“Following a very good start to the year, the Group confirms in second quarter its development momentum with satisfactory progress in volumes, a very good financial performance and a 17.5% EBITDA margin significantly up on last year,” said Thierry Le Hénaff, Arkema chairman and CEO.
“These results reflect in particular the ongoing rapid ramp-up of Bostik with a profitability which further improves. The planned acquisition of Den Braven, announced in July, will reinforce this activity in the coming years and contribute to the strong growth ambition we have for our adhesives,” added Le Hénaff.
For the second quarter of 2016, sales stood at €1,952 million, 7.3% down from second quarter 2015. Volumes grew by 2.6%, driven by innovation in Technical Polymers, geographic expansion in Adhesives, and solid demand in Coating Solutions. The -5.2% price effect reflects the acrylics cycle and the effect on sales prices of lower raw materials. The -2.2% business scope effect primarily results from the divestment of Sunclear in 4th quarter 2015. The translation effect was negative at -2.5%.
At €341 million against €320 million in second quarter 2015, EBITDA grew by 6.6%, supported in particular by innovation in Technical Polymers, developments and synergies at Bostik, the ongoing improvement in fluorogases results in line with the Group’s assumptions, and lower prices of certain raw materials.
Beyond these elements, the 17.5% EBITDA margin, significantly up (15.2% in second quarter 2015), reflects the growing share of higher added value activities and Bostik’s ramp-up (13.8% EBITDA margin in first half 2016).
Net income Group share, up by 10.5%, rose to €147 million against €133 million in second quarter 2015. Excluding the after tax impact of non-recurring items, adjusted net income stood at €134 million, i.e. €1.79 per share and close to 7% of the Group’s sales.
For the second quarter of 2016, High Performance Materials sales stood at €879 million, -3.1%down from 2015. At constant exchange rate and business scope, sales grew by +1.1%. Volumes were +2.2% higher, supported by innovation in Technical Polymers, in particular in lightweight materials and new energies and by geographic expansion at Bostik. They offset a slightly negative price effect of -1.1%. The translation effect was -3.1%.
At €165 million, EBITDA rose by +10.7% compared to second quarter 2015 (€149 million). Bostik continued to make good progress and benefited from its development projects, synergies with Arkema, and lower costs. In first half 2016, Bostik’s EBITDA margin stood at 13.8%, further catching-up with its major competitors, thereby confirming both its good momentum and a faster ramp-up than initially anticipated. At 18.8%, EBITDA margin reflects the progress made at Bostik and the excellent performance of the division’s other activities.
Industrial Specialties sales reached €609 million, 11% down on second quarter 2015, given in particular a -6.5% business scope effect related to the divestment of Sunclear in 4th quarter 2015. Supported by all product lines, volumes grew by +2.0%. The -5.6% price effect reflects changes in the price of some raw materials and the product mix in certain activities. The translation effect was -1.9%.
EBITDA amounted to €134 million, +4.7% up on second quarter 2015 (€128 million). In line with the Group’s assumptions, fluorogases continued their gradual recovery. Market conditions in PMMA remained favorable. Thiochemicals achieved a very good performance despite a maintenance turnaround in the US, and with performance at the Kerteh platform in Malaysia close to that of last year. Hydrogen Peroxide continued to benefit from the development of specialty applications.
At 22.0%, EBITDA margin was excellent, at the level of the 1st quarter 2016 (against 17.1% in full year 2015).
Coatings Solutions sales were €457 million, down by 10.2% compared to 2015. Volumes were +4.0% higher, reflecting good demand both in acrylic monomers and downstream activities. The -12.0% price effect continued to reflect the acrylics cycle and lower raw material prices. The translation effect was -2.2%.
The division continued to show resilience with an improving EBITDA margin at 13.8% (12.0% in second quarter 2015) and EBITDA slightly up at €63 million despite the impact of strikes in France, which affected raw material supplies in acrylics in particular. The good performance of downstream activities more than compensated the results in monomers still slightly below their second quarter 2015 level.
Regarding its Taixing Sunke Chemicals joint venture, the Group finalized discussions with its partner to define a 50/50 split of the rights to acrylic acid capacities. The contracts have now been signed and are being implemented, with corresponding cash-out expected in third quarter 2016.
In second quarter 2016, Arkema generated €77 million free cash flow (€108 million in second quarter 2015). Net debt stood at €1,406 million, overall stable compared to March 31, 2016 (€1,390 million).