Arkema’s Q4 EBITDA and 2023 Guidance Broadly in Line With Our Expectations

No-moat Arkema AKE reported fourth-quarter EBITDA of EUR 291 million, broadly in line with company-compiled consensus and guidance, but down 30% over the high comparison base of 2021. Organic sales grew by 13.6%, reflecting price increases, but lower volumes, mainly hit by weaker demand in all segments, especially for coating solutions and high levels of destocking in Europe. For 2023, the group expects to benefit from its expansion projects in Asia and targets EBITDA of EUR 1.5 billion to EUR 1.6 billion, generally aligned with our estimate and company-compiled consensus. We don’t expect to make a material change to our EUR 105 fair value estimate. At current levels, shares are trading in 4-star territory.

Adhesive solutions’ EBITDA was up 9% over 2021, mainly due to 16% scope effects on sales from the acquisition of Ashland’s adhesives and Permoseal. Advanced materials’ EBITDA was down 12% over 2021, mainly hit by weaker demand for polymers in China. Coating solutions’ EBITDA was down 48%, back to 2019 levels. Volumes were down primarily due to destocking in Europe and lower demand for decorative paints.

Arkema confirmed its commitment to its 2024 strategic targets. We think the group has done a good job at implementation and we expect further margin improvements over the next few years.