Arkema S/Adr

Good morning, this is the conference operator. Welcome and thank you for joining the Arkema Second Quarter 2026 Results and Outlook conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions by pressing star and 1 at any time. Should anyone need assistance during the conference call, they may signal an operator by pressing star and 0 on their telephone. At this time, I would like to turn the conference over to Mr. Thierry Le Henaff, Chairman and Chief Executive Officer. Please go ahead, sir.

Thank you very much. Good morning, everybody. Welcome to our KEMAS Q2 2026 results conference call. Joining me today are Marie-José Donsion, our CFO, as well as Investor Relations Team. To support this conference call, we have posted a set of slides, which are available on our website. I will first comment the highlights of the quarter, before letting Marie-José go through the financials, and at the end of the presentation, as usual, will be available to answer your questions. The second quarter was, as you know, marked by the challenging context in the Middle East. Oil and raw material prices, as well as energy and logistic costs, rose sharply. As a consequence of the conflicts and global supply chains were partly disrupted. We saw some temporary easing towards the end of the quarter, but following the ceasefire, the conflict resumed and raw material prices have moved back up. The market demand environment remained weak overall, in line with previous quarter, with no recovery yet in Europe and the US. On the other hand, Thank you very much. Thank you very much. Quite a strong level, 16.1%, up 90 basis points year-on-year. This marks a significant step-up and the first positive year-on-year EBITDA evolution in several quarters. This improvement was driven primarily by the strong performances of our adhesive and coating businesses, while high-performance polymers were broadly stable. As expected and as previously flagged, The disappointment came from performance additives. Performanceally, this result demonstrates the quality of Arkema's portfolio and reflects the strategic transformation carried out over the years to focus the group on higher value-added applications and attractive growth markets. I would like now to underline the hard work and commitment of our teams, who remain fully mobilized to mitigate supply chain disruptions, both in terms of raw materials availability and input cost inflation, closely working with our suppliers and with our customers. Now, looking briefly at the performance of our specialty material segments. Adhesives Solutions posted a strong quarter. with EBITDA up 7% year-on-year. By the way, this was the best quarter ever achieved by BOSTI at par with Q2 2022. This performance was mainly driven by the segment's continued product mid-shift towards higher value-added solutions and pricing actions to pass through the inflation of raw materials. Volumes were indeed broadly stable with strong growth in durable goods markets Particularly aerospace, consumer electronics, and industrial assembly. This was partially offset by volumes a bit below expectations in the construction market, in particular in Europe, and by packaging which remained soft. In a still subdued demand environment, EBITDA margin increased to a good level, 15.1%, highlighting the ongoing efforts of the team to improve the profitability of the segment. Advanced Materials delivered mixed results, as you could see in the quarter. High-performance polymer gained some momentum, benefiting from our new business development, the ramp-up of our project, and the good growth in batteries, 3D printing, and electronics. PRM delivered another very strong quarter, with EBITDA up 30% in local currency. Plural specialties were weaker than forecasted, but should improve in the second part of the year. All in all, HPP achieved EBITDA on par with last year. On the other end, performance additives were significantly down, impacted by the Middle East crisis, with particularly weak demand in some end markets, such as refining and fertilizers, and also, as you know, sulfur costs increased, which was significant. The margin of the advanced material segment remained overall at a solid level, around 19% which leaves nevertheless space for improvement. Coating Solutions delivered a strong recovery in the quarter. The EBITDA was significantly up from the low base of 2025. Our resin and additive business both posted strong results but I would like to highlight especially the positive dynamic of Sartomer delivering Strong volume growth over the quarter, notably in electronics, 3D printing and industrial cuttings. The segment's performance reflects also the ongoing refocusing of the portfolio toward higher value-added applications, as well as the agile pricing management. As a result, we were very pleased by the segment margin, which reached a high level at 18.5%. As for primary materials, as anticipated, earnings were driven by the tighter spreads in acrylic, partially offset by the fading out of all-generation refrigerant. In Asia, acrylic spreads rapidly declined, going back to their previous levels, while in Europe and the US, spreads have improved more gradually, which only moderately contributed to the earnings growth, as the volume environment remains so far subdued. We also continued in Q2 to focus on strict cost discipline and cash allocation. We are, at the end of June, in line with our target to offset fixed-cost inflation over the full year, which would be quite a performance, supported by a number of cash-cutting initiatives across the organization. We also tightly control working capital, and our capex are below the level of last year, on track with our annual target. As a result, the group was able to generate a good level of recurring cash flow in the quarter, close to 80 million euros, which was not given in the context of rising raw material costs. It is also important to continue to implement our long-term strategy. From this standpoint, one of our priorities remains to ramp up our major projects, including, recently, Our polyimide 11 and rich sand clear plants in Singapore, our new PVDF capacity in the US which has recently started up. We also started the new distillation in acrylics in our site of Carlin in France, enabling the group to reduce the size carbon footprint by 20% and its energy consumption by 25%. All together, our growth project contributed around 25 million euros of additional EBITDA in H1 versus last year, fully in line with our full-year target. I will now hand it over to Marie-José for a more in-depth look at the financials before we discuss the outlook at the end of the presentation.

Thank you, Thierry, and good morning, everyone. I'll start with our CMA revenues. At 2.4 billion euros, Q2 states were at 3.2% on-year organically, volumes came in slightly down, 1.8%, to an overall weak demand environment in Europe and in North America, and to lower volumes in performance additives. The price effect was a positive 5.1%, reflecting, on one hand, the pricing actions implemented by the group across all businesses to compensate the inflation of raw materials, and on the other hand, The Better Market Conditions in Upstream Acrylics. The scope effect was a small negative at minus 0.7%, corresponding to the divestment of some small plastic additive businesses on the 1st of July. Lastly, sales were impacted by a still negative 1.2% currency effect, reflecting the weakening of the US dollar against the euro.