LONDON (ICIS)--Arkema is paying close attention to trade tensions between the US, China and the EU, but has experienced no impact so far from the spectre of trade wars between the world’s major economies, the CEO of the France-based specialty chemicals firm said on Wednesday.
The fast-changing lists of products potentially facing sanctions between the US and China, and between the US and EU, means that the company is monitoring the situation, but capacity to manage production by region and limited exposure to products on the sanctions lists means little impact has been felt so far.
“For the moment there is no impact for us, because just a few polymers are concerned for the moment and we are able to manage production per region,” a company spokesperson added.
However, strong expected 2018 results are contingent on political and economic conditions remaining relatively steady, the company said.
Arkema’s second-quarter earnings reached an all-time high despite higher raw materials prices and currency headwinds, and expects its full-year performance to beat banner 2017 financials.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 12.6% year on year for the quarter to €430m, its highest level for a single quarter, despite currency and raw materials headwinds dogging each of the group’s three divisions.
Group net income rose by 36.9% to €219m over the same period amid higher operating margins, while sales rose by 3.3% year on year to €2.27bn driven by successful price increases, the company said.
Tight conditions in the methyl- and polymethyl methacrylate (MMA/PMMA) chain helped to drive industrial specialties earnings and margin growth, a key driver of stronger group performance during the quarter.
Second-quarter EBITDA for the division rose 18.2% year on year to €208m, buoyed by strong thiochemicals demand and an uptick in hydrogren peroxide sales in China, while recurrding EBITDA margin rose nearly five percentage points to 23%.
PMMA margins are likely to gradually normalise over time, according to CEO Thierry Le Henaff on an earnings call on Wednesday, with additional capacity coming onstream in the mid-term likely to reduce market tightness, but pricing in the market is likely to remain strong for the present.
The acrylics market is currently at the mid-point of its cycle, although demand in western Europe could be better, he added.
High performance materials division EBITDA rose 1.7% year on year during the quarter to €177m, its highest ever, driven by the integration of US coatings firm XL Brands into its adhesives division.
Coatings division earnings rose 6.3% year on year during the quarter to €68m despite an increase in feedstock propylene pricing and currency headwinds, as a robust US performance helped to offset disappointing demand in China.
Its recurring operating income margin rose to 14.0% in the second quarter of this year from 13.0% in the same period of 2017.
The company projects mid-single digit EBITDA growth compared to the €1.39bn generated last year.
This is contingent on no significant changes to the global macroeconomic environment, the company said.
(Update: Re-leads, adds geopolitical commentary)
Pictured: Arkema's headquarters in