22 October 2004 17:18 [Source: ICIS news]
With its modernization program largely complete, Arkema is looking beyond its 2006 spinoff from French oil giant Total with plans to ramp up top-line growth by drawing on a bevy of new plants, a solid pipeline of R&D projects, and a growing footprint in Asia.
"Our destiny will be in our hands," said Arkema chairman and CEO Thierry Le Henaff in a recent interview. "In terms of industrial and R&D projects which will create long-term growth, we have never been in a better position. We will start benefiting from all the efforts over the last three to four years in R&D and plant development. We are very happy to launch Arkema in this context."?xml:namespace>
With three relatively balanced business segments - vinyl products (26% of sales), industrial chemicals (38%) and performance products (36%) - and some level of integration, the $6.3bn (Euro5bn) global commodities, intermediates and specialty chemicals company will work on growing the latter two segments through new projects and acquisitions.
"In 2005, we will announce a significant amount of new projects, mainly in performance products and industrial chemicals in areas such as technical polymers, acrylics, PMMA [polymethyl methacrylate], hydrogen peroxide and fluorochemicals," says Le Henaff.
In recent years, Total has spent over $379m annually to modernize plants that comprise the Arkema group and improve performance in environmental, health and safety (EH&S). The company has 90 production facilities around the world with 16 in the ?xml:namespace>
The company is building a facility in
Arkema' PMMA expansion project in Jinhae, South Korea, came on line in May, more than doubling capacity at the site from 17,000 to 40,000 tonne/year. The company is the world's leading producer of PMMA, marketed under the Plexiglas and Altuglas names, with around 20% market share.
The company also expanded capacity of Kynar polyvinylidene fluoride technical polymers in
However, in vinyl products, where Arkema is number three in
From a geographic standpoint, Arkema will seek opportunities to build new sites in
Along with plant expansions, Arkema will rely heavily on R&D to kick-start growth. The company will continue to spend over 3% of its sales ($190m) on R&D programs. Arkema is working on developments in nanotechnology, tin-free antifoulants for marine paints, membranes for fuel cells, and a catalyst-driven process that could boost the company's acrylic production by 15 to 30%.
"By the quality of our 1,400 researchers and the current program, which includes a number of long-term projects, we think we are in very good shape," says Le Henaff. "We are also careful that at the end of the day we get a new application to the customer. "We have a regular review of R&D projects by top management to ensure top-line growth."
New environmental legislation can be a key driver of growth for innovative companies, according to Le Henaff. "We really want to invest in new technologies such as fluorochemicals for refrigerants to stay ahead of the game," he says. "We are also working on some alternatives for bromide derivative products for soil fumigation."
Total plans to spin off Arkema to existing shareholders in 2006 with a solid financial structure. "The commitment of Total is to give Arkema a level of gearing [debt/equity] similar to that of Total," notes Le Henaff. Total's current debt/equity is around 30%.
A conservative financial structure will give Arkema the financial flexibility to make acquisitions. "We think that today the chemical industry is too fragmented, and we will have a card to play," asserts Le Henaff. "Once we are spun off, we will look at opportunities to make select acquisitions to reinforce our strong business units. We want to grow in industrial chemicals and performance products. We won't make acquisitions in vinyl products."
(For additional Chemical Market Reporter Analysis, visit the CMR Web site at: http://www.chamicalmarketreporter.com.)
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