Arkema SA Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tom Wrigglesworth - Morgan Stanley - Analyst : Good morning, Thierry, Marie Two questions, if I may. The first one is on PIAM. I mean, clearly, you bought this as a business that would grow. But I don't think I fully understood the point you're making today. Are we now in a phase where PIAM is delivering its next phase of growth? You talked about 70% year-on-year growth in 1Q, but clearly, there's a strong step-up expected in the PIAM consensus through the rest of this year. So are we now at a point where we're going to start to see consistent growth from PIAM going forward? Second question, if I may, again, just around your 2Q guidance. So 1Q was down approximately 7% year-over-year. But is it fair to assume that the exit rate from 1Q is worse, i.e., is down more than 7% and therefore, the starting rate for 2Q is going to be below that, on top of which we then have to think about the FX impacts. I'm just trying to grapple with whether you're seeing a further deterioration in the data in April versus what we saw in March with regards to this wait and see from US customers?

Question: Tom Wrigglesworth - Morgan Stanley - Analyst : Okay, thank you very much.

Question: Martin Roediger - KeplerCheuvreux - Analyst : Thank you. Hello. Good morning, Thierry and Marie Jose. First question, did you see any prebuying from your customers in Q1 in advance of the tariffs? The reason I'm asking is that the volumes in intermediates were up by 16% in Q1, and that was driven primarily by acrylics China, which must have been skyrocketing in demand. And the second question, a bit coming back to Thomas' question before regarding your guidance for 2025. EBITDA was down by 6% in Q1. You say the trend continues into Q2, which means EBITDA will be down in Q2 as well year-over-year. But your full year guidance is flattish EBITDA. That means you need to catch up in the second half to reach your guidance. But the second half is usually seasonally weaker than the first half. So what makes you confident that this seasonality in the second half this year will be more favorable than in the past? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 9:00AM, AKE.PA - Q1 2025 Arkema SA Earnings Call

Question: Martin Roediger - KeplerCheuvreux - Analyst : Thank you.

Question: Aron Cecceralli - Berenberg Research - Analyst : Hello, good morning. Thanks for taking my question. I have just one on high-performance polymers. Last week, one competitor of yours reported mid-single-digit price decline. I wanted to understand what's driving your positive pricing in high-performance polymers, if you can be specific in terms of which polymers and application, that would be useful. Thank you.

Question: Aron Cecceralli - Berenberg Research - Analyst : Thank you.

Question: Alex Stewart - Barclays - Analyst : Hello, thank you for the discussion. A couple of quick questions. Did I hear you say that you're still expecting EUR80 million or so of contribution from the big projects starting up this year and that you expect that to be more heavily weighted to the second half. I just wanted to clarify that point. In Adhesive Technologies, you had quite a material slowdown in Q1, as you've highlighted. Could you tell us when in the quarter that started? Was it really towards the end of March? Was it sort of February, March? Just some idea of when that started to change would be very helpful. And then finally, in Fluorinated gases, you talked about weaker pricing, which weighed on margins. Was that as you expected? Or was it worse than you expected? And if it was worse than you expected, what are the main reasons why it was worse given that you had pretty good visibility into quotas and this isn't a business that moves around a huge amount quarter-to-quarter on volumes. So any insight on those 3 points would be great. Thank you

Question: Chetan Udeshi - J.P. Morgan Cazenove Ltd - Analyst : Yeah, hi, thanks for taking my questions. The first question was simple. Can you remind us what is your current sensitivity on FX, bearing in mind that euro has strengthened not just against US dollar, but also a few other currencies like perhaps Chinese yuan or some of the [LatAm] currencies. So I had a number of EUR 50 million in mind, but maybe just wanted to check if that has changed given the portfolio shifts and some acquisitions. The second question, just following on the following back to the discussion on fluorogases. Are you saying you expect the year-on-year to improve in the second half of the year just because the comps become easier? Or you actually think the absolute contribution from fluorogases actually gets better? And just related to that, I saw one of your competitors, Honeywell announced, I think it was surcharge of 45%, et cetera, on certain refrigerant gases, HFO type. Can you remind us if I'm not mistaken, you produce all of your fluorogases in the US that you sell in the US So for you, it should be a positive. But I'm not sure if this will be in intermediates or will that be in your advanced materials because I suppose some of your newer generation refrigerants are actually included in Advanced Materials.

Question: Laurent Favre - BNP Paribas Exane - Analyst : Yes, good morning. Two questions that may appear a bit technical, but the first one is around working capital. I think you've had one of the largest outflows in Q1 that's something I can remember. And it looks like it's mostly driven by inventories. I was wondering if that's related to, I guess, inventories of finished products or whether that's reflecting a higher level of purchase of raw materials as maybe you are preparing -- I understand you didn't see pre-buying from your customers. But I was wondering if you did some prebuying yourselves on raw materials. That's the first question. And the second one is on PIAM. I understand there's a lot of growth. But when we look at the net income from minorities, it's about EUR 1 million in Q1 '25, similar to Q1 '23 or before when you didn't have PIAM. So I'm wondering why are we not seeing the, I guess, the minorities flow back to the 46% of PIAM that you don't own?

Question: Laurent Favre - BNP Paribas Exane - Analyst : Okay, thank you.

Question: Emmanuel Matot - ODDO BHF - Analyst : (spoken in foreign language) I still have three questions. First, I understand the integration of Dow Adhesives has started well. Does that mean that the 13.8% of EBITDA margin in Adhesives in Q1 should be the low point and you should recover as from Q2? Second, do you see much more imports from China to Europe because of the trade war between US and China? Is that a risk you are considering? And last question, how much of your revenue in the US is produced locally? And what are the main business units exporting from Europe or Asia to the US?

Question: Emmanuel Matot - ODDO BHF - Analyst : Thank you very much.

Question: Geoff Haire - UBS - Analyst : Yeah, good morning and thank you for the opportunity to ask a question. I just had one left, looking at the intermediates business for Q2, you obviously delivered somewhere in the region of EUR84 million last year. Will that number be closer to where you were in Q1, or will it be closer to where you were in Q2 last year, because it's quite a big difference.

Question: Geoff Haire - UBS - Analyst : Okay. Thank you.

Question: Tony Jones - Redburn Atlantic - Analyst : Hi, good morning, everybody. Thanks for taking my questions. I've got 2 left. On PVDF, two part question. First, have you changed the growth strategy slightly? So now also targeting pushing harder into applications like cables and semiconductors in addition to EV? And then secondly, could you talk about the sales split for PVDF because I'm not really quite aware what that is? And then secondly, on Coating Solutions, and I know you touched on this a little bit a few minutes ago on the acrylic side, but the EBITDA margin now has been under 10% for a few quarters. We've just not seen that level back since 2015 or so when the acrylic chain was structurally oversupplied. And then we saw capacity taken out. What are you expecting to happen to the acrylic industry in North America and Europe? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 9:00AM, AKE.PA - Q1 2025 Arkema SA Earnings Call

Question: Tony Jones - Redburn Atlantic - Analyst : Thank you, that's very helpful.

Question: James Hooper - Bernstein - Analyst : Hello and thank you very much for taking my questions. I have one left. What do you expect the raw material progression to be in the revised guidance and in particular, how will the oil price affect margins in the kind of upstream acrylics business and coating solutions and other acrylics businesses? Thank you.

Question: Matthew Yates - Bank of America - Analyst : Hang on, Just a quick one. Just can we touch on the additives part of the Materials division? You're mentioning that was an area of softness in the portfolio. I think sales down 6%. Can you just expand on sort of where the weakness is and any view on whether or not that's going to improve as the year progresses? Thank you.

Question: Matthew Yates - Bank of America - Analyst : Thanks very much.

Question: Laurent Favre - BNP Paribas Exane - Analyst : Yes, morning again. Question on the oil and gas side of the business for PVDS and polyamide 11. We've seen one of the historical, one of your historical customers, I guess, move to a solution with a competing technology with a contract announced this morning in Brazil. What's wrong if REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 9:00AM, AKE.PA - Q1 2025 Arkema SA Earnings Call you could remind us of how big oil and gas is for your PVDS and 11 business and whether that is. I think a new serious competition that you are seeing or whether you think it's more of a one off. Thank you.

Question: Laurent Favre - BNP Paribas Exane - Analyst : Okay, thank you.