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Arkema | Strategy and Financial Highlights Information from ICIS

 

Edited from company website and 2008 annual results, 5 March 2009

 

Arkema states that its ongoing strategy focuses on three key points: growth through innovation; swifter development in Asia; and improved competitiveness. It says its strategy is boosted by portfolio management, with the divestment of non-strategic assets as well as acquisitions targeting high added value activities within Arkema’s core businesses.

 

Growth through innovation

 

This concentrates on developing a new generation of materials and designs and more efficient processes in order to contribute to sustainable development, to improve products and develop innovative applications in collaboration with customers.

 

In addition, Arkema’s says that its R&D “expertise” is a key element of its growth strategy.

 

“Without doubt R&D represents one of Arkema’s best competitive assets. Our commitment to innovation enables Arkema to look to the future, by tailoring its investments to high added value activities, in particular Performance Products which receive almost half of these investments,” says chairman and chief executive officer, Thierry Le Henaff.

 

Arkema says that R&D yields “ground-breaking” projects which open the way to new generation processes and products, and are fully in line with a sustainable development approach, in particular through a growing use of renewable raw materials and a contribution to tomorrow’s energy solutions.

 

“This is particularly true of the use of technical polymers in the manufacture of photovoltaic cells or fuel cells, nanostructured materials and their applications in cutting-edge technologies, the valorisation bio-resources, and bitumen additives. Innovative materials, designed for performance and sustainable development,” says Le Henaff.

 

Arkema expects sales of products derived in part or in full from raw materials of renewable origin (over 20% of carbon of non-fossil origin, evaluated by an independent body based on an international standard) to double by 2012 (currently 5% of Arkema sales is from its Renewable business).

 

Increasing pace of development in Asia

 

“In the last few years, the global economic environment for the chemical sector has undergone an in-depth transformation. Markets have taken on an international dimension, and new players have appeared in emerging countries, particularly in Asia where Arkema already has an extensive presence, essentially in China with five production sites, as well as in India, Singapore, Korea and Japan,” says Le Henaff.

 

Arkema’s ambition is to increase to 20% the share of its sales in Asia by 2012. To achieve this objective, Arkema will speed up the pace of its development in Asia by investing some €50m/year in Asia.

 

Improved competitiveness

 

Arkema states that against an increasingly competitive backdrop, the level of performance of industrial plants and their adjustment to market trends is a key component of the competitiveness of Arkema, so the company’s industrial strategy aims to secure in the short term “world-scale” industrial facilities, improve its operational performance, shut down loss-making production lines, and optimise fixed and variable costs.

 

Arkema further states that it is prepared for a tough economic environment due to the global recession and very weak demand expected in 2009. The company will address its challenges with the “right sense of urgency” with the following list of priorities:

 

(1) generate cash and preserve quality of balance sheet;

 

(2) reinforce its cost saving programme; and

 

(3) continue to prepare for the long term.

 

The company will make further improvements in working capital by:

 

(1) accelerating optimisation of inventory;

 

(2) carefully looking at receivables; and

 

(3) benefits from lower raw material costs.

 

Selective spending on high-growth high-margin projects in 2009 will remain a key focus.

 

It will:

 

(1) have a budget of €270m in 2009 (€335m in 2008);

 

(2) review its capital expenditure growth under cautious assumptions;

 

(3) resilient projects maintained, such as fluorogases in Asia; and

 

(4) other projects postponed, such as acrylics in Asia.

 

In addition it will reinforce its cost savings programme through:

 

(1) €500m cost savings target increased to €550m;

 

(2) implement announced projects;

 

(3) new productivity plans in vinyl products;

 

(4) optimisation of purchasing services;

 

(5) realignment of PMMA business; and

 

(6) new initiatives to adapt to current economic conditions.

 

The company will also focus on new business and M&A through:

 

(1) new generation of fluorogases;

 

(2) new development for PVDF and polyamides;

 

(3) increase market penetration in oil and gas related businesses; and

 

(4) successful integration of bolt-on acquisitions that were made in 2008/2009. Please see: Arkema to buy US Dow’s acrylate and UCAR businesses for $50m

 

Please see arkema-to-buy-us-dows-acrylate-and-ucar-businesses-for-50m  on ICIS.com 

 

Long-term strategic orientation maintained by:

 

(1) 12% earnings before interest, tax, depreciation and amortisation (EBITDA) margin target in 2010 under normalised conditions - normalised conditions expected in 2011;

 

(2) €500m cost savings target in 2010 - increased to €550m; and

 

(3) cumulative structural gains over ending 2010 from internal projects - €400m EBITDA gain - €250m improvement in working capital.

 

Please see Interview: Arkema to reinforce presence in Asia – CEO on ICIS news.  

 

Download the The ICIS Top 100 Chemical Companies listing here

 

Financial highlights: Arkema, year ended 31 December

 

 

2010

 2009

 2008

 2007

2006

Sales (€ m)

5,905

4,444

5,633

5,675

5,664

Net Profit (€ m)

347

-172

100

122

47

R&D (€ m)

34

136

150

158

168

Total Assets (€ m)

4,818

3,945

4,473

4,446

4,494

Diluted earnings per share (€)

5.69

-2.85

1.65

2.01

--

Number of Employees

14,000

13,800

15,000

15,200

17,000 

 

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Arkema Company Structure

Arkema is a global chemical company. Arkema was created from the vinyl products, industrial chemicals and performance products businesses of Total in October 2004. The creation of Arkema reorganised the chemical businesses of Total within a more flexible and reactive operating structure. Petrochemicals will remain with Total because of its synergy with refining. The Arkema unit became an independent company on 18 May 2006.
More about Arkema Structure

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