margin around 17% and free cash generation of +40%;
– Innovation strategy serving sustainable development: €235m of R&D in 15 research centers with 200 patents dedicated to sustainable development out of a portfolio of more than 10,000 patents / incubation structure, digital laboratory focused on intelligence technology and scientific and industrial partnerships / 5 innovation platforms for €1.6 billion in cumulative additional sales in 2030;
– Environmental strategy with identified objectives, validated by the SBTi: reduce in 2030 by 46%, vs 2019, its CO2 emissions in scopes 2 and 3 and by 30% for the entire value chain, via 400 M€ of investments dedicated / increase the sustainable offer to 65% in 2030 and to 80% in 2025 the share of sustainable purchases / deploy the circular economy, from design to recycling of customer products (10% of revenues made from recycled materials in 2021);
– Continuation of disposals to be a pure player in specialty materials in 2024;
– Proactive investment in lithium-ion batteries (€1 billion in sales expected in 2030), elastomers for sports and adhesives (purchase of South African Permoseal);
Challenges
– Inflation of raw materials and shortages in the coatings business, offset by the increase in selling prices;
– Integration of the Mexican Polimeros Especiales and, in 2023, start-up of the Chinese polyamide powder plant;
– Ongoing review of intermediate chemistry activities;
– After a jump of 33% in sales and 66% in net profit in 2
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quarter, raising of the 2022 objective of an increase in operating profit of 17 to 22%, to €2.1 billion;
– Share buyback program.
Learn more about the chemical 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 sales down 1.6% to 63.1 Billions of Euro’s. Specialty chemicals are doing better. On the other hand, the production capacity utilization rate in basic chemicals has slowed markedly to less than 80%. Germany’s third 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 put in place an appropriate environment for the current challenges.