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Executives

Thierry Le Hénaff – Chairman and CEO

Thierry Lemonnier – CFO

Marc Schuller – EVP, Industrial Chemicals

Analysts

Emmanuel Matot – Oddo Securities

Michael Ray – Goldman Sachs

Jean-Francois Meymandi – UBS

James Knight – Exane

Henrique Feuvert – Sycamore

Laurent Flamme

Patrick Lambert – Nomura

Martin Roediger – Kepler Cheuvreux

Andreas Heine – Barclays

Dominik Frauendienst – Citi

Jaideep Pandya – Berenberg

Anindya Mohinta – Goldman Sachs

Martin Evans – JPMorgan

Arkema SA (OTC:ARKAF) Q4 2013 Earnings Conference Call March 4, 2014 5:30 AM ET

Thierry Le Hénaff

Good morning, everyone. Thank you for joining on this conference on our Annual 2013 Result, either here in Paris or on the phone. So, I will make the presentation myself, but the whole Executive Committee of Arkema is also attending, and is ready to answer, if necessary, any of the questions you may have at the end of my speech.

They will also be present at the cocktail, so if you want to continue to exchange with them, they will certainly be available, together with the Investor Relation team which is Sophie and Jerome. And in particular, Thierry Lemonnier, our CFO, is here and will help me also complete certain answers to the question.

I just would like to begin with some highlights of this full-year 2013 results. First of all, we have been able, in a macro environment we could qualify as challenging in 2013, notably, if we compare it to the one of the last two years, to deliver a margin at a high level of 15%, which is very close to last year level.

In absolute terms, the EBITDA decreased by 9% but if we resist it in reality by eliminating the effect of the perimeter and also the translation and production effect of exchange rate. This would decrease by 5%, and the decrease really focused on a few well identified items that we already mentioned all along the cost of last year. Most of them being temporarily and expected to gradually recover in this year.

Throughout 2013, we have as you might expect, strictly managed company in terms of cash and cost. And we are also actively continued to reinforce the profile of Arkema and to implement our long-term strategy through acquisition, through industrial expansions and also by filling the innovation pipeline which is maybe less apparent to you but which also we have a significant contribution in the coming years.

And finally, we have decided to purpose to our shareholders an increased dividend at €1.85 per share despite the decrease of the adjusted net income. So this clearly reflects our confidence in the outlook of the company. So, this means that in terms of dividend this year, we’ll reach our target of 13% payout ratio, in fact we’ll exceed it a little bit.

What are the key takeaways of the year? EBITDA margin has resisted well at 15% as I mentioned that like-for-like EBITDA decrease is at 5%, it’s a decrease, it’s really focused on a few specific items like throughout the season. That we have really continued to implement the long-term strategy and mid-term strategy of the company with implementation and execution of a few very important projects that we are going to dig more in the coming slides.

The macroeconomic environment was demanding in 2013 as I mentioned at constant scope and constant exchange rates this year are stable. In terms level of margin confirms that we have reached a revision of 15% that we have been able to grow volumes and that is Q4. We have showed as expected a strong recovery here at HPM.

As you see that income represents 6% of our total sales, and it excludes the impact of the vinyl exit which is €148 million in 2013, and also a restructuring charges that are linked to the closure of Chauny in France. So we have about €30 million of provision and write-off.

Our structure of balance sheet as said in 2013, very strong, as expected. It has been the case since spin-off of Arkema and we have, frankly speaking, well managed our cash, which was impacted by Chem One and CapEx which we are at historical high. And despite the result, we are below €1 billion of that.

In slide 4 and 5, you can see the new profile of the company. You have the breakdown by business, you can see that our strategy is to have diversified and balanced profile for the company. This is one-off and also an advantage to decrease in the volatility of the world of today. We have here a mix of mature segments, more mature segments and also a mix of highly growing segments which are attracting segments and which are also attracting most of our CapEx.

Page 5, you can see the speed buy-in markets, where you can see the diversification of the company, while you have the traditional end markets of Arkema with notably putting but also the green one like electronic nutrition, energy of first partition.

In 2013, we have continued through our research programs and by building our intimacy with customer, really to reinforce the positioning of Arkema within France. This is really one of the key strategy of Arkema, and without commenting the size in too many value, it would take too much time. I would like really to reemphasize the quality of the portfolio and also the numerous opportunities that are deriving every day from our present or from very effective mixes like battery, lightweight materials, matter unit and solvent.

The geographical profile of the company has really dramatically changed over the years, as you know we started with Europe, which was close to 60%. Now Europe is getting less than 40% than by state. And with the acquisition of Jurong, we should quickly reach what we would call a fully balanced portfolio, geographical portfolio with one third, one third by many regions. One third in North America, one third in Europe and one third in Asia and rest of the world.

And clearly, and this is really our strong priority currently would benefit from our strong positions in both USA and Asia.

You know that the name of the game in chemicals is really not to be big but to be big and strong in the product line you are developing. And this is really the key of both operating excellence and financial performance to be leaders in the field where you are. And there was one important point which was missing last year and years before, it was naturally where only long before.

And we are now number three with acquisition of the acrylic acid of Jurong which will be closed this year. And which should come quickly to a sort of number two level after the second step of the acquisition. So this could regulate as GAAP and we should have everywhere leadership positions.

In 2013, we have invested about €480 million of CapEx which is about €100 million more compared to the recent past. 2015 would be a bit below than this level, but we’d still be very high and then with this CapEx at around €370 million, €380 million. So, what does this mean? This means that 2013 and 2014, has been and will be a year of significant activity with regard to industrial project.

As the transformation of the company and all this CapEx, this is important to say are pretty much in line with the strategy of the company. You can take them all and they really correspond exactly to the strategy that we started when we spend off Arkema.

And three projects and we spread particularly this strategy you have the Acrylics in Texas, you have the Thiochemicals in Malaysia and you have our R&D Center in China. The good thing is that we can confirm today that depending on this project was chosen, sometimes you have question all across the industry about the relevance of adding this capacity or that capacity in different region of the world.

And we can say that we are really consulted both with timing and with the countries where we put our capacity. And all the fixture and economics of this project because which exempt permanently are confirmed.

We have not only executed on our original project in 2013 but we have also announced new project, still in the frame of our long-term strategy. They’re not just one being as you know the acquisition of the Jurong acrylic assets which should be closed this year.

We have also communicated on the three projects, industrial CapEx and two of them being in organic Peroxide and one being in the list for organic Peroxide will be the plant of Arkema in the release. And we are pretty proud of that, it’s a very good project in high performance materials.

We come now to the second part of this presentation which is the results of the full-year 2013. I will not comment fully the details of the 2012, renew the figures. I can only mention as I said in the release that in the context which was however than the last two years as we already said. Our EBITDA like-for-like decrease by your 5% and the margin resisted well at around 15%.

Professional chain, you have released a said reach which is very simple around in fact. So, you can see that if I add value and price but still I have the organic developmental cell which is more or less stable and then the rest being the effect of the scope of business and fixed rate which represent altogether 4% of sales.

The volume expansion was mainly in the accounting sector while the price negative was mainly from fluorogases.

As mentioned earlier, the performance of our measured project line, was growing with few exceptions which are very well focused and identified which was derived of certain projects of oil and gas which weighted on high performance materials also the conditions in fluorogases, certain fluorogases which is a current generation of fluorogases, with increased competition in China.

And also in PMMA, while we had very swift performance in the U.S., we suffered more in Europe because of too much even construction where out to the point and it was really the reverse in the U.S.

We certainly continue focus our development on the regions that you know where we have the biggest potential which is U.S. and Asia. And in Asia, China and South East Asia, we put as you know since many years a lot of emphasis of cost on the management of cost and in 2013 we have been able to nearly neutralize the whole inflation on some reason of the cost.

And we will accelerate in 2014 and ‘15, our program of operational excellence with target from three years including global processing, viable cost optimization and other factors which would represent about €50 million could achieved within a year, in Australia. So it’s a big program that we are developing throughout the company.

As we are a European company, we have been affected by the stronger euro, and as I mentioned, this represent half of the EBITDA evolution to get up with the scope effect but this is something that we reverse if you do know U.S processing cell, still getting them.

Now, I will give you a few comments on the performance by business segments. We have, as you know three different segments, high performance materials, specialty chemicals and Coatex.

With regard to high performance material, I will have to highlight just three points. First one, is the level of EBITDA margin, which despite a decrease in value stay stable at level 17% which is good level, and very close to the 18% which is the target set for 2016.

As you can see, we are the strong rebound as expected, maybe the more than expected in HPM in oil and gas and 15% enough option in fact, as in Q4 we are the highest, Q4 EHPM. And last change, we are the lower result EBITDA the research valuation is coming out from the scope and business effect. And it was again the consequences of some specific oil and gas and photovoltaic situations.

On specialty, for industrial specialties, we had notable decrease in EBITDA as you can see. But in terms of margin, we resisted very well, below 2 points of margin but still at a level of 17%. And remember that this level is one, we define for the mid-term target. And we had already told you that we were anticipating the normalization of margin in this sector coming from fluorogases. So this is what we got.

And there is difference in EBITDA compared to last year is coming from fluorogases of two third, and from PMMA Europe for one third, which means the rest, we have quite well in 2013, particularly Thiochemicals, despite some technical issues at the end of the year and Hydrogen Peroxide resisted well.

Page 17, on Coatex solution, so you can see that Coatex solution will change the business segment that we have built value and we were quite slow seven years ago. And we’re seeing that we have built mainly by acquisition but also by organic growth.

As EBITDA has grown by 5%, which is a good performance, and the margin improved slightly by – at 13.1%. And this is mostly a combination of internal progress from gross CapEx and from a productivity force and innovation and also for market improvement in the U.S.

We are very confident with the 15% that we have defined in terms of this business segment we are on the right way. We have plenty of actions to continue to be a deliver over the years. We have some recent structure as you know in Changshu in our site which is close to Shanghai, which are very good plants and which will support of growth of Coatex in China and which will be backed by the Jurong Acquisition of acrylic. So we will get full integrated chain in Coatex solution in Asia.

Now, I will go quickly over the prospect, which is really in line with what we say. We have no surprise there. Maybe HPM is a bit better than what people could have expected. So this means that the mix is at least in line with what you may have in mind.

Volumes have increased by 2.4%, EBITDA is stable at 11.5% which is for prospect or amounts I would say. And we want come back of the sharp improvement of high performance material, we have communicated already. But it’s close to 15% margin for high performance material in the Q4, which is a good level.

We are liquidating sector which did well, continuing to demonstrate his LC positioning and also the good market condition in the U.S. And we are as expected a drop, significant drop in industrial specialties mainly coming from fluorogases, but there was no surprise there, it was expected.

But the mix, and maybe the most important thing is really in line with what we said and I will have to mention that the net result has increased by 4.5% recurring net result in the fourth quarter for Arkema.

Now, come to the cash flow generation which is already an important point for our investors. So it’s important point of focus for Arkema. It represented this year and it was a stable percentage compared to 2012, again 36% of EBITDA.

The net cash flow was positive at €78 million despite of taking CapEx at €480 million to support, CapEx to support the future growth as you know. We have also some restructuring expenses and we have the impact of this of our vinyl activities, which was as a consequences of Chem One 7C proceeding as you know, we have commented that all along the year with pretty much in detail. So now, this is definitely over following the decision which was made by end of December in France as you know. And this last item resulted in €123 million of cash out.

From the cash flow, we go logically to the balance sheet which as I mentioned at the beginning is remaining very stronger. And with well managed working capital, staying at 15%, even 14.9% so we have beaten the 15% gathers, provision represents a little less than €700 million with provision for pensions which decreased to €264 million as a result of higher discount rates.

So, words of the provision were stable, this remains at the same level as 2012. Basically expenses which we have booked in recent to Chem One is solvency proceeding. We are further increasing in the amount of – recognize differed tax asset which represents €632 million end of 2013, so as you can see, it’s a big number. It’s a long-term value but it’s quite significant, so it’s a nice time we should not forget for the long-term.

Important point of the presentation is the dividend, we proposed, it would be proposed through the shareholder meeting, to increase the dividend slightly, which reflects confidence in the mid-term outlook and also off free balance sheet.

So, this represents 32% exactly payout ratio which is in line with 30% dividend policies that we communicated if you remember well at Investor Day. So we are 18 months after the Investor Day and we have already reached with this target, we started from 15% so it’s a very significant move over two years. And I think that’s the best step we are in line with outlook.

With regard to 2014, and the outlook for the year, so how do we see things first on the Macro, we are not more than anybody expected Macro we see what it is. But I think it’s already useful to give us – to give you our feeling.

North America actually continued to show solid growth which is selling, we have checked with our teams there and with our customers. There seems to be a rather confident and robustness of this country and of this region.

In Europe we stick with France, what is good is that we can receive a stable Europe at a low point at least. Now for the recovery Europe, we see how much time it takes. But for the time being, we assume on offside the stability in Europe.

In Asia, we should continue to see higher growth rates compared to the other region of the world. You know that we put a lot of emphasis in terms of CapEx and acquisition in Asia, which means that we believe in Asia, short-term, mid-term and long-term. And so this is a region on which we are reserve qualities including for 2014.

This side we have assumed a stability of exchange rates on that we don’t know. But at least there is an assumption, which mean disadvantage on the soft part of the year. And an advantage on part of the year, looking at what it has been in 2013.

As usual, we continue to focus the company on what we control which are internal priority or which concerns execution of the 2014 CapEx plan which amount to around €450 million. So, which means 2013 for achieved, 2014 €450 million and then we go down for the following year. But which is still high number in 2014 and which reflects mainly in investment in Malaysian Thiochemicals because it would be the year of the stock.

So, starting this investment would be certainly a top priority for Arkema, just like finalizing the deal with Jurong acrylic in China. And we are, meanwhile we’ll continue to address competitiveness topics in Europe as we have been doing for example in 2013 with the closure of Chauny.

Our organic efforts, we try to give you an update it’s time on the, what we could expect from organic efforts and it should deliver an additional and for sure EBITDA of €40 million in 2014.

As you’re seeing through the benefits from the ramping up of the new lead commissioning unique firm but also productivity initiative. Therefore, we’re remaining questions as usual on the macro development, we’re confident in our ability to grow EBITDA in 2014.

In the first quarter, you should note that we should have a base of comparison in fluorogases which is higher last year. It was the first and the only good quarter of gases last year. But this base of comparison should reverse on the remaining part of the year.

We move now to the last chapter of the presentation which is mid-term outlook and also the implementation of the strategy. You know that we put specific emphasis within Arkema talking at the same time on the short-term but building the future which means the mid-term and the long-term.

Our strategy was defined as a spin-off you can see that it has not changed. It is the same strategy which was supported in the transformation of the company that we are executing. And this is what the portfolio today is somewhat robust and the performance has reached a completely different category.

We maintain the strategy for the coming years, so three periods, innovation, total acquisition and we think are concrete. And we are really convinced that this is the strategy which is going to continue to create a looked out value for our shareholders by focusing on high-growth country and this mega-trend for new business development and on clever acquisitions that we reinforce to the portfolio for the company.

More than the strategy itself, which is similar to some other company is really the quality of the project which are chosen and the way we execute them which makes a difference. We have here a summary of the big project of the company, you know them because we have announced them already.

But it’s good to assume on piece of paper where you can check on each business segment that all this project are of good quality that will deliver significant improvement of the financial performance of the company. And they are also pretty much in line with the strategy. While we say Thiochemicals platform of the construction in Malaysia, this is really mix of – this is really an implementation of the matching countries pillar of our strategy.

While we put in pyramid our composite, which is a big launch of Arkema as brand, this as a project, this is release implementation of the innovation pillar. And with Jurong, we have implemented some of the acquisition pillars. So really, we have strategies that we really focus on.

So, construction of Arkema was made, in fact it’s made by different ways of faces. We started in 2006 and went into 2011, we have multiplied EBITDA margin by three years and EBITDA also by the same level. So it was a new definitely in there for submission of the company with new organization, new strategy, plenty of new projects, some sales, some acquisition and which took us – we live on performance for the company.

In 2012/13, you can see that it was a step of consolidation, by continuing to end the portfolio with the acquisition of total resin also the acquisition of the Poly-med 10 in China with Hipro and Casda and also the disposal of vinyls.

For 2016, you will get the contribution of the whole project that we have been discussing in the previous years from acrylic in Clear Lake, Thiochemicals in Malaysia, Jarrie with Zhang, also some acquisitions that we have not yet announced in high-performance material but which will come, you will see our financial flexibility and also the acceleration, as I mentioned with €50 million in three years of annual gains of the operational excellence program.

So, this, we contribute to the 2016 ambition that we can fill. And some of this project will continue to ramp up after 2016. This means that you will get only a part of their contribution 2016, and on top of that you will get other projects that we have started to discuss with you, not necessarily in detail but you start to see the per piece, especially new generation of gasoline stuff in fluorogas.

Also all the benefit from this innovation breakthroughs that we have launched like PAKK that you have heard now since three years that will take again three or four years really to get a significant contribution. And all these with the new projects that are on the source but not yet announced will take us to the 2020 target of €10 million of sales and close to 17% EBITDA margin.

To implement this ambition and this vision, the cash flow location, the way we look at it is very important. We will have to give you an update of how we are used the cash allocations that we define at the end of the day 18 months ago.

So, the cash resources available have not changed and you are still between the CapEx and the M&A dividend and results. You can see that in terms of CapEx, we have used a bit more than alpha bit is normal because you have some significant project like the congestion of lack and the Thiochemical project in Malaysia. And which means that we should be more for the next two years, so beyond 2014, at around €380 million of CapEx, so will come to something which is more normalized between 5% and 5.5%, it’s around 5.5% of sale what we consider as a normal level for Arkema.

So, we are pretty much in line with the plans that we have announced. With regards to M&A, you can see that with €350 million which correspond to the first two steps and which is the best I would say actually for Jurong we have one third of the envelop that we plan in terms of auto-price value for acquisition. Then we have the dividend. So you can say that we are really completely in line with the plan that we have announced in terms of cash allocation.

I will not go in detail about the four following slides, which represent the main project. I think it’s important for you that you keep in mind of this big project because at the end it will make a significant difference for Arkema. So, I will just name the title which is Thiochemical platform in Asia, which is one, which was started a year. So, the second one, is from the acquisition that we have made two years ago to continue the ramp up of iPro in China and Poly Med 10 which is very important for Arkema because the region of very significant growth of technical polymer is definitely in Asia, including China.

Then you are which, is more realistic growth which is the organic growth side development. Up to now, we have put as you know an emphasis on organic Peroxide to restart profitability. We have now developed profitability, we have now developed profitability was still a bit below the level average of Arkema is far more I see.

And we’ll take advantage now of this new platform of profitability to accelerate the growth of organic Peroxide which to project, one is Middle East which is our first project is Middle East as I mentioned. And we’ll also double the capacity with China. In fact, when we started the plant in 2008, the plant was made to be doubled. So we’ll now make the capacity multiplied by two.

And then we have the acquisition in acrylic in China, which is as we told you already a very unique project, we are very confident. So we are in the closing process which will take some time as usual in China, but it is here somewhere. We should be bold to close this deal which would be very good for Arkema and positive in terms of value creation for the shareholders of the company.

So, now in terms of conclusion, I will act maybe to emphasize a few points. The first one, is that 2013 was in a challenge macro-environment. In fact the opportunity for Arkema to the most right good level of resilience with margin staying at good level of 15%, but we continue to be very strict in terms of managing cash and cost, and also will accelerate our plan of operational excellence as I mentioned in the coming years.

Being managing is a short-term, we’re really actively continuing to implement the long-term strategy of the company with really a high density of projects, good quality with some mention one as you can see, two of them being acrylics of Jurong and Thiochemicals in Malaysia which are top priority of execution for 2014.

We certainly continue coming back on 2014 to be a crucial buzz cool as usual but we believe that our quality of project, our strong positioning in U.S. and in Asia and also the special benefit from everything that we have launched makes us confident to roam as we mentioned in the community press release, our EBITDA in 2014, even in the first quarter you will get this element of comparison on fluorogas which will reverse on the second part of the year.

I would like also to mention to finish our presentation together with management of Arkema that we are very confident to develop significantly the company in the coming years with confirm our mid-term and long-term target. And we are absolutely convinced that all the projects and the idea that we have are there to pursue the value creation story about.

So this is what I wanted to present you today. And I am, I’m quite willing to listen to your question and to answer together with the management team. Thank you.

Question-and-Answer Session

Thierry Le Hénaff

So, we’ll start in the room and then we can move to so to some question by phone.

Emmanuel Matot – Oddo Securities

Good morning, Emmanuel Matot speaking from Oddo. Three questions. First, the decrease of your EBITDA in 2013 is mainly coming from oil and gas, photovoltaic, fluorogas and PMMA in Europe. Do you expect a recovery in that business in 2014 or stabilization in low points?

My second question is regarding pricing pressures. Are you concerned for 2014, do you see new capacity in some of your activities coming into the market which may weight on your margins notably, in acrylic acid, what are your main assumptions for acrylic acid margin in 2014? And my last question is about seasonality in 2014. Also, will it be traditional between H1 and H2 or not? Thank you.

Thierry Le Hénaff

Okay. On the first and second, I can take them all, I’m sure Thierry Lemonnier would like to answer instead of me but I will take the first three. With regard to the decrease of the manufacturers of 2013, on flourogas we see stability more or less a result of ‘13 and ‘14 but with different seasonality, which mean last year was really flourogas was strong first quarter but then is very still remaining part of the year.

So, we compare in first one, from first quarter and so we should have a disadvantage edge in the first quarter and an advantage on the remaining part of the year.

On oil and gas, we should see a gradual recovery especially for the technical polymers. But it will be more on we would rather beat on the 15%, 16% and 17% as I said many times. So, certainly being a low point, for some gradual recovery and really a bit on the 15%, 16%, 17%.

PMMA in Europe, you’ve really given on the automotive, so we’ll see. Some say that automotive in Europe will increase some of more question is and really depends a lot. And on construction also but also on construction we assume a stable level compared to last year so if we not confirm that it will come more from automotive if it comes.

On the pricing, so your question is more accretive because the other question would have been flourogas, with flourogas in iron certainly the first question. With regard to acrylic acid, we’ve not changed what we said a few months ago for 2014, this means that we should lose a little bit in unit margin of this year compared to last year. But still at bit below mid-cycle but still at okay level and volume should be good.

So, between the two I think volume growth should be at least composed in unit margin decrease. So, we are really in line with what we said a few months ago. And you have seen this kind of development already in 2013, where you could see that in the quickly segment we are little bit impacted in unit margin for acrylic acid but altogether liquidating sector has developed nicely in the current environment.

With regard to seasonality, so I got the question every year and every year I think will be a different case, I will give the severance this year. Clearly, with no consequence on the full year so start of the year should be relatively slow for two reasons, one is fuel gas and the second one being some very cold winter conditions in part of America which has significantly slowed down in January and February, the logistics and also some sites that we think which would be recovered certainly along the year so, no impact on the full year for these two elements but with relatively slow start of the year.

Michael Ray – Goldman Sachs

Hi, there, thanks it’s Michael Ray from Goldman Sachs. Just three brief questions. Firstly, it sounds that you’re quite confident on the long-term margin target within the Coatex segment. Can you just comment on whether there is any upside or rest of that if we think two or three years out?

And then secondly, in terms of the €40 million of EBITDA growth coming from organic investments this year, is that net of any ramp up cost in Thiochemicals? And then finally, just on M&A, you got kind of well documented plans to make acquisitions to help you meet your long-term targets because you comment out there on what the environment is like for acquisitions currently? Thanks.

Thierry Le Hénaff

With regard to the long-term forgetting the 15% margin target. I think that I don’t see significant downside or upside, so we are really right on the target. When we see our plan is very detailed, which includes in Europe, continuing competitiveness actions that will continue to implement in Europe. The plan U.S. of integration is nearly done but we didn’t get all the benefits.

In terms of Sartomer and Coatex, we expect some good benefit from innovation, I mean, you know that we have especially in low VUC a product or so particularly we have launched a plan which is quite interesting. So we have some upside there. We didn’t get the full benefit from the investment in Texas, that maybe would get two third of the benefit up to now. So, we’re still one third to get.

We’ll get the Jurong acquisition, which is also another element. In terms of Macro, we are always cautious as you know, and when we take assumption but we are a bit below the mid-cycle for the time being in acrylic acid so we have some flexibility there. So, altogether, based on our experience a 15% is available which is reasonable. So, we are exactly in the same mood if it is your question, at least qualitatively if we were few years ago.

Thierry Lemonnier

Okay, on the €40 million yes it’s net, this means that if your point was in Thiochemical you will get some ramp up of some cost to start of the plant etcetera that could diminish the €40 million is included. So it’s a net. And with regard to acquisition, as always it’s too expensive but so you need not to be too – you need to be patient. I think recently we have done to now in terms of acquisition has really created value. I think Jurong is really a good one.

In HPM, it’s certainly more expensive and in terms of multi-pole, better and we have made some more extensive acquisition like Sartomer and Coatex in the past and they have really created a lot of value so I think it’s again we try to resoluble as you have seen in the past. But the first grade area is really to fit the strategy of the company and to reinforce the profile of the company this is what we have in mind.

And we never done do things in emergency so we take off time and normally when we present to you acquisitions, this means that we are really absolutely convinced to create value.

As a question, there is one question at the telephone of Mr. Jean-Francois Meymandi.

Jean-Francois Meymandi – UBS

First on, on acquisitions, which you diversified away from current activities or would you like to – or would you like to stay on the same activities? The second question is on country thing on high performance materials, could you comment on the volumes, is there an ongoing group volume as we saw in Q4, on up. And the last one is on currency, could you comment on currency development as you hedged and what would be the impact in H1 at constant rate?

Thierry Le Hénaff

Maybe Thierry you can answer the third one, and I will take the first two. So, Thierry I will take the third one and I will also the first two.

Thierry Lemonnier

Okay, so John, as far as currency thing is concerned we don’t hedge neither the conversion is, said nor the competitive impact of weaker. The last we saw that means that we are in a situation where the currency change as an impact indicates positive or negative impact of around €60 million on our EBITDA for our 10 plus on variation of the euro dollar rate.

Just for the conversion effect and as far as the competitive impact is concerned, is probably an amount which is similar but it’s much more difficult to evaluate. So, we are more concerned on providing for Europe which we can consider that it’s similar to each of them.

Thierry Le Hénaff

Thank you, Thierry. With regard to acquisition clearly, we have a strategy so we are going to implement the strategy. We are not going to get outside of the strategy. So this means that total acquisition as it has been since the beginning either directly in our product line, it allocates of iPro in Arkema. It was exactly in our product line or it can also be delivered whom on the product line, especially in HPM where it was really to be exactly in what you have, your potential of growth is rather limited.

Okay, so, as I mentioned many times, we can accept to be a bit in the negative as long as in terms of technology, in terms of share we can re-leverage what are the strengths of the company.

In terms of current rating condition on HPM, so it’s a continuity of what we have seen, except that in Q4, you have noticed that there was a strong element in filtration and arts option which was announced we knew it would come. And which comes from time to time, so this element is not something which is every quarter, it comes from one quarter and then another quarter but which is a long-term development of the company.

Beyond that yes, there is a good continuity of HPM which is gradual recovery and they look better at the beginning of the year.

I have another question on the phone of James Knight from Exane, James.

Operator

Sir, your line is open.

James Knight – Exane

Thank you, Thierry, and good afternoon.

Thierry Le Hénaff

It’s still good morning for us.

James Knight – Exane

Really, I think it’s afternoon now?

Thierry Le Hénaff

Are you in London or are you in China?

James Knight – Exane

No, not now this week. Three questions, I guess, few more details firstly on flourochemicals, flourogases. You’ve mentioned in these presentation about the challenges being temporary, I guess that’s partly because the weather last year, partly because with as the mid-term entering a cycle of new standards, the 1234 YF Flourogases etcetera.

Could you just give some ideas as how we should think about how mid-term margins returns should progress in that segment as these new, these standards come through?

Secondly, I guess the obligatory Malaysia update question anything you can tell us about not just around out of your plants but of your partner, and what kind of loading you could achieve even without that downstream plant operational. And thirdly, shorter term question on Coatings, I don’t know what the time is but I want to look at the date, it’s March, so obviously somewhere into the year. What kind of orders are you seeing in Europe from your Coatex cuff as made deco I’m interested in but also industrial as well. So, those are the three questions, thank you.

Thierry Le Hénaff

So, on the first one, with regard to flourochemicals, so first of all we were expecting some normalization of the – on the flourochemicals so even if we don’t disclose margin by business line as you know, we have as I mentioned, that flourochemicals because we have now in the year game in China add, we had really a very strong benefit. And that we would use some of them because of capacities coming in China.

So, you – as the 70% you have now in the industrial special keys, sort of norm which is in-line with our mid-term target. And it comes in fact from flourochemicals and normalization of flourochemicals. But even beyond that we absolutely consider on the further flourochemical we continue to stay very robust business line and that in terms of margin again even if we don’t disclose our profitability by business line, we stay above the average of the company.

So, it’s still a very important line for Arkema, value of the mix of some macro cyclical elements where you have a mix of regulation, where you have a mix of strategic gains of everybody.

With regard to Arkema, if I see an awfully answer your question, if I see our current internal development that you’re not all aware of the two or three gas, new generation of gas, which regard integration in terms of clear spot, which regard also competitive sections particularly in the more mature areas like Europe.

If I look at all these, even if we recognize that 2013 was lower and 2014 should be at the level of 2013, we remain quite confident on the be able to maintain quite a good margin in flourochemicals for the coming years.

And the mid-term results should be above the current level. So you will see some current stabilization and then step by step we come back to higher levels.

We’ll ask Marc Schuller to comment a little bit where we are in the process and maybe continue if you want to and I can conclude after that.

Marc Schuller

Thank you Thierry. With regards to Malaysia, the plant as you might expect is under construction, it’s progressing rather well. Well, it’s a traditional challenges of any construction between weather and new traditional problem but nothing very specific.

We expect to stop the plant in the summer, as you know, our partner is also building the plant and it’s progressing as well as our plants so far. And the new project is start up, is by definition and no worry of risk but we’re working a lot to optimize the start-up procedure and we feel very confident that we’ll be starting up during the summer.

Back on your question on Coatings in Europe, the beginning of the year is definitely better than it was last year, maybe this is because we have no winter, I don’t know what to say about it. But so far, we cannot complain too much on the volume. Of course business by business within the Coatex we have different situation. But all-in-all, it looks at this point in time, better than last year on the volume.

In terms of margin, it’s still challenge but it’s not worse than it was last year. So at least we should have positive impact linked with the volume.

Thierry Le Hénaff

Thank you Marc. Just in Malaysia, to complete the last question about the loading. We see depending on the ramp-up of the market but we are still confident on our ability once it starts to unloading which is going relative seeing really in the right place of the world. And as we mentioned many time on our project in Asia, we have a positive feeling about arising, our challenges and we can debate about this issue or that issue in this country or another country.

At the end of the day, if you look mid-term or long-term which is very important for our companies like us, absolutely conveying at Asia will become more and more bigger part of the world. And it’s absolutely essential to enforce opposition there. And at the end of the day, which was not the case I told seven years ago, we will get Arkema and we’ll see that all our strong lines, we have plants, we’re on scale, first quality in Asia. And as the management project, is one example of that, in the field of Thiochemical where we are number one worldwide.

Henrique Feuvert – Sycamore

Yes, Henrique Feuvert from Sycamore. A quick question on Jurong. On a full year basis, the contribution should reach €600 million, could you tell us when this self-level would be reached and what kind of self-contribution should we expect for this year? Thank you.

Thierry Le Hénaff

So, I would like to remind you of where we are, for the time being we are signed. We have a closing to be made in China. So, before defining the self-contribution we need to ask the final debt of the closing. And as I mentioned many times, we’re no more in the current cycles.

And you have many administrative steps, in China we are very confident about. But that will take some time and we’ll see depending on which is start-up date, how much say it will be for this year. So it’s too early to say. So, let’s talk about 2015, I think clearly we’ll do everything we can to have a ramp up which is very quick. And on this plant in 2015, a plant of acrylics is competitive when you see the plant.

So, for us, we’ll do in terms of leveraging our global relationship with customers, what we need to be in 2015. So, when we close to what we can produce from the plant.

But we’ll give you an update when we know exactly the closing date, when we have making more detailed steps but we are in terms of reaching the level of sales, already the structure for full year, we should be looked very far from the quantity representing the foot sales.

We have a question from Laurent Flamme, by phone.

Laurent Flamme

Yes, good morning. Just a question on your portfolio, so it looks really cash flow statement that you restored up the stake in QDC, can you just tell us how much of the €90 million in the cash flow, how much of the €90 million was QDC, this is the other disposal?

And on the second question on this is, when you touch your portfolio today, is there anything less that looks non-core to you, is there anything that is not strategic or given that chemistry is now gone, truly being closed, the portfolio as it today. And it’s I guess what you want to keep now?

Thierry Le Hénaff

So, we don’t show the portfolio and Thierry, could we say we start with the portfolio. We have announced, as you will remember, well on Investor Day two months, we have announced €400 million of disposal. And we have made with sale of and it was outside of QDC and which was part of the vinyl disposal, okay.

So, what we have done includes China, does not include surely, I don’t think we put it in portfolio, so officially no. So, what we put in portfolio is real disposal, not closure of sites. So, in terms of portfolio, we have mainly the finalities which is what we have done. So, we have made all of the whole disposal plant, so which means that we have still to make 200 in the three years of disposal.

So now, does it mean that we are significant line which are non-core, is that true? This means that it would be some of small lines as usual that you are – maybe not even aware of it, okay, but which would be part of the disposal plant, which would be a sum of different things. And there is nothing to fully emphasize more to this on this standard loss.

Thierry, what can you say?

Thierry Lemonnier

Okay through, Laurent, your guess is correct. And most part of the €90 million is related to QDC, which is something that you can cross-check with the cash flow statement that we have provided on page 19, where €61 million negative cash flow which is related to the portfolio management includes as a minus €123 million as Thierry mentioned with Chem One.

Thierry Le Hénaff

On disposal, sufficient change to me, which is true that already with also the disposal, the recent disposal of the cutting regime in South Africa, we have made already a significant part of the remaining 200, so which means that we are really pretty much in line with the planned date assumptions.

The answer for the greater distant point, it would be a sum of different small things as well as South Africa in Coatex resins.

Laurent Flamme

Thank you.

Operator

We have our next question from Patrick Lambert from Nomura. Sir, please go ahead.

Patrick Lambert – Nomura

Hi, just a quick one, again on Jurong assets, trying to model this, I think in 2014 and onward. Do you expect EBITDA contribution to be basically zero in 2014, with integration cost mostly offsetting any potential impact, I know you said it’s pretty early, you want to know the date of closing. But is that the right way of thinking of it, so not contribution from EBITDA level from Jurong? Thanks.

Thierry Lemonnier

So, Patrick, I can tell you what we do in Jurong and we have taken nothing in our budget because we consider that first we need to close. And for us, the only priority is to make the closing as soon as possible in the best conditions possible. China is always a little bit complex, so it will take some time.

We’ll make it, we have absolutely no doubt about that. Now, it will take how longer will it take with no more in a few months as we mentioned. So on our level, we are still kind of diluted, or fully it will be as we mentioned in the conference call last time, as I mentioned myself, hopefully there will be positive. It is too early to confirm. Let’s do things by steps and the first step is to close the deal as it needs.

Patrick Lambert – Nomura

Quantify the integration cost?

Thierry Lemonnier

Then you led me to the point it Patrick.

Patrick Lambert – Nomura

I know. The integration cost, do you anticipate anything?

Thierry Lemonnier

No, no, limited.

Patrick Lambert – Nomura

So you can migrate systems?

Thierry Le Hénaff

Make him to make sure that, so he’s right but.

Patrick Lambert – Nomura

I can’t see them, unfortunately.

Thierry Le Hénaff

If you to be appealed with the answer, so it should be okay.

Patrick Lambert – Nomura

Okay. Thanks.

Thierry Le Hénaff

Yes, other questions from…

Operator

We have another question from Martin Roediger from Kepler Cheuvreux. Sir, please go ahead.

Martin Roediger – Kepler Cheuvreux

Yes. I have three questions, if I may. The first is on exchange rates again. Thanks, you have given us this sensitivity on the dollar, I understood, and also that you expect the stable average dollar-euro exchange rate. But what’s up with the emerging market currencies. Do you expect here any impact from emerging market currencies in 2014 and if you can give us any hint on that?

Second question is on working capital, which is down in 2013 versus 2012, but you guide for basically flat working capital sales ratio. Why is there no further improvement possible?

And the final question is on your outlook. And in general terms, you appear cautious on the macro environment. And can you give us an update about how your business has started at the beginning of 2013 in terms of the end markets like consumer, transportation, construction, you gave some hints about the Coatex business which started well, in terms of volumes; you hinted fluorogases, which has a high comparison base. But what is with the rest of your portfolio? How did these activities perform in January and February?

Thierry Le Hénaff

Okay, Martin. So, on the exchange rate, emerging market we have assumed stability which in a volatile world is really a global assumption. We have assumed stability in average for everything. Frankly speaking, I don’t know if we would be right, if it is optimistic or pessimistic but we are very sure assumed for us to currency which make a difference in emerging market over the yen but which is already low. So, we go to hit in 2014 and also as the Chinese Yuan.

Now I think reasonably, I think that our stability is a good assumption, frankly speaking both in exchange rate you know more than I do. But at least this is assumption in which we have built important.

On working capital, thank you for challenging us and I will pass your message to the team. We started to purchase 3%, now we are at 15%, it proves that we have stability since capital of the years. We believe that 15% based on our mix because you know that in each PM, it’s higher than in for example, in a creating season. We have some business line where we are about 10, we have some which are close to 20% so it’s a mix, based on our mix, we believe that 15% is a good ratio.

What we do is from time-to-time we make benchmarks, and we are already good in the benchmark, we are really in the first quarter based on the mix of portfolio. But don’t worry if we can do more, we’ll do more. It’s a permanent discussion with business lines. And we are frankly speaking, they have made a lot of progress in the past years. But also we need to serve our customers like that and for that we need some stock.

On the macroeconomic I don’t want to detail too much the macro at the starting of the year because I will discuss some businesses for some of those and then you will extrapolate for the full year as macro or should decline on the first two months.

So I’m very careful about that. I think we are still in the commencement of what we have said and the end of what we have said which means that Europe should be stable, so Marc was mentioning that cuttings was developing well developed in U.K. but some of the markets are late. U.S., we have cold, which isn’t typical, especially for example for Texas and while you are negative system purchase with our existing Texas.

China, has Chinese New Year, so it’s very difficult to extrapolate. So frankly speaking, we can debate that but let’s wait a little bit. What is clear is that – when you look at the start of the year, there is nothing which is against what we see for the full year, for the time being. So, it’s really comforting what we say for the full year but we prefer to work on the full year.

Martin Roediger – Kepler Cheuvreux

Thank you.

Thierry Le Hénaff

Other question.

Operator

We have a next question from Andreas Heine from Barclays. Sir, please go ahead.

Andreas Heine – Barclays

Yes, only two questions. One is on Thiochemicals. There the earnings are flat in 2013. I see this more as a growth business. Could you elaborate how the trends within that business were in 2013? And again, on fluorogases, I think, in the last quarters, you mentioned that there was these weather-related impact in the second quarter, which led to an oversupply and some softening in prices, with some progressive improvement in 2014. The comments you make now is, let’s say, more flattish development in this year, due to the high base in the first quarter, sounds a little bit more cautious. Is that the right reading, that after the weak demand in Q4 you are a little bit more cautious on fluorogases? Thanks.

Thierry Le Hénaff

We’ll also quickly note on flourogases, it seems to me but we’ll check with Sophie. If she is with us, we’re really online with what we said in the past months, I don’t see a difference. The development of last year you know it, strong first quarter and weakness started in May up until the end of the year. So, we should compare favorably starting in May for the following eight months. And we have the start of the year which is higher base of comparison.

The overall assumption was flat I think it was already done, given few months ago. So I don’t see any change but we can get the exact modern details. No, frankly speaking for me, it’s really – we’re competing now with what we said few months ago.

Thiochemicals, for 2013, so Thiochemicals it’s an area to a certain extent of transition and we are to start the site of lack which has been technically then we should utilize, a big success. Don’t forget that it was something which was in the reference document, where we add to find a solution for the next 30 years.

When we started Arkema, we knew that total will stop is supply of gas and technically we need to find a solution together with total. So, we have been able to do it. But it was very complex technologically and it has taken some EBITDA out at the end of the year, just the time to implement everything. But now it’s working fully.

And we have this big investment in Malaysia, which take a lot of resources. I would say, in terms of Macro, for Thiochemicals, for us the key is quite good. And I’m very, for the coming years, I’m quite, I put the pressure on my team but I’m quite positive on the Thiochemical development for the coming years, I have no doubt about that.

Andreas Heine – Barclays

Thanks.

Thierry Le Hénaff

Other questions, Dominik?

Dominik Frauendienst – Citi

Just two questions really, one focusing on HPM and the other one on the deferred tax assets. You talked about a strong element in the fourth quarter in HPM. Can you quantify this element and will there be a similar one in 2014? And then also, on HPM, do you feel confident that you will make progress towards your 18% margin target in 2014, really understanding the underlying performance of the business here?

And then on the deferred taxes, you mentioned it in your speech, something we shouldn’t forget, but do you feel more comfortable going forward that you will be able to use this deferred tax assets in 2014 already or when should we be able to expect to see positive contribution from that? Thanks.

Thierry Le Hénaff

So, the good thing is when people are asking me about taxes, I know that I will get arrest, so I will pass the question to Thierry Lemonnier, our CFO.

Thierry Lemonnier

Okay. So, for the deferred taxes, the key elements is related to France because as you know there are mostly – they have been mostly generated by France and the low fees that we have regarded in this country.

Now, with our Chem One, the situation is suddenly clearer. And we can expect to recover those different sets of time. However, don’t forget that the legal enhancement has changed in France and we are now limited to recover to only 50% of the net results which means that it will take twice the time that we expected initially to recover those assets. So, certainly the situation will be more favorable in 2014.

We can expect at the end of the year to be a more comfortable situation to recognize part of them but as you said, it will take good time, so we will provide more specific information during the year depending on the situation in France.

Thierry Le Hénaff

What is clear is that there is value there. It’s still difficult to quantify exactly how to – at which period it will come. But it’s certainly a significant element, long term value for Arkema.

Now, with regard to Dominik, with regard to its period, I will better, as we traditionally do at the beginning of the year, I would get you on the one business segment for margin for the full year and whenever we do that, even for the old company we will until mid-year, I will not do it.

The only thing I can say is that, as we mentioned HPM will be a gradual recovery in 2014. Then you have some specific elements of filtration, assumption we come from quarter-to-quarter depending on which quarter, more in a discreet manner, where we get some in 2014, at which level exactly is still too early to say.

What is clear is that, this kind of elements beyond 2014 will become rather significant so we ramp up quite significantly. And to this end, we see end gas development that we are in a technical polymer, we’ll participate to beyond 2014 to quite positive oil and gas use that I mentioned before.

With regard to 2014, you can take on the big business to gradual recovery, for the specific element like some infiltration option or we need a bit more time exactly where we’ll be in the year.

Dominik Frauendienst – Citi

Any comment on the quantitative impact of this strong element in the fourth quarter, I guess that was non-recurring?

Thierry Le Hénaff

It’s recurring except that it does not come every quarter but it’s purely recovering. It’s part of our big business, specialty chemicals, a big part of their profitability is made of that. So, it’s really is good.

Dominik Frauendienst – Citi

It wasn’t one big contract you booked, where you booked the profitability in the fourth quarter and that was it, that it’s really a recurring business for you now?

Thierry Le Hénaff

Repeat again.

Dominik Frauendienst – Citi

It wasn’t one big contract you booked in the fourth quarter?

Thierry Le Hénaff

No, no, no, in fact you are mainly sold contracts everywhere, every year, except that they are not necessarily the same one, the same customers. And they come regularly, except that some years you have more, some other years you have less. And it’s difficult at the beginning of the year to exactly what would be the year.

Dominik Frauendienst – Citi

Great, thank you.

Thierry Le Hénaff

Thank you. We have Jaideep Pandya.

Jaideep Pandya – Berenberg

Few questions, first on Thiochemicals. Could you give us a little bit more color about ramp up in Malaysia, is it fair to assume for time being that you are going to be targeting the massive union market to start with. But I’m more curious about the other parts of your portfolio, when should we actually start seeing your commercialization of MDS, DSO and also a little update on Paladin? That would be very appreciated.

The second question is on CapEx, the 1234 YF Flourogases project, is it included in the €1.7 billion CapEx numbers that you shared with us. And then the third question is really on your mid-term EBITDA outlook, if I just look at it on an organic basis, you need about €240 million of EBITDA growth in the next three years. Could you just really walk me through what are the few building blocks that make you confident about the path for EBITDA growth on organic basis? Thank you.

Thierry Le Hénaff

On the newly completed, so with Sophie, because some needs – some details that we take time and we give you a lot of update already. But Thiochemicals clearly we have two pillars, one is middle union as you have the one is oil and gas. And this pillar was stocked knowledge at the same time, you can have some gap of issues but so very lean. We’ll benefit from the two pillars, and we have built as it is for example in the U.S. after your chemical plant will be able to serve the two pillars.

With regard to the MDS on Paladin, which is for the AG business, I think it takes maybe more time than expected but we have a lot of growth on other seasons for our MDS which is not an issue. And that issue is still quite promising, but sometime of litigation because the AG business takes most time but is going smoothly.

And it should be in the coming years, a good contributor of the MDS among the five or six as our main business, no specific comment on it. It’s a small product. I think at the level of our discussion today is too small to detail. On the CapEx, 1234 YF is included in the €1.7 billion for dilution project because the other one will be later met dilution project.

With regard to the mid-term EBITDA, we think we know them because they are – I think they have been very well presented in the presentation, we have two pages on that where you have to detail all the main projects, okay. For the counter revision of the project, I would recommend that you see with Sophie and we have expressed many times.

I could go around but it will take 10 minutes but it should take back to the slides at the presentation where you have the detail of all the project with the ramping up over the years. You can see that project like Malaysia, like Jurong, will contribute very significantly. You have also some parts of organic profile China and in Middle East. So, I think you have all the elements you need.

There is a part of Macro because 17 Macro was negative, for example, exchange rate we started from a base of 2012, which was with at €1.27, okay. Now we’re at higher – at higher level. And 2013 was €1.43 something like that, so you have the part of Macro, part of directions right. But basically for the rest, we are really in line in terms of structural improvement for the company.

Jaideep Pandya – Berenberg

Just a follow-up flourogases, I mean, could you say now that the pricing headwind that you had especially coming out of Asia is behind you and if volume dynamic is recovering the way you’re seeing then pricing won’t be such a big headwind at least until you launch the next generation gas in ‘16?

Thierry Le Hénaff

Clearly it seems the development in Asia was fluent and people who are expecting in 2013, it has wade them on flourogas. Because in Chinese competitor are not enough internal market as they started more than expected. And they put pressure on the prices above what people who are expecting.

For 2014, as you could see we have been cautious because we plan a flat level so this is the answer to your question. And beyond that you have the factual elements of flourogas of Arkema that I have mentioned before including U-Gas, including competitive actions, including integration in stock that we contribute.

With regard to the cycle of the Macro, the way you want to collide, it’s clear that by the development of Asia, it will improve somewhat the situation on certain lines which have been affected where capacity has been put before the demand developed.

But don’t forget that Arkema to see that Arkema in flourogas, the way we mentioned so much flourogas, let’s say certainly because it was of the few elements of decline in EBITDA of Arkema that was so because 2012 and ‘11, we’re very, very strong. So it declined at flourogas, but still at good level, so we should not forget that.

And in terms of positioning, we are positioned in the old generation, the current one, and we are getting position in the future one, so I think that as number two worldwide in terms of flourogas, we are in good positioning which should help us to have good development of flourogas over the coming years, starting from flat this year.

Jaideep Pandya – Berenberg

Okay, very good. Thank you so much.

Thierry Le Hénaff

I don’t know if in the room we have further questions. So, on the phone?

Operator

We have a next question on the phone with Anindya Mohinta from Goldman Sachs. Please go ahead.

Anindya Mohinta – Goldman Sachs

Hi, just one question on HPM, please. We recently saw that Petrobras increase their E&P CapEx budget for this was their next five year plan. When you speak to your large customers, companies like Technip, what is the sense that you get in terms of timing of orders? Is this a, 2015-2016 sort of volume pickup or even further out, can you give us any color on this? Thank you.

Thierry Le Hénaff

So, I’m not sure which is your point. It’s very difficult for external observer to understand the link between announcement and for example supply potential for company like Arkema, because you have so many materials that participate to the different project. And they are not the same depending on which project, so there is absolutely no direct link between this announcement or that announcement. And what we can do.

What is clear is that with our customers, last customers what we do is regularly we check where we are depending on which project and how do we see our supply, we envision to the consumer we have said that we are confident beyond 2014 on significant development of oil and gas. But it’s difficult to give a precise, if on, I will disclose the limits which are very private. But what is clear is that if we do not try to link announcement by end-customer to what we do offside is far more complicated.

Martin Evans?

Martin Evans – JPMorgan

Hello, yes, good morning or afternoon, just hi, very well hi. Just one question, just again on the guidance, I’m just looking back at the slides from this time last year when you were talking about your assumptions for 2013 and you said that 2013 should be another strong year, that’s obviously we’ve seen, it hasn’t turned out quite like that. What’s and therefore your comments on growth in 2014, is it different this time that the climate, the macro-climate, the economic climate for you, you think is more benign, it would be kinder to you than this time last year or is it that you have more confidence in your specific measures to grow the business? Thanks.

Thierry Le Hénaff

It’s clear that but we are not genuine. When we were at the beginning of last year, we did not anticipate 2013 will be for chemical companies so challenging. And so, but this is the difficulty about the macro is that we are expert on water. We control internally, we’re not necessarily an expert of what is happening outside and you can see there are many elements in that term.

If I look at second elements which I’ve missed in 2013, you are the fuel gas where frankly speaking we are big hit which was not expected at this level. And that take when we look at profitability in China to levels where we believe that we have reached the bottom, so it makes a big difference when we start the year.

When you look at photovoltaic, we have seen no improvements on decrease after or just six months sheet. So again, the market has certainly reached about – there was a lot of discussing in the first part of last year.

PMMA Europe, you know maybe more than I do but it seems that automotive chemicals are bit more positive on Europe this year than they were last year. So, at least on the elements which have been missing in 2013, we don’t see any further deterioration. So, could be as an element that happened this year.

In fact we were talking about 2013 element which have worked in our favor years before. So they were in fact specific elements for the rights we are on the market which are certainly more mature even if some of them are growing quite significantly. And so, we don’t see the kind of element that we get in 2013, so it’s maturing.

Martin Evans – JPMorgan

Thank you. That’s very clear.

Thierry Le Hénaff

And last question from Patrick Lambert.

Patrick Lambert – Nomura

Yes, just a quick follow-up; actually two questions. The first one, can you comment on actually photovoltaic? You haven’t talked too much about it. Clear signs of recovery, poly silicon prices going up and does it translate into volumes, going forward, for you and how you measure that? The second is for Thierry Lemonnier, regarding the transaction impact. Can you comment a little bit more on the dynamics there; which products are actually affected, which business lines are actually more affected on transactions versus translation? Thanks.

Thierry Le Hénaff

Okay, since I will close the presentation. So I will ask Thierry to answer the second one and then I will close this with the photovoltaic.

Thierry Lemonnier

Okay. So, the transaction effect I think affects all the productions that we have in Europe and mostly in France and it is mostly for just under poly med and technical polymers as well as to a certain extent Thiochemical.

Patrick Lambert – Nomura

Okay.

Thierry Le Hénaff

On photovoltaic, photovoltaic is different from organic gas offers, because sometimes they both affected HPM, people put them little bit in the same basket. The effect is completely different. Oil and gas, it’s a matter of order development and we have explained how the ramp up will occur with ‘15, ‘16, ‘17 being notable a year.

With regard to photovoltaic, it’s more continuous development. This means that what has happened is as the first semester of last year, volumes have really decreased all along the chain because they were over stock. And there has been this stocking. In parallel you have the permanent evolution of what causes the photovoltaic panels with reduction of areas of materials. So you are looking on thin layers with some pressure on prices and this is permanent development.

So, offering on photovoltaic we see different from the one in oil and gas, it’s actually oil and gas we will come back to the historical levels. That on photovoltaic, we have reached now sort of stable point that when we look a little bit, but more like mature lines, okay.

And that what we have lost, which come back to a certain extent to a part of the question on 2016. What we have lost of HPM and photovoltaic because there is still remaining gap will be offset by development by some of our product transfer is very typical and development cycle of HPM, where you have some application which are decreasing, some application which are developing. And at the end, the net is positive. Oil and gas is different, it’s a separate subject where our long term we are quite positive. But you have some you have some weaker years that will affect to higher years.

Patrick Lambert – Nomura

Thank you.

Thierry Le Hénaff

Okay. That’s it. So, we’d like to thank you all both in outside of France by phone and here in the room for your questions. Thank you very much for your attention.

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