Arkema Industrial Chemicals sales rise by 3.6%
At the close of the Board of Directors meeting which reviewed Arkema's condensed consolidated financial statements for the first six months of 2008, Thierry Le Hénaff, Chairman and CEO of Arkema, stated:
Arkema's very strong performance in the second quarter fully illustrates the transformation undertaken within the Group over the last three years. EBITDA margin stands at 10.5% of sales and EBITDA is up 11% at constant conversion rates despite a more challenging environment characterized, in particular, by the sharp increase in the cost of several raw materials.
This result is supported by the very significant improvement in the Industrial Chemicals and Performance Products segments, which each reported an EBITDA margin exceeding 14%, moving closer to the best players in the sector.
Over the second half of the year, in an economic environment that remains challenging and uncertain, Arkema will continue to take the necessary measures to adapt accordingly. The 2008 EBITDA margin target is maintained at 10%.
SECOND QUARTER 2008 PERFORMANCE:
Sales in the 2nd quarter 2008 rose 1.3% to €1,509 million, against €1,489 million in the 2nd quarter 2007. Excluding the impact of exchange rates (-4.6%) and variations to the scope of business (-0.5%), sales rose by 6.4%, sustained primarily by price increases (+5.4%) implemented in the Industrial Chemicals and Performance Products segments, while volumes also improved slightly (+1.0%).
EBITDA was up 5.3% to €158 million against €150 million in the 2nd quarter 2007. The conversion effect related to the decline of the US dollar versus the euro is estimated at –€9 million, i.e. an EBITDA growth of 11% excluding the conversion effect. The contribution of new products and productivity measures, in line with the targeted €80 million EBITDA improvement announced for 2008, helped more than compensate the impact of a more challenging economic environment, in particular in the Vinyl Products segment.
Arkema reported an EBITDA margin of 10.5% of sales in the quarter against 10.1% in the same period in 2007.
Recurring operating income was stable at €97 million, taking account of higher depreciation charges following the startup of new units.
Non-recurring items stood at -€15 million in the 2nd quarter 2008. This amount corresponds to the cost of restructuring plans announced in the 2nd quarter.
Adjusted net income rose by 7%, while net income (Group share) was multiplied by 2.6 to €60 million.
Vinyl Products sales rose by 5.1% to €395 million, against €376 million in the 2nd quarter 2007, underpinned primarily by strong demand for caustic soda and sound volumes for PVC in Europe albeit with strong variations from one country to another. The segment's EBITDA stood at €14 million (against €33 million in the 2nd quarter 2007), with the ongoing and sharp hike of ethylene and natural gas prices weighing heavily on the level of unit margins. The productivity drive continued over this period.