Corrected: Arkema’s future sales a balance of organic growth, acquisitions – CEO

18 September 2012 10:38  [Source: ICIS news]

Correction: In the ICIS story headlined "Arkema’s future sales a balance of organic growth, acquisitions – CEO" dated 18 September 2012, please read in the third paragraph ... €900m will come through organic growth... instead of ... €900,000 will come through organic growth...In the same paragraph, please read ...around €600m through mergers and acquisitions... instead of ...around €600,000 through mergers and acquisitions. A corrected story follows. 

PARIS (ICIS)--Arkema’s future sales growth will be balanced between organic growth and acquisitions, the France-based specialty company’s CEO said on Tuesday.

Arkema reiterated its target to achieve group sales of €8bn ($11bn) and an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 16% in 2016, while maintaining gearing below 40%.

Arkema Chairman and CEO Thierry Le Henaff said as part of the company’s target to reach sales of €8bn in 2016, €900m will come through organic growth and around €600m through mergers and acquisitions of small- and medium-sized businesses, with particular focus placed on the group’s high performance materials business, as well as Arkema’s goal of increasing further acrylic downstream integration.

The CEO added that the company will look to divest small non-core businesses, and said Arkema expects to divest its tin stabilisers unit by the close of the fourth quarter this year.

“The contribution from organic growth is well underway,” Le Henaff said, with the already-announced construction of Arkema’s thiochemicals plant in Malaysia and the acquisition of Hipro Polymers and Casda Biomaterials in China at the beginning of 2012.

The company also carried out a divestment of the vinyl business at the beginning of July, along with capacity expansions for acrylic acid and esters at the company’s site in Clear Lake, Bayport, in the US, and polyvinylidene fluoride (PDVF) expansions in China and France.

The group also hopes the accelerated expansion of its high performance materials business will help it hit its sales growth targets through organic developments and bolt-on acquisitions.

Le Henaff said the company is aiming for 38% of its sales in 2016 to come from its high performance materials business, up from around 33% in 2012.

He added that the group will look to find a balanced geographical reach between Europe, North America and the rest of the world, but will continue to focus on expansion in higher growth countries.

In 2012, it is expected around 26% of group sales will come from Asia and the rest of the world, 34% from North America and 40% from Europe – in 2016, Arkema hopes Asia and the rest of the world will contribute 30% to group sales, with North America and Europe both contributing 35%.

At present, Arkema's sales from higher growth countries in Asia, South America and the Middle East totals around €1.7bn. In 2016, the company hopes to increase this figure to €2.4bn.

Le Henaff added that Arkema is also looking to increase its sales in North America from €2.2bn at present to €2.8bn in 2016, by trying to leverage the strong and profitable presence the region currently offers.

“Shale gas will support the long-term competitiveness of the [US] economy, there is an anticipated rebound in housing and recovery is underway in the automotive industry – North America is an important market for us,” he said.

In Europe, sales are expected to rise – but at a slower pace. Arkema expects sales of €2.8bn in Europe, up from €2.6bn at present. Le Henaff said this growth will be driven through a focus on high-value products and the divestment of non-core businesses.

Arkema also announced it hopes to generate €10bn sales in 2020 and EBITDA of close to 17% in the same year.

Le Henaff said that several of Arkema’s current projects, including the thiochemicals plant in Malaysia, PVDF expansion in Pierre-Benite, France and the acrylic expansion in Clear Lake will start delivering only at full speed after 2016.

“We have strong confidence in our long-term potential,” he said.

He also said that mobility, oil and gas, new energies, nutrition, lightweight materials, renewables and high performance coatings will continue to generate opportunities.

“[A] combination of technology leadership and enhanced end-market approach will continue to generate significant opportunities in sustainability,” he added.

($1 = €0.76)

By: Franco Capaldo
+44 (0)20 8652 3214

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