Arkema's Q3 net income narrows to €65M from €116M a year ago as sales fall 6.9% to €1.5B, with results negatively impacted by strengthening of euro; company to continue strategy involving strengthening in emerging countries, says CEO
November 7, 2013
– SOLID PERFORMANCE IN 3RD QUARTER IN A LESS FAVORABLE ENVIRONMENT THAN LAST YEAR
• €1,495 million sales, close to 3Q’12 at constant exchange rates and scope of business
• €233 million EBITDA and 15.6% EBITDA margin
- Gradual improvement in oil and gas and photovoltaic markets for High Performance Materials segment
- Stability in Coating Solutions segment with marked improvement in volumes in North America
- Industrial Specialties segment affected by more challenging market conditions in fluorogases and PMMA in Europe
- Negative impact of the strengthening of the euro on the quarter’s performance
• Net debt down to €1,033 million since 30th June 2013
• Ongoing targeted growth capex in emerging regions
• Emphasis on competitiveness in Europe
Quote of Thierry Le Hénaff
« In 3rd quarter Arkema achieved a solid performance in a mixed economic environment, in the continuity of 2nd quarter. The strengthening of the euro also impacted the Group’s results. However, market conditions appeared to have stabilized, which could be a base for a gradual recovery in Europe next year.
The High Performance Materials segment reported a high margin in a less supportive environment than last year. In 4th quarter, EBITDA of this segment should be above last year as expected. Despite the increase in raw material costs, the Coating Solutions segment achieved a stable performance, sustained by strong volumes in North America. The Industrial Specialties segment continued to be affected by the weakness in fluorogases and PMMA in Europe.
Arkema actively continued to implement its strategy: strengthening in emerging countries, targeted growth in the United States, innovation on sustainable development megatrends, and emphasis on competitiveness. »
The market conditions observed in 3rd quarter should continue over the year-end in particular with the strengthening effect of the euro vs the dollar across the Group’s activities. For the High Performance Materials segment, as expected, demand in the oil and gas market should improve, in particular for the Filtration and Adsorption business, and should result in an improvement in performance compared to 4th quarter 2012. The Coating Solutions segment should continue to show its resilience in a mixed geographic environment. Industrial Specialties should continue to be affected by the weakness of fluorogases and PMMA in Europe. Finally, the 4th quarter will reflect the traditional year-end seasonality.
In this context, and taking into account the strengthening of the euro, Arkema targets for the full year an EBITDA around €920 million.
In the medium and long term, the Group confirms its ambition to achieve by 2016 €8 billion sales and a 16% EBITDA margin while maintaining gearing below 40%, and, by 2020, the Group aims to achieve €10 billion sales and a 17% EBITDA margin with gearing below 40%.
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Industry Intelligence Editor’s Note: Arkema listed its third quarter net income as €65 million in 2013 and €116 million in 2012 in an omitted table. The table also included the company’s third quarter net sales of €1,495 billion in 2013 and €1,606 billion in 2012.