UpdateIndustrial specialties boosts Arkema's Q4 net profit

28 February 2013 10:50  [Source: ICIS news]

(adds further financial detail throughout, CEO comment)

By Franco Capaldo

PARIS (ICIS)--Arkema swung to a 2012 fourth-quarter net profit of €16m ($21m) from a net loss of €463m in the same period a year before, supported by strong earnings in its industrial specialties unit on healthy market conditions in North America, the French specialty chemicals maker said on Thursday.

Sales in the three months ended 31 December rose 3.4% year on year to €1.45bn, while earnings before interest, tax, depreciation and amortisation (EBITDA) was up by 8.2% at €171m, it added, with an 11.8% EBITDA margin (11.3% in fourth quarter of 2011).

Fourth-quarter operating profit rose 20% year on year to €78m, while overall volumes rose 3%, Arkema added.

EBITDA within the group’s industrial chemicals business, which includes the industrial specialties and coatings solutions segments, grew 28% year on year to €124m, as sales rose to €1.02bn from €980m in the prior-year quarter.

Arkema’s CEO Thierry Le Henaff said the industrial specialties achieved “a very sound performance, sustained by favourable market conditions in North America. Coating Solutions, although in low season, also improved over the previous year, and achieved a 9.1% EBITDA margin benefiting from synergies from the integration of newly acquired activities."

Le Henaff also said the quarter was “marked by the traditional seasonality of the Group’s activities at the end of the year and the cautious management by our customers of their inventory levels.”

He added that the performance products, or high performance materials, segment and more specifically the technical polymers unit within it, experienced destocking during the quarter in certain end-markets, in particular in Europe and in photovoltaics.

He said there was also some delays in a few projects in the oil and gas sector which had hindered results.

“Meanwhile, the contribution to sales from the acquisition of Hipro Polymers and Casda Biomaterials in China, and sales contributions from alkoxylates was partly offset by the impact of the divestment of the tin stabiliser activity [to US chemicals and plastics producer PMC Group in October],” Le Henaff added.

Over the full year of 2012, the company’s group share net profit swung to €220m, from a net loss of €19m a year earlier.

Full-year sales were up 8.4% year on year at €6.40bn. Le Henaff said sales growth reflected the contribution of acquisitions, including Total’s photocure and coatings resins businesses, Cray Valley and Sartomer, in July 2011; Chinese companies Hipro Polymers and Casda Biomaterials, alkoxylates; and the acquisition of a production site for acrylic additives and emulsions in Sao Paolo from Brazilian firm Resicryl, in October last year.

The CEO added the company also benefited from increasing demand for sustainability products, such as lightweight materials, bio-based products and water treatment.

However, EBITDA in 2012 slipped by 3.7% to €996m, following “less favourable and more volatile economic environment than in 2011, not just in Europe but also in China,” Le Henaff said.

He added that cheap energy costs in North America and a positive foreign exchange rate had provided a solid economic environment to work in, however the company experienced lower growth in Asia than expected and difficult macroeconomic conditions in Europe, as well as volatile an high raw material costs.

“This performance, achieved in an economic environment that was less favourable than in 2011, confirms the validity of the repositioning of the Group’s activities portfolio towards high added value niche markets. Moreover, the group’s geographic presence is now more evenly balanced and is further strengthened by several ongoing major investment projects in Asia and the US,” Le Henaff said.

In 2013, the CEO said global market conditions are expected to “remain contrasted” in 2013, but was confident in Arkema would once again report a strong performance

($1 = €0.76)


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



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