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Arkema's EBITDA grew 54.4 percent year on year in the third quarter, well above pre-epidemic levels

Industry News > Arkema's EBITDA grew 54.4 percent year on year in the third quarter, well above pre-epidemic levels

Arkema Group's earnings before interest, tax, depreciation and amortization (EBITDA) surged 54.4% year on year in the third quarter, well above pre-COVID-19 2019 levels, driven by growing demand for innovative, high-performance materials in an environment of high raw material inflation and supply chain disruptions affecting organic growth. This performance highlights the evolution of the Group's image as a pure specialty materials producer and its unique positioning to provide technological solutions to major challenges related to sustainability.

· At constant business lines and exchange rates, group sales were eur 2.4 billion, up nearly 30% year-on-year and up nearly 17% from 2019:

· This growth is driven by the growing demand for cutting-edge, sustainable solutions, especially in the areas of batteries, lightweight materials and designs, high-performance bonding and more environmentally friendly products

· Solid volume growth (5.3% vs. 3Q20) against the backdrop of growing raw material shortages and logistics constraints in Asia and the US

· The significant increase in selling prices (23.8% over 3Q20) on the back of soaring raw material and energy prices reflects the group's initiatives to adapt to market conditions and improve its product mix

· Earnings before interest, tax, depreciation and amortization (EBITDA) of eur 474 million, a strong increase of 54.4% from Q3 20, with EBITDA margin reaching 20%, a record high for Q3 performance.

· Specialty materials EBITDA increased 57.1% to €421 million, with growth across all business units and well ahead of pre-COVID-19 levels (up 34.9% from 3Q19)

· Intermediate EBITDA was eur 74 million, benefiting from favorable market conditions that were sufficient to offset negative range effects related to PMMA divests

· Adjusted net income increased 1.4 times to eur 258 million, or EUR 3.44 per share

· Net debt of €1.255 billion (including €700 million of hybrid bonds), equivalent to 0.8 times EBITDA for the past 12 months, consolidated recurrent cash flow of €236 million

· The group took another step in its strategy of refocusing on specialty materials with the acquisition of Ashland's high performance adhesives business on 31 August

· Full-year target significantly increased again: Arkema's 2021 target for specialty materials EBITDA growth of more than 40% over 2020 at constant business lines and exchange rates will give the group a new EBITDA estimate of around €1.6 billion

On 9 November 2021, Arkema convened a board of Directors meeting to review the Group's consolidated financial information for the third quarter of 2021. Thierry Le Henaff, Chairman and Chief Executive Officer of Arkema Group, said: "We should be proud of Arkema's strong financial performance in a complex and challenging operating environment. I particularly want to thank our team, as these results reflect the high quality of their work and unassailable determination. Even more prominent is our overall sustainable growth strategy. Our specialty materials benefit from their positioning in the context of social trends. We are seeing structural acceleration in many of our high-growth support markets, such as batteries, 3D printing, eco-friendly coatings, sports, lifestyle and electronics. In addition, we are actively pursuing our published 2024 strategy and refocusing the group's focus on specialty materials. As a result, we will strengthen our adhesives solutions business unit through the acquisition of Ashland's high performance adhesives business, leveraging its technical expertise to accelerate Bostik's growth. The divestiture of our epoxy products business to Cargill is also consistent with our active management of our product portfolio."

Outlook 2021,

Performance in the fourth quarter of 2021 will be consistent with previous months. Operating results will continue to be constrained by shortages and inflation of certain raw materials logistical difficulties and higher energy and transportation costs. These factors will continue to influence the group's pricing policy. The automotive sector will also continue to suffer from shortages of electronic components, while energy restrictions in China could temporarily reduce demand in the region.

While continuing to focus on the macroeconomic backdrop, Arkema will continue to benefit from the positive momentum driven by the repositioning of its portfolio towards specialty materials and the general direction of sustainability, particularly in the areas of lightweight materials, green mobility, natural resource management and energy efficiency in comfortable living and homes.

As a result of these factors, the group again significantly increased its full-year target. Arkema's current target is to grow specialty Materials EBITDA by more than 40% over 2020 at constant business lines and exchange rates (2) (the target was 30% as announced in the first half of 2021 results). As a result, group EBITDA for the full year will be about €1.6bn. In addition, the Group confirmed its full-year EBITDA margin target of 14% for the Adhesives Solutions business segment, up one percentage point from 2020, demonstrating the resilience of the business against the exceptional backdrop of severe raw material inflation and supply shortages.

In conclusion, the Group will continue to implement its strategy to achieve its ambitious goal of becoming a sustainable, high-performance producer of pure specialty materials by 2024.

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Arkema's EBITDA grew 54.4 percent year on year in the third quarter, well above pre-epidemic levels

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