Arkema swings to loss of €463M from year-ago period's profit of €58M on sales of €1.4B, up 17%; year-end seasonality, significant destocking by industrial chemicals customers offset stronger sales in performance products, company says

COLOMBES, France , March 8, 2012 (press release) – ADJUSTED NET INCOME UP +33% AT € 574 M ACCELERATING GROUP TRANSFORMATION

• Excellent financial performance1 in globally favorable market conditions o Sales up 21% at 5.9 billion euros o EBITDA above 1 billion euros fully in line with guidance o EBITDA margin at 17.5%

o Strong contribution from Asia and solutions for sustainable development

• Group profile strengthened in specialty chemicals o Acquisition of Total specialty resins and Seppic specialty alcoxylates o Acquisition of Hipro and Casda in bio-sourced polyamides in China closed beginning 2012 o Project to divest Vinyls business to Groupe Klesch2 (- € 587 m impact on net income) o Major investment announced in Thiochemicals in Malaysia

• Very solid balance sheet with 27% gearing • Proposed dividend at 1.30 euro per share • Upgrade of long-term EBITDA target (2016) at 1,250 million euros3

The Board of Directors of Arkema met on March 7th 2012 to close the consolidated accounts of Arkema for 2011. At the end of the meeting, Thierry Le Hénaff, Chairman and CEO of Arkema stated:

“2011 is a new milestone in Arkema history. Financial performance is excellent and Group transformation has been actively pursued. For the first time, EBITDA exceeds 1 billion euro. This performance represents twice the EBITDA of 2007 in an overall similar macro-environment and reflects the extent of structural improvements achieved by the Group over the past years.

A project to divest the Vinyls business to Groupe Klesch2 was announced last November. This is a major project for both our Group and all of the employees, men and women of the Vinyls business. Having a strong balance sheet and maintaining the current industrial operations, this new group aims to become a major player in the European PVC industry.

We also announced in 2011 several acquisitions representing close to one billion euros of additional sales and the construction of a Thiochemicals plant in Malaysia, our largest industrial investment so far. These projects reinforce Arkema as one of the top world specialty chemical player.”While end of 2010 was atypical with restocking by our customers, the 4th quarter 2011 was marked as expected by the return to a more pronounced seasonality. This is the second best performance achieved by Arkema in a 4th quarter.

With a 14% EBITDA margin, Performance Products improved strongly year-on-year confirming the successful repositioning on higher value added and fast-growing product lines.
Industrial Chemicals performance reflects the return to the usual year-end seasonality (refrigeration and coatings) and significant destocking by customers. The gradual volume recovery beginning of 2012 suggests that this destocking was only temporary.

In this context, Arkema achieved a solid performance. Sales of continuing operations of the 4th quarter amount to € 1.4 billion up 17% compared to 2010 and stable at constant foreign exchange rate and scope of business. EBITDA of continuing operations amounts to € 158 million and EBITDA margin at 11.3%.

POST BALANCE SHEET EVENTS

To give employees the opportunity to further benefit from the Group development, the Board of Directors held on March 7th, 2012 has decided to proceed with a share capital increase reserved for employees. The subscription price has been set at € 54.51.

OUTLOOK

2012 should be another year of significant change for Arkema with the integration of Seppic alcoxylates and of Chinese companies Hipro and Casda, the start-up of new units or capacity expansions in Asia and the beginning of the construction of the Thiochemicals plant in Malaysia. The information / consultation process of workers councils on the project to divest Vinyls business to group Klesch will continue and the closing is expected mid 2012.

From a geographical standpoint, growth in Asia should remain well oriented notably in China. Demand improvements are perceivable in the United States and Europe should remain challenging especially in construction. Raw materials are expected to remain volatile at high levels.

While remaining cautious about 2012 macro environment, Arkema is confident in its strengths and will continue to combine strict management of the company with targeted growth.
Since the beginning of the year, volumes are progressing compared to end 2011. The 1st quarter 2012 performance should show a real improvement compared to the 4th quarter 2011 while remaining below a very high 1st quarter 2011. This recovery is expected to continue during the 2nd quarter.

Taking into account the 2011 performance and the portfolio repositioning achieved since spin-off, Arkema upgrades its long-term targets and aims to achieve sales of € 8 billion and an EBITDA of € 1,250 million in 5 years time (2016) while maintaining its gearing at around 40%. This growth would come half from organic growth and half from bolt-on acquisitions. These targets have been defined in normalized environment.

Industry Intelligence Editor’s Note: In an omitted table, the company reported Q4 net loss of €463 million, net sales of €1.4 billion. For the same period a year ago, the company reported profit of €58 million, net sales of €1.197 billion.

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