Arkema S/Adr

Thank you very much. Good morning, everyone. Welcome to Arkema's full year 2022 results conference call. Joining me today are Marie-Josée D'Ancien, our CFO, and the investor relations team. As always, the slides used during this webcast are available on our website, and together with Marie-Josée, we'll be able to answer your question at the end of the presentation. our chemist teams can be proud of what they achieved. And I'd like to highlight some key points. We delivered an all-time high EBITDA of 2.1 billion euros, fully in line with our guidance, with growth in all three specialty materials segments, and a rebate margin at a high level of 13.5%, in a demanding operating environment marked in particular by the war in Ukraine supply disruptions, and persistently elevated raw materials and energy costs. I will let Marie-José provide more detail by segment later on. The 20% plus growth in sales in this inflationary environment demonstrates our agility and pricing power and enabled us to more than offset lower volumes. We also delivered an excellent recurring cash flow of over 900 million euros and an EBITDA to cash conversion rate above our long-term target of 40%, a performance which really sets us apart from our competitors. I would really like to thank the teams for this achievement and for the hard work in this challenging context. Our balanced geographic footprint and diversified end-market exposure proved once again to be a real asset, as strength in some areas enabled us to offset weakness in others. 2022 was a year of two halves, with a very strong performance in H1, which benefited also from an exceptional tightness in some product lines. essentially acrylics and PVDF, while in H2, we were impacted by the slowdown in the European economy, particularly in construction, as well as by significant stocking in Q4. But in those different environments, our expertise in material science and the accelerating shift toward higher value-added, high-performance materials was the underlying structural driver of our success. In fact, specialty materials now make up 91% of our sales, positioning us on track toward our 2024 roadmap. Beyond this excellent financial performance, we continue to strengthen our profile in 2022. With the value creative acquisition of Ashon's performance additives, which we have successfully integrated into the group as well as a couple of Boltons. We also made good progress in our organic capex projects to support our customers' sustainable growth. Sustainability is indeed the key driver of our growth. First of all, through our innovative materials. Innovation in sustainable megatrends and designing solutions that are essential to addressing the world challenge is key to our success And we benefited from it in 2022. And you can see in the slide a number of examples. Our positioning across three core segments is unique and allows Arkema to benefit from strong synergies in terms of technological know-how, market expertise, or customer intimacy, and to provide a complementary offering. Products launched less than five years ago made up around 15% of our specialty materials sales in 2022, solidifying our ambition to generate 1.5 billion euros of additional sales coming from our five innovation platforms by 2030 versus the 2019 baseline. The past few years have provided us with a wealth of opportunities in areas like batteries, eco-friendly paint, 3D printing, or home efficiency. I met with many of our larger customers last year, and they are really excited by the technological solutions that we can provide that are critical to them to innovate and meet the challenges and expectations generated by new environmental regulations and the circular economy. Sustainability is embedded in the way we work and interact with stakeholders. Our ESG commitment was strengthened in 2022 with a new climate plan on a 1.5-degree trajectory across a whole value chain, and our continuous progress in our CSR performance was again highly recognized by external agencies. For example, we kept our third place in the chemicals category of the DGSI World Index with an improved rating. We also improved our Moody's ESG solution score and we were confirmed as part of the CAC 40 ESG Index for the second year running. We are also proud to have been certified as top employer in four key countries for the group and named as a Forbes Best Employer in third place within our sector globally. As a result of our very good financial performance in 2022 and the Board's confidence in Arkema's growth prospects, a dividend of €3.4 per share will be proposed as the next HGM, up by 13% versus last year, and in line with our Progressive Dividend Growth Strategy. the magnitude of the increase is appropriate and reasonable, and it leaves room for the coming years. I will come back to the outlook at the end of the presentation, and we'll now hand it over to Marie-Josée, who will review in more detail our Q4 and FOLIA results.

Thank you, Thierry. So as already said, 2022 was a record year for Arkema, despite the weaker year-ends. Analyzing the sales breach at 11.6 billion euros, sales were up 21% year-on-year, with organic growth reaching nearly 14%. The price effect at 21% for the main driver, reflecting our initiatives to transfer to our selling prices the elevated inflation in raw materials, energy, and transportation costs. Volumes were 8% lower, impacted in the second half by the slowdown and destocking in Europe. especially in the construction market, where we had experienced robust growth since mid-2020. U.S. demand was resilient over the year, also impacted in Q4 by some destocking in construction, while activity in China was weak due to the COVID situation. There is a small 1% perimeter effect attributable to the acquisitions we made in specialty materials, Ashland's performance adhesives offsetting the divestment of PMMA in May 2021. Currencies had a positive impact of 6.5% on sales, mainly due to the stronger US dollar and Chinese Yuan against the Euro. EBITDA grew 22% to 2.1 billion euros in line with our guidance. North America actually delivered a strong growth, which reflects our good positioning in the region. Regarding the phasing of the year, first nine months benefited from some extraordinary profits estimated at around 400 million euros. They were linked to a very tight supply chain in specialty materials. I would say around two-thirds came from PVDF and one-third from acrylics. In this context, the group EVD margin reached 18.3%. EBITDA amounted to 291 million euros in the context of a very high comparison base in the prior year. Looking at the profitability of the different segments, I'll start with Bostik, which used an EBITDA of 366 million euros, up by 16% year-on-year, supported by the integration of Ashland's adhesives, which performed well throughout the year. Our price management, as well as a better product mix, more than offset the 8% drop in volume. The EBITDA margin resisted well at 12.6%, given the nearly 2 percentage point negative impact linked to the mechanical dilution of price increases. In Q4, the stocking accelerated in Europe, but we managed to maintain neutral net pricing, and Q4 EBITDA rose to 9%. rose by 9% to 75 million euros. Advanced materials EBDA is up 40% year-on-year to 941 million euros, with an EBDA margin reaching 21.7%. High-performance polymers are an excellent year, of course, benefiting from a better product mix on the backs of a solid demand for batteries and other premium solutions. Q4 EBDA came in at 148 million euros, lower than last year's high level due to the drop in volumes and to moderating tightness in PVDF. EBITDA of coating solutions grew 13% to 593 million euros and the EBITDA margin reached 18.2%. Volumes declined mainly because of the slowdown and destocking in Europe, especially in decorative paints. However, In a context of much higher input costs, our pricing in the downstream as well as the upstream was supported. In Q4, EBDA for the segment dropped to 63 million, affected especially by weak volumes. Finally, EBDA was stable year-on-year in intermediates at 306 million euros, despite the negative impact from the divestment of PMMA. This performance was supported by the good momentum of refrigerant gases, especially in the U.S. EBITDA in Q4 was down strongly to $24 million, given much less favorable conditions for acrylics in Asia and in a context of low seasonality in refrigerant gases. With depreciation and amortization at $550 million in 2022, recurring EBIT is up 32% versus last year, at close to 1.6 billion euros. Rebate margin improved by 110 basis points, standing at 13.5%. Financial results stand at 61 million euros negative, close to last year. Due to higher interest rates, we foresee a slight increase of the cost of debt in 2023 from the debt that is swapped into US dollar in our portfolio. The recurring tax rates came to 21% of recurring EBITs, and we expect the 2023 rates to remain at this level. All in all, adjusted net income increased by 30% year-on-year at close to 1.2 billion euros, which corresponds to 15.75 euros per share. Moving on to cash flow now, recurring cash flow amounted to $933 million in 2022, up a strong 24% from last year. The growth in cash flow is broadly in line with the evolution of our operating results. We had a working capital outflow, as you know, in H1, which was partly reversed in H2, thanks to our strict management of inventories and receivables in the context of slowing activity levels. The working capital ratio on annualized sales is unchanged versus last year at 12.6%, and still stands at quite a low level relative to the 14% that we consider more as our normative level. Capital expenditure totalled €707 million during the year, which reflects lower exceptional capex of €123 million as we are finalizing the construction of the polyamide 11 plant in Singapore. In 2023, recurring capital expenditure should come to around 6% of group sales, and we should have a limited 30 million of exceptional capital expenditure linked to the Nutrien project in the U.S., which spills over slightly from 2022. Pre-cash flow amounts to 784 million euros, and the EBITDA to cash conversion rate stands at 44%, in line with our 40% long-term target. Net debt at the end of 2022 stands at 2.4 billion euros, including the 700 million euros of hybrid bonds, and the net debt to last 12 months EBITDA ratios stands at 1.1 times. I thank you for all your attention, and we'll now hand it over to Thierry for the output.

Thank you, Marie-Josée. The dynamics at the beginning of 2023 are quite similar to what we experienced in Q4 2022, with weak demand in Europe and China, as well as continued destocking. So clearly, in this type of environment, we will focus on managing fixed costs and working capital in order to generate strong cash flow once again this year. We expect 2023 to offer a different profile relative to 2022, with a slower start to the year, and a greater weighting for H2. Furthermore, the comparison base is elevated, as we benefited last year from, as you know, from atypical tightness in a number of our product lines, as Marie-Josée said. Taking these elements into consideration, we expect EBITDA in H1 2023 to be clearly below last year's very high level, as I think already recognized in the current consensus for Q1. Having said that, we see several positive drivers developing. We expect volume to improve progressively, hopefully during the spring, driven by China's reopening and the stabilization of Europe after many months of significant stocking. In addition, we'll benefit from our new key projects focused on decarbonization and sustainability. Many are bio-based and recyclable PA11 units in Singapore, Our eco-friendly project with Nutrien in the U.S., expansion of our exceptional PBACS material in France, PVDF expansion in France and China, and Sartomer in China also. We expect an EBITDA contribution of 50 to 70 million euros in 2023 from those new projects, essentially positioned in the second half of the year, given the wrap-ups. Together with the board, I visited the Singapore unit in January and really I was very impressed by the quality of the construction and also by the team's work. We also expect adhesives to improve, driven by Ashland's performance adhesives and our ongoing synergy program, which confirms the strong growth potential of this combination. All in all, at this stage, we aim to achieve in 2023 an EBITDA of around 1.5 to 1.6 billion euros. When you look at the last three years, we delivered an average EBITDA of around 1.7 billion euros. So this guidance takes into account the economic shutdown we are seeing, and it means that we will be above the pre-COVID levels of around 1.4 billion euros. We also aim to keep an elevated cash conversion ratio, which is part of the DNA of the company, as you know, over 40% this year. Besides, we are entering 2023 with a robust balance sheet that Marie-Josée underlines with an EBITDA ratio at 1.1, which places us in a good position to carry out our projects, including further targeted M&A should opportunities arise. This financial flexibility is a valuable asset as we continue to deliver our 2024 roadmap. But we are of course thinking beyond 2024 and we will hold a capital market base on September 27th, I think the last one was in March 2020, when we will unveil new financial targets and our vision for the future of Arkema with our unique positioning around our three specialty materials platforms, adhesives, advanced materials, and coating solutions, led by innovation, sustainability-driven manufacturing, and strong societal commitment. I thank you very much for your attention, and we are now together with Marie-Josée, ready to answer your questions.

Thank you. If you wish to ask a question over the phone, please press star and 1 on your telephone keypad. If you wish to withdraw your question, please press the star and two. Again, please press the star and one on your telephone to enter the question queue and wait for your name to be announced. Our first question comes from the line of Martin Rodiger with Kepler-Shaver. Please go ahead.

Hello, good morning. Yeah, I have actually three questions. First is a financial question for Marie-José. You touched a bit on that the financial result was rather poor in Q4, and you mentioned that high interest rates also swap effects. Can you elaborate on the latter? And the other two questions are for Thierry. Yesterday, Akema published a press release on its position on the European proposal to restrict PFAS. You don't do any business in PFAS, but there are products linked to it, i.e. fluoropolymers. If the proposal becomes law, what does that mean for Akema economy-wise? And a follow-up to that question. Assuming the same law is established in other regions outside Europe, what will be the financial impact for Arkema? Thank you.

Hello, Martin. So I'll start maybe with the first question, if I may say.

Yeah, sure.

So as you know, the dollar has been kind of volatile in 2022, so we had a strengthening of the dollar across the year, but in particular, there is an increase in the differential of interest between Europe and the U.S. For the acquisition of Ashland, we actually swapped a portion of our debt into a dollar, and therefore, we faced some increased interest rates on the dollar part of this debt that generated an additional financial cost let's say in the Q4 in particular. I would foresee, basically, that we have a slight increase in our financial interests going forward into next year, since I don't anticipate right now closing the gap, let's say, between the interest rates in Europe and U.S. yet.

Okay, thank you, Marie-Josée. With the question on NECA, So it's really an early process. It's part of the REACH regulation, so with a proposal made by five member states. But it's really the first phase of a long, multi-step process until 2025, as we say in our in our race so it would be a mistake to try to speculate what it would be at the end or if it could go to as a country we all know that each region of the world are completely different i think we met chinese people recently they are doing exactly the opposite so i mean so i don't want to speculate i mean the comment that i can give is that this, and we are very surprised, this law is really embracing 10,000 different substances. They are all different in profile, in application, in ecotoxical profile. I think, so you're talking about PVDF and Arkema, but I mean it concerns between other suppliers of PVDF as a whole, and the fluorogas as a whole, many, many actors, and the same for the customer, which would be, I mean, this means tomorrow you cannot make battery, if you can imagine. So there are plenty of critical applications. The only thing that we can say, which was very clear in our press release, is that we don't understand why fluoropolymer, without fluorosurfactant, and it will be the case completely 100% for Arkema. It's already mostly the case for Arkema and nearly the full case end of 24. Why these products are not exempted from the proposed restrictions? So we'll give the data which are necessary to, let's say, to answer this inquiry. And our fluoropolymers are considered not to pose any risk. So on the human health, they have a favorable or toxicological profile, so it was important for us to say that to the politics in Europe, to say that to the administration, and to say that to our customers, because we are a long-term committee to our products. They are wonderful products, polymers, which bring a lot by their performance with their unique properties, and we will answer the question. Part of the process, it's a process as we have seen on other products, and we will certainly bring our knowledge, which is important in this polymer, but you will see it from plenty of other companies and customers which are concerned by this very, very large, it was quite surprising, proposal to restrict PFAS. This is what I can say so far.

Thank you.

The next question is from Matthew Yates. with Bank of America. Please go ahead.

Hey, good morning, Thierry. Good morning. A couple of questions. Firstly, can we dig into the additives bit of the materials division in a bit more detail? I think you were calling out that was one of the weaker areas in Q4. Just if you can talk about the different product segments that that's impacting and maybe a view on how Q1 has started. And then I wanted to ask a little bit about the dividend. As you say, quite a nice increase of 13% there. And if I recall correctly, you've talked about a 40% payout ratio in the future as the company matures. But at the same time, you're still saying you're open to acquisitions. The accelerating shift to high-value materials may mean more CapEx opportunities in due course. So the dividend proposal you've given today, is that still consistent with that mid-term 40% payout ratio? Is that where we're heading, or is that one of the things that maybe you're reviewing as part of the financial targets after the summer?

Okay, thank you very much for these two questions. With regard to performance additives, actually Q4, as you understood, was significantly impacted by destocking But I would say in this destocking world and low-volume world, I would say performance additive was, in relative terms compared to the rest of the portfolio, was relatively okay. So it was impacted by the general economy destocking at the end of the year, which went beyond construction. You know performance additive is pretty much representative, pretty... far less represented in construction than other segments. And overall, I would say it suffers less than the rest of the portfolio. And I think it will be the same on Q1. So you have the overall picture, and we did not detail every segment precisely, but I would say that in this relative performance, performance-addictive resisted more certainly because they are less impacted by this that we have seen in construction. With regard to the payout ratio, in fact, your question is valid, but you know that we have this atypical first semester in our performance of 22. The ratio that you have in mind is the one you calculate on the 22 performance, which is fair. But in fact, if you put it on a more normalized performance of Arkema, you see that you get far closer to the 42, to the 40% payout ratio. So I would say the 40% payout ratio is still valid. And this includes what you mentioned on the CapEx ride. It's true that the payback, and you have a slide on it, of the organic capex is quite good, and we should not be too shy, still being careful and being reasonable in terms of capex, and you know that we are. We should not be shy if we have on megatrends some very good long-term project like we have, for example, for the polyamide-11 in Singapore. So, but this, take that into account, and this 40 percent payout ratio is still our mid-term goal. Thank you, Thierry. You're welcome.

The next question is from Georgina Fraser with Goldman Sachs. Please go ahead.

Hi. Hi, Thierry. Hi, Marie-José. I've got two questions today. The first one is on your guidance for 2023. I think that we previously talked about building blocks going into 2023 of about 400 million normalization. from that exceptional first semester you just mentioned, Terry, and then also a positive 70-ish million from your capacity additions in the second half. So with that said, would you agree that your guidance, 1.5 to 1.6 billion, assumes a very conservative macro backdrop? And then my second question is related to your 2024 targets. They imply an EBITDA of about 1.7 billion or higher, and I believe that your targets also promised that the portfolio would be 100% pure specialties by 2024. Can you confirm that you're on track to have completed the strategic review of intermediates by 2024 and that your targets for specialty materials alone will generate that 1.7 billion in EBITDA for 2024? Thanks.

Okay, thank you. Thank you, Georgina. So with regard to the normalization, so first of all, this concerns more two segments, which are advanced materials and coating solutions, okay, in our portfolio. that if you make the match, you don't take into account what we have just been discussing, Marie-Josée and myself, today in the presentation, which is the destocking that we are seeing at the beginning of the year and the general economic environment. I don't know what is your forecast, but the forecasts are quite, I would say, overall for the general economy at least the first semester or up until the spring, says that it should be a rather weak environment. So if you make the math including this element of environment which are beyond this capacity addition and the 400, you come to our guidance which we believe, honestly speaking, is a fair guidance as we always do. There is no specific, any specific leeway. This is our guidance, 1.5 to 1.6 in a certain environment. So I think it's a fair guidance. I would certainly not say it's conservative or optimistic. It's a fair guidance. I cannot say more. With regard to, I would say, the target of 2024, yes, this assumes what we say as a capital market day. This is still the intention, so this is why we have launched, as you know, this process on fluorogas, which started a month ago, but we are still at the early stage. So this means that specialties, which is at the end, the company should generate the 1.7 billion EBITDA. Have in mind that if you look back at the capital market day, we are offsetting more or less what we sell by acquisition. So, so far, compared to the 24 target, we are still a part to deliver on the selling side, but also on the acquisition side. So let's say we sell for gas, the EBITDA has to be compensated by the same amount in terms of EBITDA coming more or less by acquisition. which means that when you look at the debt of Arkema so far, it's a lower debt than what we had in the plan for 24, the reason being that we have spent less also in acquisition. So 24 is not today, so we have still action initiatives to deliver. We have done a lot already, fortunately, but we are still, in terms of M&A, which is your question, still to deliver on the... We made the PMMA, but we have still this flora gas and a part of the acrylics in EGR. And on the other side, we have done less so far than what we say in terms of acquisition. Hopefully it answers your question, Georgina.

Yeah, that was very clear. Thank you, Thierry.

You're welcome.

The next question is from Charlie Webb with Morgan Stanley. Please go ahead.

Good morning, everyone. Yeah, just a couple more from me. Just on the demand side, you talked about the stocking kind of continuing into Q1. Just, you know, can you provide a little bit more color? What end markets, you know, what regions you're seeing that? And maybe, you know, are you seeing any incremental signs of things improving perhaps in China post-Chinese New Year? Are you seeing, you know, some green shoots in terms of a restock or recovery in demand. So that's kind of first question. And just second question on the Ashton Adhesives business. Given the environment you see and some of the destocking you see across construction markets, Europe and the US, does it change at all in terms of the timeline for your kind of revenue synergy delivery, positive or negative? Just wondering, does the environment we find ourselves in today make that more difficult, less difficult, the same, when you think about the synergies from that acquisition. Thank you.

Okay. I will start with the second one, and then I will go back to the previous one. On Ashland, before answering more difficult, less difficult, I would say certainly more relevant, because Ashland Adelief is really a Adhesive rather resilient. And on top of that, is really as a minority, very minority part in construction. So it's more, you know, it's pressure-sensitive adhesive for most of it, the steps, levels, packaging. So it's less impacted by, and it's mostly a U.S. sales base, okay? So for these two reasons, I would say Ashland is more resilient by far than the rest of the group. One says that is sure that the general economy is weaker than it was last year or the year before. Everybody recognizes that, whatever your business is. And Ashland will suffer a little bit from that, but less than the rest of the group. So in terms of ramp up of the sales of Ashland, because of this general climate in from what we see in the first part of 23, will be a bit late in terms of development, but we will catch up as soon as the economy is recovering. I have absolutely no doubt that Ashland is a great acquisition and will deliver. Now, semester by semester or year by year, you can be a little bit in advance or a bit late, but overall, on the three, five years, we'll deliver what we promised on Ashland, no doubt about that. On your first question, which to a certain extent was answered when I answered for Ashland, partially at least, U.S. is the most resilient part in the world. Europe is suffering. China is suffering. When I discuss with the teams, so in terms of end market, but you mentioned it yourself, it's mostly construction. It's more construction than the rest of the end market. You have some market like automotive, which is quite okay. You have also what is related to oil and gas is quite okay. Aeronautics, but we're very small for our schema, is certainly... grain, so you have some niches which are going okay, but I would say overall, the environment is weaker at the beginning of the year, but it's mostly construction Europe, I would say, is the largest weakness. Now, when we discuss with the team, and this is why we mentioned that we expect recovery starting from the spring, progressive recovery, it will accelerate more in the second half, When we discuss with the teams, they share this feeling. Now, do we see it in the orders from the customer yet? The answer is for most of it, no. But it's still early and we are still end of Feb. So we'll see. So we maintain this statement starting from the spring. but you don't see too much so far in the order book from the customer, but we don't have long order books on Cytoskema anyway, so.

Okay. No, that's really helpful. Thank you very much.

The next question is from Laurent Favre with BNP. Please go ahead.

Yes, good morning all. I've got, I guess, one question, but it's a three-part question. The number one Can you talk about pricing and areas of the business where you would expect pricing to be resilient, even if raw material and prices are, I guess, collapsing? Maybe that's the right word. The second question, Thierry, you mentioned opportunities on the M&A side. I was wondering if you could say anything about the pipeline. And then the third question, when you announced the Ashland acquisition, you mentioned a, I think, 17% margin target for adhesives. What does it translate into now, given the new environment? What kind of margin do you think that 2024 target actually is achievable for adhesive? Thank you.

Thank you, Laurent, for your question. In fact, with regard to adhesive, the raw material has not really started to go down. So because of that, the pricing is resilient for most of it, I would say. In fact, it's a paradox of today, but maybe it's good news that the raw material, maybe with the exception of China, but, you know, our adhesives market share in China is quite low, so it's not a topic. I would say raw material have not decreased significantly, so I think we have good good pricing and there is an overall inflation which are going beyond the raw material with energy, with salaries, etc. So it's important to at least maintain our pricing in adhesive. It's not increasing in some pockets. So this is what we do because we have done quite a good job last year, but there are still some pockets where we are a bit late and we need to finalize our job in adhesives. With regard to M&A, we have a pipeline which I cannot comment as you can imagine, but which is a which is quite okay, but as I mentioned a few times, I think with regard to M&A, it's important that the base results are restated and that the multiple are also restated. So we continue to push, but we prefer to take our time, at least for the first part of the year. But it remains we are still as committed as we were. to continue this fragmented world of adhesives to make acquisition, but I don't expect too much in the first semester. With regard to the margin target of BOSTIC, we consider that let's assume that the raw material environment is staying exactly the same as today. I would say the math that we have done in terms of dilution of margin targets, which is your question, compared to when we announced the 17%, is about 2.5%. This year is about 1.7, and we had 0.8 from the previous year. So it's 2.5, so the 70% correspond to 14.5%. But at a certain point, we'll come back to raw material as they were before. So the 17% is still valid, but if in 24 we have, let's say, raw material environment, which is between the one we had in 2021 and the one of today, then we would have to adjust to 70%. But it's mechanical. There's nothing to see within interesting performance of adhesives. And you could see it with all this downstream chemical business. They have been affected the same way. If you look at the competitors or in industry which are close to the adhesives.

Okay, thank you very much.

You're welcome.

The next question is from Chetan Yudeshi with JP Morgan. Please go ahead.

Yeah, hi, thanks. A couple of questions from my side. First one was to clarify, you said Q1 will be close to consensus. I'm just wondering what consensus are you referring to? Because on Bloomberg, I see 357 consensus. Do you think that is the right pace or you have slightly different consensus than that? So just wanted to confirm. The second question was a bit more technical. I was just looking at the reported EBIT in fourth quarter and it was just 18 million, 1.8. And I think there's always some delta between reported and adjusted EBIT, but it was much higher than usual at almost 128 million euros in Q4. So I was just curious what... what was included in those one in 20 adjustments in Q4 besides the usual PPA? Thank you.

Okay, so Marie-Josée will answer the second one. Chetan, on the first one, the consensus is 325. This is a Bloomberg one. I'll check with which one. Visible alpha and internal consensus. Okay. So the one we see is 325, which is the one we published is the same. I mean, it's the same method, exactly. Okay. So Marie-Josée, yeah.

So for the non-recurring in the P&L, we have actually completed the purchase price allocation of the Ashland and the Permacil acquisitions in the Q4. So there was actually a substantial catch-up for the amortization of that PPA. So classically, we had 20 million, I think, per quarter type of acquisitions. in fact, on PPA amortization. And Ashland amortization of PPA is adding up something like 50 million per year. So this is basically what's happened in Q4. It's just a one-off catch-up of the purchase price allocation of Ashland that took place. And obviously, in a cumulative basis, next year you would have two additional months of depreciation of PPA as well falling in this category. Other than that, frankly, on the non-recurring, it's pretty much, you know, a stable thing. We review classically, you know, depreciation of assets or provisions levels, and we have some startup costs coming from the Singapore front, and that's about it.

So can I confirm the startup costs are actually classified as non-recurring costs?

That's correct.

And how much were they cost in 2022? Can I just confirm the number? Do you have it?

So basically, we assume roughly at this moment, because obviously the ramp-up of the plant has been very progressive across the year. But let's say per quarter, I would estimate around 15 million euros. So this is also probably an estimation you should have for the year Q1.

Understood. Thank you very much.

And the plant should have, you know, as Marie-Josée mentioned, it's a startup by, you have different steps. So now at the end of Q1, the startup will be fully completed. And now we will be in a wrap-up of commercial phase, which will come gradually. So, and it has been, so it's not a financial question, but it's important for you to know. that we are very satisfied with what we see in terms of quality of products and quality of construction. So it will be a very interesting asset for the coming years for Arkema.

Thank you.

You're welcome.

The next question is from Jean-Baptiste Hollande with Credit Suisse. Please go ahead.

Good morning and thank you for taking my question. I noted that you referred in your materials division to the share of products which are less than five years old. I think you mentioned about 15%. I was interested if you could comment to what extent you look at this metric or what you infer from it for this division, but also for your other divisions. I'm purely interested in Maybe the evolution that you've seen, if you have any targets for this kind of product and how generally you see Arkema's position. Thank you.

So the way I look at it, I think it's important to monitor it, especially for our R&D and marketing teams. And this is why we wanted to communicate it with you because sometimes we have questions. At my level, I put more emphasis on the 1.5 billion of new sales on this five growth platform up until 2030 is correlated, but there are different KPIs. I look more as a new business development on structural new platforms supported by megatrends, the margin which is related, and how much EBITDA it brings to the bottom line. I would say it's more internal KPI, which allows us to make sure that we have a renewal of our portfolio, but this five years old can mean completely disruptive new products or ongoing renewal of the range. I think it's a KPI that we follow, but for me it's not the best KPI. The best KPI is we have defined a certain number of growth platforms, most of them being supported by megatrends. You have the five ones which are communicated externally, on which you have 1.5 billion of new business up until 2013 versus 2019. We have other platforms which are complementary, more traditional. And this, for me, is the largest KPI that we are following internally and which we follow business unit by business unit and market by market. And part of the Capital Market Day, by the way, will take the opportunity to communicate with a little bit more granularity on this number because we have some questions, 1.5, where you are on the trajectory, what is behind. We don't want to disclose competitive information, but I think Capital Market Day can be an opportunity to give you a little bit more granularity on this topic.

Thank you very much.

You're welcome.

The next question is from JD Pandya with On-Field Investment Research. Please go ahead.

Thanks. The first question I have is on PVDF. It's a two-part question. In the short term, we've seen a very sharp drop in R142b prices in China. So do you think that there could be scope for some margin expansion in the short run because of this? And then a more fundamental question is really how do you see the product development in terms of more capacity, more projects, especially in the U.S.? ? Or are you going to take a bit of a back step because there is potentially a risk of overcapacity in China? So that's my first question. And the second question really is around a few of the projects that are in a ramp up phase this year, where I guess the guidance for EBDA is between 50 to 70. So, you know, when we actually see a progressive ramp up of this in 2024, what sort of EBDA contribution should we expect from these projects? Thanks a lot.

Okay, with regard to the very shallow work for 142B, I assume you mean in China? Yes. I would say when, in fact, you have different factors which would be influenced 23 with 22. It relates also to your question, your second question. The fact that PVDF in 22 was really positively impacted by an exceptional is more for semester, at least nine months. And we recognize that. I mean, we are very transparent, as you know, as a management. So we say don't take that for granted. It will remain quite a good product line, but not at the level of 22. Part of what is happening is a combination of pricing normalization, 1.42 drop, but it's eaten by the pricing normalization, so I would not make a case with it. Certainly, it attenuates, unfortunately, the pricing, and it's also an engine of this pricing, but this pricing normalization is also coming from capacities which were late to come, which came and which is part of the full story. And on top of that, we have our capacity, new capacity coming on PVDF. So I would say all in all, this is basically what we say, on PVDF we stay a good line, but we'll not continue with the kind of, profitability we got in 22, it will be more normalized, and this includes all the parameters that you have been mentioning. Now, if you take the full contribution of the new project in 23, taking it to 24, what I can say is that our project brings 50 to 70, as you mentioned, in 23. And then at full maturity, which is, I would say, after five years in average, it will be between 180 and 200. So to go to 24, you take a straight line between 50, 70 in 23, and 100 to 200 five years, so it's 28. You take a straight line, and you have the 24 number.

Just if I can ask a follow-up question on PVDF. Would you say that your quality and the grades that you're serving into the LFP or the NMC market is at par with the competition that you have? Because there's obviously a theory that one of your key competitors is suggesting you're more in LFP and they're in NMC. So would you say that your portfolio is life for life, and therefore there is no reason for us to assume divergence in performance?

So you know me, it's true for PVDF or other products. I'm not the one who will try to play this game of comparing competitors between each other. I mean, everybody is very proud of what they are doing, so I will tell you the contrary. I think it's clear that PVDF is a broad range. You have different applications in the battery between the What is the cathode technology? Is that separator, et cetera, et cetera? And it will continue to evolve for years. So our competitors have some advantage. We have other advantage. All in all, I think we are very well positioned. I think there is room for everybody. I think the game will continue to evolve. So I don't enter this kind of question for me. It's minor question. I think everyone has his strengths and weaknesses, including the one you mentioned, and we know what we want to do. Our strategy has not changed since a few years. You have the current generation of battery, but then you have the solid. In the middle, you have semi-solid. You have the cathode will continue to evolve. You have the evolution of the legislation. PVDF is one product. You have other products which will come into the story. And I will certainly not disclose all our competitive advantage in this discussion. So no, I don't have the discussion. I can just tell you that we are confident in where we are, what we know. And also to come back to your question on the U.S., yeah, sure. I mean, we are a leader of PVDF in the U.S., will be a strong player. And I would say each region, the competition is really region by region for most of it. So I see the Chinese dynamics, which is weighing on the pricing currently, is one. Then you have the European dynamics. Then you have the U.S. dynamics. I mean... In this new world, especially for the battery, which is quite strategic for each of the continent, I would say the local supply is absolutely key. And so I don't think there are long-term too much influence between what is happening in one region versus the other regions. OK?

Thanks a lot for the transparency.

The last question is from Emmanuel Matteau with Odo. Please go ahead.

Hello, Thierry. Hello, Marie-José. I still have two questions for you. First, how do you intend to develop your fixed-cost structure in 2023 in the context of still low visibility and high inflation? And second, Where are you in the process of reducing your exposure to acrylics in Asia? Thank you.

With regard to the first one, you have different elements. Clearly, in this kind of environment, we are strict on our discretionary costs, but we are not a company which will suddenly wake up and say we need to launch a big plant because We work more in continuity. On the other side, Arkema is a company which has this advantage to work on different horizons, time horizons. So at the same time, we are very strict in our cost spendings, but we invest in certain areas. We continue to increase our cost. For example, for battery, we mentioned that with GDIP, we invest a lot. And for example, for polyamide delivered, in terms of R&D and marketing, we invest a lot. So we have, and we are a little bit schizophrenic. So this means that on one side, we are very strict on cost where we believe the value is limited. On the other side, we spend more money on different areas which are, very promising in terms of growth for Arkema. And beyond that, we have the inflation, which is hitting more than usual this year. It was also the case last year. And for me, we have a tendency to discuss our pricing versus raw material. Now, versus raw material and energy, it's important that our pricing takes into account the fact that the inflation on six costs is higher than it was in the past. It's part also of to overpricing the policy, you need to value the amount of costs you put in the process. But if you want to be reassured, I mean, yes, we have frequent costs. And the second question was?

Actually, it's in Asia.

Actually, it's in Asia. As you know, we put more emphasis on the different nature on the fuel gas was really a straight sale. On acrylics, on AGR, it's more partnership on capacity reservation. And I would say, to be frank with you, the COVID period has not been helpful for that because you need to be present in China to discuss this kind of partnership. And we have not been, I mean, it's really now. after three years that we will be able again to come to China. So give us a little bit of time.

We do for sure.

Thank you. Okay. Any other questions?

No other questions from the call, sir.

Okay. So thank you very much for your question. Really interesting and looking forward to seeing you in the presence. And if you have any further questions, don't hesitate to challenge Beatrice and Peter this afternoon. Thank you.