2nd quarter 2025: Arkema, whose results are down moderately, focuses on advanced materials

 
Arkema’s booth on JEC World 2025

At €2,395 million, Group sales were down 5.6% year-on-year, impacted by a negative 3.3% currency effect reflecting the weakening of the US dollar and of certain Asian currencies against the euro. At constant exchange rates, sales decreased by 2.3%. In a demand environment broadly disappointing in Europe and the United States, and positively oriented in Asia, volumes declined slightly by 1.3%, down in most end-markets. They were supported by Arkema’s growth in several attractive sectors such as sports, batteries, efficient buildings and 3D printing, benefiting from the Group’s innovation focus. The negative 2.5% price effect reflected market conditions, the geographical mix and the evolution of certain raw materials. The 1.5% positive scope effect corresponded essentially to the integration of Dow’s laminating adhesives.

At €364 million, Group EBITDA was down on the previous year (€451 million in Q2’24) and the EBITDA margin remained solid at 15.2% (17.8% in Q2’24). This result benefited from the good resilience of High Performance Polymers and Adhesive Solutions, but reflected the significant decline in Coating Solutions and the decrease in Intermediates compared with the high comparison base of last year. Furthermore, this performance integrated the strengthening of cost control initiatives and included an unfavorable currency effect estimated at around €15 million on EBITDA for the quarter.

Recurring depreciation and amortization totaled €166 million, up €17 million on the second quarter of 2024, reflecting the start-up of new production units during 2024, partially offset by a favorable currency effect. Recurring operating income (REBIT) therefore amounted to €198 million (€302 million in Q2’24) and REBIT margin came in at 8.3% (11.9% in Q2’24).

Operating income came in at €117 million (€217 million in Q2’24). It included €47 million of exceptional expenses, mainly corresponding to restructuring costs in Hydrogen Peroxides linked notably to the reorganization of the Jarrie site in order to ensure its future by refocusing on activities in which Arkema is one of the world leaders, and resulting in the shutdown of certain production lines of the site.

Adjusted net income amounted to €118 million (€214 million in Q2’24), i.e. €1.56 per share.

Cash flow and net debt at 30 June 2025

Cash generation was solid with recurring cash flow of €111 million (€132 million in Q2’24). It included a small change in working capital, reflecting the Group’s strict management in response to market conditions. At end-June 2025, working capital represented 17.0% of the annualized sales (15.7% at end-June 2024).

Recurring cash flow also included lower capital expenditure at €151 million (€170 million in Q2’24), in line with the annual guidance. Free cash flow amounted to €91 million (€117 million in Q2’24), including a non-recurring cash outflow of €20 million, linked notably to restructuring costs and reorganization costs at the Jarrie site in France.

Net debt and hybrid bonds came in at €3,580 million at end-June 2025 (€3,425 million at end-March 2025), integrating the €3.60 per share dividend payment in May 2025 for a total amount of €272 million. The net debt and hybrid bonds to last-twelve-months EBITDA ratio stood at 2.5x.

Second-quarter 2025 performance by segment

At €716 million (€706 million in Q2’24), sales in the Adhesive Solutions segment (30% of total group sales) were up 4.8% year-on-year excluding the currency effect, supported by an 8.0% positive scope effect corresponding to the acquisition of Dow’s flexible packaging laminating adhesives business.

Sales in the Advanced Materials segment (38% of total group sales) amounted to €917 million (€918 million in Q2’24), supported by an organic growth of 3.3%.

Sales in the Coating Solutions segment (24% of total group sales) decreased significantly by 12.8% year-on-year to €565 million.

At €188 million (€254 million in Q2’24), sales in the Intermediates (8% of total group sales) segment were down sharply 26.0% compared to last year.

Outlook

The start of the second half of the year follows the trend of recent months, within a macroeconomic environment marked by continuing weakness in demand, geopolitical uncertainties and unfavorable evolution of exchange rates relative to the euro. In this context, Arkema is focusing as a priority on the elements that are within its control, and is significantly strengthening its cost-cutting initiatives, aiming to achieve €100 million of fixed and variable cost savings over the year, i.e., double the original target. Cash will continue to receive a particular attention, notably through strict management of working capital and capital expenditures.

The Group will also rely on the ramp-up of its major projects in high value-added innovative applications and in fast growing regions. Their additional EBITDA contribution is now expected to reach around €50 million in 2025 compared to 2024, with the Group also reaffirming its target of over €400 million in 2028.

Furthermore, Arkema anticipates a limited direct impact from the increase in tariffs thanks to its industrial footprint close to customers in the three major regions of the world but will nevertheless remain vigilant about their indirect impact on the macroeconomic environment and the wait-and-see attitude of customers.

based on these elements, the Group now expects to achieve EBITDA of between €1.3 billion and €1.4 billion in 2025, including an unfavorable impact linked to the evolution of exchange rates of around €50 million compared to last year. Recurring cash flow should adjust accordingly to between €300 million and €400 million.

Finally, beyond the short-term priorities, Arkema will also continue to implement its strategic roadmap, notably its innovation focus and the development of high-performance solutions for a less carbon-intensive and more sustainable world, in close partnership with its customers. Relying also on its balanced geographical footprint, the Group will thus reinforce its positioning and its resilience, while benefiting from numerous growth opportunities.

Chairman and CEO Thierry Le Hénaff said: “The macroeconomic environment remained difficult in the second quarter, marked notably by the wait-andsee attitude of customers in response to tariffs and by the unfavorable evolution of exchange rates. Arkema’s teams continue to adapt with agility and commitment, as they have done in the past in similar contexts, and to work simultaneously across both short- and long-term time horizons. In the short term, cost and cash management actions are being significantly strengthened. Furthermore, operating with a long-term perspective, the Group is pursuing its strategy of development centered on innovative materials with the execution of its major projects and its innovation dynamic focused on its large growth platforms such as batteries, sustainable consumer goods or efficient buildings.”

With its Composites and Advanced Materials segment, Arkema is working to meet the growing interest of manufacturers in biomaterials, lightweight materials and product recycling by developing appropriate resins and polymers that improve the performance of their composites.