Arkema was in a position to implement (strong) price increases even in businesses where the company had a ‘tradition’ of suffering from higher raw material prices. We believe availability was also a strong argument. Interestingly, Adhesive Solutions did not benefit as strongly as the other divisions.
Q3 figures were above our cautious expectations and beat consensus expectations by +16.4% (top line) and +13.9% (EBITDA).
Companies: Arkema (AKE:EPA)Arkema SA (AKE:PAR)
… to become a speciality chemicals company by 2024, by acquiring something pharma-like. Basically, Arkema plans to acquire the US-based adhesive platforms corralled together at Ashland’s Performance Adhesives business. The charm of the acquisition is that the acquired technologies will be globally rolled out, giving Arkema’s portfolio a broader stance. Management is quite optimistic it can generate substantial synergies including some positive tax effects, which should make the high valuation a
Arkema surfs the chemicals wave well, being carried along by the strong recovery. Supply availability is one side of the coin. On the other, stands cash collection and the company was good at this. Business-wise, the paved path seems to be a well-chosen one.
We appreciate the guidance increase, but do not understand that it is based on an unchanged scope after the closing the PMMA divestment.
Consensus was beaten by +5.7% (top line) and +21% (adjusted EBITDA).
The top line has already matched the Q1 19 level, but profitability could not fully catch up, despite the optimised business structure, which might be related to the strongly rising raw material prices. Additionally, management managed the organic momentum of the growth well as NWC outflow remained quite stable. Management has become more optimistic after the clear beat in its Q1 guidance.
Figures were slightly above our expectations and beat street estimates.
Arkema’s increasing footprint in speciality chemicals helped to protect profitability. Furthermore, management has taken the next steps towards the mid-term target, even in a crisis. By divesting PMMA, its has taken advantage of a special situation, allowing for a decent valuation.
Unfortunately, the company still fully consolidates the to-be-divested business showing up our estimates. Consensus was clearly beaten as it still included the PMMA business.
Like other chemicals companies, Arkema had to manoeuvre in challenging times, but the adhesives business was an anchor with its quite resilient business. The other divisions were in rough seas, as expected, giving a mixed picture from a variety of impacts. Intermediates was negatively affected by all factors. The newly-provided guidance looks like a strong commitment.
The Q3 figures were a notch stronger than expected, but matched well with the street’s expectations.
Companies: Arkema SA
Like other chemicals, Arkema could not escape from the developments in the customer markets. Nevertheless, the speciality side of the company did quite well despite some meaningful declines in volumes, whereas Intermediates was hit by lower volumes and lower prices. All divisions saw a strong drop in profitability. The divestment proceeds of Functional Polyolefines were a tonic and helped profitability to beat our expectations. Consensus was also beaten.
Arkema’s business model is still a chemicals one, even though the specialities’ share has increased in the recent past. Interestingly, management’s strategy to focus on adhesives seems to be paying off. In addition to the spreading virus, the country, where Arkema has its headquarters, also had an adverse impact on profitability. Q1 came in a notch weaker than we expected. Consensus was perfectly met.
Arkema reported a better than expected set of figures (consensus was perfectly met on the profitability level). The portfolio changes in recent years have made the company’s financial mechanics more resilient to economic downturns. Despite all current uncertainties, management seems to be quite optimistic for 2020 – at first sight. But it has excluded any virus-triggered effects, which are estimated to be around €20m by the end of February.
The good point is that the EBITDA margin has not faded away as Arkema’s top-line was driven by an acquisition and FX tailwinds. However, lower raw material prices put some pressure on it. Volumes developed positively in most divisions.
Reported figures beat our expectations, but were below consensus. For Q4, we remain cautious.
At Group level, given the tough environment, Arkema’s results proved fairly resilient. After the company’s ‘overhaul’ in recent years and the increase in the proportion of specialties’ sales (to 71%), no one would have expected Coatings Solutions to report higher profitability. Despite confirming FY guidance, management indicated some weakness in H2. The figures did not fully meet our expectations (profitability undershoot), but consensus was beaten.
The announced acquisition of ArrMaz has a reasonable strategic rationale, but it also stresses Arkema’s gross debt. We do not expect any large issues that may prevent approval from the anti-trust authorities or affect financing. All in all, we value the announced deal as positive, despite being quite expensive.
Arkema’s negative organic development was characterised by lower demand from some industries as the implementation of higher sales prices to cushion higher raw material prices partly offset the lower volumes. After a period of margin expansion, Industrial Specialties saw organic regression, but defended the margin more or less. Coatings Solutions was driven by volumes.
Consensus was met, but our expectations were barely met.
Thanks to the differentiation, Arkema had a favourable business year. As High Performance Materials took a breath after recent years’ strong growth and with Coating Solutions suffering from a mix of higher raw material prices in some segments and high capacities in others, Industrial Specialties became a strong contributor to sales and earnings. Figures were above our expectations but did not meet the consensus. The higher than expected dividend could be valued shareholders’ pain killer as guida
Arkema was in a position to increase sales prices, especially in Industrial Specialties and Coating Solutions, in order to pass on higher raw material prices, notably acrylic acid and PMMA precursors. In general, PMMA is expected to see a stronger relief in Q4.
The Q3 figures met our expectations and slightly beat consensus. At first sight, it looks as if management had confirmed the recently-lifted guidance, but the footnote shows a kind of narrowing to ~5%.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Arkema SA.
We currently have 28 research reports from 2
Companies: DX (Group) Plc
Seeing Machines has announced that it has been selected as the DMS supplier for automotive programmes through Magna International worth cA$120m and a fundraise of at least US$40m at 11p.
The funds will be used to accelerate growth in the rapidly expanding DMS technology market, across all transport sectors globally. This includes the acceleration of the development of new core software and system features, acquisition of additional specialised technology, expansion of sales channels and produc
Companies: Seeing Machines Limited
Seeing Machines has announced results for its financial year ended June 2021 and, after the 3 August 2021 trading update, there were few surprises in the numbers with the company trading ahead of expectations in terms of margins and cash. This reflects the successful focus by the management on reducing costs and conserving cash. However, with the conclusion of the recent fund raise, we expect the company to change gear to investing in the business and managing for longer term shareholder value.
Whitelee windfarm hydrogen project funding
Companies: ITM Power PLC
The Whitelee project to which ITM is supplying its PEM electrolyser technology has won £9.4m of government funding. We see this project as a key demonstration of the value of co-locating hydrogen production with renewables and indicates a wide market for this key energy storage solution.
The oversubscribed placing to raise £25m and £2m open offer leaves Velocys well placed to move forward on its reference projects and strengthens its ability to address further demand as airlines increasingly seek out sustainable fuelling solutions. We have updated our forecasts for the raise and after a review of project timings. These show that if the company can progress its projects, it is capable of being cashflow positive in FY 24 without recourse to further funding. Our DCF based central c
Companies: Velocys plc
While there remains considerable uncertainty over the planning and permitting of the Uskmouth power station conversion there have been a couple of recent pieces of good news for SIMEC Atlantis in our view. Inclusion of waste-to-energy in the carbon capture support model is potentially positive for Uskmouth and may increase its political attractiveness to the Welsh Government as they consider permitting. The ring fencing of CfD support for tidal steam in the next allocation round opens up the pos
Companies: SIMEC Atlantis Energy Ltd.
Macfarlane Group, the leading protective packaging solutions specialist, servicing clients across the UK
and now emerging into Continental Europe, has issued a trading update this morning (25 November)
covering the period since end June and the year to date. Trading has continued to be robust in a difficult
supply chain environment and the Group now expects to exceed its previous expectations for the full
year. Sales growth for the year to date has accelerated through to October at rate of +2
Companies: Macfarlane Group PLC
The H1 results were a bit of a double check. First, how high hopes (battery materials) persist in a rapidly changing environment, something already communicated to the markets. The second, and a rather annoying one, was how to deal with the issues as management was not really transparent. This explains the strong miss in EBIT compared to the consensus. We were also wrong-footed as our impairment figure was far too low.
Companies: Johnson Matthey Plc
Like Taylor Maxwell before it, management's patience and persistence has landed another prized target, this one HBS NE Limited trading as HBS New Energies and UPOWA, giving Brickability a platform into the fast-growing renewables energy products market. It is Brickability's 13th acquisition in the past three years, will cost a maximum £5.5m and falls within the group's target 4-6x EV/EBITA purchase range thus enhancing earnings whilst broadening the product offering to its core housebuilder cust
Companies: Brickability Group PLC
The trading update confirms that TClarke is on track to meet FY21 expectations signalling a strong recovery from the pandemic-hit 2020 with revenues +47%, H2 margins back at 3%, underlying EPS +50% and net cash of c£5m in the year-end balance sheet. The highlight, in support of its target £500m turnover by 2023, is continued improvement in the order book, currently at £525m (end June £503m) including a record £320m (+25%) secured for a year out. This is not ‘being bought' but comes with a real s
Companies: TClarke plc
Confirming a strong start to the year, with revenues and adjusted EBITDA up 30% and 43% respectively,
CML’s interims resultsfor H1 FY22A(six months to 30th September 2021)reflect a business with a bigger
spring in its step following on from the Hyperstone divestment earlier in 2021. Importantly, there are
pleasing signs that the new strategy of growing customer share and expanding the customer base is
already paying dividends, alongside recovery in existing markets. We are pleased to push th
Companies: CML Microsystems Plc
Overall, a good operating performance with 9m sales and EBITDA up by 11% and 15% respectively. It was able to manage its margins better than some of its peers as it is a solutions rather than just products provider which allows it to have flexible pricing. Management expects FY21 EBITDA at €5.25bn which is 7% above our current estimate. Hence, we will revise our estimates upwards which will lead to a positive revision to our target price.
Companies: CRH Plc
Last week, as part of Diversified's Capital Markets Day, CEO Rusty Hutson and the Diversified senior leadership team provided investors with an in-depth overview of the Company's strategy and operations, with a specific focus on the Company's Environmental, Social and Governance (ESG) initiatives. Some of the key takeaways include US$15m of additional investment from 2022 on emission reduction activities and equipment. Mid-term plans (2023-2026) include plans to curb Scope 1 methane emissions in
Companies: FO 88E DEC EME GTC TRIN UOG WEN
Companies: Volex plc