Arkema S/Adr

Welcome to Arkema's full year 2025 results and outlook conference call. For your information, this call is being recorded. It will take place in a listen-only mode, and you will have the opportunity to ask questions after the presentation by pressing star and 1 on your touch-tone telephone. I will now hand you over to Thierry Le Henaf, Chairman and Chief Executive Officer. Sir, please go ahead.

Thank you very much. Good morning, everybody. Welcome to Arkema's full-year 2025 results conference call. With me today are Marie-José, our CFO, and the Investor Relations Team. As always, the slides used during this webcast are available on our website, and together with Marie-José, we'll be available to answer your questions at the end of the presentation. In 2025, The macroeconomic environment was, as you know, particularly challenging, probably one of the most difficult our industry has faced in the last 20 years. The second part of the year, in particular, was marked by subdued demand across many end markets, the slowdown in the U.S. while Europe remained at low levels. This reflected ongoing cautiousness of economic actors as well as tight end inventory management and many of our customers. On the other hand, Asia continued to be the most dynamic region for the group, in particular China, where we could see an acceleration in certain sectors like electric mobility, advanced electronics, and sustainable consumer goods as well. As you could expect in this context, the group focused on its fundamentals of customer proximity and innovation while strengthening its cost and cash initiatives. The teams have been fully mobilized on a daily basis to best address the environment and strictly control the operations. As a result, we generated a high level of cash at 464 million euros, well above our revised guidance of 300 million euros. This performance was also better than last year's level despite the significant EBITDA decrease. EBITDA stood indeed at 1.25 billion euros with a margin of 13.8%, so close to 14%, not living up to our expectation at the beginning of our year, but not different from what most of our peers have experienced. We were able to offset fixed cost inflation and delivered around 90 million euros of fixed and variable cost savings in 2025, nearly doubling our initial annual target set at CMD. This work will be pursued in 2026 as we strive to offset against the inflation, and we should therefore be able to deliver the 2028 cumulative cost savings target of 250 million euros two years in advance. As you can see in slide 7, the group has launched a number of new initiatives to make the organization even more efficient, leading to more than 2% headcount reduction in 2025, and we anticipate the further reduction of around 3% per year over the next few years. Our performance continues to be supported by several of our key attractive markets, namely batteries, sports, 3D printing, healthcare, and new generation fluorospecialties, with low global warming potential, which benefited from strong dynamics with sales of 16% year-on-year. These markets will continue to grow in the future and contribute to the ramp-up of our major projects listed on slide 5. These projects delivered around 60 million euros additional EBITDA in 2025, and we expect this trend to continue in 2026. The group will benefit from the ramp-up of the recent investment in the U.S. and Asia, successfully started in 2025 and early 2036, namely our new 1233 ZD and DMDS unit in the U.S., as well as the recent clear transparent polyamide capacity downstream of the polyamide 11 plant in Singapore. In addition, our investment in PVDF in the U.S. is planned to start up in the first half of 2026, increasing our capacity by 15% in the region. PIAM should continue to benefit from the launch of new smartphones, notably foldable and ultra-thin models, in which polyimide is becoming essential to answer their higher requirements in terms of reliability and thermal management. TIAM should also start benefiting from successful diversification into new high-end applications in industry markets. After this important wave of organic projects offering significant room for growth mid-term, Arkema will further reduce its capex envelope to €600 million in 2026. This level will enable the group to continue investing in targeted projects with high returns and fast payback. We did not only focus on the very short term, but continued to build Arkema for the future by developing strategic partnerships with leaders in their domain in order to strengthen our positioning in key markets such as batteries or sports. Maintaining our efforts in R&D is key in order to stay differentiated and accelerate our growth in high-end applications. We stay focused on sustainable innovation. We leverage our competencies by collaborating with startups. Hulu in carbon capture is a good example. Coming back to our 2025 EBITDA performance outside of the negative currency impact, the low cycle in upstream acrylics and the decline of old generation refrigerants explained most of the decrease. The rest of Arkema's business was far more resilient, but this performance to a certain extent was overshadowed by these other activities. That's why, in order to improve the reading of the group's results, we have decided to implement a new segmentation starting in 2026 to better highlight the distinct dynamics and business models of the resilient and fast-growing platforms within specialty materials compared to the most cyclical and large-scale industrial activities which will be regrouped in a new segment called primary materials. The global acrylic monomer business will be included in this new segment. This business has been much more volatile in recent years than it used to be, as you can see in slide 21. However, looking back since the acquisition of our American asset in 2010, this activity has been tremendously cash-generative, largely contributing to fund the growth portfolio transformation over the past year, so we will continue to leverage our strong industrial and commercial position in acrylics to generate solid cash generation and capital returns over the cycles. The new segmentation will also bring more visibility to our next-generation low-GWP solution for air conditioning, which we have actively managed to enhance our prospects. They will now be integrated into the fuel specialties portfolio and will benefit from accelerated growth in applications like heat pumps and data centers. On the other hand, all-generation refrigerants that have been a highly profitable and cash-generative business since 2020 – probably exceeding potential proceeds from a disposal, will join the primary material segment. While this business will quickly fade over the coming years, Arkema will benefit on the other end and within the specialty materials from the ongoing growth of the load GWP solution, generating substantial value. I believe this new segmentation will provide the financial community with greater transparency on Arkema's portfolio business rivals and specialty materials performance. Finally, I think it's important, I also want to quickly highlight some of our CSR results where we made again strong progress and achieved quite good performance in 2025. This is a case for our climate plan where the group's numerous initiatives to reduce its carbon footprint are paying off. We reduced our Scope 1 and 2 emissions by 48.7% at the end of 2025, compared to 2029, fully in line with our target, and we have also decided to strengthen our water reservoirs and introduced a new target on waste treatment, another key priority for Arkema. Given the strength of the group's balance sheet, the board decided to propose a stable dividend of €3.60 per share to the annual general meeting, despite the challenge at home, which is a sign of confidence, both in the quality of the portfolio and in the relevance of the strategy. Thank you for your attention. I will now hand over to Marie-Josée, who will review in more detail the financial results before I come back to discuss the outlook with you.

Thank you, Thierry, and good morning, everyone. As commented by Thierry, 2025 was a challenging year, starting with revenues of 9.1 billion euros, still to about 5% earlier in the year, impacted by a negative 2.9% currency effect, reflecting mainly the weakening of the U.S. dollar against the euro, but also from other currencies, including the Chinese yuan and the Korean won. The scope effect at plus 1.6% reflected the integration of Dow's laminating adhesives, Volumes were down 1.6%, reflecting the overall weak demand environment in Europe and North America, as well as a tight inventory management by customers in the fourth quarter. On the other hand, we continued to benefit from a positive dynamic in Asia, and more particularly in China, mainly driven by high-performance polymers. Price effect was a negative 2.1%, impacted essentially by the acrylic cycle and by the refrigerant gases that are transitioning from old to new generation. Other activities showed a more limited price decrease of 0.8% in a context of declining costs of raw materials. The group EBITDA came in at 1.25 billion euros, including 40 million euro negative currency effect. Let's mention first Q4. which is a seasonally low quarter. The declining EBITDA in the fourth quarter reflected the overall weak demand environment in Europe and in the U.S., as well as the strong destocking due to tight year-end inventory management at our customers and ourselves, actually, which impacted particularly our adhesives and advanced material segments. Looking now at the full-year performance by segment, Adhesives margin came in at around 14% if we exclude the dilutive effect of Dow's laminating adhesives business, still in its integration phase. Foliere Vita reflected the weak demand in industrial adhesives and the slowdown in the U.S. in the second half, notably in flexible packaging, transportation, and construction. Bust-in performance continues to be supported by our ongoing work on efficiency and our price discipline. Advanced materials resisted well with a broadly stable volume of prices, delivering an EBITDA margin of 17.9%. High-performance polymers in particular showed a 10% organic growth on the year, supported by new business developments in batteries, sports, and 3D printing, and the ongoing positive dynamic in Asia. The segment CBDA was nonetheless impacted by the negative currency effect, by an unfavorable mix in performance additives, as well as by lower volumes in Europe and in U.S. In coatings, EBITDA was impacted by the low cycle conditions in the upstream acrylics, as well as by the weak demand environment in coating markets. Construction and decorative paints markets in Europe and U.S. were subdued. The performance of the segment was therefore significantly lower than last year, despite the resilience of downstream activities. Lastly, intermediate EBITDA was mostly impacted by the decline in refrigerants in the first half of the year, while acrylics in Asia improved slightly. The group recurring EBIT amounted to €564 million, which corresponds to a recurring EBIT margin of 6.2%. It takes into account €687 million of recurring 6% depreciation, higher than last year due to the integration of DAOs laminating adhesives. and to the starting amortization of new production units, which came online during 2025. Non-retiring items amounted to 276 million euros. They include 144 million euros of PPA depreciation and 132 million euros of one-off charges, notably the restructuring costs linked to the hydrogen peroxide site in France. Financial expenses stood at minus 125 million euros The increase versus last year reflects the increased interest cost of our bonds on one hand and the lower interest on invested cash on the other. All in all, adjusted net income amounted to €328 million, which corresponds to €4.34 per share. Moving on to cash and debt. Arkema delivered a strong cash flow generation, with recurring cash flow standing at 464 million euros. This reflects our continuous initiatives to tightly manage our working capital. Working capital ratio on annualized sales reached 12.5% on EBITDA, and the EBITDA to operating cash conversion rates stood at 88%. Our spend in capital expenditure amounted to €636 million, below the level of our recurring depreciation in Vienna. Retail flow amounted to €390 million, including a non-recurring outflow of €74 million, linked essentially to research ring costs. Taking into account these elements, Arkema net debt and hybrid bonds were slightly down at €3.2 billion, which includes the €1.1 billion of hybrid bonds. The group continues to enjoy a strong balance sheet with a net debt to last 12 months EBITDA ratio of 2.5 times. Note that our 2026 maturities were all pre-financed in 2025. The 300 million euro outstanding hybrid bond issued in January 2020 was redeemed in January 2026. So our portfolio of hybrid bonds at the end of this month, end of Jan, is back at 800 million euros. I hand it over back to Thierry now.

Thank you, Marie-José, for this explanation. So, we are exchanging the outlook for this year. So, at the beginning of the year, the environment remains, and there is no surprise to find the continuity of the second half of last year, with limited visibility and weak demand. The currency effect, you saw it, continues to be headwind, following the further weakening of the USD and Asian currencies, the Again, Euro. In this context, as we said already, our first priority will continue to focus, and I think we did a good job last year, and we'll continue to do a good job this year on the elements under our control. This means, in particular, optimization of fixed costs, optimization of variable costs, CapEx, and working capital. Besides, we continue to rely on the progressive ramp-up of our major project, and it's slower than expected because of the macro, but it's still material for the company, and it will support the Arkema's growth in the long run. So for 26 versus 25, we expect this project to contribute around 50 million euros of additional EBITDA. It will continue to help us... and the following year to reinforce our geographical footprint since we anticipate more long-term development potential in Asia and in the U.S. In light of these elements for 2026, the group aims for its EBITDA to grow slightly at constant FX, and we prefer, obviously, to reason at constant FX given the unusual volatility of exchange rates against the euro. Not only the USD, as I mentioned, but also most of the Asian currencies. The year-on-year comparison will be more challenging in H1, and more particularly in Q1, since last year's profile was more weighted on the first semester, with significant stocking in the second half. Besides, the currency effect on Q1 should be negative, estimated at 25 million euros. If we put the currency effect aside, we expect in 2026 a macro more or less similar to 2025. The comparison with last year should ease progressively until the end of the year, including specifically to Arkema, the ramp-up of our major project. As a result, we anticipate a performance of the two halves more balanced in 2026 than in 2025. So thank you very much for your attention. And together with Marie-José, we are ready to answer the questions you may have.

Thank you. 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 enter the question queue and wait for your name to be announced. The first question comes from Tom Rigglesworth with Morgan Stanley. Please go ahead.

Thanks, Thierry. Thanks, Mario, for the opportunity to ask questions, too, if I may. Firstly, could you talk a little bit about the construction and markets by region and kind of help us understand how much step down you saw in the U.S. in the second half and how much weight that weighs on 2026? And conversely, you know, there are expectations that construction refurbishment improves in Europe in 26. Do you see anything in your order books or in your discussions with customers that kind of talk to that? And then secondly, if I may, just around obviously very strong free cash flow in the fourth quarter, how much of that was your decision to really cut the working capital versus the pricing element rolling through working capital, i.e., as we look at working capital for 26, if we do start to see some volume improvement at some point, do you need to see a rapid increase in working capital to meet that demand? Thank you.

I will let Marie-Josée answer on the working capital. On the construction market, it's an interesting question because, as you know, we have, compared to other peers, we are more weighted in construction, especially Europe and U.S. and in Asia is less than that. I would say, and it joins your question, in fact, to a certain extent, the answer is in your question. Europe, we have reached certainly a bottom. I'm quite cautious on the signals, because we have been caught several times by surprise. My feeling is that there is a little bit of incremental improvement, but to be confirmed. Okay, so Europe is like... The bottom, it does not decrease anymore. And if there was a trend, it would be incrementally slightly better. In the U.S., clearly in second semester, it was one of the bad surprises we had in terms of business development. I would be – I know the elasticity and the agility of the U.S. economy, so I would not extrapolate necessarily what we saw in the second semester in the U.S. with what it could be this year. What is clear is that – and this is the difference with Europe – U.S. decreased second semester of last year in construction. while Europe gave the impression it was more at the bottom and was a little bit more positive. So the U.S. will see. I know that the Trump administration is trying to put in place some measures in order to support construction-related activities. We'll see if it brings... it brings some support, but there are so many variables that are difficult to know today. So I would be cautious as I am on the overall macroeconomy. Let's take month by month and see how things are developing.

On the cash, a few comments. Basically, you saw the working capital landed at 12.5% of our annual sales and frankly reflecting the similar work that our customers have been doing on their end for 2026 at constant macro I would expect frankly a flat working cap in case of a rebound then for sure working cap should increase in a commensurate way versus those 12.5 or 13% of our sales

Okay. Thank you both. Just as a quick follow-up, I mean, do you think that the industry – well, the supply chain has overcut inventories and working capital? It just feels like everybody has cut aggressively at the end of last year and has then aggressively cut again at the end of 2025 – sorry, 24 and 25 – I guess investors are surprised as to how much de-stocking has taken place. So any commentary or color there as to the level of inventories in the system would be very helpful.

Certainly, this question is worth a lot of money. The difficulty, as you know, and you know as much as I know, Tom, is in the supply chain in chemicals, they are complex and they are long-term. and fragmented, so it's very difficult to have a clear view. What is sure is that, and it has been to a certain extent a little bit of a mystery for all of us, because normally when you have a cycle in chemical, it doesn't last so long. It's clear that we see this talk now. We are already talking about end of this talking 18 months ago. We thought it was already long. But it's clear that the stock for most of the chain seems to be rather low, but they are low if there is a rebound. If there is no rebound, certainly the chain can live with that. So my theory is still the same, it has not changed, and is that at a certain point you will get a rebound, we don't know when, it will happen, we don't know when, and when the rebound will come, the chain will be under big pressure. This is obvious, but we don't know when, And there will be nuances depending on which region, which end market, which product line, et cetera. But basically, this is a typical cycle of chemicals where you have volume and pricing on the both directions depending on if it goes down or it goes up, or is amplifying the industry. Then we have to be a bit patient, but it will come at a certain time. We don't know. We'll see. So your question is valid. Certainly stock are less at the end of this year than they were at the end of 24. 24 was less at the end of 23. But now this is a demand which will be the main driver of the stock.

Thank you.

You're welcome.

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

Hey, good morning everyone. Thanks for taking the question. I'd like to ask about the new structure, the divisional restatement. Not the first time the company has done that since its creation. And I heard your introductory remarks about the benefits of transparency. But I would put it to you that there is an argument that it highlights a lack of industrial logic to the portfolio, that you can move things around so frequently. it hurts investors' ability to track performance over time because we lose that transparency. So can you just elaborate a little bit more as to why you think this is a good decision? And by association, have you changed reporting lines or management structure? I had a quick glance at your exec committee on the website, which hasn't changed, but is there going to be a change in roles and responsibilities that may help us bring some better operational performance and some genuine benefit of this move.

Thank you. First of all, Matthew, we don't change so often, and here we are talking about an incremental change. I think the difficulty we had, and hopefully it was well explained, and we are completely open to discuss more with you and who wants, the difficulty we had was two things. The first one, we got the impression that on the specialty material business, which is whatever definition, by far the large majority of Arkema portfolio, we are really doing a great job. And this year, we were frustrated by the fact that we could not read it and you could not read it simply. And the reason was that we have things that changed over the past three years. The world has changed. I think maybe we changed, but I think it's good to be agile and to try to be as transparent and as clear as possible in a world which is changing a lot, where yourself, ourselves, all our stakeholders are trying to understand what is happening and on what you can really rely and build for the future. And what we saw is that, in fact, on the refresher on gas while we saw that we were mostly old generation gases and little development in new generation and this is why we wanted to sell it because we saw that there was no future and it was far from our sustainable strategy what we saw is two things that the old generation that we knew already were going to, were phasing out, or fading out, and with an acceleration in the past two years. But on the other side, we're far stronger, far better, far quicker in the development of new generation, not for the traditional application in refrigerant, but for new application heat pump, data center, energy efficiency in the buildings, which are really completely core in terms of the strategy of Arkema with some of niches, same end market, same kind of growth pattern, et cetera. So we wanted absolutely to recognize that, and this is why a part of this, if we speak between old and new generation, and it makes completely sense from the portfolio standpoint that this new generation joins. We have already started to do it, join the HPP. The second thing with regard to acrylics, for a long time, and we had, I know, a discussion together on that, we are absolutely convinced that we would be able for Europe and U.S. to stabilize their volatility by developing the downstream. It was true for Asia, but Asia we knew that it would be quite limited. But Europe and U.S., we thought we could go further on this path to balance the upstream and the downstream. But in fact, we have seen that the targets were not so many. In fact, we bought already most of these targets with Sartomer and Coatex. And the second thing was that... Not only we decided when we bought BOSIC to put most of our allocation of cash for acquisition for additives. And the second trend that we see, which is linked to the fact that the world is becoming far more volatile than it was in the old time, you can see on every parameter, the FX, the also the macro figures in this or that market, et cetera, of the brand evolution. In fact, it reinforced the volatility of the acrylic acids, the acrylic monomers. And we wanted to also to, so we decided to put back China, Europe, and US together, And to recognize that in the portfolio, we have a minority, a small minority, which is around 15% of the portfolio, which is really, in nature, more volatile. Even if, over the cycle, you still generate a lot of cash. And for acrylic, it's normal, because the upstream goes with the downstream, but the is a basic material. We know that. So we think that with this evolution of the world that we want to recognize, the more volatility of what is now in primary materials, we are able really to show you that all the jobs that we have been doing on the specialty materials is really bearing its fruits with quite a resilience and the growth over time. And it was in this context of 25, which was completely atypical and unexpected, they were able to deliver a minus 5% EBITDA evolution, which, frankly speaking, given the level of the context, of the challenge of the context, was quite a good performance. For us, it was far easier to explain it like this, so you have to take it as a better reading. Now, this is why we did it so fully, and we are ready to discuss with any of you. For us, it reinforced the quality of the reading of the performance and also of the benefit of the strategy we have been leading over the past 10 years.

Thierry, can I ask a follow-up? Because from your answer, it sounds like the concept of integration across the value chain hasn't worked and is no longer valid. So this goes above and beyond simply the way you're reporting. It questions the actual strategy of the company. Are you open to the idea of exiting the three upstream acrylic plants if there were to be a possible buyer out there, or are they still core to the broader group?

No, I would say that we have to take it for what it is, which is a better reading and reporting of where we are. Acrylix remains the backbone, which is important, of the downstream. So, so far, I would say it's really part of the portfolio. And anyway, the results are quite low. So, it's not at all, even beyond what you say, the topic of... Now, as you say, and you have seen the history of Arkema, there is never any taboo. So I think that, for the time being, is quite a reporting topic, and we have to take it as such.

Thank you, Pierre.

You're welcome.

The next question comes from Laurent Favre of the ANP. Please go ahead.

Yes, good morning. Thanks for taking the questions. My first question, I guess, is on HPP, where we had stable Q2, stable Q3, and Q4, I think, a bit of a collapse, sales down 15%. We saw something similar with your peer this morning. And I was wondering if you could talk about what you're seeing on, beyond, I guess, this talking, what you're seeing on competitive pressures, and in particular, maybe some kind of commoditization risk, That's question number one. And the second one, just to echo the comments from Matthew, I think best practice for us, especially if you're talking about adding transparency, would be to have sort of restatements for the divisions going back to at least 2023. That would be really, I think, helpful for investors and for us. But a question related to that restatement is around acrylics. EU-US, I think it looks like you have 13 million of EBITDA in 2025. And I was wondering how you're thinking about this going forward. It seems that we still have capacity additions in the industry in 2026 and maybe 2027. So are you expecting acrylics EU-US to still be around that sort of break-even EBITDA for 2026 before we eventually see a recovery? What did you bake in the guidance? Thank you.

Okay, so with regard to the first question, I really think that the end of the year, and you mentioned also our peers on the HPP, is really driven by the stock of customers. When I saw, we saw in detail, you can imagine the dynamics and to really understand the the results, beyond the fact that the impact of the FX was more important in Q4. Don't forget that. What we saw is that the impact of this stock was quite high. And this stock, it happened less in Asia, where by culture they don't stock a lot, but in Europe and U.S. So, in fact, not only we have the stock globally, but the fact that the stock was more pronounced in Europe and U.S., where culturally our customers have more stock, change the geographical mix, okay? And it weighs on the profitability evolution. So the geographical mix was, especially this low sales in the U.S., was a little bit of a surprise and that was linked to this dystopia. We have spent a lot of time, as you can imagine, in this kind of context with our customers. We knew... we understood that they would be very cautious in terms of stock at the end of the year. So this destocking topic is not just a matter of the chemical industry. Our customers, they destock. Our suppliers, they destock. Everybody tried to finish the year with stock, which was, I would not say minimal, but more reasonable than they were given the level of the demand. So for me, it's not a matter of more competition or... anything special sort of change in evolution we would have seen in Q4. It's really a matter of customer by customer of this stock. As you can imagine, we check our market shares very precisely also. And you know, Q4 is the last quarter of the year, so sometimes you can have certain years, you can have a little bit of amplification of the low demand. But I would not... considered is a sort of new trend at all. It's not my feeling, and as you know, in HPP, we put a lot of efforts on the new business, development, innovation, and I think this is a paradox. I think we have been good on that, and so the growth is there. We are able to differentiate versus competition, and the market is not easy, but we are not particularly concerned for the for the next few years. On, yes, retirement, so I pass the message to the Investoration team. We'll do what we can, but the idea is certainly not to lose you. On the contrary, it's to help you. So don't worry about that. We'll do our best.

We're willing to support.

Yeah. And with acrylics, Yes, EBITDA, you could make the math. At least, maybe we are not as complicated for you, but as you could see, you could try to make some, find some new information that you had not before. So, it helps you also. I can see you have started to work on the acrylic. No, clearly, we are surprised by the, let's say, the depth of the cycle of acrylics. In fact, we have to go back to 2010 and the acquisition of the acrylic from Dow, where the cycles were more or less that one, and I don't know if it makes you more comfortable, a year after, it was one of our Best product line. So I think everybody has to be modest and anticipating. So I think that actually it was under Europe and U.S. was more under pressure than expected, clearly in 25. We expect for the time being something, hopefully a little bit of improvement, but something not far from what we saw in 25. Okay.

Thank you.

You're welcome.

The next question comes from Emmanuel Matto of OdoBHF. Please go ahead.

Hello, Thierry. Hello, Marie-Josée. Three questions for me. First, Does that make sense to believe that H2 could be in line with H1 in terms of ABDA? Is that the seasonality you are factoring into your guidance for 2026? Because it's quite unusual historically. Second, given the ramp-up of your , why do you expect those projects to have a lower additional contribution to the group's ABDA in 2026? Because you are mentioning only 50 million euros contribution compared to 60 million euros last year. It seems to be cautious. And last question, do you feel that the authorities in Europe are more willing than in the past to help you and the sector regain competitiveness? significantly and protect you more from unfair competition, in particular from China. Thank you very much.

Thank you, Emmanuel, for the question. On the first one, we didn't say it would be equal. We said it would be more balanced. Because, on the contrary, 2025 was atypical in terms of seasonality. But we did not say it would be at par. H1 and H2, it's just... the unbalance we had in 25 would be more back to normal, I would say. On the project, no, it's just, in fact, there is no, maybe it's counterintuitive, but it's not because you do 61 years and 50 the following year. We are talking about incremental, as you know, additionally bid down. Okay, it depends on the momentum of the project. If in 2024 you had a project which was started with a first step, in 2025 with a first step which was very high in terms of contribution, the year after, the same project will deliver far less on top of it. So you can deliver on a project, I don't know, I will give you an example. You deliver on five years... 100 million, you can have the first year 40, the second year 20, and then 10, etc. So it's not linked. So what is important is the cumulative, and it depends on the phasing of the project. Some have started three years ago. Some have just started at the end of last year. So there is no ration, I would say. What is important is... is accumulation. If we are cautious, so much the better. It will depend on the macro. But I think that we should count on the 50 million. I think it's reasonable. But the projects are... What is more important beyond the figures is that we confirm that the positioning of the project is still completely valid from a strategic standpoint, from a geographical standpoint. And I think this is good news. This means that since the world is changing, your question could have been also, do you think that some of the projects are not relevant anymore because the world has changed? It's not the case. We really confirm the quality of the projects. They are all meaningful, even if it takes more time to develop than we would have thought at the beginning. On the last question, yes, we think that... So, first of all, we are a global company, so... This is not Arkema protected, this is the assets of Arkema in Europe, but we have assets everywhere, and we will be pragmatic at the end, even if we like our region or country, we'll put our money where we believe we can be competitive and we can develop. Now, with regard to Europe, yes, authorities have understood the danger for the industrial assets of chemical companies, but also beyond chemicals in Europe, they seem to be more aware of the danger, more protective, think more about competitiveness. So in terms of, let's say, awareness and intent, I would say it's positive in terms of act. For the time being, we see nothing. Or little.

The next question comes from Chetan Udeshi of JP Morgan. Please go ahead.

Yeah, hi, thanks for taking my question. I had maybe two, maybe three, I don't know, but I'll try. The first one was, I'm looking at your advanced materials Q4 numbers, and you're saying you had destocking, but then your revenue in Q4 is actually above Q3? And your EBITDA has been, I mean, it seems revenue is up 10 million versus Q3. EBITDA is down 40 million versus Q3. I'm just curious what happened there. And maybe just to challenge your comment, you know, that Arkema is doing very well in specialties. You know, it doesn't seem like when I look at your numbers in adhesives or advanced materials, that's really coming through in terms of numbers. EBITDA in both these divisions are down. quite dramatically year on year. So just curious why you think, you know, we should think Akima is doing well and there's not a comparative pressure that is coming through in the business. And the last question I had was just in Q1, sorry, Q1 guidance. You know, historically, if I go like many years back, you know, typically Q1 will be up 20 to 30% versus Q4. But, you know, in the last year, two years, we've had a more modest improvement of one to five. What should we think in terms of the magnitude of that seasonal rebound that we should have in mind for Q1? Thank you.

Okay, Shetan. I try to understand the rationale of your question. Will you compare Q4 with Q2 with on-usance materials or... No, I think on advanced materials, this is the answer to Laurent. This is a distock. So, as I said, which was not the case in T3, it happened mostly in Europe and the U.S. We have strong distocking in the U.S., and this is where, in terms of added value, we are higher than in Asia. So the geographical mix is working against us. That's all. You have all the figures. So at the end, it's really the stock and the geographical mix. We have some high-value application in Europe and U.S. which really completely destock. And, you know, sometimes just in December you have no order because your customers are just optimizing their stock. So this is what happens. But from what I see with other peers that I know that you have some peers you especially follow, you can see that this talk was all across the board by many peers. So I would say no, no, I confirm what we say. Then your second question, Beatrice.

It's the seasonality between Q1. No, there was another one.

We say we are doing well in specialty, but she can't seem to flag data disease and materials are not so great.

No, I think what we said, I don't really understand what your question, but what we say is that I'm sure you are referring to my point to Matthew on the transparency. Why we change segmentation? I think what we say very clearly is that the EBITDA, the specialty material over the year, have declined by 5%, which we consider in macroeconomic, which is one of the worst we have seen in 30 years, is performance, which shows the quality of this portfolio. That's all. For the rest... You have your own opinion, as always, but we consider that to have minus 5% EBITDA in really more than craft conditions on 85% of the portfolio is a performance which needs to be appreciated and to be highlighted. This is what we do. We think it was worth doing it. With regard to Q1 guidance, we're not entering into precise figures. The only thing that we can say is that Q1 will be above Q4. There is a seasonality. The macro is comparable. Certainly, the stockings should be less. And the seasonality, typical, is better in Q1. We agree that in the recent years, it has been a bit less higher compared to Q4 than it was before. So you have some reference points that you can... but I think this is a qualitative element that it will certainly not be the kind of seasonality you could find a few years ago. It's more typical of the more recent years, but Q1 will be above Q4. No surprise there. The macro should be quite comparable, but the destocking will be less also. Okay. Thank you very much. And don't forget the FX impact of 25 million that we have mentioned.

Got it. Thank you.

The next question comes from James Hooper of Bernstein. Please go ahead.

Hi, good morning. Thank you very much for taking my question. Can we go into a little bit more detail around the outlook, please? Specifically, kind of division through division approach. if that's possible. And another thing I'd like to try and understand is obviously you're guiding for the 50 million cumulative effect from the projects. But is there a cannibalization impact on some of the existing revenues? Because I'm just trying to bridge to the kind of the how this and also the kind of impact of the specialty groups versus refrigerants. Thanks very much.

I think you got our press release and what we can say at this stage on the outlook. So we are not given, I think we have never given any guidance by division. We give a guidance for the whole company. Now, I would say the macro, and this was our feeling in 2020, In 25, especially if you look at the new segmentation, I would say the macro is similar for each of the business. Their geographical footprint is quite comparable. The end markets are a little bit different, but they are all diversified in terms of end markets. So I would not make a big difference by division. Then there was a question of Laurent. on the primary products, materials with the weight of Axelix, et cetera, where we think it will stay at least for the first part of the year at a low level. But for the rest, I think the macro should be similar. Now on HPP, you will benefit more of this material. You will benefit more from the project. than the rest, than the other division. You could see that in, if you take the list of the project, it's more in advanced material and in ADZs, but certainly advanced materials and the other division. The construction in Europe, we mentioned that I think should more help the adhesives and the coating. So I'm sure you factored also all-generation refrigerant on the primary material. So you have some nuances depending on which division you are talking about. So overall, a similar picture, but with some nuances that you know pretty well if you take our slide because you have... You have where the projects are located. You have this discussion on construction, this discussion on oil generation, refrigerant, and on acrylics. On the project, the $50 million, I don't know what you mean by cannibalization, but there is no cannibalization. So this means this is a real... At least it does not cannibalize other product lines. If it is your question, a new product line would replace another one. No, it's not the case, except with refrigerant. But refrigerant is, first, it's one project. And, in fact, it's not for us. In the case of the new refrigerant business, the end market is not the same. So it's not a cannibalization, but we all know that, old generation disappear, new generation are coming, but for the rest, no, I don't see any cannibalization coming from the projects.

Thank you very much. Can I just ask a quick follow-up as well in terms of the cash outlook as well? I don't think you can form more guidance for cash.

On the cash outlook, as we said, at a comparable macro, cash performance should be should be quite comparable, let's say, provided, you know, you take into account that the working capital would remain flat. So you see, in fact, for 2025, the contribution of the working capital variance, if we assume macro remains comparable, then there is no change in working capital expected increase.

Thank you. That's helpful. Thanks very much.

Mr. Le, enough. There are no more questions registered right now. So back to you for any closing remarks you may have.

Yes. So first of all, thank you very much for your attention. I think this new year will be quite interesting as was the previous one. I think the team is really focused on the two-time horizon, as you know, and as you could appreciate the efforts of cash, fixed costs, which are very important. So we'll continue them with a lot of engagement, and we still are confident on our major projects. It's a very important part. It takes more time than expected to develop them in the current macro, but it will really be a very material contributor in the coming years. And for the rest, we confirm that the We have really a strong positioning on most of our business line, and even if the macro for the time being remains rather weak, we think that our leadership position is really a support in this kind of environment. So looking forward to meeting you at different occasions, and have a good day. Thank you.

Ladies and gentlemen, this concludes this conference call. Arkema thanks you for your participation.