Arkema, at today’s Capital Markets Day held in Gouvieux, France, announced ambitious financial objectives and several major investment projects, mostly in Asia.
Presenting its long-term strategy, Arkema affirmed a determination to speed up development in specialty chemicals, which should account for more than 80% of sales by 2023, up from 72% in 2016. The company also says it is confident of achieving its €1.3-billion ($1.48 billion) EBITDA target in 2017 and that its newly announced goals are for 2023. These are supported by the investment projects, an innovation drive to address major societal challenges, and a bolt-on acquisition strategy in adhesives.
The new plan continues the group’s transformation strategy of the last 10 years, during which time it has repositioned its business portfolio toward specialties and rebalanced its geographic footprint. Arkema aims in particular to participate in the consolidation of the still-fragmented adhesives market, which the company considers attractive, and says it will invest significantly in its advanced materials businesses of technical polymers and performance additives, which offer broad development and innovation opportunities in material lightweighting, biobased polymers, and design of consumer goods.
As part of this strategy, Arkema today announced a major investment in the biobased nylon-11 chain in Asia, a 30% hike in production capacity at the Sartomer subsidiary in Nansha, China, and a doubling of capacity for thiochemicals in Malaysia. “Confident in the execution of its strategy, and building on these projects and the current momentum in its results, which favorably position the group for the future, Arkema announces ambitious financial objectives for 2023 with a REBIT [recurring EBIT] margin of 11.5% to 12.5%, significantly up from 2016, and an EBITDA-to-free-cash conversion rate maintained at 35%. These objectives will be achieved over time while keeping a net-debt-over-EBITDA ratio below two, a return on capital employed of at least 10%, and a solid investment grade rating by financial rating agencies,” the company says.
Addressing analysts and journalists at today’s briefing, Thierry Le Hénaff, chairman and CEO said, “2023 represents a new strategic horizon for the group. Arkema is stepping up the development of its specialty activities, in particular around the three growth pillars of adhesives, advanced materials, and thiochemicals. Innovation addressing the major societal challenges, bolt-on acquisitions, and the strengthening of our positions in higher-growth countries will underpin this ambition. Finally, digital transformation will stand at the core of this new chapter for Arkema.”
The major project announced in Malaysia will double capacity for methyl mercaptan at Kerteh, to support the growth of the animal feed, petrochemical, and refining markets in Asia and strengthen Arkema’s world-leading position in value–added sulfur derivatives. Le Hénaff said the project is expected to involve a capital expenditure of €100–150 million ($114–171 million). The existing methyl mercaptan plant forms part of a thiochemicals unit that started up at Kerteh in early 2015.
Methyl mercaptan is a sulfur-based intermediate for the manufacture of methionine and other sulfur derivatives. Annual growth of these markets is expected to exceed 5% in the coming years. The Kerteh project should be onstream in 2020 and will represent one of the main pillars of the group’s growth, Arkema says. The company is also considering plans to double thiochemicals capacity at Beaumont, Texas.
The biosourced nylon-11 chain project involves an investment of about €300 million in an unspecified Asian country, to serve the growth in automotive, 3D-printing, and consumer goods markets such as sports and electronics. Over the next five years, Arkema plans to build a world-scale plant to produce amino 11 monomer and Rilsan-brand nylon-11 biosourced nylon from castor oil. The plant, which will be onstream in late 2021, will increase Arkema’s Rilsan nylon-11 capacity by 50%. The project includes a 50% increase in worldwide capacity for Pebax, in particular Pebax RNew, of which amino 11 is a key component. Pebax RNew is a biosourced nylon elastomer catering in particular for the sports and electronics markets. The new plant will be Arkema’s second for amino 11, complementing an existing site at Marseille, France.
Rilsan nylon-11 is the only high-performance, 100% biosourced nylon to qualify for the most exacting applications in the electronics, 3D-printing, and automotive markets, where it serves as a metal substitute, Arkema says. Asian demand in these markets is forecast to grow at about 7% annually in the next few years. Arkema’s specialty nylons business has 40% of its sales in Asia. The company forecasts that advanced materials will eventually account for more than 25% of group sales.
Le Hénaff tells CW that the company is also at an advanced stage of developing its super engineering plastic polyether ketone ketone (PEKK). Arkema is producing PEKK in France and will, by 2018, make the product at Mobile, Alabama. The Mobile plant will be twice the size of the unit in France, Le Hénaff tells CW.
Source: Chemical Week
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