Arkema Earnings: EBITDA Results Beat Consensus Across All Segments

No-moat Arkema AKE reported first-quarter EBITDA of EUR 367 million, down 41% compared with the exceptionally high comparison base of 2022 in upstream acrylics and PVDF, but around 9% above the company’s compiled consensus. Arkema confirmed its guidance for the year and aims to achieve EBITDA of around EUR 1.5 billion to EUR 1.6 billion and maintain a high EBITDA to cash conversion rate of over 40%. Shares rose 4% intraday. We don’t expect to make a material change to our EUR 105 fair value estimate. At current levels, the shares are trading in 4-star territory.

Prices were up 3% in the first quarter, but not enough to offset declining volumes of 18% in a context of weak demand in Europe, a slowdown in construction in the United States, and relatively stable volumes in Asia, excluding the destocking in batteries in China. The first-quarter consensus beat was across all segments, particularly in advanced materials. However, due to lower demand, there was a sharp decline in EBITDA within the advanced materials and coating solutions segments. On the other hand, EBITDA increased by 3% in the adhesive solutions segment, driven by scope effect, price increases, and cost-control measures that offset the volume decline.