Arkema S/Adr

Ladies and gentlemen, welcome to the Archimedes Alfreo Results Conference call. I will now hand over to Marie-Josée Donzio, CFO. Madame, please go ahead.

Good morning, everyone. Welcome to the webcast conference. I'm actually together with Thierry, so I'll actually hand over to Thierry himself for the call.

Thank you, Marie-Josée, for this introduction. Good morning, everyone. Welcome to Arkema Q2 2022 results conference call. So with me today is Marie-Josée, as you could see, and also Beatrice and Peter from Investor Relations team. As usual, to support this conference call, we have posted the presentation on our website, which details our second quarter performance and revised outlook. We now commence the highlights of the quarter before letting Marie-Josée go through the financials in more detail. And as always, we will answer your question at the end of the call. So in Q2, we clearly delivered an excellent set of results. Actually, this was a record quarter in many respects. The numbers were ahead of our forecast and well above market expectation. This financial performance is really an element of pride for our teams. All the more as the operating environment remains challenging and demanding with many disruptions. As a matter of fact, the high inflation, the Ukraine conflict leading to insecurity of gas supply and supply chain disruptions, as well as volatile conditions in China due to the pandemic and lockdown, all represent great challenges for our teams. As for our peers and many companies, our performance integrates the tightness on a few of our product lines, but above all, reflects the relevance and the right execution of our strategy on specialty materials, our balanced geographic footprint, our differentiation, as well as the strength of our innovation and of our technology to help our customers develop and provide sustainable solutions. Specifically, I would mention the following key points of this second quarter. First, Arkema's EBITDA rose by nearly 50%. to €705 million, breaching the quarterly €700 million mark for the first time and the EBITDA margin improved by over 200 basis points to 22.1%. This excellent performance was in particular driven by firstly our pricing power in all businesses to offset notably the continued and extraordinary inflationary trends in raw materials, energy, and transportation costs. Secondly, the evolving product mix towards high-value added applications in light weighting, clean mobility, 3D printing and electronics, reflecting our strategy of innovative material for a sustainable world and our unique positioning. Third, our balanced geographical exposure which allows us to mitigate the underperformance of one region and take advantage of our strong presence in other regions. And the benefit from the tightness, which we mentioned before, partly sustained by this context of supply chain disruptions. This quarter, we really saw the importance of having a balanced geographic footprint and diversified in markets. Europe slowed down. impacted in particular by construction, which has an end market in this region, represents around 10% of total group sales, and the automotive market remains affected by component shortages. But the overall dynamic stays strong in the U.S. and resilient in Asia. Besides, the diversity of our end market should hold us in good stead in the second half with growth in areas such as sports, oil and gas, new energy, 3D printing, electronics, for example. It's really this combination of high value-added solutions across all those end markets that has made the company robust in the different market conditions which we have experienced in the past several years. Furthermore, each of Arkema's four segments contributed very positively in Q2. BOSIC achieved its first ever triple-digit million euro EBITDA in a quarter. We are very pleased about it. Supported by Ashland's excellent contribution and its ability to maneuver in a challenging environment marked by continued raw material shortages and the slowdown in European construction and do-it-yourself. Advanced materials particularly benefited from our exposure to megatrons and best-in-class innovation in high-performance polymers. Performance additive also delivered a solid performance with a pricing effect of close to 30%. In coating solutions, while conditions in upstream acrylics, which represent around one-third of segment cells, remained favorable, the pricing effect was virtually the same in the downstream and the upstream, demonstrating our pricing power, and the benefit of our innovation in megatrends and attractive niches. And in intermediates, we benefited from good market conditions in refrigerant gases in the U.S. and a good resilience of acrylics in China despite the lockdowns. Q2 results confirm that Arkema is benefiting from its unique positioning specialty material, which makes up 90% of group sales. There are many examples of our drive to develop high-performance and innovative solutions, but I will focus on some specific opportunities in clean mobility where we have exciting initiatives to support future technologies. We recently announced a joint venture with Nippon Shokubai, a long-lasting partner, to accelerate the development of new electrolyte formulations for the next generation of batteries with the aim of significantly increasing batteries' power, stability, cycle life, and recyclability. This project is completely in line with Arkema's strategy to leverage its technical expertise and develop tomorrow's solutions to accelerate the decarbonization of our economy. There are many other similar projects across our specialty material platform working closely with our customers in 3D printing or electronics, for example, to further our innovation, not to mention new business development in lightweighting in sports and automotive. This will enable Arkema to stay at the forefront of industry development in megatrends. Our strategy of sustainable growth is therefore clearly paying off and gaining traction. On the M&A front, we are happy to have announced last week the Bolton acquisition of Polymeros Especiales, a leading player in solvent-free waterborne resins in Mexico, reinforcing the downstream of our North American cutting segment. Meanwhile, the integration of recent acquisitions in Adhesives, Notablisation and Permoseal is going very well. Our rich pipeline of high-return organic impacts projects is progressing nicely, with PVDF expansion in China and France, 1233ZD fluoro-specialties in the US, Sartomer in China, PBACs in France, all starting in the next 18 months, and which will strengthen our sustainable growth profile in attractive markets. We will also soon be starting our two exceptional CAPEX projects focused on decarbonization, namely our polyamide-11 biofactory in Singapore and the HF acid plant in the US. On this important subject, earlier this month, Arkema unveiled a new ambitious climate plan aligned with a 1.5-degree trajectory and using a science-based target approach to reduce emission spanning scope 1, 2, and 3 by 46% by 2030 relative to 2019. It clearly places Arclima among the most ambitious companies within the industrial sector and positions us well to bring our contribution to the key challenge of global warming. This climate plan complements our broader corporate social responsibility initiatives, including our Impact Plus target to increase the share of our solutions that contribute to the UN Sustainable Development Goals, our circular economy initiatives, as well as efforts to improve safety and diversity in the workplace. I will comment on the outlook at the end of the call, so I will now hand it over to Marie-Josée.