02 August 2012 14:16 [Source: ICIS news]
LONDON (ICIS)--Investment bank Credit Suisse on Thursday raised its target share price for Arkema to €80 from €75 after the French specialty producer reported its second-quarter earnings.
Credit Suisse also maintained its “Outperform” rating for the company. The investment bank said Arkema was one of the strongest performers in its sector.
On Wednesday, Arkema reported it had swung to a second-quarter net loss of €12m ($15m), from a net profit of €184m in the same period last year, following the divestment of its vinyl business.
Its sales in the second quarter grew by 15.4% year on year to €1.72bn, while earnings before interest, tax, depreciation and amortisation (EBITDA) for the quarter slipped by 4.7% to €306m, because of tough comparables.
Arkema’s second-quarter results reflect market conditions in the acrylates sector, in which lower feedstock costs would have affected profits despite healthy volumes. The company produces 250,000 tonnes/year of acrylic acid from its site in ?xml:namespace>
Although sales in the acrylates sector were largely healthy, lower feedstock propylene costs in the second quarter pushed prices down. For Arkema, demand in the second quarter picked up from the first, and was largely steady, although down by approximately 4% compared with the second quarter of 2011, when offtake was particularly healthy.
However, orders continued to come in through the quarter, despite concerns regarding the wider economy and as the summer holiday period approached.
“[Acrylic acid] volumes were stable in this business despite poor conditions in the key coatings end market,” said Credit Suisse.
“Specialty acrylics, which has been a focus for bolt-on acquisitions, saw an 'excellent performance' due to niche positioning. We believe this supports above-average margins and returns through the cycle,” it added.
($1 = €0.82)
Additional reporting by Helena Strathearn
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