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Full-year 2020 results

- Press release
Corporate - Finance
In a context strongly marked by the pandemic, the Group’s EBITDA margin remained robust at 15.0%, supported by the resilience of its Specialty Materials [1] and by the rebound in volumes in the fourth quarter (+5% vs Q4’19). Arkema is well positioned to take advantage of the recovery in 2021 and beyond, thanks to the benefits of its strong balance sheet and its focus on sustainable and high performance Specialty Materials.

Rebound in volumes in the fourth quarter and solid performance during the year

  • Rebound in the Group’s performance in the fourth quarter
    • Sales growth of 2.1% at constant scope and currency, driven by a significant improvement in volumes (+5.2% vs Q4’19)
    • Continued positive momentum in construction, decorative paints and batteries, and recovery seen in several industrial markets
    • EBITDA broadly stable at €289 million (€295 million in Q4’19), supported by the strong increase of Adhesive Solutions (+15%) and Coating Solutions (+19%)
  • €7.9 billion in sales in 2020, representing a limited decline of 8% year on year at constant currency, reflecting the impact of the pandemic on global demand
  • EBITDA in 2020 of €1,182 million (-18.9%) and EBITDA margin of 15.0%. Good resilience of Specialty Materials (12% decrease in EBITDA and a 100 bp contraction in EBITDA margin to 15.8% [2])
  • Adjusted net income of €391 million in 2020, representing €5.11 per share
  • High free cash flow for the year at €651 million, comparable to the level achieved in 2019, reflecting excellent management of working capital (11.8% of sales at 31 December 2020) and strict control of capital expenditure
  • Net debt down strongly at €1,910 million including hybrid bonds (€2,331 million at 31 December 2019), representing 1.6x EBITDA for 2020

 

[1] Specialty Materials include the three following segments: Adhesive Solutions, Advanced Materials and Coating Solutions  

[2] Before allocation of corporate costs

Confidence in the outlook for 2021 and in the execution of the 2024 roadmap

  • Significant progress made in 2020 on the strategy to refocus on Specialty Materials
  • Reinforced ambition in terms of CSR and creation of the Innovation and Sustainable Growth committee, a new committee of the Board of Directors
  • Dynamic cash allocation in line with the guidelines of the April 2020 Capital Markets Day
    • Proposed dividend back at pre-Covid level at €2.50 per share [3]
    • Share buyback program totaling €300 million to be launched after the closing of the planned divestment of PMMA [4]
  • EBITDA growth in 2021 to be concentrated in Specialty Materials (82% of Group sales in 2020). In an environment that is still volatile, excluding a significant resumption of the pandemic, Arkema aims, at constant currency [5] for Specialty Materials EBITDA to grow by around 10% in 2021 relative to 2020, and for EBITDA of Intermediates to be stable at constant currency [5] and scope (closing of PMMA expected mid-2021).

 

[3] Dividend proposed at the general meeting of 20 May 2021

[4] This project is still subject to the approval of the relevant antitrust authorities and to an information and consultation process involving Arkema’s employee representative bodies

[5] With the assumption of a €/$ rate of 1.2 for 2021, the impact on 2020 EBITDA is estimated at a negative €30 million for Specialty Materials and a negative €10 million for Intermediates

Arkema Chairman and Chief Executive Officer

Arkema’s Board of Directors met on 24 February 2021 to approve the Group’s consolidated financial statements for 2020. Commenting on the year’s results, Chairman and CEO Thierry Le Hénaff said:

 

“Last year we faced the challenging context of the pandemic and first and foremost, I would like to thank the responsiveness and mobilization of our employees across the world. Their unwavering commitment, as well as Arkema’s geographic and technological positioning, enabled the Group to deliver a robust financial performance in 2020, be highly efficient in managing operations to quickly adapt to the context, record a strong rebound in sales and earnings in the fourth quarter, and look confidently ahead to 2021.

 

2020 was ultimately a year of major qualitative progress for Arkema. Progress in refocusing the Group’s profile toward Specialty Materials with the divestment of Functional Polyolefins to SK and the proposed divestment of PMMA to Trinseo. Progress in our innovation programs, in particular with the acceleration in our high-performance adhesives, cutting-edge solutions for mobility and natural resources management. Progress in CSR with the admission to the DJSI World index, the strengthening of our environmental and diversity targets, and the continued assessment of our solutions portfolio based on sustainability criteria.

 

Despite the ongoing uncertainty of the health context, 2021 should be a year of good growth for Arkema. In addition, we will continue to accelerate our high value-added developments in the 3 segments, Adhesive Solutions, Coating Solutions and Advanced Materials, as well as the execution of our strongly value-creative strategy to refocus entirely on Specialty Materials.”

Outlook for 2021

In an environment that is still uncertain, particularly with regards to the pandemic, the start of the year is marked by an increase in the level of global demand, in the continuity of fourth-quarter 2020. EBITDA for first-quarter 2021 could thus rise by around 10% relative to first-quarter 2020, including a negative currency impact estimated at €15 million.

Moreover, the growth of Arkema’s EBITDA during the year should be concentrated in Specialty Materials (82% of Group sales in 2020). Excluding a significant resumption of the pandemic,

  • Arkema aims at constant currency [6] for Specialty Materials EBITDA to grow by around 10% in 2021 relative to 2020
    • Bostik, in line with its 2024 trajectory, is aiming for 14% EBITDA margin in 2021, thanks to the benefits of its positioning in the construction and high-performance industrial adhesives markets, and its operational excellence initiatives, as well as its acquisition strategy.
    • The Advanced Materials segment should record a significant rebound, driven in particular by its innovations in batteries, electronics, lightweight materials, sporting goods and filtration, as well as by higher demand in certain industrial markets, animal nutrition and crop protection.
    • Finally, earnings of Coating Solutions should be supported by the growth momentum and sustainable innovation in the paints, electronics and 3D printing markets.
  • EBITDA for the Intermediates segment in 2021 is expected to be at a comparable level to 2020 at constant currency [6]and scope. The divestment of PMMA is expected to close in mid-year.

 

Moreover, in 2021 the Group will continue to execute its mid-term strategy presented at the Capital Markets Day in April 2020, in line with its ambition to become a pure Specialty Materials player by 2024. In this respect, the two major industrial projects – the bio-based polyamides plant in Singapore and hydrofluoric acid plant in the United States – will progress as expected and come on stream mid-2022. Arkema will pursue its bolt-on acquisition strategy in Specialty Materials, particularly in Adhesive Solutions, and will accelerate the strategic review of Fluorogases. Lastly, the Group will reinforce its innovation for sustainable development given the opportunities arising from governments’ stimulus plans in the fields of new mobility, home comfort and management of natural resources.

 

[6] With the assumption of a €/$ rate of 1.2 for 2021, the impact on 2020 EBITDA is estimated at a negative €30 million for Specialty Materials and a negative €10 million for Intermediates

Financial calendar

 6 May 2021  Publication of first-quarter 2021 results
 20 May 2021  Annual General Meeting
 29 July 2021  Publication of first-half 2021 results
 10 November 2021  Publication of third-quarter 2021 results

 

Contacts

Béatrice ZILM
Investor relations
Peter FARREN
Investor relations
Mathieu BRIATTA
Investor relations
Caroline CHUNG
Investor relations
Gilles GALINIER
VP Communication
Arkema
Véronique OBRECHT
Corporate Press relations
Arkema