Regulatory News:
Arkema (Paris:AKE):
The Group delivered a solid financial performance in 2023 in
a demanding macroeconomic environment, with €1.5 billion in EBITDA,
in line with its full-year guidance, and excellent cash generation.
Arkema expects EBITDA to grow in 2024, mainly weighted to the
second half of the year with the ramp-up of its major projects and
a gradual improvement in market conditions.
- Group sales of €9.5 billion, down 16.1% on 2022
at constant scope and currency:
- Volumes down by 10.0%, reflecting the
overall slowdown in demand and destocking, although volumes were
slightly higher in the fourth quarter relative to last year
- Positive dynamic in innovation-driven high
performance solutions addressing sustainable megatrends
- Negative price effect of 6.1% reflecting
lower prices for certain raw materials and the progressive price
normalization of PVDF and upstream acrylics, which had benefited
from particularly favorable conditions in 2022
- EBITDA at €1,501 million, down compared with last
year’s very high comparison base (€2,110 million), and solid
EBITDA margin in this context of low demand at 15.8%
(18.3% in 2022). Q4’23 EBITDA up by 14% year-on-year
to €331 million (€291 million in Q4’22), driven by the good
performance of Adhesive Solutions and the resilience of the other
segments
- Adjusted net income of €653 million, representing
€8.75 per share (€15.75 in 2022)
- Excellent recurring cash flow of €761 million,
reflecting the strict management of working capital and tight
control of capital expenditure, and net debt of €2,930
million at end-December, representing 1.95x full-year
EBITDA
- Proposed dividend of €3.50 per share (€3.40 in
2022), in line with the policy of a gradual increase, and
corresponding to a payout ratio of 40%
- Finalization on 1 December 2023 of the acquisition of
54% of PI Advanced Materials, marking a key step in the
strengthening of Arkema's very high performance polymers
portfolio
- Continued progress in CSR performance with, in
particular, reductions in greenhouse gas emissions of 7% for Scopes
1 and 2 and 9% for Scope 3 compared with 2022. Moreover, the share
of women in senior management positions rose to 29% (26% in
2022)
- Outlook for 2024: the Group aims for EBITDA to grow in
2024 and reach between €1.5 billion and €1.7 billion. The start of
the year should be in the continuity of the low demand of
fourth-quarter 2023. EBITDA growth should be weighted mainly to the
second half of the year with the ramp-up of the main growth
projects from the second quarter onwards and the progressive
improvement of market conditions.
Following Arkema’s Board of Directors’ meeting held on 28
February 2024 to approve the Group’s consolidated financial
statements for 2023, Chairman and CEO Thierry Le Hénaff said:
“Arkema recorded a solid financial performance in 2023 in a
particularly demanding macroeconomic context. I would like to thank
our teams, who once again demonstrated their agility and unwavering
commitment, enabling Arkema to deliver some important achievements
in 2023, notably in terms of cash generation, CSR performance and
the strengthening of the Group’s profile in Specialty
Materials.
As 2024 has started in the continuity of the previous quarter,
in a context of ongoing weak demand, we will continue to manage our
operations tightly. We will benefit from the growing contribution,
from spring onwards, of several major industrial projects in Asia
and the United States, as well as from the integration of PI
Advanced Materials’ activities.
In addition to managing the short-term, our teams are fully
mobilized on our 2028 objectives which we unveiled at the Capital
Markets Day last September.”
KEY FIGURES FOR 2023
in millions of euros
2023
2022
Change Sales
9,514
11,550
-17.6%
EBITDA
1,501
2,110
-28.9%
Specialty Materials
1,373
1,900
-27.7%
Intermediates
213
306
-30.4%
Corporate
-85
-96
EBITDA margin
15.8%
18.3%
Specialty Materials
15.8%
18.1%
Intermediates
26.7%
30.0%
Recurring operating income (REBIT)
939
1,560
-39.8%
REBIT margin
9.9%
13.5%
Adjusted net income
653
1,167
-44.0%
Adjusted net income per share (in €)
8.75
15.75
-44.4%
Recurring cash flow
761
933
-18.4%
Free cash flow
625
784
-20.3%
Net debt including hybrid bonds
2,930
2,366
2023 BUSINESS PERFORMANCE
Group sales came in at €9,514 million in 2023,
down 17.6% on the previous year in a more challenging macroeconomic
context, marked by lower underlying demand and destocking, first in
Europe and then spreading to other regions of the world. The
decline in volumes came in at 10% overall, affecting most of the
Group’s important end markets like construction, industry and
consumer goods. Some markets such as automotive and energy resisted
much better, and the dynamic remained positive in high performance
solutions addressing sustainable megatrends, particularly in new
energies, bio-based and recycled products, as well as in the areas
of energy efficiency and lightweighting. The negative 6.1% price
effect reflects the decline of certain raw materials and the
normalization of PVDF and upstream acrylics relative to the
particularly favorable conditions of 2022. Moreover, Arkema
benefited from the repositioning of its portfolio towards higher
value-added solutions. The scope effect was small, standing at a
positive 0.7%, and included mainly two months’ additional
contribution from Ashland’s adhesives business and three small
acquisitions, partially offset by the divestment of Febex at the
beginning of the year. The currency effect was a negative 2.2%,
mainly as a result of the depreciation of the US dollar and Chinese
yuan against the euro.
The share of Specialty Materials within total sales grew
slightly and represented 92% of the Group’s sales in 2023.
Moreover, the geographic sales split saw the share of North America
increase (37% of the Group’s sales in 2023 versus 35% in 2022),
Asia and the rest of the world decline to 29% versus 32% in 2022,
and Europe remain steady (34% of sales in 2023 versus 33% in
2022).
At €1,501 million (€2,110 million in 2022), EBITDA
held up well in view of the economic context, while reflecting the
absence of the exceptional contribution in the prior year of around
€400 million from PVDF and upstream acrylics. The dynamics were
mixed between the various product lines, with Adhesive Solutions
and Performance Additives reporting good growth in the second half
of the year, driven by the product mix, dynamic management of sales
prices and continued operational excellence actions. In this less
buoyant context than in the prior year, Arkema’s EBITDA
margin came in at a good level at 15.8% (18.3% in 2022),
reflecting notably the quality of the product mix in higher
value-added solutions and appropriate management of pricing in a
more normalized raw materials context.
At €562 million, recurring depreciation and amortization rose
marginally year-on-year (€550 million in 2022). Recurring
operating income (REBIT) therefore amounted to €939
million (€1,560 million in 2022) and REBIT margin came
in at 9.9% (13.5% in 2022).
The financial result represented a net expense of €70
million (€61 million in 2022), up by €9 million relative to
2022, reflecting mainly the impact of the bond issues carried out
in 2023.
Excluding exceptional items, the tax rate amounted to 21% of
recurring operating income in 2023.
Adjusted net income thus amounted to €653 million,
representing €8.75 per share (€15.75 per share in 2022).
The Board of Directors decided that it would recommend, at the
annual general meeting of 15 May 2024, a 3% increase in the
dividend at €3.50 per share for 2023, in line with the
policy of a gradual increase and representing a payout ratio of
40%. The dividend will be paid entirely in cash as from 21 May
2024, with an ex-dividend date on 17 May 2024.
CASH FLOW AND NET DEBT AT 31 DECEMBER 2023
Recurring cash flow reached the high level of €761
million (€933 million in 2022). It includes a €170 million cash
inflow linked to working capital, which reflects the price effect
and strict management of inventories. Excluding PI Advanced
Materials, working capital thus represented 13.1% of the Group’s
annual sales at 31 December 2023 (12.6% at 31 December 2022).
Recurring capital expenditure amounted to €608 million (€584
million in 2022) and represented 6.4% of Group sales in 2023.
Calculated based on recurring cash flow, the EBITDA to cash
conversion rate was 50.7%, exceeding the target of 40%.
Free cash flow totaled €625 million in the year
(€784 million in 2022) and included residual exceptional capital
expenditure of €26 million (€123 million in 2022) related to the
bio-based polyamides project in Singapore and the hydrofluoric acid
supply project with Nutrien in the United States. Thus, for
full-year 2023, recurring and exceptional capital expenditure
reached €634 million. Free cash flow also included a non-recurring
outflow of €110 million in 2023, mainly corresponding to start-up
costs for the Singapore platform and restructuring costs in order
to adapt the cost structure to the economic context.
Net cash flow from portfolio management operations
primarily reflected the acquisition of a 54% majority stake in PI
Advanced Materials and amounted to a net outflow of €708
million in 2023.
Net debt including hybrid bonds stood at €2,930
million at end-2023, including the payment of a €3.40 dividend
per share for 2022 for a total payout of €253 million, the €32
million cost of share buybacks carried out by the Group, and €16
million in interest paid on hybrid bonds. This net debt figure
represents 1.95x last-twelve-months EBITDA.
CONTINUOUS PROGRESS IN CSR PERFORMANCE
The Group continued to implement its CSR actions in 2023 to
support the sustainable and responsible growth of its activities
and by offering its customers solutions that contribute to their
sustainable performance.
Arkema thus reduced its Scope 1 and 2 greenhouse gas emissions
by 7% in 2023 compared with 2022 (-39% vs 2019) and by 9% for Scope
3 (-53% vs 2019). These results reflect the ongoing proactive
initiatives taken by Arkema as part of the roll-out of its climate
plan, accentuated by the temporary decrease in production volumes,
in line with its 1.5°C trajectory by 2030 validated by the SBTi. In
addition, on 26 February 2024, Arkema announced that it had signed
long-term renewable energy supply contracts in the United States
for the Calvert City, Beaumont, Chatham and West Chester sites, as
well as for all Bostik sites, allowing it, with existing contracts
for the Clear Lake and Bayport sites, to cover 40% of the
electricity needs for the Group's operations in the United States
by the end of 2024.
Moreover, in order to encourage eco-design and develop the
circular economy, the Group increased the proportion of its sales
covered by a life-cycle assessment to 56% of Group sales in 2023
(41% in 2022), in line with its long-term target of 90%.
The Group also maintained its high safety standards, with an
accident rate per million hours worked stable at 0.9, among the
leaders of the industry, and the process safety event rate per
million hours worked also stable at 2.8.
Lastly, as a certified Top Employer 2024 in ten countries and a
holder of the Top Employer Europe certification, Arkema continued
to promote inclusion and diversity, as illustrated notably by the
percentage of women in senior management and executive positions
reaching 29% at end-2023.
On the strength of the Group’s results and long-term
commitments, its CDP climate change score was raised to A-. Its
Sustainalytics score was also increased and the Group now ranks
among the best in its sector. In addition, Arkema was once again
included in S&P’s Global Sustainability Yearbook.
2023 PERFORMANCE BY SEGMENT
ADHESIVE SOLUTIONS (29% OF TOTAL GROUP SALES)
in millions of euros
2023
2022
Change Sales
2,714
2,898
-6.3%
EBITDA
380
366
+3.8% EBITDA margin
14.0%
12.6%
Recurring operating income (REBIT)
293
288
+1.7% REBIT margin
10.8%
9.9%
Sales in the Adhesive Solutions segment fell by 6.3%
compared with 2022 to €2,714 million. This figure reflects
mainly a 7.5% reduction in volumes linked to weak demand, as well
as to destocking in the construction sector and certain industrial
markets, which nevertheless subsided in the second half of the
year. Sales also included a negative 2.8% currency effect. The
price effect was slightly positive over the year, amounting to 0.9%
and reflected on the one hand, during the first part of the year,
the increased sales prices implemented in 2022 in response to cost
inflation, and on the other hand, a negative price effect in the
second half linked to the normalization of certain raw materials.
The 3.1% positive scope effect corresponds to the integration of
Polytec PT and Permoseal, as well as to the additional contribution
from Ashland’s adhesives business in the first two months of the
year.
Recording robust growth of 16% in the second half of the year,
EBITDA grew 3.8% in 2023 compared with 2022 and reached
€380 million. This higher year-on-year performance despite
lower volumes reflects the dynamic management of sales prices in an
evolving environment of raw materials, as well as operational
excellence and cost control actions. It also incorporates the
contribution of acquisitions. EBITDA margin improved
significantly by 140 bps to 14.0%, also benefiting from the
evolution in the product mix towards higher value-added
applications.
ADVANCED MATERIALS (38% OF TOTAL GROUP SALES)
in millions of euros
2023
2022
Change Sales
3,562
4,341
-17.9%
EBITDA
666
941
-29.2%
EBITDA margin
18.7%
21.7%
Recurring operating income (REBIT)
366
663
-44.8%
REBIT margin
10.3%
15.3%
At €3,562 million, sales of the Advanced Materials
segment were down 17.9% year-on-year. Reflecting lower demand,
volumes declined by 8.0%, also impacted by destocking, mostly in
the first half for High Performance Polymers, and throughout the
whole year for Performance Additives, mainly in Europe. The
business areas linked to sustainable megatrends grew, notably new
energies and bio-based and recycled products, and the automotive
and energy markets remained well oriented. In the second half of
the year, High Performance Polymers volumes were up relative to the
prior year, supported in particular by higher demand in batteries
in China. The price effect was a negative 7.2%, essentially
reflecting the normalization of PVDF in batteries following the
significant tightness observed in the prior year. For the segment’s
other activities, the price effect was broadly positive,
demonstrating the strength of their positioning and an improved
product mix towards higher value-added solutions. The scope effect
was a negative 0.6%, corresponding to the divestment of Febex, and
the currency effect was a negative 2.1%.
In this context, EBITDA of €666 million was down
29.2% relative to the prior year’s particularly high comparison
base. Driven by significant growth in the second half, EBITDA for
Performance Additives was up year-on-year despite lower volumes,
supported by growth in high value-added applications in areas
linked to sustainable megatrends, in particular new energies. The
segment’s EBITDA margin thus came to 18.7% versus
21.7% in 2022.
COATING SOLUTIONS (25% OF TOTAL GROUP SALES)
in millions of euros
2023
2022
Change Sales
2,402
3,250
-26.1%
EBITDA
327
593
-44.9%
EBITDA margin
13.6%
18.2%
Recurring operating income (REBIT)
201
466
-56.9%
REBIT margin
8.4%
14.3%
Sales of the Coating Solutions segment fell sharply by
26.1% year-on-year and amounted to €2,402 million, around
30% of which were in acrylic monomers. Volumes in this segment were
down 12.4% overall, reflecting subdued demand and destocking in
Europe and the United States in the decorative paints and
industrial markets. The price effect of negative 13.1% reflects
mainly the progressive normalization of market conditions in
upstream acrylics after an exceptional 2022, as well as the
pass-through of certain lower raw materials prices in downstream
product lines. The scope effect of positive 0.7% is linked to the
integration of Polimeros Especiales, and the currency effect was
limited at a negative 1.3%.
In this context, EBITDA declined 44.9% on 2022 to
€327 million. Downstream activities nevertheless held
up better than upstream acrylics, driven by the benefits of an
improved product mix towards higher value-added solutions and by
dynamic price management. In this context of low volumes, EBITDA
margin held up relatively well at 13.6% (18.2% in
2022).
INTERMEDIATES (8% OF TOTAL GROUP SALES)
in millions of euros
2023
2022
Change Sales
797
1,020
-21.9%
EBITDA
213
306
-30.4%
EBITDA margin
26.7%
30.0%
Recurring operating income (REBIT)
170
245
-30.6%
REBIT margin
21.3%
24.0%
At €797 million, sales in the Intermediates
segment fell by 21.9% year-on-year, impacted by an 18.7% drop in
volumes linked notably to low demand for acrylics in Asia. The
price effect was a positive 0.1%, reflecting good momentum for
refrigerant gases in Europe and the United States, which offset
less favorable market conditions for acrylics in Asia. The currency
effect was a negative 3.3%.
In this context, EBITDA declined by 30.4% to €213
million and EBITDA margin remained at a high level of
26.7% (30.0% in 2022).
KEY FIGURES FOR FOURTH-QUARTER 2023
in millions of euros
Q4'23 Q4'22 Change
Sales
2,222
2,507
-11.4%
EBITDA
331
291
+13.7% Specialty Materials
312
286
+9.1% Adhesive Solutions
94
75
+25.3% Advanced Materials
149
148
+0.7% Coating Solutions
69
63
+9.5%
Intermediates
40
24
+66.7% Corporate
-21
-19
EBITDA margin
14.9%
11.6%
Specialty Materials
15.2%
12.3%
Adhesive Solutions
14.6%
10.8%
Advanced Materials
17.4%
14.5%
Coating Solutions
12.5%
10.4%
Intermediates
24.8%
13.3%
Recurring operating income (REBIT)
174
146
+19.2% REBIT margin
7.8%
5.8%
Adjusted net income
107
88
+21.6% Adjusted net income per share (in €)
1.43
1.16
+23.3%
Recurring cash flow
325
238
+36.6% Free cash flow
283
199
+42.2%
Group sales declined 11.4% year-on-year to €2,222
million, impacted by a negative 10.5% price effect which
reflected mainly a raw materials environment that was less tight.
Volumes were up 2.0%, driven mainly by an improvement in Coating
Solutions relative to the low comparison base of fourth-quarter
2022, and by the good performance of High Performance Polymers in
Asia. The scope effect of positive 0.3% reflects the integration of
Polytec PT in Adhesive Solutions and PI Advanced Materials in
Advanced Materials in December, partially offset by the divestment
of Febex. The currency effect of negative 3.2% was linked mainly to
the appreciation of the euro against the US dollar.
At €331 million, EBITDA was 13.7% higher relative
to fourth-quarter 2022, driven by the growth of Adhesive Solutions,
the resilience of the other Specialty Materials segments and the
good performance of refrigerant gases. EBITDA margin
improved by 330 bps to 14.9%.
Sales of the Adhesive Solutions segment totaled €642
million, down 7.2% compared with fourth-quarter 2022, impacted
notably by a 3.2% negative currency effect. The negative 3.2% price
effect reflects essentially the evolution of certain raw materials.
Volumes were down slightly by 1.3%, reflecting ongoing soft demand
and some residual destocking in Europe and the United States. The
scope effect was a positive 0.5%, corresponding to the integration
of Polytec PT.
At €94 million, the segment’s EBITDA was up by a
sharp 25.3% compared with fourth-quarter 2022, driven by the
product mix, dynamic price management and ongoing operational
excellence actions. EBITDA margin thus improved
significantly to 14.6% (10.8% in Q4’22), reflecting Bostik’s
teams’ thorough work.
Sales of the Advanced Materials segment came in at
€857 million, down 16.1% compared with fourth-quarter 2022,
impacted by a 15.9% negative price effect which takes into account
the evolution of raw materials. Volumes rose 2.3%, driven in
particular by High Performance Polymers in Asia. Performance
Additives volumes were down slightly as a result of weak demand in
Europe, overshadowing the good performance of the United States.
The scope effect was a positive 0.5%, corresponding to the
contribution of PI Advanced Materials in December, partly offset by
the divestment of Febex. The currency effect was a negative 3.0%.
The segment’s EBITDA was stable at €149 million (€148
million in Q4’22), and EBITDA margin improved by 290 bps to
17.4%, benefiting also from a favorable product mix linked
to stronger demand for higher value-added solutions.
At €552 million, sales for the Coating Solutions segment
declined by 8.5% year-on-year, strongly impacted by a 17.3%
negative price effect reflecting both less favorable market
conditions in upstream acrylics and lower raw materials in
downstream activities. Volumes were up 11.8%, benefiting from
improved activity levels in view of the prior year’s low point. The
currency effect was a negative 3.0%. Driven notably by better
volumes, EBITDA rose by 9.5% to €69 million, and
EBITDA margin improved by 210 bps to 12.5%.
At €161 million, sales of the Intermediates
segment were 11.0% lower than in fourth-quarter 2022, impacted by a
21.0% drop in volumes which reflects lower demand for acrylics in
Asia. The price effect of positive 14.4% reflected the solid
momentum of refrigerant gases in Europe and the United States. The
currency effect reduced the segment’s sales by 4.4%.
EBITDA rose sharply to €40 million (€24 million in
Q4’22), driven by the good contribution of refrigerant gases.
EBITDA margin thus grew to 24.8% from 13.3% in
fourth-quarter 2022.
FOURTH-QUARTER 2023 HIGHLIGHTS
On 1 December 2023, Arkema finalized the acquisition of Glenwood
Private Equity’s 54% stake in the listed South Korean company PI
Advanced Materials (PIAM), for an enterprise value of €728 million.
This acquisition completes Arkema’s portfolio of high performance
technologies for the fast-growing advanced electronics and electric
mobility markets.
SUBSEQUENT EVENTS
On 2 January 2024, Arkema finalized the acquisition of Irish
manufacturer Arc Building Products, specialized in construction
adhesives and sealants and which generates around €15 million in
annual sales.
OUTLOOK FOR 2024
In the first quarter, the macroeconomic context remains marked
by a lack of visibility and soft demand in the continuity of
fourth-quarter 2023. First-quarter EBITDA should thus be comparable
to the fourth-quarter 2023 level and below the first-quarter 2023
level, which still benefited from favorable market conditions in
PVDF and upstream acrylics, which progressively normalized during
2023.
Irrespective of a progressive rebound in demand, Arkema will
benefit, starting in second-quarter 2024, from the ramp-up of
several growth projects, which should contribute in the full year
around €60 million to €70 million in terms of EBITDA. These
projects include notably the hydrofluoric acid plant in partnership
with Nutrien in the United States, the bio-based polyamide 11 unit
in Singapore, the expansion of the Sartomer® plant in China and of
the Pebax® plant in France, and the development of 1233zd
fluorospecialties with low global warming potential. Arkema will
also benefit from the contribution of the PIAM acquisition and from
its associated growth synergies, in particular in the electronics
and battery markets. Adhesive Solutions should achieve good growth
in 2024, benefiting from the positive dynamic which started in
second-half 2023.
Based on these factors, Arkema aims to achieve in 2024 a higher
EBITDA, estimated at €1.5 billion to €1.7 billion depending on the
level of recovery in demand, and with seasonality more weighted to
the second half of the year.
Moreover, the Group will continue to implement its strategic
roadmap unveiled at the Capital Markets Day of September 2023. It
should notably confirm during the year its capital expenditure plan
to support the growth of batteries for electric vehicles in the
United States. It will continue to strengthen, in partnership with
its customers, its innovation efforts in solutions for a less
carbonized and more sustainable world, and pursue the
implementation of its climate plan.
Further details concerning the Group’s 2023 results are provided
in the “Full-year 2023 results and highlights” presentation and the
“Factsheet”, both available on Arkema’s website at:
www.arkema.com/global/en/investor-relations/
The consolidated financial statements at 31 December 2023 have
been audited, and an unqualified certification report has been
issued by the Company’s statutory auditors. These financial
statements and the statutory auditors’ report are available on the
Company’s website at:
www.arkema.com/global/en/investor-relations/
FINANCIAL CALENDAR
7 May 2024: Publication of first-quarter 2024 results
15 May 2024: Annual general meeting
1 August 2024: Publication of first-half 2024 results
6 November 2024: Publication of third-quarter 2024 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 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, escalating 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 statements at 31
December 2023 as reviewed by Arkema’s Board of Directors on 28
February 2024. 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; and
- 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 a pure player in Specialty Materials in
2024, the Group is structured into three complementary, resilient
and highly innovative segments dedicated to Specialty Materials –
Adhesive Solutions, Advanced Materials, and Coating Solutions –
accounting for some 92% of Group sales in 2023, 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 €9.5
billion in 2023, and operates in some 55 countries with 21,100
employees worldwide.
ARKEMA financial statements
Consolidated financial information - At the
end of December 2023
Consolidated financial statements as end of
December 2022 and 2023 have been audited.
CONSOLIDATED INCOME STATEMENT 4th quarter 2023 4th quarter 2022 (In millions of euros)
Sales
2,222
2,507
Operating expenses
(1,797)
(2,129)
Research and development expenses
(71)
(71)
Selling and administrative expenses
(213)
(219)
Other income and expenses
(59)
(70)
Operating income
82
18
Equity in income of affiliates
(2)
(2)
Financial result
(26)
(30)
Income taxes
(31)
23
Net income
23
9
Attributable to non-controlling interests
3
(2)
Net income - Group share
20
11
Earnings per share (amount in euros)
0.27
0.13
Diluted earnings per share (amount in euros)
0.27
0.13
End of December 2023
End of December 2022 (In
millions of euros)
Sales
9,514
11,550
Operating expenses
(7,554)
(8,970)
Research and development expenses
(275)
(270)
Selling and administrative expenses
(874)
(868)
Other income and expenses
(130)
(155)
Operating income
681
1,287
Equity in income of affiliates
(9)
(6)
Financial result
(70)
(61)
Income taxes
(177)
(254)
Net income
425
966
Attributable to non-controlling interests
7
1
Net income - Group share
418
965
Earnings per share (amount in euros)
5.39
12.81
Diluted earnings per share (amount in euros)
5.36
12.75
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
4th
quarter 2023 4th quarter 2022 (In millions of euros)
Net income
23
9
Hedging adjustments
6
7
Other items
0
1
Deferred taxes on hedging adjustments and other items
1
1
Change in translation adjustments
(155)
(459)
Other recyclable comprehensive income
(148)
(450)
Impact of remeasuring unconsolidated investments
—
—
Actuarial gains and losses
(41)
(79)
Deferred taxes on actuarial gains and losses
8
15
Other non-recyclable comprehensive income
(33)
(64)
Total income and expenses recognized directly in equity
(181)
(514)
Total comprehensive income
(158)
(505)
Attributable to non-controlling interest
(2)
(5)
Total comprehensive income - Group share
(156)
(500)
End of December 2023
End of December 2022 (In
millions of euros)
Net income
425
966
Hedging adjustments
(45)
26
Other items
0
1
Deferred taxes on actuarial gains and losses
3
(2)
Change in translation adjustments
(189)
108
Other recyclable comprehensive income
(231)
133
Impact of remeasuring unconsolidated investments
—
(1)
Actuarial gains and losses
(22)
88
Deferred taxes on actuarial gains and losses
4
(14)
Other non-recyclable comprehensive income
(18)
73
Total income and expenses recognized directly in equity
(249)
206
Total comprehensive income
176
1,172
Attributable to non-controlling interest
0
—
Total comprehensive income - Group share
176
1,172
INFORMATION BY SEGMENT 4th quarter 2023 (In millions of euros)
Adhesive Solutions Advanced Materials Coating
Solutions Intermediates Corporate Total
Sales
642
857
552
161
10
2,222
EBITDA
94
149
69
40
(21)
331
Recurring depreciation and amortization of property, plant and
equipment and intangible assets
(25)
(93)
(32)
(5)
(2)
(157)
Recurring operating income (REBIT)
69
56
37
35
(23)
174
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
(25)
(6)
(2)
—
—
(33)
Other income and expenses
(10)
(44)
(2)
1
(4)
(59)
Operating income
34
6
33
36
(27)
82
Equity in income of affiliates
—
(3)
—
1
—
(2)
Intangible assets and property, plant, and equipment
additions
34
159
53
13
9
268
Of which: recurring capital expenditure
34
150
53
13
9
259
4th quarter 2022
(In millions of euros)
Adhesive Solutions Advanced
Materials Coating Solutions Intermediates
Corporate Total Sales
692
1,022
603
181
9
2,507
EBITDA
75
148
63
24
(19)
291
Recurring depreciation and amortization of property, plant and
equipment and intangible assets
(21)
(74)
(32)
(16)
(2)
(145)
Recurring operating income (REBIT)
54
74
31
8
(21)
146
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
(53)
(4)
(1)
—
—
(58)
Other income and expenses
(18)
(48)
(1)
0
(3)
(70)
Operating income
(17)
22
29
8
(24)
18
Equity in income of affiliates
—
(2)
—
—
—
(2)
Intangible assets and property, plant, and equipment
additions
37
202
59
11
9
318
Of which: recurring capital expenditure
37
166
59
11
9
282
INFORMATION BY SEGMENT End
of december 2023 (In millions of euros)
Adhesive
Solutions Advanced Materials Coating Solutions
Intermediates Corporate Total
Sales
2,714
3,562
2,402
797
39
9,514
EBITDA
380
666
327
213
(85)
1,501
Recurring depreciation and amortization of property, plant and
equipment and intangible assets
(87)
(300)
(126)
(43)
(6)
(562)
Recurring operating income (REBIT)
293
366
201
170
(91)
939
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
(102)
(19)
(7)
—
—
(128)
Other income and expenses
(32)
(81)
(3)
—
(14)
(130)
Operating income
159
266
191
170
(105)
681
Equity in income of affiliates
—
(10)
—
1
—
(9)
Intangible assets and property, plant, and equipment
additions
82
389
115
28
20
634
Of which: recurring capital expenditure
82
363
115
28
20
608
End of december 2022 (In
millions of euros)
Adhesive Solutions Advanced
Materials Coating Solutions Intermediates
Corporate Total Sales
2,898
4,341
3,250
1,020
41
11,550
EBITDA
366
941
593
306
(96)
2,110
Recurring depreciation and amortization of property, plant and
equipment and intangible assets
(78)
(278)
(127)
(61)
(6)
(550)
Recurring operating income (REBIT)
288
663
466
245
(102)
1,560
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
(95)
(18)
(5)
—
—
(118)
Other income and expenses
(63)
(79)
—
23
(36)
(155)
Operating income
130
566
461
268
(138)
1,287
Equity in income of affiliates
—
(6)
—
—
—
(6)
Intangible assets and property, plant, and equipment
additions
85
456
127
20
19
707
Of which: recurring capital expenditure
85
333
127
20
19
584
CONSOLIDATED CASH FLOW STATEMENT End of december 2023 End of december 2022 (In millions of
euros)
Operating cash flows Net income
425
966
Depreciation, amortization and impairment of assets
718
707
Other provisions and deferred taxes
(30)
(45)
(Gains)/losses on sales of long-term assets
(34)
(38)
Undistributed affiliate equity earnings
10
6
Change in working capital
158
(137)
Other changes
25
37
Cash flow from operating activities
1,272
1,496
Investing cash flows Intangible assets and
property, plant, and equipment additions
(634)
(707)
Change in fixed asset payables
(44)
(23)
Acquisitions of operations, net of cash acquired
(714)
(1,616)
Increase in long-term loans
(71)
(93)
Total expenditures
(1,463)
(2,439)
Proceeds from sale of intangible assets and property, plant
and equipment
14
18
Change in fixed asset receivables
(1)
—
Proceeds from sale of operations, net of cash transferred
32
19
Repayment of long-term loans
63
61
Total divestitures
108
98
Cash flow from investing activities
(1,355)
(2,341)
Financing cash flows Issuance (repayment) of
shares and paid-in surplus
—
48
Purchase of treasury shares
(32)
(22)
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)
(4)
Increase in long-term debt
1,096
6
Decrease in long-term debt
(85)
(233)
Increase / (Decrease) in short-term debt
(191)
611
Cash flow from financing activities
516
168
Net increase/(decrease) in cash and cash equivalents
433
(677)
Effect of exchange rates and changes in scope
20
(16)
Cash and cash equivalents at beginning of period
1,592
2,285
Cash and cash equivalents at end of the period
2,045
1,592
CONSOLIDATED BALANCE SHEET 31 december 2023 31
december 2022 (In millions of euros)
ASSETS Goodwill
3,040
2,655
Other intangible assets, net
2,416
2,178
Property, plant and equipment, net
3,730
3,429
Equity affiliates: investments and loans
13
24
Other investments
52
52
Deferred tax assets
157
166
Other non-current assets
251
245
TOTAL NON-CURRENT ASSETS
9,659
8,749
Inventories
1,208
1,399
Accounts receivable
1,261
1,360
Other receivables and prepaid expenses
170
202
Income tax receivables
142
130
Other current financial assets
32
57
Cash and cash equivalents
2,045
1,592
Assets held for sale
—
22
TOTAL CURRENT ASSETS
4,848
4,762
TOTAL ASSETS
14,517
13,511
LIABILITIES AND SHAREHOLDERS' EQUITY Share
capital
750
750
Paid-in surplus and retained earnings
6,304
6,218
Treasury shares
(21)
(20)
Translation adjustments
170
352
SHAREHOLDERS' EQUITY - GROUP SHARE
7,203
7,300
Non-controlling interests
252
39
TOTAL SHAREHOLDERS' EQUITY
7,455
7,339
Deferred tax liabilities
436
362
Provisions for pensions and other employee benefits
397
382
Other provisions and non-current liabilities
416
458
Non-current debt
3,734
2,560
TOTAL NON-CURRENT LIABILITIES
4,983
3,762
Accounts payable
1,036
1,149
Other creditors and accrued liabilities
392
437
Income tax payables
83
109
Other current financial liabilities
27
13
Current debt
541
698
Liabilities related to assets held for sale
—
4
TOTAL CURRENT LIABILITIES
2,079
2,410
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
14,517
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 1st January 2023
75,043,514
750
1,067
700
4,451
352
(231,087)
(20)
7,300
39
7,339
Cash dividend
—
—
—
—
(269)
—
—
—
(269)
(3)
(272)
Issuance of share capital
—
—
—
—
—
—
—
—
—
—
—
Capital decrease by cancellation of treasury shares
—
—
—
—
—
—
—
—
—
—
—
Purchase of treasury shares
—
—
—
—
—
—
(357,726)
(32)
(32)
—
(32)
Grants of treasury shares to employees
—
—
—
—
(31)
—
359,912
31
0
—
0
Share-based payments
—
—
—
—
25
—
—
—
25
—
25
Issuance of hybrid bonds
—
—
—
—
—
—
—
—
—
—
—
Redemption of hybrid bonds
—
—
—
—
—
—
—
—
—
—
—
Other
—
—
—
—
3
—
—
—
3
216
219
Transactions with shareholders
—
—
—
—
(272)
—
2,186
(1)
(273)
213
(60)
Net income
—
—
—
—
418
—
—
—
418
7
425
Total income and expense recognized directly through equity
—
—
—
—
(60)
(182)
—
—
(242)
(7)
(249)
Comprehensive income
—
—
—
—
358
(182)
—
—
176
0
176
At 31 december 2023
75,043,514
750
1,067
700
4,537
170
(228,901)
(21)
7,203
252
7,455
* The "Other" line corresponds to the share of the PI Advanced
Materials acquisition
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 december 2023
End of december 2022
4th
quarter 2023 4th quarter 2022 OPERATING INCOME
681
1,287
82
18
- Depreciation and amortization related to the revaluation of
tangible and intangible assets as part of the allocation of the
purchase price of businesses
(128)
(118)
(33)
(58)
- Other income and expenses
(130)
(155)
(59)
(70)
RECURRING OPERATING INCOME (REBIT)
939
1,560
174
146
- Recurring depreciation and amortization of tangible and
intangible assets
(562)
(550)
(157)
(145)
EBITDA
1,501
2,110
331
291
Details of depreciation and
amortization of tangible and intangible assets:
(In millions of euros)
End of december
2023 End of december
2022 4th quarter 2023
4th
quarter 2022
Depreciation and amortization of tangible and intangible
assets
(718)
(707)
(206)
(215)
Of which: Recurring depreciation and amortization of tangible and
intangible assets
(562)
(550)
(157)
(145)
Of which: Depreciation and amortization related to the revaluation
of assets as part of the allocation of thepurchase price of
businesses
(128)
(118)
(33)
(58)
Of which: Impairment included in other income and expenses
(28)
(39)
(16)
(12)
ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER
SHARE (In millions of euros)
End of december 2023 End of december 2022 4th quarter 2023 4th quarter 2022 NET INCOME - GROUP
SHARE
418
965
20
11
- Depreciation and amortization related to the revaluation of
tangible and intangible assets as part of the allocation of the
purchase price of businesses
(128)
(118)
(33)
(58)
- Other income and expenses
(130)
(155)
(59)
(70)
- 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
30
25
7
13
- Taxes on other income and expenses
14
27
0
22
- One-time tax effects
(21)
19
(2)
16
ADJUSTED NET INCOME
653
1,167
107
88
Weighted average number of ordinary shares
74,647,205
74,095,040
Weighted average number of potential ordinary shares
75,043,514
74,420,933
ADJUSTED EARNINGS PER SHARE (in euros)
8.75
15.75
1.43
1.16
DILUTED ADJUSTED EARNINGS PER SHARE (in euros)
8.70
15.68
1.42
1.16
RECURRING CAPITAL EXPENDITURE (In
millions of euros)
End of december
2023 End of december
2022 4th quarter 2023
4th
quarter 2022 INTANGIBLE
ASSETS AND PROPERTY, PLANT, AND EQUIPMENT ADDITIONS
634
707
268
318
- Exceptional capital expenditure
26
123
9
36
- Investments relating to portfolio management operations
—
—
—
—
- Capital expenditure with no impact on net debt
—
—
0
—
RECURRING CAPITAL EXPENDITURE
608
584
259
282
CASH FLOWS AND EBITDA TO CASH CONVERSION RATE
(In millions of euros)
End of
december 2023 End of december
2022 4th quarter 2023
4th
quarter 2022 Cash flow from
operating activities
1,272
1,496
462
457
+ Cash flow from investing activities
(1,355)
(2,341)
(843)
(259)
NET CASH FLOW
(83)
(845)
(381)
198
- Net cash flow from portfolio management operations
(708)
(1,629)
(664)
(1)
FREE CASH FLOW
625
784
283
199
Exceptional capital expenditure
(26)
(123)
(9)
(36)
- Non-recurring cash flow
(110)
(26)
(33)
(3)
RECURRING CASH FLOW
761
933
325
238
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. (In millions of euros)
End of december 2023 End of december 2022 RECURRING CASH
FLOW
761
933
EBITDA
1,501
2,110
EBITDA TO CASH CONVERSION RATE
50.7%
44.2%
NET DEBT (In millions of euros)
End of december 2023
End of december 2022
Non-current debt
3,734
2,560
+ Current debt
541
698
- Cash and cash equivalents
2,045
1,592
NET DEBT
2,230
1,666
+ Hybrid bonds
700
700
NET DEBT AND HYBRID BONDS
2,930
2,366
WORKING CAPITAL (In millions of euros)
End of december 2023
End of december 2022
Inventories
1,208
1,399
+ Accounts receivable
1,261
1,360
+ Other receivables including income taxes
312
332
+ Other current financial assets
32
57
- Accounts payable
1,036
1,149
- Other liabilities including income taxes
475
546
- Other current financial liabilities
27
13
WORKING CAPITAL
1,275
1,440
CAPITAL EMPLOYED (In millions of euros)
End of december 2023
End of december 2022
Goodwill, net
3,040
2,655
+ Intangible assets (excluding goodwill), and property, plant and
equipment, net
6,146
5,607
+ Investments in equity affiliates
13
24
+ Other investments and other non-current assets
303
297
+ Working capital
1,275
1,440
CAPITAL EMPLOYED
10,777
10,023
Adjustment *
(1,038)
13
ADJUSTED CAPITAL EMPLOYED
9,739
10,036
* In 2022, elements of capital employed classified as assets held
for sale (Febex).In 2023, capital employed relating to PIAM,
consolidated at the end of the year and with no material
contribution to income for the year.
RETURN ON CAPITAL
EMPLOYED (ROCE) (In millions of euros)
End of december 2023 End of december 2022 Recurring
operating income (REBIT)
939
1,560
Adjusted capital employed
9,739
10,036
ROCE
9.6 %
15.5 %
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240228140627/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 Alexis Noël, +33 (0)1 49 00 74 37,
alexis.noel@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
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