Arkema S.A.

Capacities expansion and targeted projects will continue to drive capex, which we expect at slightly below €600 million this year, rising to €750 million-€800 million in 2021. The stable outlook reflects our expectation that Arkema's adjusted FFO to debt will remain close to 45% in 2020 and strongly recover in 2021, supported by our expectation of favorable macroeconomic conditions and the disposal of the MMA/PMMA business. We view expected average FFO to debt over the forecast horizon as commensurate with the rating, and do not expect the financial policy will result in credit metrics deviating significantly from our base-case scenario. A deterioration of adjusted FFO to debt to significantly below 45% without prospects for a timely recovery could pressure the

...The COVID-19 pandemic has had an extraordinary impact on global economic activity and temporarily eroded demand for some of Arkema's products. Despite strong free cash flow generation this year, the challenging environment due to the COVID-19 pandemic has reduced French chemical producer Arkema S.A.'s rating headroom. S&P Global Ratings anticipates that Arkema's adjusted funds from operations (FFO) to debt could stand at 40%-45% in 2020 versus the 50%-55% forecast pre-pandemic. This is still commensurate with the '###+' rating because we anticipate stronger credit metrics in 2021-2022. We expect that the company's reported EBITDA could decline by slightly more than 20% this year, driven by lower volumes due to weak demand in construction, paints, and automotive sectors, and a negative pricing effect stemming mainly from lower propylene prices and unfavorable market conditions in intermediates. Given our expectation of a gradual global economic recovery, which started in second-half 2020,...

Full Report