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Good resilience of Industrial Chemicals results, Arkema
03 Aug '09
7 min read
Cash flow and net debt at June 30th 2009
In the 1st half 2009, free cash flow stood at €135 million against –€33 million at end of 1st half 2008. Arkema therefore confirms its ability to generate cash, which is its priority for 2009.
This cash flow included €125 million recurring capital expenditures, €41 million expenses related to restructuring , and a +€220 million variation in working capital. This sharp reduction of working capital is the result of lower raw material costs and volumes, a significant effort to optimize inventory levels, and very tight credit control.
After taking account of the impact of portfolio management operations (-€28 million) and the payment of a €0.60 euro dividend per share (-€36 million), the Group's net debt at end June 2009 stood at €420 million against €435 million at March 31st 2009 and €495 million at December 31st 2008. This amount represents less than 1.5 times the EBITDA for the last 12 months, and illustrates Arkema's initiatives to maintain the quality and strength of its balance sheet.
2nd quarter 2009 highlights
In the 2nd quarter 2009, Arkema announced two new major projects to help improve structurally its productivity:
In May 2009, Arkema announced the restructuring of its activities in North America in order to adapt to the current economic situation and boost its long-term competitiveness. The loss of positions, a significant reduction in ove head costs, and the optimization of the organization will result in savings of US$40 million (€30 million) from 2010, to reach US$50 million (€37 million) in 2012.
In June 2009, Arkema presented a restructuring project3 aimed at consolidating its MMA/PMMA sector in Europe, which should entail the shutdown of MMA (methyl methacrylate) production at the Carling site (France) and the refocusing of PMMA sheet production at the Bernouville site (France) on higher added value products. These various restructuring operations should result in the loss of 239 positions. Meanwhile, Arkema announced two divestment operations designed to recenter its activity portfolio concerning:
• the aluminum chloride activity (European goodwill and the Indian subsidiary ARCIL) accounting for total annual sales of the order of €24 million;
• non-strategic activities (ceramic opacifiers and catalysts forpolyester resins) within its Functional Additives BU, based at the Guangzhou site, China, and accounting for annual sales of the order of €13 million.
Post balance sheet events
In order to sustain the growth of the specialty acrylic polymer market in Asia, Arkema has announced the construction of an industrial plant on its Changshu site (China) from mid-2011, for a total investment of approximately €15 million. This project represents a further step in Arkema's transformation and development drive, in particular in Asia. The project is fully in line with the Group's strategy to consolidate its acrylics activities.
2009 outlook
Thierry Le Hénaff, Chairman and CEO of Arkema, commenting on the outlook at the close of the Board of Directors meeting, stated:
“The global economic environment half-way through the year remains highly challenging overall despite a few more positive signs, including an improvement in volumes in China and a gradual reduction in destocking at our customers. Against this background, we remain very cautious in our economic environment assumptions for the 2nd half of the year, and will continue to implement our progress actions with the same determination”.
Accordingly, Arkema will continue to adapt its organization and will pursue its efforts to reduce fixed costs which should amount to €170 million in 2009, in line with a new target of €600 million cumulated fixed costs over the 2006 - 2010 period.
Meanwhile, for Arkema the priority remains managing cash flow rigorously and maintaining the Group's financial strength. The Group's target for 2009 has been revised upward and is to generate free cash flow of the order of €80 million. In this regard, Arkema will continue to improve its working capital and will limit its investments to €260 million in 2009.
“Over and above these efforts to adapt to the crisis, we are continuing the in-depth t
In the 1st half 2009, free cash flow stood at €135 million against –€33 million at end of 1st half 2008. Arkema therefore confirms its ability to generate cash, which is its priority for 2009.
This cash flow included €125 million recurring capital expenditures, €41 million expenses related to restructuring , and a +€220 million variation in working capital. This sharp reduction of working capital is the result of lower raw material costs and volumes, a significant effort to optimize inventory levels, and very tight credit control.
After taking account of the impact of portfolio management operations (-€28 million) and the payment of a €0.60 euro dividend per share (-€36 million), the Group's net debt at end June 2009 stood at €420 million against €435 million at March 31st 2009 and €495 million at December 31st 2008. This amount represents less than 1.5 times the EBITDA for the last 12 months, and illustrates Arkema's initiatives to maintain the quality and strength of its balance sheet.
2nd quarter 2009 highlights
In the 2nd quarter 2009, Arkema announced two new major projects to help improve structurally its productivity:
In May 2009, Arkema announced the restructuring of its activities in North America in order to adapt to the current economic situation and boost its long-term competitiveness. The loss of positions, a significant reduction in ove head costs, and the optimization of the organization will result in savings of US$40 million (€30 million) from 2010, to reach US$50 million (€37 million) in 2012.
In June 2009, Arkema presented a restructuring project3 aimed at consolidating its MMA/PMMA sector in Europe, which should entail the shutdown of MMA (methyl methacrylate) production at the Carling site (France) and the refocusing of PMMA sheet production at the Bernouville site (France) on higher added value products. These various restructuring operations should result in the loss of 239 positions. Meanwhile, Arkema announced two divestment operations designed to recenter its activity portfolio concerning:
• the aluminum chloride activity (European goodwill and the Indian subsidiary ARCIL) accounting for total annual sales of the order of €24 million;
• non-strategic activities (ceramic opacifiers and catalysts forpolyester resins) within its Functional Additives BU, based at the Guangzhou site, China, and accounting for annual sales of the order of €13 million.
Post balance sheet events
In order to sustain the growth of the specialty acrylic polymer market in Asia, Arkema has announced the construction of an industrial plant on its Changshu site (China) from mid-2011, for a total investment of approximately €15 million. This project represents a further step in Arkema's transformation and development drive, in particular in Asia. The project is fully in line with the Group's strategy to consolidate its acrylics activities.
2009 outlook
Thierry Le Hénaff, Chairman and CEO of Arkema, commenting on the outlook at the close of the Board of Directors meeting, stated:
“The global economic environment half-way through the year remains highly challenging overall despite a few more positive signs, including an improvement in volumes in China and a gradual reduction in destocking at our customers. Against this background, we remain very cautious in our economic environment assumptions for the 2nd half of the year, and will continue to implement our progress actions with the same determination”.
Accordingly, Arkema will continue to adapt its organization and will pursue its efforts to reduce fixed costs which should amount to €170 million in 2009, in line with a new target of €600 million cumulated fixed costs over the 2006 - 2010 period.
Meanwhile, for Arkema the priority remains managing cash flow rigorously and maintaining the Group's financial strength. The Group's target for 2009 has been revised upward and is to generate free cash flow of the order of €80 million. In this regard, Arkema will continue to improve its working capital and will limit its investments to €260 million in 2009.
“Over and above these efforts to adapt to the crisis, we are continuing the in-depth t
Arkema
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