Good resilience of Industrial Chemicals results, Arkema
Arkema announces second quarter results.
At the close of the Board of Directors meeting which reviewed Arkema's condensed consolidated accounts for the first six months of 2009, Thierry Le Hénaff, Chairman and CEO of Arkema, stated:
"Arkema's teams were very quick to gauge the scale of the current crisis, and, since the end of last year, have been deploying quickly and successfully the necessary efforts to adapt to the situation by giving priority to generating cash and reducing fixed costs. Three figures in particular reflect the work achieved in the first six months of 2009: €135 million free cash flow despite a 23% drop in volumes, net debt representing 23% of shareholders' equity, and a reduction of around 10% in fixed costs. We are very pleased with what we have achieved, as this is helping Arkema face the crisis with confidence."
2nd quarter 2009 activity
Sales stood at €1,167 million against €1,509 million in the 2nd quarter 2008. This 22.7% decline was due primarily to a drop in volumes (-18.2%), as demand remained weak in many market segments, and to further de-stocking at customers . The price effect (–6.5% on average) observed primarily in PVC and Acrylics reflects the very sharp drop in the cost of ethylene and propylene in the 2nd quarter 2009 compared to the 2nd quarter 2008. The translation effect was positive (+2.8%) as a result of the dollar's strengthening vs the euro, and the effect of variations to the scope of business remained limited (-0.7%).
The decline in volumes in the 2nd quarter 2009, lower than in the 1st quarter, reflected a recovery in the activity in China and a progressive reduction in de-stocking.
EBITDA stood at €70 million against €158 million in the 2nd quarter 2008. The impact of the sharp drop in volumes was partly offset by the ongoing implementation of productivity measures and a reduction in overhead costs which account for a €86 million improvement over the 1st six months of 2009.
Recurring operating income stood at €2 million, and included depreciation of €68 million, €7 million up over the 2nd quarter 2008.
Non-recurring items accounted for –€94 million, and primarily included costs related to the restructuring plans announced in the 2nd quarter 2009 in North America and in the methacrylates activity in Europe2.
Net income (Group share) therefore stood at –€114 million against +€60 million in the 2nd quarter 2008.
Vinyl Products sales stood at €266 million euros, 33% down on the 2nd quarter 2008. EBITDA stood at –€7 million against €14 million in the 2nd quarter 2008. This quarter was marked by a sharp decrease in caustic soda prices, the impact of which was eased by a significant improvement in PVC prices and volumes compared to the 1st quarter 2009 and by the productivity measures undertaken in downstream activities.
Industrial Chemicals sales stood at €543 million against €682 million in the 2nd quarter 2008, reflecting weak demand. EBITDA for the segment remained sound at €75 million against €96 million in the 2nd quarter 2008 thanks to a resilient performance in Fluorochemicals, Thiochemicals and Specialty Acrylic Polymers, with unit margins for Acrylics and PMMA remaining under pressure. The many productivity measures undertaken in particular in PMMA, Acrylics and Thiochemicals continued to sustain the segment's performance.
Performance Products sales stood at €355 million in the 2nd quarter 2009, 17% down on the 2nd quarter 2008 (€430 million). Weak demand in the automotive and construction sectors continued to affect strongly sales volumes in Technical Polymers. EBITDA stood at €23 million against €61 million in the 2nd quarter 2008, with major fixed costs savings in the segment's 3 activities helping mitigate the impact of lower demand.
The Corporate segment reported EBITDA of –€21 million in the 2nd quarter 2009, and included an impact of –€15 million related to measures taken to optimize inventory levels.