Arkema S/Adr

Good morning, everybody. Welcome to Orchema's Q1 24 Results Conference Call. Joining me today, as usual, are Marie-Josée Doncion, our CFO, and the Investor Relations Team with Beatrice and Peter. As always, to support this conference call, we have posted a set of slides which are available also on our website. I will comment the highlights of the quarter before letting Marie-Josée go through the financials And at the end of the presentation, we'll be available to answer your questions. After a challenging macro in 2023, as you know, during which we performed well, the demand environment in Q1 2024 remained globally unchanged in the continuity of Q4 2023 with relatively weak volumes in Europe and the US and some slight improvements in Asia. This materialized in a volume growth of 3% in specialty materials with growth across all three platforms, the intermediates decreasing mechanically with a quota set in fluorogases. In this context, Arkema continued to deliver a robust set of results. slightly lower relative to last year, which was sustained by the high comparison in the pricing of acrylics and of PVDF. The start of the year is in line with what we expected and consistent with our full year guidance. Here are some key points I'd like to highlight to you. We delivered an EBITDA of €350 million, close to last year's level. despite the negative impact of around 30 million euros from less favorable market conditions in PVDF and extreme acrylics, a specific and expected gap of Q1. Our performance was in particular driven by double-digit EBITDA growth in adhesives that I am pleased to underline. This follows on from the positive momentum of last year for adhesives. The group's results also reflect, we think, good growth in high-performance polymers and downstream cuttings, where our positioning in high-value applications is paying off. Note that our EBITDA margin increased versus last year at the good level of 15%. Now we're looking briefly at the performance of our three specialty material segments. Our disease had a really solid quarter. with an EBITDA margin above 15% thanks to the benefits of the successful integration of our acquisitions, notably Ashland, which continues to perform well, as well as good price management and a more favorable product mix in line with our strategy. In advanced materials, our EBITDA was stable year-on-year despite the headwind from PVDF pricing thanks to the good dynamic of high-performance polymers in Asia, driven by volume growth in batteries, sports, automotive, and the contribution of PM, which should accelerate from Q2. Performance Additive delivered another resilient performance, while not at the excellent level of last year. Finally, in coatings, we benefited from good volume growth, notably for Sartomer and Coatex, which only partly offset the lower contribution of upstream acrylics. Beyond the Q1 results, in the first months of this year, we were active on many fronts, including the M&A field. As you saw recently, we were pleased to announce that we agreed to acquire Dow's flexible packaging laminating adhesive business which will further fuel our medium-term growth for the adhesive segment a couple of years after the Ashland good. This is really an exciting deal, which will create significant value from a set point for shareholders over time. It is a first-rate business, which has been, like other specialty chemical businesses, impacted by the challenging macro and customer dystopian in the past two years. But it is really a business we have been following for a long time with superior technologies and high-quality manufacturing assets and with a long history. The revenues amount at $250 million, and we will buy this business for an enterprise value of $150 million, which represents 50-50 the working capital and the book value of the plants and other physical assets. So no goodwill is included in the EV. Since our daily business is for flexible packaging are very complementary. We plan to generate significant synergies, estimated at $30 million at the EBITDA level over the next five years, equally split between cost and development. There will be implementation costs, which we estimate around $50 million, and all in all, including this one, of course, to the EV for the sake of the calculation and of the transaction multiple, We estimate the EV EBITDA at maturity, so let's say within five years, to reach around 3.5 times. We also invested in two exciting startups, Tiamat and ProUnique, which will strengthen our KEMA position as a key player in high-end solutions for next-generation batteries. These small steps will participate in our strategy in battery to progressively build an extensive range for this attractive and rapidly growing market. Now on the organic project front. We started our paybacks capacity in Normandy in France in January, and we are progressing well with the new project which we announced at the Capital Market Day, namely expanding our organic peroxide in China, the new DMDS unit in the US, and the decarbonization of acrylics production in France. They are, as you know, in the early construction phase, but so far they are progressing as expected. As stated in this morning press release, we had a few questions during the rituals on these two projects. Our polyamide-11 and nutrient projects are now almost ready to deliver, and we start contributing in June, end of June, to be fully operational starting in the second half. We are very excited to finally see these two attractive and sustainability-focused projects delivering. In the same decarbonization vein, And as part of our climate plan, we recently signed long-term renewable energy agreements for a number of our sites in the U.S., including all Bostik sites. This means that by the end of 2024, approximately 40% of the power needed to run our operations in the U.S. will be obtained from renewable resources, marking another step toward our long-term net zero ambitions. And we now hand it over to Marie-Josée for a more in-depth look at the financials before we discuss the outlook at the end of the presentation.

Thank you, Thierry. So looking at the sales bridge at 2.3 billion euros, sales are down 7.3% year-on-year, driven by a negative 7.2% price effect, which is linked mainly to the price decrease of raw materials as well as a lower PVDF and upstream acrylic prices. Volumes were stable year-on-year, on one hand decreasing in intermediates due to the enforcement of quotas in the U.S. and Europe for fuel gases, and on the other hand, slightly better, plus 3% in specialty materials, reflecting continued good demand in the automotive and energy markets. Construction seems to have now stabilized after over a year of customer destocking. The scope effect is basically offset by the currency effect. So the scope effect is positive at 1.8%, corresponding mainly to the contribution of the PI advanced materials acquisition, and to a lesser extent to bolt-ons in additives. And the currency effect is negatively impacted by 1.7% on Q1 sales as a result of the depreciation of the UN and the US dollar relative to the euro. Q1 EBITDA came in at €350 million. Looking at the different segments, on one hand we have Bostik, which achieved a good performance with EBITDA at €105 million, a 13% year-on-year. Volumes grew slightly thanks to good demand in structural and packaging adhesives, and we benefited from our dynamic pricing management, operational excellence actions, and synergies linked to Ashland notably. The EBITDA margin reached a level of 15.4% as a progression compared to the exit point of Q4 last year. Advanced material DBDA was stable at 162 million euros. As the adverse impact of PVDF was offset by the contribution of PI, advanced materials, and the solid performance of other businesses in the segment, notably the polymers in Asia. Advanced material DBDA margin improved 140 bps to 18.5%. The EBITDA of cooking solutions came in at 75 million euros, reflecting less favorable conditions in the upstream, while we enjoyed growth in some high-value-added downstream activities. Finally, intermediate EBITDAs to that 39 million euros volumes were lower, given the impact of quotas reductions in refrigerant gases and the low environment for acrylics Asia. In the positive side, pricing dynamics continue to be positive for the fluorogases. Depreciation and amortization stood at 148 million euros, leading to a recurring EBIT of 202 million euros and a rebate margin of 8.6%. The non-recurring items amount to 67 million euros. They include 38 million of PPA depreciation and amortization, and around 29 million for one-off charges, restructuring and legal expenses, as well as the startup costs for our Polyamide 11 platform in Singapore. Financial expenses stand at 18 million euros, with the cost of the newly issued bonds broadly offset by the higher interest of cash investment. So basically, we have a cost of carry, which is basically neutral. At 36 million euros, the tax charge represents 22% of rebate and reflects the group's results evolution. Consequently, the quarter one adjusted net income stood at 138 million euros, which corresponds to 1.84 euros per share. Moving on to cash flow and debt. The Q1 recurring cash flow amounts to a negative 60 million euros, which includes the usual first quarter working capital seasonality. The working capital ratio on annualized sales stands at 16.1%, broadly unchanged. That's just last year. Total capital expenditure amounted to a bit short of 100 million euros in the quarter. at 21 million euro outflow correspondingly to the acquisition of ARC building products in Ireland to be compared with an inflow last year of 30 million euros linked to the sale of FIBEX. The net debt at the end of March 24 therefore amounts to just over 3 billion euros. This includes 1.1 billion euros hybrid bonds following the 400 million euro issuance. in March to anticipate the refinancing of the tranche of the same amount with the first call date in September 24 this year. The net debt to last 12 months EBITDA ratio stands at around two times. I thank you for your attention and will now hand it over to Thierry for the outlook.

Thank you Marie-Josée. So going into Q2. The current macroeconomic environment remains mostly in continuity. We have not yet witnessed a clear pickup in volumes, although there are here and there small improvements yet to be confirmed in activity level. So hopefully things will start to move in the right direction at some point at the end of the quarter or during the second part of the year. For the second quarter, we'll continue, as you expect, to focus on our self-help and our main projects. This is our first beauty. We look forward to the initial contribution of some of our key projects, and in addition, we will benefit from the contribution of PIAM as a continued positive dynamic of adhesives. So, all in all, we expect in Q2 an EBITDA slightly above last year's level, which would show a positive trend after the slightly below-trend performance of the first water. We confirm that our main organic project should contribute 60 to 70 million euros in EBITDA over the full year, mostly in the second half. So, on the back of our Q1 results and the current outlook, we confirm our annual guidance and aim to achieve in 2024 an EBITDA of around 1.5 to 1.7 billion euros, depending on the strength of the recovery of the economy. We'll also continue to work towards achieving the medium-term targets announced at the Capital Market Day with progress in our organic projects, integrating and delivering the synergies of acquisition and furthering our innovation together with our customers to best leverage our unique positioning across our three specialty materials segments. I thank you for your attention and together with Marie-José, we are now ready to to answer the question you may have.

If you wish to ask a question over the phone, please press star 1 on your telephone keypad. If you wish to withdraw your question, please press star 2. Again, please press star 1 on your telephone to answer the question queue and wait for your name to be announced. The first question comes from the line of Matthew Yates of Bank of America. Please go ahead.

Hey, good morning, Thierry, Maria Jose. Can I ask a question about the Dow Adhesives deal that you've announced? And really, if there's anything more you can say around the historical performance of this business, I guess we can imply that it's expected to do about a 6% margin at the moment. And you note that it has been impacted by the macro and destocking. Is it possible to give more context as to where this has been historically? Because obviously your synergy target to double or triple profits from the current level is very interesting. And then just as related on the Arkema Adhesives business, your margins are up. 200 basis points or so year on year. Marie-José mentioned a variety of different factors behind that improvement from mix to pricing. Are you able to break that down just a little bit more as to which drivers were more important than others so we can think about the evolution going forward? Thank you.

Thank you, Mathieu. So, as you mentioned, it's quite an interesting deal for us for Arkema, this flexible packaging and laminating adhesive business. It's a rare opportunity. It's clear that as a mini specialty business, it has been impacted by this stock. We have seen that also at Arkema for the adhesive and some other polymers. We're unpackaging specifically. We were surprised. by the level of the stocking of the past two years, which has been for a market which normally is quite resilient above what we expected. So clearly the starting point, which you estimated, but that you could get through from our press release, is well below what we have for EBITDA margin for BOSTIC today. But in the old time, without having all the precise numbers, but we know this business, we follow it since a long time. It was really the reference for flexible packaging in the old time. It's a business which has delivered good margins. And so with, I would say, normal business conditions with the integration also into a pure, we are confident that we will come back rather quickly with some improvement of the macro to solid margin. After that, to go to the following step, it really comes from what you have mentioned, the synergy, which are certainly important because it's a bit like for Ashland. These businesses are very technology-driven, intimacy with customers, and you can do a lot by offering a far broader range. and we see that every day with an industrial adhesive. So you have different elements of value. The first one is to have a decent recovery of the business after this year of destocking, and then you have the layer of synergy, which are split more or less in two. One is cost, and the other part, which is more soft synergy, but which are not insignificant, which is more benefiting from the complementary ranges with what Arkema has to do. So if you make a math, in fact, since the current, the starting EBITDA multiple is applied to a low EBITDA, you can really decrease over time the EBITDA multiple quite significantly. So it's really a good acquisition and we appreciated that DAO trusted Arkema to finalize the deal. It was really a good move for both companies. With regard to the adhesive margin Q1, it's cool that it's a rather good Q1, both in terms of increase, plus 11% on EBITDA, and in terms of margin percentage, because 15.4%, it's a good margin for Bostik for Q1. It can mostly... I would say first from industrial adhesives, and especially this adhesive for durable goods, which really perform very well, which to a certain extent shows that the macro in electronics, in automotive, in specific application is a bit better, and we have a lot of new business in production also we supported. this industrial adhesive and notably durable goods, improvement of EBITDA. Beyond that, I would say it's across the three regions, and it's a combination, I would say, rather balanced between net pricing, operational excellence, introduction of new businesses with a higher margin.

Perfect. Thank you so much, Thierry. You're welcome, Thierry.

The next question is from Martin Rudiger of Kepler. Please go ahead.

Yes, thanks for taking my two questions. First, on advanced materials, every day was slightly up, which I think was a positive surprise because I thought that low PVDF prices would cause a decrease in earnings. Did you benefit from lower input costs in Q1, which overcompensated the effect from lower selling prices? And the second question is on coating solutions. You say upstream acrylics was down in earnings year-over-year, downstream was up year-over-year. Given the current margin in coating solutions, my question is, are we now at the low cycle conditions in upstream and at peak cycle conditions in downstream? Thanks.

Okay. So with regard to advanced materials, maybe a remark or... I would say of the 30 million that we incurred negative compared to last year in EBITDA for acrylics and PVDF, we put the two in the same basket, but in fact the majority is really acrylics monomer. So PVDF was a contributor, but less than the acrylics part. Now, what we had, we had different elements, maybe three. I would say that the polyamide, despite the fact that we had no contribution yet from Singapore, the polyamide compared to last year behaved well with a combination of better mix, a little bit of softer raw material, including net gas in Europe, but we had a good production. of the year for Polymer 11 compared to last year. We had also PAM starting to contribute, even if Q2, as we said, would be better. And the last one, we have this specialty fluorochemicals, fluorogas, which are In HPP, notably the 1233ZD, where we started to contribute a little bit. So we have a little bit of on the HFO gas and contribution. So the sum of the three. And all in all, yes, because on performance additive, last year, especially the first part of the year, was very strong. So because of that, we are overall, and thank you for your comment, quite pleased by the more than stability of advanced material. With regard to cutting solutions, so different story, I would say, yes, I believe that in the upstream we are at the low cycle. Low cycle is not, it's a relative notion, but I would say we think that we have reached a sort of low point in the current context. And this low point was, to a certain extent, revealed by the differential of raw material between Asia and the rest of the world, namely Europe and U.S. So we had to absorb that, which has been the case. But now the differential is not increasing further, and hopefully it will start to get reduced a little bit. And the volume, as you could see in coating solutions, start to be a bit better. Let's wait and see. With regard to Sartomer and Coatex, it's clear that when the stream is lower cycle, we benefit a little bit in the downstream. This is the beauty of having an integration. And also, we have a strong emphasis, especially for Sartomer, of new business development in electronics, medical, in other one , I would say, development platform. And you remember that we started end of last year a rather big expansion of Sartomer in south of China, in Guangzhou, and we see that also in the numbers. So I would not consider it a matter of cycle in the downstream. It's really a matter of structural improvement in a macro which is slightly better, than it was maybe at the same time last year for Sartumair. Thank you.

The next question is from Aaron Ciccarelli of Berenberg. Please go ahead.

Hello. Good morning. Thanks for taking my question. My first one is on the ramp-up of your project. Maybe can you update us a little bit on where you are from a technical standpoint? It looks like you should start seeing some contribution in Q2 already. Is there any color you can provide about earnings contribution from these projects in Q2, please? The second one is on PVDF. We saw some recent industry reports which highlighted a stabilization and improvement in PVDF prices. Today you mentioned continued pressure because, of course, high comparable bays, but I would like to understand a little bit what you see, especially in China, from a competitive landscape. Thank you.

Okay. So on the first one, I would say that the technical, let's say, challenges in polyamide 11 and nutrient are behind us. So we are now in a technical ramp-up. I would say in terms of contribution, I would say quite incremental and quite limited still in the second quarter. This is why we say, okay, let's assume that for the end of the quarter, we'll be at a nominal capacity. This means that we will start to ramp up from the start of the second semester, which is completely consistent with the share of their contribution into the 60 to 70 million of a major project on the full year. So this is all consistent, but I would say we are now there technically, which is good news. So now it's just a matter of some fine-tuning, let's say up until June, so to make it around, let's say, end of the quarter, but we should really work. But now also the limitation will not be anymore the technical limitation starting the second semester, but will only be the ramp up of the demand because we don't wrap up from the first day of this kind of investment, but this is a completely normal specialty products. On PVDF, you're right to say that, in fact, the negative is compared to sequentially. We have now, we have reached a sort of stability Now it's really the product mix which is driving the improvement of PVDF, but I would say on the most, let's say, commoditized product, which is more on the big market, on coatings and on batteries, we think that we have reached a sort of stability, and we continue to... to grow in these two markets, and on top of that, we have our differentiation on the product mix. But there is a difference when you think year on year or sequentially. Your comment is right sequentially.

Thank you. Maybe if I can have a final one just on performance additives. We usually don't talk too much about this segment, but I believe last year the performance has been pretty strong, and it looks like volumes were strong again this quarter. Can you provide some color around that, please?

No, it's clear that performance as it is, it was nearly our best business last year in terms of progression versus 22, which was already high. So this year, we continue to be solid, our feeling, but will not be at the same level as last year. And to a certain extent, the Q1 was a little bit in this vein. This means that solid, but not as strong as last year. But since this year, is a year of a wrap-up of HPP. It creates quite a solid performance on the total of advanced material. Okay?

Thank you.

The next question is from Emmanuel Matto of Odo. Please go ahead.

Yes, good morning, Thierry and Marie-Josée. Three questions from this panel. First, why haven't you tightened your EBD guidance range for 2024? I'm surprised that without sign of clear rebounds in demand currently, you still consider that the top end of the range at 1.7 billion euros remains a possible scenario. Second, you still indicate that you expect growth to be more focused on the second half of the year. Is it the case for all your four segments and not only for advanced materials. And my last question, startup cost for the Singapore platform amount to 22 million shows in Q1. Should we expect further cost over the coming quarters? Thank you very much.

So with regard to the EBITDA guidance, I think we gave our EBITDA guidance, it was just two months ago. there is still a lack of visibility on the economy. You see it also in the communication of different players in the chemical industry. Some start to see some positive signals. Some consider they are not necessarily sustainable. So I think there is still uncertainty around it. So we don't see the value of Titan, the EBITDA guidance. I think the good thing that you have to consider is that we confirm it and that the Q1 and our guidance also, we gave the guidance for the Q2. We show a progressive ramp-up, as we explained to you when we published early March. It's going in the right direction, but no, I think I'm sure that among you, depending on your sensitivity, some would expect some Titan range, and some others will think that there is no necessity, so I think that's I think that the important point is that we confirm the guidance and that the development of the profitability of the company is going in the right direction with the second quarter, which is slightly up compared to Q1, and also which would mean that it will be also including the seasonality significantly up compared to the Q1. With regard to the growth or segment growth, no, it's not the case because you could see that the ADS is already growing in the H1. So, no, this is a beauty of even if all the segments are focused on the specialty materials, the beauty is that they don't have exactly the same economic profile. And the adhesives should grow all along the year, while, for example, HPP should grow also, while, for the reason I mentioned before, performance additive, comparing to a very high base, will certainly be a bit lower. And coating solution, we have still, up until we see more clarity, some challenges. So it's good to have a portfolio, which will all contribute to the guidance we have just mentioned before, and more generally, all this growth depends on the strength of the recovery, which you should not exclude. With regard to Singapore, I think it's very consistent with what we say with regard to the rompers. This means you should still have a little bit of one-off in the Q2, but it should disappear for the second semester because the plant, as we mentioned, will have technically be fully developed at the end of the semester.

Thank you very much.

The next question is from Jean-Luc Romain of CIC Market Solutions. Please go ahead.

Good morning. Thank you for taking my question. Recently, the Rhone prefecture mandated some changes or maybe some acceleration in adaptation to change of PFAS. Does it entail additional costs for you or is it already planned for you?

You have any one question, or you have several questions? Only one. Oh, okay. No, I think we have the, we make some analysis in cooperation with the administration, so we are incurring the cost of this analysis, which are asked by the administration. So we do that, and we fully cooperate in order to implement the analysis they are asking us to do. So we have this cost.

Thank you.

You're welcome.

The next question is from Chetan Udeshi of J.P. Morgan. Please go ahead.

Yeah, thanks, Monique. I had two questions. First was I just wanted to understand the mechanics of the contribution from projects a bit better because if I'm not mistaken, you're already reporting the startup costs which are, I think from memory, 15 million per quarter as one-off costs below the adjusted EBITDA. So when you say 60 to 70 million contribution in primarily second half, so that will be on top of those startup costs actually coming into the adjusted EBITDA line. So that's actually looking more like more than 100 million contribution run rate. Is that the right understanding or those startup costs will remain in the other line for some more time. That's the first question. And the second question, just going back to the acquisition that you announced, and I appreciate you see significant synergies potential on this transaction, but I'm just curious, if I look at your ROTC, pre-tax ROTC in your Adidas business over the last five years or so, it's remained between 7% to 8% pre-tax, which some would say is below the cost of capital. So how should we think about your ROSI transition in your business in the coming year, especially in the context of deals like DAO, which may still be returned dilutive for at least a couple of initial years? Thank you.

Not sure if your question on the second was the ROSI or the EBITDA, but we'll come back to that. So the first one I think is very clear. We say 60 to 70 EBITDA contributions. So what is below the line is not in the EBITDAs, you know, but I'm sure you knew the answer to the question. As we mentioned, will decrease already in Q2 and will disappear in the second semester. I just answered before. With regard to the DAO acquisition, so BOSTIC, as you know, has been built from the start by acquisition. It's only acquisition. BOSTIC was bought. So, clearly, you take more time to take the work than for organic. But this is the beauty of Arkema, to have a combination of organic business that we have researched over time, which have a good... strong ROC, but they were in the legacy, and then we make acquisition mostly from the proceeds of the businesses that we have disposed of, which have most of them very high ROC, and we invest mostly in In the additives, so the only thing is that when you sell, I've mentioned it to you many times and to all of you, when you sell, you have the capital gain, you're one, but you don't keep the benefit in your ROC calculation for the future reinvestment. That's a mechanic of the accounting. But, no, I think for Bostik, we will try to get, as we have mentioned many times, especially when we will make less acquisition above at work and then above work. From this standpoint, the acquisition will be accretive. This is an acquisition for which the challenge is really to increase significantly the profitability. We take the challenge, but if we deliver the challenge, the return on capital employed of this acquisition will be very significant and will be accretive after two years. on the ROC. Now on the EBITDA, as you make, by making a simple math, it's clear that the first year, the EBITDA percentage of this acquisition is below the EBITDA percentage of the BOSIC. So it will be dilutive, but this is because it's dilutive and will be that, this is why we create a lot of value on the long run. So it goes together, but frankly speaking, It's a very nice acquisition, and for BOSIC, it's a very good add-up. And BOSIC, I think, inside Arkema, is really a very, very strong platform. We are very proud of what we have built over time for this adhesive platform.

Thanks. And I think your point on gap gains is completely fair. You know, we tend to always ignore it, but understood. Thank you.

You're welcome.

The next question is from Jaideep Pandya of Onfield Research. Please go ahead.

Thank you. The first question is on PA11, actually. Siri, you've been tight on this product for years, and obviously you've had a mixed improvement strategy. So, you know, for a lot of the legacy end markets, like oil and gas, for instance, which used to use this product then, Unfortunately, you had to say no to them. Maybe you haven't. I'm just using that as an example. Now that you have capacity, how quickly can you bring some of those end markets back? Or is your strategy actually to not bring those end markets and actually focus on further mix enhancement in the Singapore plan? So I'm just trying to understand whether it's going to be more value-oriented or volume-oriented strategy in PA11 as we speak. And How is the dynamic, I know the products are two different ones, but how is the dynamic between 12 and 11 when 12 actually also has more capacity in the next couple of years? That's my first question. The second question is on coatings. Could you tell us what are you seeing from an end market point of view with regards to volume when we look at the more industrial end markets versus the more paint-oriented end markets in terms of volume? And then the last question, sorry to come back, but just on PVDF, how do you see the technology evolution within Arkema when we think about the suspension versus emulsion grade, but also when we think about PVDF in other markets like electronics, for instance? How do you see your penetration, given that your product suite in electronics has increased as well with the PI acquisition? Thanks a lot.

Okay, thank you for your question. So on polyamide 11, specialty products, this means it's not like you have a plant, you fill the plant like a commodity plant. This means that, sure, you have to accept at the beginning maybe some volumes which are lower margin in order to have a plant which is running smoothly, but the philosophy of the polyamide 11 is really focused on specialty markets, specialty applications, and the potential of development is really unlimited. You mentioned but you have textile, you have shoes, you have , you have plenty of applications, and you have new ideas coming all the time. What we could not do, because it's not possible, is in advance of the startup to feel a strong density of new business just to be ready the first day. In a specialty product, it doesn't work like that. So you need, as we have mentioned many times, for the, let's say, the high end of the range of the portfolio, it will take several years to go where we want to go in Singapore. But we have also... Some good growth on the good businesses, maybe not with superior margin, but a solid margin that we will take also in the meantime, because polyamide 11, I would say, has two big qualities, three big qualities. It's high performance. It's bio-source, as you know. And the third one that maybe not everybody has in mind is very competitive also. So because of that, I think we are really confident in the coming years to fill this Singapore plot. But also, we don't want to go too quickly because, as you know, it's a big ticket each time. And fortunately, Marseille has lasted 70 years. So if we can fill Singapore, which is not the same size as Marseille but still significant, in five years, we'll be really in very good shape. So we really manage the mix and take the time we need. Now, with regard to dynamic versus polyimide 12, polyimide 11 is not positioned as a competitor of polyimide 12. It's higher performance. It's bio-sourced. So we have our own market. Sometimes we have some gray area where we play on the two grades. You know, we are in polyimide 12. We are not the leader, but we are a good challenger with some very good products. We try also to position more on specialties and commodities. It's a whole game, which is a marketing game that is very important in the long-chain polyimide. But overall, you are right to say that we try to focus on the IN of the range because this is a superior product. On the coatings, I would say it's a growing market. The acrylic-valued chain It's a good chain from this standpoint. It has many applications which are far beyond coatings and paints. You know, when we think coating solution, by nature, our mind goes to paint. But in fact, it's far beyond that. Electronics, batteries, we'll talk about battery later in your third question. In super absorbent, in... And when you say paint, it's industrial paint and paint also for construction, new energy, so it's a big market. And paper also is a market. So you have plenty of market. It's growing, I would say, at GDP with overtime. You can take all history and also what you think looking forward. GDP is a good assumption. Now, you need to have in mind that in Europe and the U.S., our base of volume starting the year, if I look at 2023, is rather low. So we have also some catch-up in this accelic value chain. So you have a sort of, let's say, catch-up plus a natural growth of cutting solutions. But basically, if you go to the Capital Markets Day, not only the main presentation, but the different deep dive, you will find plenty of elements of answer also, GDP, if I may. Then on the PVDF, what more can I say compared to what I've said already? I think on the, so first of all, on PVDF, you have plenty of application, far beyond battery. Battery is on top of it. Secondly, with regard to battery, it's clear that you have one product which is better For NMC, the other one is better for LFP. And I would say, if you look mid-term, the two technologies, LFP and NMC, will share the market. So I think, I don't see where is the issue. And beyond that, emission is very strong for other application batteries. And it's very strong for plenty of application outside of battery. So we like what we have. We'll certainly be a player in suspension one day. But for the time being, we have far enough to grow our PVDF plants. And most of the time, we are sold out. So I would say we don't see any specific points there. We work a lot to have an evolution of our range for battery, including PVDF. So we have plenty of ideas, but also we work outside of PVDF for batteries. As you could see, we have invented recently a liquid ionic, okay, ionic liquid, which is really a very interesting technology, especially for solid-state batteries. And we are the only player, as you know, who is able to provide both PVDF, so fluoropolymers, And acrylics in a battery, which is clearly a very strong advantage to Arkema. We have solution inside the cell. This is what I've just mentioned. But also outside the cell, for example, with polyimide, with polyimide 11, et cetera. So plenty of hopes in this world of PVDF and plenty of hopes in this world of batteries.

Great. Thanks.

You're welcome.

The next question comes from Georgina Fraser of Goldman Sachs. Please go ahead.

Hi. Good morning, Terry. Good morning, Marie-José. I've got two questions. One of them is a little bit of a follow-up to Matt's question right at the beginning. This is maybe more specific to adhesives, but if you could relate it to the whole portfolio as well. Do you think that Q1 is where we will have the greatest price versus cost benefit throughout 2024? And then the second question is, you've clearly based your guidance on a flat macro picture year on year, but with Arkema's own startups contributing to more second half weighted momentum. But could you give us an update on how the end markets have been evolving? Is there anything that's surprising you? Thank you.

Thank you, Georgina. So on the first question, you know, you need to, I would say the answer to your question would be yes, but it's now becoming incremental because we compare to last year where we had already a good net pricing benefit. So now I would say it's more incremental and the topping becomes more from evolution of the mix from synergy from acquisition, and from growth, coming growth from the macro, and from our major projects we have mentioned, the one we should contribute to 60 to 70. Okay, so I would not take this year the topic of net pricing. I would make more this year a topic of volume with different levels, including our own projects, including the dynamics of the different end market, and also the synergies coming from acquisition, for example, with Ashland. We have no time to mention it today, but we see a lot of possibility. I was there recently. It's very, very encouraging how much business we can create beyond the organic momentum. On the 24, we don't say we assume a flat macro one. We say that we have a range. In fact, we come back to the question of the on the guidance range. We have two assumptions and everything in the middle. So you have the one which says no improvement which is lower end of the guidance at 1.5 billion EBITDA for the year. And you have the one which assumes a strong recovery which goes to 1.7 and then you have the middle ground, which is basically the consensus of today. So beyond that, where we see some, I would not talk about surprises. There is no particular surprises at this stage. We don't see signals of rebound that we would interpret like something more than incremental and obviously long-lasting. So let's wait and see. There are some incremental signals which are more positive, but difficult to interpret them. So we stay in this mood for the time being. If it is better, it's better. Everybody will be happy. Now, with regard to the end market, batteries, maybe which refer to the question on PVDF, start of the year was... was okay in China, was quite okay in sport. Sport, we suffered in the second part of last year. You know, we have application like our PBAC for sport. It's improving. Automotive, better than what we saw, but also this is an area where we have a lot of new business. And you have automotive and you have the new automotive, the clean mobility, which is doing well. Energy market, I will not surprise you, are doing well. Construction is still challenging. I would say, let's say if we are optimistic, we say stabilizing at a low level, but at three, the question there. So you have some different elements, but overall, we stay in a continuity of what we have seen. With some incremental signal, we still remain to be confirmed.

Thank you very much, Thierry.

You're welcome.

The last question is from Alex Stewart of Barclays. Please go ahead.

Hello. Good morning. Thank you for the interesting discussion. Just building on something that Georgina said, I think I'm right in calculating your volumes are approximately 10% lower than they were in 2019, if I add up all of the volume numbers you give us. Do you think it's realistic to assume that all of the volume you've lost over the last four years will come back? Or do you think that there's a portion in there related to some construction markets that were a little bit peak. And so you may not get back to the 2019 level. I'm interested just qualitatively what your views are on that. And then the second one, we talk a lot about the 60 to 70 million contribution from your new projects in fiscal 2024. But clearly that will last multiple years. So could you maybe give us an idea of what the the annualized contribution from those projects would be if we take a sort of maybe Q3 or Q4 of this year, but over the course of a full 12 months rather than the half year that you're expected to contribute would be very interesting. Thank you.

Thank you very much for your question. In fact, the two questions refer to a certain extent to the capital markets there. On the volume, so first of all, we will not get everything back this year. It's not possible. Our assumption that we took in the capital market day organic growth that we would recoup maybe 7% out of the 10%. At least it was in our model when we say for our plan 24 to 28, we have this organic growth, and we say we will recoup not the whole, 10% because the world has changed and maybe some markets, some volume, we are ready to give up because we are continuously improving our product mix, but let's say 7 out of the 10, but it will take a couple of years to be back, to get back this 7%. On the new project contribution, again, I think from memory, in the Capital Market Day, we say that latest in 28, this project which contributes 60 to 70 would contribute full-speed 250 million euros of EBITDA, 250. But this 250 is not, if it was your question, the annualized of the Q3 or Q4, not at all, because the ramp-up will take years. We were mentioning before to question the ramp-up of the polyamide 11. This will take several years to be at the speed we expect. It's around 100 million of EBITDA for this project. It will take years to go there. So what you could do, Alex, I think this is the best, is to take a sort of zero point at the start of this year. You put 250 in 28, and you take a straight line. We'll more or less be there. then you have the EBITDA contribution year after year.

Thank you very much.

You're welcome.

This was the last question. Back to you for any closing remarks you may have, Mr. Henaf.

Okay, but I would like to thank you very much for your question. Hopefully we were able to answer all of them, and I wish you, on behalf of the team, a good end of the day. Thank you.