Against the background of the global economy being severely affected by the new crown pneumonia epidemic, Arkema has proved its resilience with its strong financial performance and high cash flow creativity.
●Sales of 1.9 billion euros, down 15.6% year-on-year (10.7% sales in the first half of 2020) ●Significant slowdown in the construction, transport and industrial sectors, but good demand in the nutrition, packaging and hygiene markets
BR> ●Sales continued to improve in June thanks to developments in the European and US construction markets and solid sales in China
EBITDA was EUR 286 million (2nd quarter in 2019) €407 million in the quarter), with an EBITDA margin of 15.0%; good resilience based on:
Solid advanced materials performance, with an EBITDA margin of 20%
Bostik sales rebounded sharply in June
BR> ● Benefit from fast implementation of interim measures to reduce fixed costs
● Adjusted net income of EUR 90 million (Q2 2019: EUR 192 million) and EPS of EUR 1.18
Free cash flow Outstanding performance at EUR 288 million (Q2 2019: EUR 90 million), reflecting disciplined management of working capital and capital expenditures
Net debt fell significantly to EUR 2,134 million (including 1 billion euro hybrid bonds), including dividend payments of 168 million euros and net proceeds of 246 million euros from the divestiture of the functional polyolefins business
With the final divestiture of the functional polyolefins Announcing on the 20th that it intends to acquire the adhesive solutions company Fixatti, Arkema has made further progress in refocusing on its specialty materials strategy
Arkema Chairman and Chief Executive Officer
On July 29, 2020, Arkema held a board meeting to approve the group’s consolidated financial statements for the first half of 2020. Mr. Thierry Le Hénaff, Chairman and Chief Executive Officer of Arkema Group, said:
“In the second quarter, in the context of the new crown pneumonia epidemic, many countries adopted blockade measures. Arkema’s Sales were clearly affected by this situation, but the decline was stemmed thanks to the Group’s global positioning and its diversity in end markets. Arkema showed its resilience against this unprecedented backdrop and therefore also Validated its strategy to refocus the business portfolio on specialized areas.
I am very pleased with the mobilization and responsiveness of our Group employees during this period. Our teams have worked hard while focusing on the short and medium term.
In the short term, we were able to deliver strong financial results despite a challenging operating environment in the second quarter, as we focused on factors within our control, took decisive steps to reduce costs, and tightly controlled working capital and capital expenditures , Create a high level of cash flow. In the second half of the year, although the terminal market is expected to gradually improve, in an environment where the development of the epidemic and its impact are still unknown, Arkema will continue to focus on cost savings and cash creation.
At the same time, the group confirmed the implementation of the development blueprint announced at the investor day on April 2. The completion of the divestiture of the functional polyolefin business in early June, the acquisition of Fixatti by Bostik, and the start of the development strategy review of the intermediate product portfolio marked mergers and acquisitions The launch of the phase 2. The support of our partner Nutrien, the progress we have made in the construction of our bio-based polymer factory in Singapore in the face of the new crown pneumonia epidemic, and the accelerated development of sustainable innovation projects in the field of specialty materials will help us achieve organic growth. Ambitious goals.”
Outlook to 2020
As some of Arkema’s key national markets are gradually easing lockdown measures, demand is expected to continue in the second half of the year Gradually improving, but still below last year’s levels. The speed and magnitude of improvement is uncertain, will depend on the evolution of the outbreak, and will vary by end market and region. Arkema expects sales in the third quarter to decline by around 10% year-over-year at a constant scope and currency at this stage, a significant improvement from a decline of around 20% in the second quarter.
Against this backdrop, Arkema will focus on its controllable elements, in particular costs, capital expenditures and working capital, in order to maintain a strong level of liquidity. The Group confirmed that in 2020 it is on track to reduce its fixed costs by EUR 50 million compared to 2019 and to reduce capital expenditure by EUR 100 million compared to the originally planned level. In order to meet various technical needs of customers and create opportunities for sustainable development, Arkema will continue its innovation in the field of special materials. Thanks to these initiatives, Arkema is well positioned to respond to this unprecedented crisis, given the Group’s solid performance in the second quarter in the current environment, as well as its well-balanced geographic presence, diversified end markets and strong balance sheet. Ability is still full of confidence.
Finally, Arkema will continue its acquisition strategy, launching major organic growth.�� project, and a strategic review of its intermediates business, contributing to its ambitious goal of becoming a pure-play specialty materials producer by 2024.
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