Financial Performance Update: Arkema Q1 2024
Arkema reported sales of €2.3 billion for the first quarter of 2024, marking a 7.3% decline compared to the same period last year. However, there was a slight increase of 2.7% in volume across the three Specialty Materials segments. Notable growth was observed in markets such as structural bonding, sports, automotive, and energy. The Specialty Materials segment experienced a negative price effect of 8.4%, primarily due to lower raw material costs and ongoing unfavorable conditions in the upstream acrylics and PVDF sectors.
EBITDA and Margins
EBITDA for Q1 2024 stood at €350 million, down slightly from €367 million in Q1 2023. This performance was bolstered by improvements in industrial adhesives, high-performance polymers, and the downstream segment of Coating Solutions. However, it was negatively impacted by lower prices for PVDF and acrylics compared to the high baseline of Q1 2023. The EBITDA margin saw a slight uptick to 15.0%, reflecting effective price management and the benefits of the Group’s innovative, high value-added solutions.
Net Income and Cash Flow
Adjusted net income was €138 million, or €1.84 per share, down from €2.17 per share in Q1 2023. Recurring cash flow was negative €60 million, compared to negative €21 million in Q1 2023, due to typical first-quarter seasonality in working capital. Net debt remained stable at €3,063 million, representing around 2 times the last-twelve-months EBITDA.
2024 Outlook and Guidance
Arkema reaffirms its full-year 2024 EBITDA target of €1.5 billion to €1.7 billion, with growth expected to be stronger in the second half of the year. This forecast is supported by the ramp-up of major industrial projects and an anticipated gradual improvement in market conditions. Second-quarter EBITDA is projected to be slightly higher than the same period last year.
Strategic Acquisitions and Projects
The company continues its targeted acquisition strategy in adhesives, with a planned acquisition of Dow’s flexible packaging laminating adhesives business for an enterprise value of $150 million. This acquisition, which boasts sales of $250 million, will enhance Arkema’s high-tech industrial adhesives portfolio.
CEO Commentary
Thierry Le Hénaff, Chairman and CEO, emphasized the solid financial performance despite ongoing macroeconomic challenges. He highlighted the significant progress in Arkema’s Adhesive Solutions segment, particularly the planned acquisition of Dow’s adhesives business. Le Hénaff also noted continued efforts in decarbonizing the value chain with new green electricity supply agreements.
Future Developments
Arkema remains focused on internal growth, with several high-stake projects expected to ramp up in the second quarter. These include the start-up of the 1233zd fluorospecialties unit in the US, and the progression of production levels at the PA11 plant in Singapore and the Nutrien HF site. These projects are anticipated to contribute €60 to €70 million to EBITDA for the full year.
Commitment to Sustainability and Innovation
Arkema continues to implement its strategic roadmap, including expanding organic peroxide capacity in China, constructing the DMDS unit in the US, and decarbonizing acrylics production in France. The Group remains dedicated to innovation in sustainable solutions, partnering with customers to advance its climate plan.
In summary, despite a challenging start to 2024, Arkema remains focused on strategic growth, innovation, and sustainability, reaffirming its full-year guidance and anticipating stronger performance in the latter half of the year.
