Arkema reports its financial results for the second quarter of 2020, confirming its resilience with robust financial performance and high cash flow generation in the context of a global economy strongly impacted by the effects of the COVID-19 pandemic.
Arkema recorded €1.9 billion in sales, down 15.6% year on year (-10.7% in H1’20), seeing a significant slowdown in the construction, transportation and industrial sectors, overshadowing good demand in the nutrition, packaging and hygiene markets. The company saw sequential improvement in June, supported by the progress in the construction market in Europe and the US and solid sales in China.
The company reported €286 million in EBITDA (€407 million in Q2 2019) and EBITDA margin of 15%, and free cash flow, at €288 million (€90 million) in Q2 2019.
“The second quarter was marked by the context of COVID-19 and the lockdown measures imposed in many countries,” chairman and CEO Thierry Le Hénaff said. “Arkema’s sales were clearly impacted by this situation, but the decline was contained thanks to the Group’s worldwide positioning and the diversity of its end markets. The Group demonstrated its resilience in this unprecedented context, thereby validating its strategy of refocusing its business portfolio toward specialties.
“For the short-term, we concentrated on the elements that are within our control, putting in place decisive initiatives to reduce costs and tightly control working capital and capital expenditure. This enabled us to deliver a robust financial performance in the second quarter and achieve a high level of cash generation despite the challenging operating environment. In the second half of the year, while expecting to see a gradual improvement in end markets, Arkema will continue its cost-saving and cash-generation efforts in an environment still marked by low visibility with regards to the evolution and effects of the pandemic,” he added.
Based on the progressive lifting of lockdown measures in some important countries for the Group, Arkema expects that demand will continue to improve gradually in the second part of the year, while remaining below last year’s level. Arkema estimates at this stage that sales in the third quarter will decline by around 10% year-on-year at constant scope and currency, representing a clear improvement compared to the decline of around 20% recorded in the second quarter.