07 November 2013 11:36 [Source: ICIS news]
LONDON (ICIS)--One-off charges, prevailing economic headwinds and currency effects led to a 44% year-on-year fall in net income for Arkema in the third quarter of 2013, the French specialties producer said on Thursday.
The company reported a fall in net income for the period to €65m ($88m), compared to €116m in the third quarter of 2012.
Net sales fell by 6.9% year on year to €1.50bn in July-September this year, while its earnings before interest, tax, depreciation and amortisation (EBITDA) was down by 12.4% at €233m, Arkema said.
The company added that economic conditions during the quarter were more challenging than during the same period in 2012, indicating that the slow recovery of Europe’s economy may not necessarily be felt by European industry at this stage.
Arkema noted that Europe stabilised at a low point during the third quarter, “which might be a base for slow recovery next year”.
Arkema posted non-recurring charges of €37m in the third quarter which “correspond to restructuring charges and write-off recorded following the announcement of the proposed shutdown of the Chauny site in France”, it said.
The strengthening of the euro also weighed on the company’s performance, according to CEO Thierry Le Henaff.
Arkema’s high performance materials division posted a 21% fall in EBITDA to €85m, due in part to lower demand from the oil and gas and photovoltaics markets. The divestment of Arkema’s tin stabilisers business also represents half of the sales decrease for the division during the quarter. Sales were down from €548m in 2012 to €451m in 2013.
EBITDA for the industrial specialties segment fell by 25% year on year to €74m during the quarter, due to weakness in fluorogases impacting the division’s performance. Polymethyl methacrylate (PMMA) earnings held up well in the US but remained pressured in Europe as a result of prevailing weakness in the region’s automotive and construction markets.
Fluorogases performance is expected to improve in 2014, the company added. Industrial specialties division sales fell to €461m during the quarter from €496m during the same quarter in 2012.
The company’s coating solutions business generated slight gains on the previous year during the quarter, with EBITDA increasing by 1% to €79m and sales rising by 3% to €574m.
The gains were driven by growth in the acrylics monomers market and improvements in the North American paints market, buoyed by a less pronounced improvement in Europe.
Le Hanaff said: "The high performance materials segment reported a high margin in a less supportive environment than last year. In [the fourth] quarter, EBITDA of this segment should be above last year as expected. Despite the increase in raw material costs, the coating solutions segment achieved a stable performance, sustained by strong volumes in North America.
“The industrial specialties segment continued to be affected by the weakness in fluorogases and PMMA in Europe,” he added.
“The fourth quarter will reflect the traditional year-end seasonality,” the company said, adding that it targets a full-year 2013 EBITDA of around €920m.
($1 = €0.74)
Additional reporting by Nurluqman Suratman
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