AKE Alikem Limited

Regulatory News:

Arkema (Paris:AKE) achieved a solid EBITDA margin and high cash generation in an ongoing context of low volumes reflecting the current economic environment.

• Sales of €2.3 billion, down by 17.2% at constant currency compared with Q3’22:
  • Volumes down by 6.6% year-on-year in an environment of generally slow demand comparable to that of previous quarters
  • 10.6% negative price effect reflecting lower raw materials, as well as price normalization in PVDF and upstream acrylics following the exceptional market conditions in 2022
• EBITDA at €386 million, down compared with the prior year’s high comparison base (€495 million in Q3’22), and EBITDA margin holding up well at 16.6% (16.7% in Q3’22), reflecting the strength of the Group’s positioning and the initiatives taken to adapt to the economic climate
• Adjusted net income of €177 million (€260 million in Q3’22), representing €2.38 per share
• High cash generation with recurring cash flow of €312 million (€434 million in Q3’22) and net debt at €2,419 million including hybrid bonds (€2,645 million at end-June 2023), representing 1.7x last-twelve-months EBITDA
• As indicated last September at the Capital Markets Day, Arkema confirms its EBITDA forecast of around €1.5 billion in 2023, supported in particular by the resilience of several product lines and ongoing cost-saving actions

Following Arkema’s Board of Directors’ meeting held on 8 November 2023 to review the Group’s consolidated financial information for the third quarter of 2023, Chairman and CEO Thierry Le Hénaff said:

“In line with the first half of the year, demand continued to be weak this quarter. Arkema’s performance nevertheless remained solid, supported by the quality of its portfolio of technologies serving sustainable megatrends and by the strengthening of cost initiatives. In an uncertain context marked by heightened geopolitical tensions, we continue to strictly manage our operations and to adapt thanks to the agility and commitment of our teams.

Moreover, Arkema is fully mobilized to prepare for the future. At the Capital Markets Day held in Paris on 27 September, we detailed our longer-term strategy and set ambitious financial targets for 2028. Arkema will focus its investments on high-growth areas, centered on innovative, high performance materials for a more sustainable world. Thanks to the technologies it has acquired or developed in recent years, and the expertise it has built up in markets with superior growth potential such as batteries, advanced electronics and sustainable consumer goods, the Group is now ready to embark on this new stage in its development, mainly focused on organic growth. Several important projects, which started up this year or which will shortly be completed, will contribute to the Group’s growth in 2024.

As a key component of our strategy, we will also pursue our climate actions, and in particular the reduction of our CO2 emissions, bolstered by the SBTi’s validation of our 1.5°C trajectory by 2030, and in order to pave the way for Net-Zero by 2050.”

KEY FIGURES

 

in millions of euros

Q3'23

Q3'22

Change

Sales

2,326

2,972

-21.7%

EBITDA

386

495

-22.0%

Specialty Materials

346

458

-24.5%

Intermediates

55

59

-6.8%

Corporate

-15

-22

EBITDA margin

16.6%

16.7%

Specialty Materials

16.4%

16.9%

Intermediates

26.7%

24.0%

Recurring operating income (REBIT)

246

356

-30.9%

REBIT margin

10.6%

12.0%

Adjusted net income

177

260

-31.9%

Adjusted net income per share (in €)

2.38

3.52

-32.4%

Recurring cash flow

312

434

Free cash flow

273

397

Net debt including hybrid bonds

2,419

2,615

€2,366m as of 31/12/2022

 

THIRD-QUARTER 2023 BUSINESS PERFORMANCE

At €2,326 million, Group sales were down by 21.7% relative to the particularly elevated level of third-quarter 2022. Volumes declined by 6.6%, impacted as in recent quarters by continued weak demand in Europe and North America in most end markets, which overshadowed the good performance of certain sectors such as automotive and energy. In Asia, volumes rose slightly in a market struggling to gain impetus, supported in particular by the positive momentum in batteries. The 10.6% negative price effect reflects the expected normalization of market conditions in PVDF and upstream acrylics, as well as lower raw materials prices. The scope effect was neutral on sales, with small acquisitions in Adhesive Solutions and Coating Solutions offset by the divestment of Febex. The currency effect was more pronounced at negative 4.5%, primarily reflecting the strength of the euro against the US dollar and the Chinese yuan.

EBITDA came to €386 million (€495 million in Q3’22), reflecting contrasting trends between product lines and regions. Adhesive Solutions and Performance Additives were up year-on-year. The decline of EBITDA in High Performance Polymers was mainly linked to the high comparison base of the prior year, which benefited from exceptional profits in PVDF, and the decline in Coating Solutions to less favorable market conditions in upstream acrylics. In addition, strict price management in a context of easing tightness in raw materials, as well as cost-cutting initiatives implemented within the Group, mitigated the impact of the general decline in volumes linked to the macroeconomic environment. Despite this much less buoyant context than in 2022, the EBITDA margin remained solid and comparable to the prior-year’s at 16.6% (16.7% in Q3’22).

The recurring operating income (REBIT) of €246 million (€356 million in Q3’22) included €140 million in recurring depreciation and amortization, stable compared with Q3’22. REBIT margin thus amounted to 10.6% (12.0% in Q3’22).

Adjusted net income came to €177 million (€260 million in Q3’22), representing €2.38 per share. Excluding exceptional items, the tax rate amounted to approximately 21% of recurring operating income in the first nine months of the year.

CASH FLOW AND NET DEBT AT 30 SEPTEMBER 2023

The Group generated high recurring cash flow of €312 million in third-quarter 2023 (€434 million in Q3’22). This figure includes a cash inflow of €138 million from the change in working capital, which reflects the reduced level of business activity and lower raw materials costs. At end-September 2023, working capital represented 16.3% of annualized sales (15.5% at end-September 2022). Recurring cash flow also included recurring capital expenditure of €137 million (€131 million in Q3’22).

Free cash flow amounted to €273 million (€397 million in Q3’22) and included exceptional capital expenditure of €5 million (€21 million in Q3’22).

Net debt including hybrid bonds came to €2,419 million (€2,645 million at end-June 2023), and the net debt to last-twelve-months EBITDA ratio stood at 1.7x.

THIRD-QUARTER 2023 PERFORMANCE BY SEGMENT

ADHESIVE SOLUTIONS (29% OF TOTAL GROUP SALES)

 

in millions of euros

Q3'23

Q3'22

Change

Sales

682

757

-9.9%

EBITDA

98

90

+8.9%

EBITDA margin

14.4%

11.9%

Recurring operating income (REBIT)

77

69

+11.6%

REBIT margin

11.3%

9.1%

 

Sales in the Adhesive Solutions segment amounted to €682 million, down by 9.9% year-on-year, impacted mainly by a 5.2% negative currency effect. Volumes decreased by 3.4% compared with the prior year’s baseline, which had already been impacted in Europe by the start of destocking. Demand remained weak in most end markets, particularly in Europe and the United States. Volumes were up in Asia, supported by slightly more dynamic activity overall. The price effect in the segment was a negative 1.8% in a context of lower raw materials prices, while the scope effect, corresponding to the integration of Polytec PT, was limited at a positive 0.5%.

At €98 million, EBITDA was up by 8.9% compared with third-quarter 2022, benefiting from strict price management, operational excellence and cost control initiatives, as well as an improved product mix toward high value-added solutions. In this ongoing context of low volumes, the EBITDA margin improved by 250 bps to 14.4% (11.9% in Q3’22), reaching a level more aligned with the targeted medium-term progression.

ADVANCED MATERIALS (37% OF TOTAL GROUP SALES)

  in millions of euros Q3'23 Q3'22 Change Sales

856

1,131

-24.3%

EBITDA

172

237

-27.4%

EBITDA margin

20.1%

21.0%

Recurring operating income (REBIT)

100

167

-40.1%

REBIT margin

11.7%

14.8%

 

Sales in the Advanced Materials segment totaled €856 million, down by 24.3% compared with third-quarter 2022. Performance was impacted by a price effect of negative 13.9%, mainly reflecting the normalization of PVDF in batteries in China. Volumes were down by 5.3% overall, declining in Performance Additives, where they were impacted in particular by subdued demand in Europe, but rising in High Performance Polymers, driven by the automotive and energy markets, as well as by new developments in areas linked to sustainable megatrends such as sustainable lifestyle, electric mobility and water filtration. The scope effect was a negative 1.0%, linked to the divestment of Febex, and the currency effect was a negative 4.1%.

Segment EBITDA came to €172 million, a significant decrease compared with third-quarter 2022 (€237 million in Q3’22), which had benefited from a temporary period of highly favorable market conditions in PVDF. Performance Additives’ EBITDA rose significantly despite the decrease in volumes, thus confirming the quality of the portfolio and the positive momentum in niche applications driven by sustainable megatrends, particularly renewable energies. In this context, the EBITDA margin held up well at 20.1% (21.0% in Q3’22).

COATING SOLUTIONS (25% OF TOTAL GROUP SALES)

 

in millions of euros

Q3'23

Q3'22

Change

Sales

572

825

-30.7%

EBITDA

76

131

-42.0%

EBITDA margin

13.3%

15.9%

Recurring operating income (REBIT)

43

99

-56.6%

REBIT margin

7.5%

12.0%

 

Sales in the Coating Solutions segment totaled €572 million, down by a sharp 30.7% year-on-year (€825 million in Q3’22), including an 18.4% negative price effect related in particular to less favorable market conditions in upstream acrylics and to lower raw materials prices. Segment volumes rose in Asia, but fell by 9.5% overall, impacted by weak demand. The scope effect was a positive 0.7%, reflecting the integration of Polimeros Especiales, and the currency effect was a negative 3.5%.

At €76 million, the segment’s EBITDA was lower than in the prior year (€131 million in Q3’22), impacted mainly by less favorable market conditions in acrylic monomers. EBITDA for downstream product lines held up better despite the decline in volumes, supported by an improved product mix toward higher value-added solutions and dynamic price management in a context of lower raw materials prices. In this significantly more challenging environment, the decline in the EBITDA margin was limited thanks to initiatives undertaken by the segment’s teams and the integration of the acrylics value chain, reaching 13.3% (15.9% in Q3’22).

INTERMEDIATES (9% OF TOTAL GROUP SALES)

 

in millions of euros

Q3'23

Q3'22

Change

Sales

206

246

-16.3%

EBITDA

55

59

-6.8%

EBITDA margin

26.7%

24.0%

Recurring operating income (REBIT)

42

44

-4.5%

REBIT margin

20.4%

17.9%

 

Sales in the Intermediates segment declined by 16.3% year-on-year to €206 million (€246 million in Q3’22). The 12.6% fall in volumes was mainly due to weak demand for acrylics in Asia. The price effect was a slightly positive 3.7%, reflecting solid momentum in refrigerant gases in the United States and Europe. The currency effect was a negative 7.4%, with the segment impacted by a stronger euro against the Chinese yuan.

EBITDA held up well at €55 million, down by 6.8% year-on-year, and the EBITDA margin remained at a very good level at 26.7% (24.0% in Q3’22).

THIRD-QUARTER 2023 HIGHLIGHTS

At the Capital Markets Day on 27 September 2023, Arkema presented the new stage of its development and unveiled its 2028 ambition. Building on its achievements since the April 2020 strategy update, the Group now aims to accelerate its organic sales growth in the medium term, by capitalizing on its recent or future industrial investments in high value-added technological solutions serving fast-growing market segments supported by sustainable megatrends.

By 2028, Arkema thus aims to achieve sales of around €12 billion with an elevated EBITDA margin of around 18%.

The Group will also capitalize on the recent validation by SBTi of its 1.5°C trajectory by 2030 to further strengthen its decarbonization initiatives, paving the way for Net-Zero by 2050.

On 27 September 2023, the Group also unveiled three industrial projects aligned with its new 2028 ambition:

• the implementation by 2026 of a new, patented purification technology at its acrylics production site in Carling (France), which will enable the Group to decarbonize production by reducing CO2 emissions by 20%, and to improve the site’s operational efficiency and environmental footprint toward the highest standards, while optimizing competitiveness;
• the increase, at its Beaumont site in the United States, of its global production capacity of DMDS (dimethyl disulfide), an additive that is key in the production of renewable fuels, in a fast-growing biofuels market, driven by the demand for decarbonization of road and air transport; and
• a two-and-a-half-fold increase of its organic peroxide production capacity at its Changshu site in China, to support its Asian customers in fast-growing markets, notably in renewable energies.

OUTLOOK FOR 2023

The economic environment remains challenging as the year draws to a close, in line with the level seen since the beginning of the year, and is marked by low volumes in most end markets and uncertainties in all three regions, as well as by heightened geopolitical tensions.

In this context, the Group will continue to work on the elements under its control, in particular managing costs, optimizing working capital and rolling out ongoing technological developments with its customers and partners. Beyond that, Arkema will ensure the successful completion of several key projects that will contribute to the growth in 2024, including the ramp-up of the bio-based plant in Singapore, HF supply in the United States, the development of Sartomer® photocure resins in China, and the finalization in the United States of the HFO-1233zd project for batteries and building insulation.

Based on the results of the first nine months and the momentum expected in the fourth quarter, and as indicated last September at the Capital Markets Day, Arkema confirms its EBITDA forecast of around €1.5 billion in 2023, supported in particular by the resilience of several product lines and ongoing cost-saving initiatives. The Group is also aiming for a high EBITDA to cash conversion of around 40%.

Further details concerning the Group’s third-quarter 2023 results are provided in the “Third-quarter 2023 results and highlights” presentation and the “Factsheet”, both available on Arkema’s website at: www.arkema.com/global/en/investor-relations/

FINANCIAL CALENDAR

29 February 2024: Publication of full-year 2023 results 7 May 2024: Publication of first-quarter 2024 results 15 May 2024: Annual general meeting

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 a context of significant geopolitical tensions, where the outlook for the global economy remains 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, rising geopolitical tensions, 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 2023 as reviewed by Arkema’s Board of Directors on 8 November 2023. 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 91% of Group sales in 2022, 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 €11.5 billion in 2022, and operates in some 55 countries with 21,100 employees worldwide.

A French société anonyme (limited company) with share capital of €750,435,140 Registered in Nanterre: RCS 445 074 685 Nanterre

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ARKEMA financial statements

Consolidated financial information at the end of September 2023

Consolidated financial statements as end of December 2022 have been audited.

CONSOLIDATED INCOME STATEMENT

     

3rd quarter 2023

3rd quarter 2022

(In millions of euros)       Sales

2,326

2,972

  Operating expenses

(1,835)

(2,356)

Research and development expenses

(68)

(66)

Selling and administrative expenses

(209)

(214)

Other income and expenses

(32)

(15)

Operating income

182

321

Equity in income of affiliates

(2)

(3)

Financial result

(9)

(17)

Income taxes

(54)

(76)

Net income

117

225

Attributable to non-controlling interests

3

1

Net income - Group share

114

224

Earnings per share (amount in euros)

1.39

2.88

Diluted earnings per share (amount in euros)

1.37

2.86

 

End of September 2023

End of September 2022

(In millions of euros)       Sales

7,292

9,043

  Operating expenses

(5,757)

(6,841)

Research and development expenses

(204)

(199)

Selling and administrative expenses

(661)

(649)

Other income and expenses

(71)

(85)

Operating income

599

1,269

Equity in income of affiliates

(7)

(4)

Financial result

(44)

(31)

Income taxes

(146)

(277)

Net income

402

957

Attributable to non-controlling interests

4

3

Net income - Group share

398

954

Earnings per share (amount in euros)

5.12

12.68

Diluted earnings per share (amount in euros)

5.09

12.62

  CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME    

3rd quarter 2023

3rd quarter 2022

(In millions of euros)   Net income

117

225

Hedging adjustments

(13)

3

Other items

0

—

Deferred taxes on hedging adjustments and other items

0

0

Change in translation adjustments

109

240

Other recyclable comprehensive income

96

243

Impact of remeasuring unconsolidated investments

0

—

Actuarial gains and losses

26

52

Deferred taxes on actuarial gains and losses

(5)

(10)

Other non-recyclable comprehensive income

21

42

Total income and expenses recognized directly in equity

117

285

Total comprehensive income

234

510

Attributable to non-controlling interest

3

2

Total comprehensive income - Group share

231

508

   

End of September 2023

End of September 2022

(In millions of euros)   Net income

402

957

Hedging adjustments

(51)

19

Other items

0

—

Deferred taxes on hedging adjustments and other items

2

(3)

Change in translation adjustments

(34)

567

Other recyclable comprehensive income

(83)

583

Impact of remeasuring unconsolidated investments

0

(1)

Actuarial gains and losses

19

167

Deferred taxes on actuarial gains and losses

(4)

(29)

Other non-recyclable comprehensive income

15

137

Total income and expenses recognized directly in equity

(68)

720

Total comprehensive income

334

1,677

Attributable to non-controlling interest

2

5

Total comprehensive income - Group share

332

1,672

  INFORMATION BY SEGMENT    

3rd quarter 2023

(In millions of euros)

Adhesive

Solutions

Advanced

Materials

Coating

Solutions

Intermediates

Corporate

Total

  Sales

682

856

572

206

10

2,326

EBITDA

98

172

76

55

(15)

386

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

(21)

(72)

(33)

(13)

(1)

(140)

Recurring operating income (REBIT)

77

100

43

42

(16)

246

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)

(5)

(1)

—

—

(32)

Other income and expenses

(10)

(21)

0

(1)

0

(32)

Operating income

41

74

42

41

(16)

182

Equity in income of affiliates

—

(2)

—

—

—

(2)

  Intangible assets and property, plant, and equipment additions

15

93

23

7

4

142

Of which: recurring capital expenditure

15

88

23

7

4

137

   

3rd quarter 2022

(In millions of euros)

Adhesive

Solutions

Advanced

Materials

Coating

Solutions

Intermediates

Corporate

Total

  Sales

757

1,131

825

246

13

2,972

EBITDA

90

237

131

59

(22)

495

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

(21)

(70)

(32)

(15)

(1)

(139)

Recurring operating income (REBIT)

69

167

99

44

(23)

356

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

(14)

(5)

(1)

—

—

(20)

Other income and expenses

(13)

(9)

1

25

(19)

(15)

Operating income

42

153

99

69

(42)

321

Equity in income of affiliates

—

(3)

—

0

—

(3)

  Intangible assets and property, plant, and equipment additions

21

94

29

4

4

152

Of which: recurring capital expenditure

21

73

29

4

4

131

  INFORMATION BY SEGMENT    

End of September 2023

(In millions of euros)

Adhesive

Solutions

Advanced

Materials

Coating

Solutions

Intermediates

Corporate

Total

  Sales

2,072

2,705

1,850

636

29

7,292

EBITDA

286

517

258

173

(64)

1,170

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

(62)

(207)

(94)

(38)

(4)

(405)

Recurring operating income (REBIT)

224

310

164

135

(68)

765

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

(77)

(13)

(5)

—

—

(95)

Other income and expenses

(22)

(37)

(1)

(1)

(10)

(71)

Operating income

125

260

158

134

(78)

599

Equity in income of affiliates

—

(7)

—

—

—

(7)

  Intangible assets and property, plant, and equipment additions

48

230

62

15

11

366

Of which: recurring capital expenditure

48

213

62

15

11

349

   

End of September 2022

(In millions of euros)

Adhesive

Solutions

Advanced

Materials

Coating

Solutions

Intermediates

Corporate

Total

  Sales

2,206

3,319

2,647

839

32

9,043

EBITDA

291

793

530

282

(77)

1,819

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

(57)

(204)

(95)

(45)

(4)

(405)

Recurring operating income (REBIT)

234

589

435

237

(81)

1,414

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

(42)

(14)

(4)

—

—

(60)

Other income and expenses

(45)

(31)

1

23

(33)

(85)

Operating income

147

544

432

260

(114)

1,269

Equity in income of affiliates

—

(4)

—

0

—

(4)

  Intangible assets and property, plant, and equipment additions

48

254

68

9

10

389

Of which: recurring capital expenditure

48

167

68

9

10

302

 

CONSOLIDATED CASH FLOW STATEMENT

     

End of September 2023

End of September 2022

  (In millions of euros)       Operating cash flows   Net income

402

957

Depreciation, amortization and impairment of assets

512

492

Other provisions and deferred taxes

(70)

(36)

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

(29)

(31)

Undistributed affiliate equity earnings

7

4

Change in working capital

(27)

(384)

Other changes

15

37

  Cash flow from operating activities

810

1,039

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

(366)

(389)

Change in fixed asset payables

(131)

(99)

Acquisitions of operations, net of cash acquired

(66)

(1,614)

Increase in long-term loans

(45)

(49)

  Total expenditures

(608)

(2,151)

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

8

6

Proceeds from sale of operations, net of cash transferred

32

20

Repayment of long-term loans

56

43

  Total divestitures

96

69

  Cash flow from investing activities

(512)

(2,082)

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

0

—

Purchase of treasury shares

(32)

(11)

Dividends paid to parent company shareholders

(253)

(222)

Interest paid to bearers of subordinated perpetual notes

(16)

(16)

Dividends paid to non-controlling interests and buyout of minority interests

(3)

(2)

Increase in long-term debt

397

5

Decrease in long-term debt

(63)

(62)

Increase / (Decrease) in short-term debt

(31)

384

  Cash flow from financing activities

(1)

76

  Net increase/(decrease) in cash and cash equivalents

297

(967)

  Effect of exchange rates and changes in scope

11

(38)

Cash and cash equivalents at beginning of period

1,592

2,285

  Cash and cash equivalents at end or the period

1,900

1,280

 

CONSOLIDATED BALANCE SHEET

 

30 September 2023

31 December 2022

  (In millions of euros)  

ASSETS

  Goodwill

2,709

2,655

Intangible assets, net

2,099

2,178

Property, plant and equipment, net

3,434

3,429

Equity affiliates: investments and loans

16

24

Other investments

52

52

Deferred tax assets

165

166

Other non-current assets

235

245

  TOTAL NON-CURRENT ASSETS

8,710

8,749

  Inventories

1,347

1,399

Accounts receivable

1,396

1,360

Other receivables and prepaid expenses

198

202

Income tax receivables

103

130

Other current financial assets

13

57

Cash and cash equivalents

1,900

1,592

Assets held for sale

—

22

  TOTAL CURRENT ASSETS

4,957

4,762

  TOTAL ASSETS

13,667

13,511

   

LIABILITIES AND SHAREHOLDERS' EQUITY

  Share capital

750

750

Paid-in surplus and retained earnings

6,332

6,218

Treasury shares

(52)

(20)

Translation adjustments

320

352

  SHAREHOLDERS' EQUITY - GROUP SHARE

7,350

7,300

  Non-controlling interests

41

39

  TOTAL SHAREHOLDERS' EQUITY

7,391

7,339

  Deferred tax liabilities

345

362

Provisions for pensions and other employee benefits

357

382

Other provisions and non-current liabilities

415

458

Non-current debt

2,955

2,560

  TOTAL NON-CURRENT LIABILITIES

4,072

3,762

  Accounts payable

946

1,149

Other creditors and accrued liabilities

464

437

Income tax payables

89

109

Other current financial liabilities

41

13

Current debt

664

698

Liabilities related to assets held for sale

—

4

  TOTAL CURRENT LIABILITIES

2,204

2,410

  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

13,667

13,511

  CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY          

Shares issued

Treasury shares

Shareholders'

equity - Group

share

Non-controlling

interests

Shareholders'

equity

(In millions of euros)

Number

Amount

Paid-in

surplus

Hybrid

bonds

Retained

earnings

Translation

adjustments

Number

Amount

At 1 January 2023

75,043,514

750

1,067

700

4,451

352

(231,087)

(20)

7,300

39

7,339

Cash dividend

-

-

-

-

(269)

-

-

-

(269)

(2)

(271)

Issuance of share capital

-

-

-

-

-

-

-

-

-

-

-

Capital decrease by cancellation of treasury shares

-

-

-

-

-

-

-

-

-

-

-

Purchase of treasury shares

-

-

-

-

-

-

(357,726)

(32)

(32)

-

(32)

Cancellation of purchased treasury shares

-

-

-

-

-

-

-

-

-

-

-

Grants of treasury shares to employees

-

-

-

-

0

-

1,235

0

0

-

0

Sale of treasury shares

-

-

-

-

-

-

-

-

-

-

-

Share-based payments

-

-

-

-

19

-

-

-

19

-

19

Issuance of hybrid bonds

-

-

-

-

-

-

-

-

-

-

-

Redemption of hybrid bonds

-

-

-

-

-

-

-

-

-

-

-

Other

-

-

-

-

0

-

-

-

-

2

2

Transactions with shareholders

-

-

-

-

(250)

-

(356,491)

(32)

(282)

—

(282)

Net income

-

-

-

-

398

-

-

-

398

4

402

Total income and expense recognized directly through equity

-

-

-

-

(34)

(32)

-

-

(66)

(2)

(68)

Comprehensive income

-

-

-

-

364

(32)

-

-

332

2

334

At 30 September 2023

75,043,514

750

1,067

700

4,565

320

(587,578)

(52)

7,350

41

7,391

 

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 2023

End of September 2022

3rd quarter 2023

3rd quarter 2022

  OPERATING INCOME

599

1,269

182

321

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

(95)

(60)

(32)

(20)

- Other income and expenses

(71)

(85)

(32)

(15)

RECURRING OPERATING INCOME (REBIT)

765

1,414

246

356

- Recurring depreciation and amortization of tangible and intangible assets

(405)

(405)

(140)

(139)

EBITDA

1,170

1,819

386

495

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

End of September 2023

End of September 2022

3rd quarter 2023

3rd quarter 2022

  Depreciation and amortization of tangible and intangible assets

(512)

(492)

(178)

(166)

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

(405)

(405)

(140)

(139)

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

(95)

(60)

(32)

(20)

Of which: Impairment included in other income and expenses

(12)

(27)

(6)

(7)

   

ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE

  (In millions of euros)

End of September 2023

End of September 2022

3rd quarter 2023

3rd quarter 2022

  NET INCOME - GROUP SHARE

398

954

114

224

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

(95)

(60)

(32)

(20)

- Other income and expenses

(71)

(85)

(32)

(15)

- 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

23

12

10

4

- Taxes on other income and expenses

14

5

6

(2)

- One-time tax effects

(19)

3

(15)

(3)

ADJUSTED NET INCOME

546

1,079

177

260

Weighted average number of ordinary shares

74,636,305

73,947,397

—

—

Weighted average number of potential ordinary shares

75,043,514

74,333,266

—

—

ADJUSTED EARNINGS PER SHARE (in euros)

7.32

14.59

2.38

3.52

DILUTED ADJUSTED EARNINGS PER SHARE (in euros)

7.28

14.52

2.36

3.50

   

RECURRING CAPITAL EXPENDITURE

  (In millions of euros)

End of September 2023

End of September 2022

3rd quarter 2023

3rd quarter 2022

  INTANGIBLE ASSETS AND PROPERTY, PLANT, AND EQUIPMENT ADDITIONS

366

389

142

152

- Exceptional capital expenditure

17

87

5

21

- Investments relating to portfolio management operations

—

—

—

—

- Capital expenditure with no impact on net debt

—

0

0

0

RECURRING CAPITAL EXPENDITURE

349

302

137

131

   

CASH FLOWS

  (In millions of euros)

End of September 2023

End of September 2022

3rd quarter 2023

3rd quarter 2022

  Cash flow from operating activities

810

1,039

393

508

+ Cash flow from investing activities

(512)

(2,082)

(125)

(232)

NET CASH FLOW

298

(1,043)

268

276

- Net cash flow from portfolio management operations

(44)

(1,628)

(5)

(121)

FREE CASH FLOW

342

585

273

397

Exceptional capital expenditure

(17)

(87)

(5)

(21)

- Non-recurring cash flow

(77)

(23)

(34)

(16)

RECURRING CASH FLOW

436

695

312

434

  The net cash flow from portfolio management operations corresponds to the impact of acquisition and divestment operations. Non-recurring cash flow corresponds to cash flow from other income and expenses.  

NET DEBT

  (In millions of euros)

End of September 2023

End of December 2022

  Non-current debt

2,955

2,560

+ Current debt

664

698

- Cash and cash equivalents

1,900

1,592

NET DEBT

1,719

1,666

+ Hybrid bonds

700

700

NET DEBT AND HYBRID BONDS

2,419

2,366

   

WORKING CAPITAL

  (In millions of euros)

End of September 2023

End of December 2022

  Inventories

1,347

1,399

+ Accounts receivable

1,396

1,360

+ Other receivables including income taxes

301

332

+ Other current financial assets

13

57

- Accounts payable

946

1,149

- Other liabilities including income taxes

553

546

- Other current financial liabilities

41

13

WORKING CAPITAL

1,517

1,440

   

CAPITAL EMPLOYED

  (In millions of euros)

End of September 2023

End of December 2022

  Goodwill, net

2,709

2,655

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

5,533

5,607

+ Investments in equity affiliates

16

24

+ Other investments and other non-current assets

287

297

+ Working capital

1,517

1,440

CAPITAL EMPLOYED

10,062

10,023

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20231108771552/en/

Investor relations contacts 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 contacts Gilles Galinier +33 (0)1 49 00 70 07 gilles.galinier@arkema.com Anne Plaisance +33 (0)6 81 87 48 77 anne.plaisance@arkema.com