The Group delivered a solid financial performance in 2023 in a demanding macroeconomic environment, with €1.5 billion in EBITDA, in line with its full-year guidance, and excellent cash generation. Arkema expects EBITDA to grow in 2024, mainly weighted to the second half of the year with the ramp-up of its major projects and a gradual improvement in market conditions.

• Group sales of €9.5 billion, down 16.1% on 2022 at constant scope and currency:
  • Volumes down by 10.0%, reflecting the overall slowdown in demand and destocking, although volumes were slightly higher in the fourth quarter relative to last year
  • Positive dynamic in innovation-driven high performance solutions addressing sustainable megatrends
  • Negative price effect of 6.1% reflecting lower prices for certain raw materials and the progressive price normalization of PVDF and upstream acrylics, which had benefited from particularly favorable conditions in 2022
• EBITDA at €1,501 million, down compared with last year’s very high comparison base (€2,110 million), and solid EBITDA margin in this context of low demand at 15.8% (18.3% in 2022). Q4’23 EBITDA up by 14% year-on-year to €331 million (€291 million in Q4’22), driven by the good performance of Adhesive Solutions and the resilience of the other segments
• Adjusted net income of €653 million, representing €8.75 per share (€15.75 in 2022)
• Excellent recurring cash flow of €761 million, reflecting the strict management of working capital and tight control of capital expenditure, and net debt of €2,930 million at end-December, representing 1.95x full-year EBITDA
• Proposed dividend of €3.50 per share (€3.40 in 2022), in line with the policy of a gradual increase, and corresponding to a payout ratio of 40%
• Finalization on 1 December 2023 of the acquisition of 54% of PI Advanced Materials, marking a key step in the strengthening of Arkema's very high performance polymers portfolio
• Continued progress in CSR performance with, in particular, reductions in greenhouse gas emissions of 7% for Scopes 1 and 2 and 9% for Scope 3 compared with 2022. Moreover, the share of women in senior management positions rose to 29% (26% in 2022)
• Outlook for 2024: the Group aims for EBITDA to grow in 2024 and reach between €1.5 billion and €1.7 billion. The start of the year should be in the continuity of the low demand of fourth-quarter 2023. EBITDA growth should be weighted mainly to the second half of the year with the ramp-up of the main growth projects from the second quarter onwards and the progressive improvement of market conditions.

Following Arkema’s Board of Directors’ meeting held on 28 February 2024 to approve the Group’s consolidated financial statements for 2023, Chairman and CEO Thierry Le Hénaff said: “Arkema recorded a solid financial performance in 2023 in a particularly demanding macroeconomic context. I would like to thank our teams, who once again demonstrated their agility and unwavering commitment, enabling Arkema to deliver some important achievements in 2023, notably in terms of cash generation, CSR performance and the strengthening of the Group’s profile in Specialty Materials. As 2024 has started in the continuity of the previous quarter, in a context of ongoing weak demand, we will continue to manage our operations tightly. We will benefit from the growing contribution, from spring onwards, of several major industrial projects in Asia and the United States, as well as from the integration of PI Advanced Materials’ activities. In addition to managing the short-term, our teams are fully mobilized on our 2028 objectives which we unveiled at the Capital Markets Day last September.”

2023 BUSINESS PERFORMANCE 

Group sales came in at €9,514 million in 2023, down 17.6% on the previous year in a more challenging macroeconomic context, marked by lower underlying demand and destocking, first in Europe and then spreading to other regions of the world. The decline in volumes came in at 10% overall, affecting most of the Group’s important end markets like construction, industry and consumer goods. Some markets such as automotive and energy resisted much better, and the dynamic remained positive in high performance solutions addressing sustainable megatrends, particularly in new energies, bio-based and recycled products, as well as in the areas of energy efficiency and lightweighting. The negative 6.1% price effect reflects the decline of certain raw materials and the normalization of PVDF and upstream acrylics relative to the particularly favorable conditions of 2022. Moreover, Arkema benefited from the repositioning of its portfolio towards higher value-added solutions. The scope effect was small, standing at a positive 0.7%, and included mainly two months’ additional contribution from Ashland’s adhesives business and three small acquisitions, partially offset by the divestment of Febex at the beginning of the year. The currency effect was a negative 2.2%, mainly as a result of the depreciation of the US dollar and Chinese yuan against the euro. 

The share of Specialty Materials within total sales grew slightly and represented 92% of the Group’s sales in 2023. Moreover, the geographic sales split saw the share of North America increase (37% of the Group’s sales in 2023 versus 35% in 2022), Asia and the rest of the world decline to 29% versus 32% in 2022, and Europe remain steady (34% of sales in 2023 versus 33% in 2022). 

At €1,501 million (€2,110 million in 2022), EBITDA held up well in view of the economic context, while reflecting the absence of the exceptional contribution in the prior year of around €400 million from PVDF and upstream acrylics. The dynamics were mixed between the various product lines, with Adhesive Solutions and Performance Additives reporting good growth in the second half of the year, driven by the product mix, dynamic management of sales prices and continued operational excellence actions. In this less buoyant context than in the prior year, Arkema’s EBITDA margin came in at a good level at 15.8% (18.3% in 2022), reflecting notably the quality of the product mix in higher value-added solutions and appropriate management of pricing in a more normalized raw materials context. 

At €562 million, recurring depreciation and amortization rose marginally year-on-year (€550 million in 2022). Recurring operating income (REBIT) therefore amounted to €939 million (€1,560 million in 2022) and REBIT margin came in at 9.9% (13.5% in 2022).

The financial result represented a net expense of €70 million (€61 million in 2022), up by €9 million relative to 2022, reflecting mainly the impact of the bond issues carried out in 2023. 

Excluding exceptional items, the tax rate amounted to 21% of recurring operating income in 2023. 

Adjusted net income thus amounted to €653 million, representing €8.75 per share (€15.75 per share in 2022).

The Board of Directors decided that it would recommend, at the annual general meeting of 15 May 2024, a 3% increase in the dividend at €3.50 per share for 2023, in line with the policy of a gradual increase and representing a payout ratio of 40%. The dividend will be paid entirely in cash as from 21 May 2024, with an ex-dividend date on 17 May 2024.

CASH FLOW AND NET DEBT AT 31 DECEMBER 2023 

Recurring cash flow reached the high level of €761 million (€933 million in 2022). It includes a €170 million cash inflow linked to working capital, which reflects the price effect and strict management of inventories. Excluding PI Advanced Materials, working capital thus represented 13.1% of the Group’s annual sales at 31 December 2023 (12.6% at 31 December 2022). Recurring capital expenditure amounted to €608 million (€584 million in 2022) and represented 6.4% of Group sales in 2023. Calculated based on recurring cash flow, the EBITDA to cash conversion rate was 50.7%, exceeding the target of 40%. 

Free cash flow totaled €625 million in the year (€784 million in 2022) and included residual exceptional capital expenditure of €26 million (€123 million in 2022) related to the bio-based polyamides project in Singapore and the hydrofluoric acid supply project with Nutrien in the United States. Thus, for full-year 2023, recurring and exceptional capital expenditure reached €634 million. Free cash flow also included a non-recurring outflow of €110 million in 2023, mainly corresponding to start-up costs for the Singapore platform and restructuring costs in order to adapt the cost structure to the economic context. 

Net cash flow from portfolio management operations primarily reflected the acquisition of a 54% majority stake in PI Advanced Materials and amounted to a net outflow of €708 million in 2023. 

Net debt including hybrid bonds stood at €2,930 million at end-2023, including the payment of a €3.40 dividend per share for 2022 for a total payout of €253 million, the €32 million cost of share buybacks carried out by the Group, and €16 million in interest paid on hybrid bonds. This net debt figure represents 1.95x lasttwelve-months EBITDA.

CONTINUOUS PROGRESS IN CSR PERFORMANCE 

The Group continued to implement its CSR actions in 2023 to support the sustainable and responsible growth of its activities and by offering its customers solutions that contribute to their sustainable performance. Arkema thus reduced its Scope 1 and 2 greenhouse gas emissions by 7% in 2023 compared with 2022 (-39% vs 2019) and by 9% for Scope 3 (-53% vs 2019). These results reflect the ongoing proactive initiatives taken by Arkema as part of the roll-out of its climate plan, accentuated by the temporary decrease in production volumes, in line with its 1.5°C trajectory by 2030 validated by the SBTi. In addition, on 26 February 2024, Arkema announced that it had signed long-term renewable energy supply contracts in the United States for the Calvert City, Beaumont, Chatham and West Chester sites, as well as for all Bostik sites, allowing it, with existing contracts for the Clear Lake and Bayport sites, to cover 40% of the electricity needs for the Group's operations in the United States by the end of 2024. 

Moreover, in order to encourage eco-design and develop the circular economy, the Group increased the proportion of its sales covered by a life-cycle assessment to 56% of Group sales in 2023 (41% in 2022), in line with its long-term target of 90%. 

The Group also maintained its high safety standards, with an accident rate per million hours worked stable at 0.9, among the leaders of the industry, and the process safety event rate per million hours worked also stable at 2.8.

Lastly, as a certified Top Employer 2024 in ten countries and a holder of the Top Employer Europe certification, Arkema continued to promote inclusion and diversity, as illustrated notably by the percentage of women in senior management and executive positions reaching 29% at end-2023. 

On the strength of the Group’s results and long-term commitments, its CDP climate change score was raised to A-. Its Sustainalytics score was also increased and the Group now ranks among the best in its sector. In addition, Arkema was once again included in S&P’s Global Sustainability Yearbook.