Story
Arkema Beats Q2 EBITDA Forecasts on Pricing Power, Reaffirms Full-Year Guidance
Summary
French specialty chemicals firm Arkema SA reported second-quarter earnings that surpassed analyst estimates, driven by price increases that offset a slight dip in volumes. The company maintained its full-year guidance for slight EBITDA growth.
Arkema SA reported second-quarter adjusted earnings that topped analyst forecasts, as the company's ability to raise prices successfully countered a minor decline in sales volumes. The French specialty chemicals producer confirmed its full-year financial guidance, signaling stability in its outlook.
Quarterly Performance by the Numbers
Arkema posted second-quarter adjusted EBITDA of €391 million, exceeding the analyst consensus of €362 million by 8%, according to company figures. Group sales for the period reached €2,428 million, representing a 3.3% increase on an organic basis.
This growth was driven by a 5.1% increase in prices, which more than compensated for a 1.8% decline in volumes. The company noted that currency fluctuations and portfolio changes acted as headwinds, reducing sales by 1.2% and 0.7%, respectively.
Divisional Results Show Mixed Performance
Performance varied across Arkema's business segments, with two of its three main divisions beating expectations.
Ad- Adhesive Solutions: Adjusted EBITDA came in at €111 million, ahead of the €97 million consensus. Sales rose 3.8% organically to €735 million.
- Coating Solutions: This division reported adjusted EBITDA of €78 million, significantly surpassing the €60 million forecast. Organic sales grew by 10.4% to €422 million.
- Primary Materials: The segment underperformed, with adjusted EBITDA of €58 million versus a consensus of €63 million. While sales grew 6.3% organically, this was due to a steep 16.0% price hike that offset a 9.7% drop in volumes.
Outlook and Financial Health
Arkema maintained its full-year guidance for slight EBITDA growth on a constant currency basis. The company expects new project startups to contribute €50 million to earnings and anticipates cost savings of approximately €90 million compared to the prior year. Capital expenditure is projected to be below €600 million.
The company's cash flow moderated during the quarter. Operating cash flow was €195 million, down from €262 million in the same period last year, while free cash flow totaled €68 million compared to €91 million a year earlier. Arkema attributed the decline to higher working capital needs stemming from increased raw material prices. Net debt stood at €3,605 million, equal to 2.9 times net debt to EBITDA.
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