Regulatory News:

Arkema (Paris:AKE):

Supported by accelerating demand for innovative, high-performance materials, in an environment marked by strong inflation of raw materials and supply chain disruptions, Group EBITDA rose by a significant 54.4% year-on-year, and is well above the pre-Covid level of 2019. This performance reflects in particular the evolution in the Group's profile towards Specialty Materials and its unique positioning to provide technological solutions that address the major challenges linked to sustainable development.

  • Group sales of €2.4 billion, up, at constant scope and currency, nearly 30% versus 2020 and approximately 17% versus 2019:
    • Accelerating demand for cutting-edge and sustainable solutions, notably in batteries, material lightweighting and design, high-performance bonding and more environmentally friendly products
    • Solid growth in volumes (+5.3% versus Q3’20) in an operating context marked by the shortage of an increasing number of raw materials and logistics constraints in Asia and the United States
    • In a context of strong raw materials and energy inflation, significant increase in selling prices (+23.8% versus Q3’20), reflecting the Group’s initiatives to adapt to the situation, as well as an improved product mix
  • EBITDA of €474 million, up by a strong 54.4% compared to Q3’20, and EBITDA margin of close to 20%, a record level for a third quarter:
    • Specialty Materials’ EBITDA up 57.1% to €421 million, with growth across all segments, and well above the pre-Covid level (+34.9% versus Q3’19)
    • Intermediates’ EBITDA of €74 million, benefiting from favorable market conditions that more than offset the negative scope effect related to the PMMA divestment
  • Adjusted net income multiplied by 2.4 at €258 million, representing €3.44 per share
  • Net debt of €1.255 billion (including €700 million in hybrid bonds), representing 0.8x last-twelve-months EBITDA, integrating a recurring cash flow (1) of €236 million
  • New step in the strategy to refocus on Specialty Materials with the acquisition of Ashland’s performance adhesives business on 31 August
  • Full-year targets significantly raised again: for 2021, Arkema is now targeting growth of at least 40% in Specialty Materials’ EBITDA relative to 2020 at constant scope and currency (2), resulting in a new forecast for Group EBITDA at around €1.6 billion

Following Arkema’s Board of Directors' meeting, held on 9 November 2021 to review the Group’s consolidated financial information for the third quarter of 2021, Chairman and CEO Thierry Le Hénaff said:

“We can be proud of Arkema’s strong financial performance, achieved in a complex and demanding operating environment. I would like to particularly thank our teams, as these results reflect both their high quality work and their faultless level of commitment.

It is our whole sustainable growth strategy which really stands out. Our Specialty Materials are fully benefiting from their positioning on societal megatrends. We are seeing our developments accelerate structurally across many high-stake markets, such as batteries, 3D printing, eco-friendly paint, sports, home comfort and electronics.

Moreover, we are actively continuing the roll-out of our 2024 strategy and the refocusing of the Group toward Specialty Materials. Thus, by acquiring Ashland’s performance adhesives business, we will strengthen our Adhesive Solutions segment with this first-class activity, which through its technological know-how, will enable Bostik to accelerate its growth. The divestment of our epoxides business to Cargill is also in line with our pro-active management of the portfolio.

These positive developments make us truly confident about the future. In this fast-changing world, our cutting-edge innovation in high-performance materials for sustainable solutions, our current and prospective major industrial projects, and our bolt-on acquisition policy provide us with many growth opportunities.”

KEY FIGURES FOR THIRD-QUARTER 2021

  in millions of euros

Q3'21

Q3'20

Change

Sales

2,398

1,909

+25.6%

EBITDA

474

307

+54.4%

Specialty Materials

421

268

+57.1%

Intermediates

74

55

+34.5%

Corporate

-21

-16

EBITDA margin

19.8%

16.1%

Specialty Materials

20.1%

16.9%

Intermediates

24.7%

17.5%

Recurring operating income (REBIT)

343

171

+100.6%

REBIT margin

14.3%

9.0%

Adjusted net income

258

109

+136.7%

Adjusted net income per share (in €)

3.44

1.42

+142.3%

Recurring cash flow

236

311

-24.1%

Free cash flow

74

285

-74.0%

Net debt including hybrid bonds

1,255

1,869

€1,910m as of 31/12/2020

THIRD-QUARTER 2021 BUSINESS PERFORMANCE

Sales rose 25.6% year-on-year to €2,398 million. At constant scope and currency, sales were up 29.1% compared to last year and 17.2% versus Q3’19. Despite shortages in an increasing number of raw materials, particularly in Adhesive Solutions, and certain logistics constraints in Asia and the United States, volumes rose by 5.3%, supported by accelerating demand for sustainable, high-performance materials used in applications relating to societal megatrends. Driven by the Group’s innovation and technological know-how, growth remained strong in the battery, consumer goods, electronics and transportation markets, although a slowdown was observed in the automotive sector. The oil & gas and paper markets remained lower year-on-year. The 23.8% positive price effect reflects the continuation of the Group’s active policy to pass on in its sales prices the significant inflation in raw materials, energy and logistics costs, tight market conditions in the acrylics chain, as well as mix improvement through the development of high value-added products. The scope effect was a negative 4.6%, as the divestment of PMMA was only partially offset by acquisitions in Adhesive Solutions and Advanced Materials. The currency effect was limited (+1.1%). In third-quarter 2021, Specialty Materials sales accounted for 87.5% of total Group sales (83% in Q3'20).

EBITDA was up sharply by almost 55% to €474 million, despite a negative scope effect of approximately €30 million and a complex operating environment. This very good performance, driven by the increase in volumes, particularly in High Performance Polymers and Coating Solutions, and by the improved product mix toward solutions with high technological content, is also a reflection of the Group’s positioning in structurally growing applications and markets. Supported by price increases in each segment in an environment of high inflation in raw materials, energy and transportation costs, and benefiting from a favorable context in acrylics, all segments grew significantly, also reflecting the diversity of the Group’s end markets and geographic exposure. Specialty Materials’ EBITDA came in at €421 million, up by a sharp 57.1% year-on-year and by 34.9% versus Q3’19.

In this context, the Group's EBITDA margin, up 370 bps to 19.8%, reached a record level for a third quarter.

At €343 million, recurring operating income (REBIT) doubled year-on-year. This figure includes recurring depreciation and amortization of €131 million, down €5 million compared to third-quarter 2020, primarily due to the scope effect. The REBIT margin improved significantly by 530 bps to reach 14.3%.

Adjusted net income rose very sharply to €258 million, representing €3.44 per share, versus €109 million in Q3'20. For the first nine months of the year, excluding exceptional items, the tax rate came in at 20% of recurring operating income.

CASH FLOW AND NET DEBT AT 30 SEPTEMBER 2021

In third-quarter 2021, Arkema reported recurring cash flow of €236 million (€311 million in third-quarter 2020). This figure includes an outflow of €103 million (inflow of €158 million in Q3’20), linked to the increase in working capital in a context marked by a strong inflation of raw materials prices and a progressive rebuilding of inventories relative to a particularly low level at the end of June. At end-September 2021, working capital remained tightly controlled and represented 12.3% of annualized sales (13.9% at end-September 2020 and 16.4% at end-September 2019), a ratio that is still below the normative level in a context of sustained demand and tightness in certain raw materials. Recurring cash flow also includes recurring capital expenditure of €111 million, virtually stable year-on-year (€105 million in Q3'20).

Free cash flow came in at €74 million (€285 million in Q3’20) and includes a non-recurring outflow of €98 million corresponding mainly to the payment of part of the capital gains tax linked to the divestment of PMMA. The free cash flow figure also includes the ramp-up of exceptional capital expenditure (€64 million versus €33 million in Q3'20), relating to the bio-based polyamides unit in Singapore and the hydrofluoric acid supply project with Nutrien in the United States.

At 30 September 2021, including hybrid bonds, net debt of €1.255 billion was stable versus 30 June 2021 (€1.28 billion) and the net debt (including hybrid bonds) to last-twelve-months EBITDA ratio stood at 0.8x.

THIRD-QUARTER 2021 PERFORMANCE BY SEGMENT

ADHESIVE SOLUTIONS (24% OF TOTAL GROUP SALES)

  in millions of euros

Q3'21

Q3'20

Change

Sales

568

516

+10.1%

EBITDA

79

73

+8.2%

EBITDA margin

13.9%

14.1%

Recurring operating income (REBIT)

63

57

+10.5%

REBIT margin

11.1%

11.0%

Sales of the Adhesive Solutions segment totaled €568 million, up 10.1% relative to third-quarter 2020. In a context of robust demand in the construction market and in high-performance industrial applications, volumes were impacted by difficulties to source raw materials and logistics constraints, particularly in the United States and in Asia. They fell 2.3% compared to the high comparison base of Q3’20, which was supported by a strong rebound in the construction market. Up 6.6%, the price effect reflected the Group’s actions to pass on the sustained inflation in raw materials. The 4.8% positive scope effect corresponds to the integration of Fixatti, Ideal Work, Poliplas and Edge Adhesives Texas, and the currency effect was a positive 1.0%.

At €79 million, EBITDA for the segment was up 8.2% relative to third-quarter 2020, and the EBITDA margin remained at a very high level of 13.9%, stable compared to the prior year (14.1% in Q3’20) despite the mechanical dilutive impact of price increases on this ratio. This robust performance integrates the benefits of pricing actions to offset increases in raw material prices, and also reflects operational excellence actions, the repositioning toward higher added-value applications, and the integration of bolt-on acquisitions. In this context, which is less favorable than expected, the Group is maintaining its 14% EBITDA margin target for the full year, representing an increase of almost 100 bps compared to last year.

ADVANCED MATERIALS (32.5% OF TOTAL GROUP SALES)

  in millions of euros

Q3'21

Q3'20

Change

Sales

781

603

+29.5%

EBITDA

174

127

+37.0%

EBITDA margin

22.3%

21.1%

Recurring operating income (REBIT)

111

66

+68.2%

REBIT margin

14.2%

10.9%

At €781 million, sales of the Advanced Materials segment were up a very significant 29.5% year-on-year. With volumes up 13.3%, the Advanced Materials segment continued to benefit from the strong increase in volumes of High Performance Polymers linked to major sustainable trends, notably in batteries, sports and bio-based consumer goods. Performance Additives recorded more moderate growth, impacted by health restrictions in Malaysia, and soft demand in the oil & gas and paper markets. The price effect was up by a sharp 14.6%, reflecting price increase initiatives in the context of raw materials inflation and an improved product mix toward high-performance applications. The 0.8% positive scope effect reflects the integration of Agiplast. The currency effect on the segment was a positive 0.8% over the quarter.

In this context of accelerating demand for sustainable, high-performance materials, EBITDA for the segment was up 37.0% year-on-year to €174 million, far exceeding the pre-Covid level of Q3’19 (€159 million). This figure reflects the strong dynamic of new business development in solutions for sustainable development, while the automotive (excluding batteries) and oil & gas markets were less supportive. The EBITDA margin reached the high level of 22.3% (21.1% in Q3’20 and 22.5% in Q3’19).

COATING SOLUTIONS (31% OF TOTAL GROUP SALES)

  in millions of euros

Q3'21

Q3'20

Change

Sales

742

469

+58.2%

EBITDA

168

68

+147.1%

EBITDA margin

22.6%

14.5%

Recurring operating income (REBIT)

138

39

+253.8%

REBIT margin

18.6%

8.3%

At €742 million, sales of the Coating Solutions segment were up sharply by 58.2% compared to last year. Despite the impact of the shortage of certain raw materials, volumes increased by 5.8%, driven by continued strong demand in decorative paints, industrial coatings, 3D printing, graphic arts and electronics. The positive 52.4% price effect is linked both to price actions implemented in downstream product lines to offset the strong inflation in raw materials, and relative tightness of the acrylics market. The currency effect was neutral on third-quarter 2021 sales.

With a very sharp rise in EBITDA to €168 million (€68 million in Q3’20 and €82 million in Q3’19), the Coating Solutions segment delivered another very good quarter. It benefited from accelerating demand for more environmentally friendly and higher added-value solutions, as well as from improved market conditions in the acrylics. In this favorable environment, the EBITDA margin remained at a very high level at 22.6% (14.5% in third-quarter 2020 and 15.4% in third-quarter 2019).

INTERMEDIATES (12.5% OF TOTAL GROUP SALES)

  in millions of euros

Q3'21

Q3'20

Change

Sales

300

315

-4.8%

EBITDA

74

55

+34.5%

EBITDA margin

24.7%

17.5%

Recurring operating income (REBIT)

53

27

+96.3%

REBIT margin

17.7%

8.6%

At €300 million, sales of the Intermediates segment decreased by 4.8% year-on-year. The divestment of the PMMA business, finalized in May 2021, resulted in a negative scope effect of 37.5%. The price effect for the quarter was significant (+27.6%), mainly reflecting more favorable market conditions for acrylics in Asia and an improvement in Fluorogases in the United States. Volumes in the segment grew by 1.6%, held back by the reduction in acrylics production toward the end of the quarter, following the Chinese authorities' measures aimed at limiting energy consumption. The currency effect was a positive 3.5%.

Intermediates EBITDA increased by 34.5% to €74 million, and the EBITDA margin came in at 24.7% compared to 17.5% in the prior-year period.

THIRD-QUARTER 2021 HIGHLIGHTS

In line with the Group’s ambition to become a pure Specialty Materials player by 2024, Arkema announced on 31 August 2021 the proposed acquisition of Ashland’s performance adhesives business, a first-class leader in high-performance adhesives in the United States. With sales of around US$ 360 million (3) and EBITDA at the very high level of around US$ 95 million (3) in 2021, Ashland offers a portfolio of high-performance adhesive solutions in high value-added industrial applications. The offer was made on the basis of a US$ 1,650 million enterprise value, or 15x estimated 2021 EBITDA (3) after taking into account the tax benefits linked to the structure of the transaction. The EV/EBITDA multiple is reduced to 8.7 by 2026 including pre-tax synergies, estimated at 12.5% of sales. This acquisition also allows Arkema to revise upwards the 2024 profitability target of the Adhesive Solutions segment, which now aims for an EBITDA margin above 17%, among the best in the industry, and sales exceeding €3 billion.

On 27 September 2021, Arkema also announced the proposed divestment of its epoxides business to Cargill, a leader in agricultural products and services, pursuing the repositioning of its portfolio on its core businesses.

Moreover, in September 2021, the Group received an ESG score of 67/100 from the V.E (Vigeo Eiris) rating agency, placing it in the top percentile of companies across all sectors, thereby recognizing its performance in Corporate Social Responsibility.

Finally, on 6 July 2021, Arkema announced that it had acquired a stake in Verkor, a French start-up specialized in the production of high-performance batteries. Arkema, a key player thanks to its cutting-edge materials and the innovative solutions that it provides in batteries, in particular for electric vehicles, is thus strengthening its development in batteries and clean mobility.

SUBSEQUENT EVENTS

In parallel with its major project to increase global capacity of bio-based polyamide 11 by 50% in Singapore, on 11 October 2021, Arkema announced the construction of a polyamide 11 powders plant on its Changshu platform in China, scheduled to come on stream in the first quarter of 2023. This investment will further support the growing demand for advanced bio-circular materials in Asia and is included in the €450 million exceptional capital expenditure envelope dedicated to polyamide expansion in Asia.

OUTLOOK FOR 2021

Activity in the fourth quarter of 2021 is expected to be in line with the previous few months. Operational performance will continue to be impacted by the unavailability and inflation of certain raw materials, logistical difficulties and rising energy and transportation costs. These factors will continue to guide the Group’s selling price policy. The automotive sector will also remain impacted by the shortage of electronic components, and energy restrictions in China could temporarily reduce demand in the region.

While remaining attentive to the evolution of the macro-economic context, Arkema will continue to greatly benefit from the repositioning of its portfolio towards Specialty Materials and from the very positive momentum driven by major sustainable trends, particularly in the fields of materials lightweighting, clean mobility, natural resource management, and living comfort and home efficiency.

Taking all of these elements into account, the Group is once again significantly raising its annual guidance. Arkema is now aiming for growth of at least 40% in Specialty Materials’ EBITDA in 2021 relative to 2020 at constant scope and currency (4), versus the 30% announced at the first-half 2021 financial results publication. Group EBITDA should therefore reach around €1.6 billion for the full year. In addition, the Group confirms its full year EBITDA margin target of 14% for the Adhesive Solutions segment, an increase of one percentage point compared to 2020, thus demonstrating the segment’s resilience in an exceptional context of strong raw materials inflation and shortages.

Finally, the Group will continue to implement its strategy in line with its ambition to become a pure sustainable and high-performance Specialty Materials player by 2024.

Further details concerning the Group’s third-quarter 2021 results are provided in the “Third-quarter 2021 results and outlook” presentation and the Factsheet, both available on Arkema’s website at: www.finance.arkema.com.

FINANCIAL CALENDAR

24 February 2022: publication of full-year 2021 results

DISCLAIMER

The information disclosed in this press release may contain forward-looking statements with respect to the financial position, results of operations, business and strategy of Arkema.

In the current context, where the Covid-19 pandemic persists across the world, and the evolution of the situation as well as the magnitude of its impacts on the global economy are highly uncertain, the retained assumptions and forward-looking statements could ultimately prove inaccurate.

Such statements are based on management’s current views and assumptions that could ultimately prove inaccurate and are subject to risk factors such as (but not limited to) changes in raw materials prices, currency fluctuations, the pace at which cost-reduction projects are implemented, developments in the Covid-19 situation, and changes in general economic and financial conditions. Arkema does not assume any liability to update such forward-looking statements whether as a result of any new information or any unexpected event or otherwise. Further information on factors which could affect Arkema’s financial results is provided in the documents filed with the French Autorité des marchés financiers.

Balance sheet, income statement and cash flow statement data, as well as data relating to the statement of changes in shareholders' equity and information by segment included in this press release are extracted from the consolidated financial information at 30 September 2021 reviewed by Arkema’s Board of Directors on 9 November 2021. Quarterly financial information is not audited.

Information by segment is presented in accordance with Arkema’s internal reporting system used by management.

Details of the main alternative performance indicators used by the Group are provided in the tables appended to this press release. For the purpose of analyzing its results and defining its targets, the Group also uses EBITDA margin, which corresponds to EBITDA expressed as a percentage of sales, EBITDA equaling recurring operating income (REBIT) plus recurring depreciation and amortization of tangible and intangible assets, as well as REBIT margin, which corresponds to recurring operating income (REBIT) expressed as a percentage of sales.

For the purpose of tracking changes in its results, and particularly its sales figures, the Group analyzes the following effects (unaudited analyses):

  • scope effect: the impact of changes in the Group’s scope of consolidation, which arise from acquisitions and divestments of entire businesses or as a result of the first-time consolidation or deconsolidation of entities. Increases or reductions in capacity are not included in the scope effect;
  • currency effect: the mechanical impact of consolidating accounts denominated in currencies other than the euro at different exchange rates from one period to another. The currency effect is calculated by applying the foreign exchange rates of the prior period to the figures for the period under review;
  • price effect: the impact of changes in average selling prices is estimated by comparing the weighted average net unit selling price of a range of related products in the period under review with their weighted average net unit selling price in the prior period, multiplied, in both cases, by the volumes sold in the period under review;
  • volume effect: the impact of changes in volumes is estimated by comparing the quantities delivered in the period under review with the quantities delivered in the prior period, multiplied, in both cases, by the weighted average net unit selling price in the prior period.

Building on its unique set of expertise in materials science, Arkema offers a portfolio of first-class technologies to address ever-growing demand for new and sustainable materials. With the ambition to become in 2024 a pure player in Specialty Materials, the Group is structured into 3 complementary, resilient and highly innovative segments dedicated to Specialty Materials–Adhesive solutions, Advanced Materials, and Coating Solutions–accounting for some 82% of Group sales in 2020, and a well-positioned and competitive Intermediates segment. Arkema offers cutting-edge technological solutions to meet the challenges of, among other things, new energies, access to water, recycling, urbanization and mobility, and fosters a permanent dialogue with all its stakeholders. The Group reported sales of around €8 billion in 2020, and operates in some 55 countries with 20,600 employees worldwide.

A French société anonyme (limited company) with share capital of €767,364,760 – Registered in Nanterre: RCS 445 074 685 Nanterre

Follow us on: Twitter: Twitter.com/Arkema_group LinkedIn: Linkedin.com/company/arkema

___________________ (1) Recurring cash flow corresponds to free cash flow before exceptional items. It excludes non-recurring items and exceptional capital expenditure (2) With the assumption of a €/$ exchange rate of 1.2 for 2021, the impact on 2020 EBITDA is estimated at a negative €30 million for Specialty Materials and a negative €10 million for Intermediates (3) Including pro forma adjustments (4) With the assumption of a €/$ exchange rate of 1.2 for 2021, the impact on 2020 EBITDA is estimated at a negative €30 million for Specialty Materials and a negative €10 million for Intermediates

ARKEMA financial statements

Consolidated financial information - At the end of September 2021

CONSOLIDATED INCOME STATEMENT        

3rd quarter 2021

 

3rd quarter 2020

(In millions of euros)                       Sales  

2,398

 

1,909

      Operating expenses  

(1,826)

 

(1,518)

Research and development expenses  

(59)

 

(57)

Selling and administrative expenses  

(187)

 

(177)

Other income and expenses  

1

 

(9)

Operating income  

327

 

148

Equity in income of affiliates  

(1)

 

0

Financial result  

(15)

 

(23)

Income taxes  

(64)

 

(32)

Net income  

247

 

93

Attributable to non-controlling interests  

0

 

1

Net income - Group share  

247

 

92

Earnings per share (amount in euros)  

3.19

 

1.02

Diluted earnings per share (amount in euros)  

3.16

 

1.02

             

End of September 2021

 

End of September 2020

(In millions of euros)                       Sales  

7,019

 

5,899

      Operating expenses  

(5,407)

 

(4,729)

Research and development expenses  

(178)

 

(177)

Selling and administrative expenses  

(574)

 

(561)

Other income and expenses  

709

 

84

Operating income  

1,569

 

516

Equity in income of affiliates  

0

 

(1)

Financial result  

(43)

 

(68)

Income taxes  

(327)

 

(156)

Net income  

1,199

 

291

Attributable to non-controlling interests  

2

 

2

Net income - Group share  

1,197

 

289

Earnings per share (amount in euros)  

15.57

 

3.60

Diluted earnings per share (amount in euros)  

15.47

 

3.59

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME        

3rd quarter 2021

 

3rd quarter 2020

(In millions of euros)           Net income  

247

 

93

Hedging adjustments  

6

 

17

Other items  

-

 

-

Deferred taxes on hedging adjustments and other items  

(1)

 

(3)

Change in translation adjustments  

82

 

(92)

Other recyclable comprehensive income  

87

 

(78)

Impact of remeasuring unconsolidated investments  

(1)

 

-

Actuarial gains and losses  

(5)

 

(12)

Deferred taxes on actuarial gains and losses  

0

 

2

Other non-recyclable comprehensive income  

(6)

 

(10)

Total income and expenses recognized directly in equity  

81

 

(88)

Total comprehensive income  

328

 

5

Attributable to non-controlling interest  

1

 

0

Total comprehensive income - Group share  

327

 

5

             

End of September 2021

 

End of September 2020

(In millions of euros)           Net income  

1,199

 

291

Hedging adjustments  

(19)

 

25

Other items  

-

 

-

Deferred taxes on hedging adjustments and other items  

(1)

 

(3)

Change in translation adjustments  

174

 

(128)

Other recyclable comprehensive income  

154

 

(106)

Impact of remeasuring unconsolidated investments  

(3)

 

-

Actuarial gains and losses  

62

 

(50)

Deferred taxes on actuarial gains and losses  

(14)

 

12

Other non-recyclable comprehensive income  

45

 

(38)

Total income and expenses recognized directly in equity  

199

 

(144)

Total comprehensive income  

1,398

 

147

Attributable to non-controlling interest  

4

 

1

Total comprehensive income - Group share  

1,394

 

146

INFORMATION BY SEGMENT                 3rd quarter 2021 (In millions of euros)  

Adhesive Solutions

 

Advanced Materials

 

Coating Solutions

 

Intermediates

 

Corporate

 

Total

              Sales  

568

 

781

 

742

 

300

 

7

 

2,398

EBITDA  

79

 

174

 

168

 

74

 

(21)

 

474

Recurring depreciation and amortization of property, plant and equipment and intangible assets  

(16)

 

(63)

 

(30)

 

(21)

 

(1)

 

(131)

Recurring operating income (REBIT)  

63

 

111

 

138

 

53

 

(22)

 

343

Depreciation and amortization related to the revaluation of property, plant and equipment and intangible assets as part of the allocation of the purchase price of businesses  

(12)

 

(4)

 

(1)

 

-

 

-

 

(17)

Other income and expenses  

(5)

 

(1)

 

0

 

4

 

3

 

1

Operating income  

46

 

106

 

137

 

57

 

(19)

 

327

Equity in income of affiliates  

-

 

0

 

-

 

(1)

 

-

 

(1)

              Intangible assets and property, plant, and equipment additions  

15

 

108

 

22

 

26

 

5

 

176

Of which: recurring capital expenditure  

15

 

56

 

21

 

14

 

5

 

111

                              3rd quarter 2020 (In millions of euros)  

Adhesive Solutions

 

Advanced Materials

 

Coating Solutions

 

Intermediates

 

Corporate

 

Total

              Sales  

516

 

603

 

469

 

315

 

6

 

1,909

EBITDA  

73

 

127

 

68

 

55

 

(16)

 

307

Recurring depreciation and amortization of property, plant and equipment and intangible assets  

(16)

 

(61)

 

(29)

 

(28)

 

(2)

 

(136)

Recurring operating income (REBIT)  

57

 

66

 

39

 

27

 

(18)

 

171

Depreciation and amortization related to the revaluation of property, plant and equipment and intangible assets as part of the allocation of the purchase price of businesses  

(8)

 

(4)

 

(2)

 

-

 

-

 

(14)

Other income and expenses  

(7)

 

(2)

 

-

 

(1)

 

1

 

(9)

Operating income  

42

 

60

 

37

 

26

 

(17)

 

148

Equity in income of affiliates  

-

 

1

 

-

 

(1)

 

-

 

0

              Intangible assets and property, plant, and equipment additions  

18

 

64

 

19

 

34

 

4

 

139

Of which: recurring capital expenditure  

18

 

47

 

18

 

18

 

4

 

105

INFORMATION BY SEGMENT                 End of September 2021 (In millions of euros)  

Adhesive Solutions

 

Advanced Materials

 

Coating Solutions

 

Intermediates

 

Corporate

 

Total

              Sales  

1,698

 

2,213

 

2,021

 

1,066

 

21

 

7,019

EBITDA  

247

 

494

 

403

 

236

 

(70)

 

1,310

Recurring depreciation and amortization of property, plant and equipment and intangible assets  

(48)

 

(186)

 

(88)

 

(72)

 

(5)

 

(399)

Recurring operating income (REBIT)  

199

 

308

 

315

 

164

 

(75)

 

911

Depreciation and amortization related to the revaluation of property, plant and equipment and intangible assets as part of the allocation of the purchase price of businesses  

(36)

 

(11)

 

(4)

 

-

 

-

 

(51)

Other income and expenses  

(34)

 

(115)

 

(13)

 

880

 

(9)

 

709

Operating income  

129

 

182

 

298

 

1,044

 

(84)

 

1,569

Equity in income of affiliates  

-

 

1

 

-

 

(1)

 

-

 

0

              Intangible assets and property, plant, and equipment additions  

43

 

267

 

47

 

92

 

12

 

461

Of which: recurring capital expenditure  

43

 

141

 

43

 

37

 

12

 

276

                              End of September 2020 (In millions of euros)  

Adhesive Solutions

 

Advanced Materials

 

Coating Solutions

 

Intermediates

 

Corporate

 

Total

              Sales  

1,484

 

1,883

 

1,422

 

1,091

 

19

 

5,899

EBITDA  

192

 

373

 

192

 

189

 

(53)

 

893

Recurring depreciation and amortization of property, plant and equipment and intangible assets  

(46)

 

(185)

 

(89)

 

(92)

 

(6)

 

(418)

Recurring operating income (REBIT)  

146

 

188

 

103

 

97

 

(59)

 

475

Depreciation and amortization related to the revaluation of property, plant and equipment and intangible assets as part of the allocation of the purchase price of businesses  

(26)

 

(12)

 

(5)

 

-

 

-

 

(43)

Other income and expenses  

(36)

 

(20)

 

(3)

 

183

 

(40)

 

84

Operating income  

84

 

156

 

95

 

280

 

(99)

 

516

Equity in income of affiliates  

-

 

(1)

 

-

 

0

 

-

 

(1)

              Intangible assets and property, plant, and equipment additions  

52

 

147

 

48

 

96

 

11

 

354

Of which: recurring capital expenditure  

52

 

102

 

46

 

51

 

11

 

262

CONSOLIDATED CASH FLOW STATEMENT        

End of September 2021

 

End of September 2020

      (In millions of euros)           Operating cash flows           Net income  

1,199

 

291

Depreciation, amortization and impairment of assets  

571

 

576

Other provisions and deferred taxes  

34

 

42

(Gains)/losses on sales of long-term assets  

(960)

 

(247)

Undistributed affiliate equity earnings  

0

 

1

Change in working capital  

(248)

 

133

Other changes  

11

 

21

      Cash flow from operating activities  

607

 

817

      Investing cash flows           Intangible assets and property, plant, and equipment additions  

(461)

 

(354)

Change in fixed asset payables  

(14)

 

(54)

Acquisitions of operations, net of cash acquired  

(41)

 

(94)

Increase in long-term loans  

(20)

 

(26)

      Total expenditures  

(536)

 

(528)

      Proceeds from sale of operations, net of cash transferred  

12

 

3

Variation des créances sur cession d'immobilisations  

0

 

-

Proceeds from sale of intangible assets and property, plant, and equipment  

1,122

 

327

Proceeds from sale of unconsolidated investments  

8

 

-

Repayment of long-term loans  

44

 

58

      Total divestitures  

1,186

 

388

      CASH FLOW FROM INVESTING ACTIVITIES  

650

 

(140)

      Financing cash flows           Issuance (repayment) of shares and paid-in surplus  

-

 

7

Purchase of treasury shares  

(240)

 

(21)

Issuance of hybrid bonds  

-

 

299

Rachat d'obligations hybrides  

-

 

-

Dividends paid to parent company shareholders  

(191)

 

(168)

Interest paid to bearers of subordinated perpetual notes  

(15)

 

(14)

Dividends paid to non-controlling interests  

(2)

 

(2)

Increase in long-term debt  

7

 

3

Decrease in long-term debt  

(46)

 

(58)

Increase / (Decrease) in short-term debt  

(57)

 

(531)

      CASH FLOW FROM FINANCING ACTIVITIES  

(544)

 

(485)

      Net increase/(decrease) in cash and cash equivalents  

713

 

192

      Effect of exchange rates and changes in scope  

(14)

 

48

Cash and cash equivalents at beginning of period  

1,587

 

1,407

  CASH AND CASH EQUIVALENTS AT END OF PERIOD  

2,286

 

1,647

CONSOLIDATED BALANCE SHEET        

30 September 2021

 

31 December 2020

      (In millions of euros)           ASSETS           Goodwill  

1,911

 

1,933

Intangible assets, net  

1,500

 

1,433

Property, plant and equipment, net  

2,906

 

2,828

Equity affiliates: investments and loans  

29

 

29

Other investments  

55

 

57

Deferred tax assets  

150

 

159

Other non-current assets  

196

 

209

      TOTAL NON-CURRENT ASSETS  

6,747

 

6,648

      Inventories  

1,254

 

881

Accounts receivable  

1,394

 

1,131

Other receivables and prepaid expenses  

177

 

163

Income tax receivables  

67

 

70

Other current financial assets  

67

 

40

Cash and cash equivalents  

2,286

 

1,587

Assets held for sale  

4

 

191

      TOTAL CURRENT ASSETS  

5,249

 

4,063

      TOTAL ASSETS  

11,996

 

10,711

            LIABILITIES AND SHAREHOLDERS' EQUITY           Share capital  

767

 

767

Paid-in surplus and retained earnings  

5,395

 

4,458

Treasury shares  

(245)

 

(6)

Translation adjustments  

140

 

(32)

      SHAREHOLDERS' EQUITY - GROUP SHARE  

6,057

 

5,187

      Non-controlling interests  

52

 

48

      TOTAL SHAREHOLDERS' EQUITY  

6,109

 

5,235

      Deferred tax liabilities  

347

 

320

Provisions for pensions and other employee benefits  

514

 

530

Other provisions and non-current liabilities  

406

 

383

Non-current debt  

2,673

 

2,663

      TOTAL NON-CURRENT LIABILITIES  

3,940

 

3,896

      Accounts payable  

1,097

 

987

Other creditors and accrued liabilities  

439

 

339

Income tax payables  

191

 

69

Other current financial liabilities  

52

 

15

Current debt  

168

 

134

Liabilities related to assets held for sale  

-

 

36

      TOTAL CURRENT LIABILITIES  

1,947

 

1,580

      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  

11,996

 

10,711

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY                     Shares issued           Treasury shares Shareholders'equity - Groupshare Non-controllinginterests Shareholders'equity (In millions of euros)   Number   Amount   Paid-insurplus   Hybridbonds   Retainedearnings   Translationadjustments   Number   Amount At 1 January 2021  

76,736,476

 

767

 

1,272

 

700

 

2,486

 

(32)

 

(59,756)

 

(6)

5,187

48

5,235

Cash dividend  

-

 

-

 

-

 

-

 

(206)

 

-

 

-

 

-

(206)

(2)

(208)

Issuance of share capital  

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

-

-

-

Purchase of treasury shares  

-

 

-

 

-

 

-

 

-

 

-

 

(2,277,309)

 

(240)

(240)

-

(240)

Annulation d'actions propres  

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

-

-

-

Grants of treasury shares to employees  

-

 

-

 

-

 

-

 

(1)

 

-

 

14,722

 

1

-

-

-

Cessions d'actions propres  

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

-

-

-

Share-based payments  

-

 

-

 

-

 

-

 

13

 

-

 

-

 

-

13

-

13

Issuance of hybrid bonds  

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

-

-

-

Redemption of hybrid bonds  

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

-

-

-

Other  

-

 

-

 

-

 

-

 

(91)

 

-

 

-

 

-

(91)

2

(89)

Transactions with shareholders  

-

 

-

 

-

 

-

 

(285)

 

-

 

(2,262,587)

 

(239)

(524)

-

(524)

Net income  

-

 

-

 

-

 

-

 

1,197

 

-

 

-

 

-

1,197

2

1,199

Total income and expense recognized directly through equity  

-

 

-

 

-

 

-

 

25

 

172

 

-

 

-

197

2

199

Comprehensive income  

-

 

-

 

-

 

-

 

1,222

 

172

 

-

 

-

1,394

4

1,398

At 30 September 2021  

76,736,476

 

767

 

1,272

 

700

 

3,423

 

140

 

(2,322,343)

 

(245)

6,057

52

6,109

ALTERNATIVE PERFORMANCE INDICATORS

To monitor and analyse the financial performance of the Group and its activities, the Group management uses alternative performance indicators. These are financial indicators that are not defined by the IFRS. This note presents a reconciliation of these indicators and the aggregates from the consolidated financial statements under IFRS.

RECURRING OPERATING INCOME (REBIT) AND EBITDA           (In millions of euros)  

End of September 2021

 

End of September 2020

 

3rd quarter 2021

 

3rd quarter 2020

          OPERATING INCOME  

1,569

 

516

 

327

 

148

- Depreciation and amortization related to the revaluation of tangible and intangible assets as part of the allocation of the purchase price of businesses  

(51)

 

(43)

 

(17)

 

(14)

- Other income and expenses  

709

 

84

 

1

 

(9)

RECURRING OPERATING INCOME (REBIT)  

911

 

475

 

343

 

171

- Recurring depreciation and amortization of tangible and intangible assets  

(399)

 

(418)

 

(131)

 

(136)

EBITDA  

1,310

 

893

 

474

 

307

                    Details of depreciation and amortization of tangible and intangible assets:                   (In millions of euros)  

End of September 2021

 

End of September 2020

 

3rd quarter 2021

 

3rd quarter 2020

          Depreciation and amortization of tangible and intangible assets  

(571)

 

(576)

 

(150)

 

(154)

Of which: Recurring depreciation and amortization of tangible and intangible assets  

(399)

 

(418)

 

(131)

 

(136)

Of which: Depreciation and amortization related to the revaluation of assets as part of the allocation of the purchase price of businesses  

(51)

 

(43)

 

(17)

 

(14)

Of which: Impairment included in other income and expenses  

(121)

 

(115)

 

(2)

 

(4)

                    ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE           (In millions of euros)  

End of September 2021

 

End of September 2020

 

3rd quarter 2021

 

3rd quarter 2020

          NET INCOME - GROUP SHARE  

1,197

 

289

 

247

 

92

- Depreciation and amortization related to the revaluation of tangible and intangible assets as part of the allocation of the purchase price of businesses  

(51)

 

(43)

 

(17)

 

(14)

- Other income and expenses  

709

 

84

 

1

 

(9)

- Other income and expenses - Non-controlling interests  

-

 

-

 

-

 

-

- Taxes on depreciation and amortization related to the revaluation of assets as part of the allocation of the purchase price of businesses  

12

 

10

 

4

 

3

- Taxes on other income and expenses  

(162)

 

(61)

 

(4)

 

3

- One-time tax effects  

5

 

-

 

5

 

-

ADJUSTED NET INCOME  

684

 

299

 

258

 

109

- Weighted average number of ordinary shares  

75,865,209

 

76,424,364

    - Weighted average number of potential ordinary shares  

76,316,982

 

76,690,590

    ADJUSTED EARNINGS PER SHARE (€)  

9.02

 

3.91

 

3.44

 

1.42

DILUTED ADJUSTED EARNINGS PER SHARE (€)  

8.96

 

3.90

 

3.41

 

1.42

                    RECURRING CAPITAL EXPENDITURE           (In millions of euros)  

End of September 2021

 

End of September 2020

 

3rd quarter 2021

 

3rd quarter 2020

          INTANGIBLE ASSETS AND PROPERTY, PLANT, AND EQUIPMENT ADDITIONS  

461

 

354

 

176

 

139

- Exceptional capital expenditure  

181

 

90

 

64

 

33

- Investments relating to portfolio management operations  

-

 

-

 

-

 

-

- Capital expenditure with no impact on net debt  

4

 

2

 

1

 

1

RECURRING CAPITAL EXPENDITURE  

276

 

262

 

111

 

105

                    FREE CASH FLOW           (In millions of euros)  

End of September 2021

 

End of September 2020

 

3rd quarter 2021

 

3rd quarter 2020

          Cash flow from operating activities  

607

 

817

 

174

 

401

+ Cash flow from investing activities  

650

 

(140)

 

(110)

 

(121)

NET CASH FLOW  

1,257

 

677

 

64

 

280

- Net cash flow from portfolio management operations  

886

 

142

 

(10)

 

(5)

FREE CASH FLOW  

371

 

535

 

74

 

285

- Non-recurring cash flow including exceptional capital expenditure  

(163)

 

(47)

 

(162)

 

(26)

RECURRING CASH FLOW  

534

 

582

 

236

 

311

          The net cash flow from portfolio management operations corresponds to the impact of acquisition and divestment operations. NET DEBT       (In millions of euros)  

End of September 2021

 

End of December 2020

      Non-current debt  

2,673

 

2,663

+ Current debt  

168

 

134

- Cash and cash equivalents  

2,286

 

1,587

NET DEBT  

555

 

1,210

+ Hybrid bonds  

700

 

700

NET DEBT AND HYBRID BONDS  

1,255

 

1,910

            WORKING CAPITAL       (In millions of euros)  

End of September 2021

 

End of December 2020

      Inventories  

1,254

 

881

+ Accounts receivable  

1,394

 

1,131

+ Other receivables including income taxes  

244

 

233

+ Other current financial assets  

67

 

40

- Accounts payable  

1,097

 

987

- Other liabilities including income taxes  

630

 

408

- Other current financial liabilities  

52

 

15

WORKING CAPITAL  

1,180

 

875

            CAPITAL EMPLOYED       (In millions of euros)  

End of September 2021

 

End of December 2020

      Goodwill, net  

1,911

 

1,933

+ Intangible assets (excluding goodwill), and property, plant and equipment, net  

4,406

 

4,261

+ Investments in equity affiliates  

29

 

29

+ Other investments and other non-current assets  

251

 

266

+ Working capital  

1,180

 

875

CAPITAL EMPLOYED  

7,777

 

7,364

 

Investor relations Béatrice Zilm +33 (0)1 49 00 75 58 beatrice.zilm@arkema.com Peter Farren +33 (0)1 49 00 73 12 peter.farren@arkema.com Mathieu Briatta +33 (0)1 49 00 72 07 mathieu.briatta@arkema.com Caroline Chung +33 (0)1 49 00 74 37 caroline.chung@arkema.com

Media Gilles Galinier +33 (0)1 49 00 70 07 gilles.galinier@arkema.com Véronique Obrecht +33 (0)1 49 00 88 41 veronique.obrecht@arkema.com

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