Ladies and gentlemen, welcome to Arkema's results conference call. I will now hand over to Thierry Le Hénaff, CEO, and Marie-José Donsion, CFO.
Good morning, everyone. First of all, I would like to thank you for taking the time to join us today in these busy times. I am very happy to be here today to present our full year results, as well as our priorities for 2021, together with our CFO, Marie-José Donsion, and the IR team. It's been one year now since the pandemic started and deeply changed the way we live and work. However, I'm optimistic that we will be able to meet again in person in the not-so-distant future. As usual, today we'll be happy to answer all your questions at the end of the presentation. 2020 has been a challenging year. It was like no other we have seen before. The board and I are extremely grateful for the hard work and commitment of all Arkema's employees.
They adapted quickly and enabled us to continue supplying the best possible product and services to our customers safely and efficiently. Since the beginning of the pandemic, our objective has been, at the same time, to manage operations, to react to the crisis, and limit its financial impact, and to reposition the group to benefit fully from the post-COVID rebound and emerge stronger than before. Unsurprisingly, COVID impacted many of our end markets and key geographies. Despite this difficult context, we achieved a solid set of results, delivering an EBITDA margin of 15% and limiting the volume decline to 4%. Among the highlights of the year was our high cash generation, with free cash flow of EUR 651 million, and the resilience of our Specialty Materials platform, which, as you know, will represent the backbone of the company going forward.
We finished 2020 on a strong dynamic driven by the recovery in volumes in several end markets and deliver a Q4 EBITDA broadly stable compared to last year, representing a very clear sequential improvement. Thus, despite the global pandemic and ensuing lockdowns, 2020 was another important year, and the efforts of Arkema's teams were focused both on the short term and on the execution of the medium-term strategy. We made significant progress in our transformation journey to become a pure specialty materials player. We also reinforced our commitment to sustainability and received external recognition for progress in this area. One of the elements of this movement towards sustainability is the innovation pipeline, mainly focused on the opportunities created by well-identified structural trends such as light weighting, energy efficiency, and urbanization.
Our large industrial project, which beyond generating significant financial returns and strengthening our position in high-growth countries, will enable us to have the capacities in place to monetize the benefits of this innovation. The resilience of our Specialty Materials platform was confirmed, validating the soundness of our strategy. As mentioned just before, they limited their EBITDA decrease to 12%, delivering solid results given the context, while our intermediate business declined by around 40%. The performance of Specialty Materials in 2020 is perfectly in line with the historical pattern of robust resilience, as evidenced by the chart outlining our EBITDA margin evolution since 2012. Our confident guidance for 2021 is another strong signal of the quality of Specialty Materials. Staying with Specialty Materials, this platform represented 79% of group sales in 2019, and in 2020, it increased to 82% of revenue.
This proportion reaches 89% when taking into account the portfolio transformation steps we announced in 2020, namely the proposed disposal of PMMA, which is a big step forward in our transformation, the earlier sale of functional polyolefins, both at an attractive multiple and our bolt-on acquisition, mostly in adhesives. Beyond portfolio management, Arkema reinforced its commitment to sustainability with several significant achievements in 2020. First of all, we defined new ambitious climate and environmental targets, having already reached most of the previous ones. This includes reducing our greenhouse gas emission by 38% in 2030 compared to 2015, after a decrease of 23% in 2020. We also lowered our emission into air and water by 10%. We continued sustainability projects around the world with the Pragati initiative, for example, to help Indian farmers produce castor oil in a more sustainable way.
This same castor oil is used as a raw material for the production of our bio-based high-performance polyamide 11, for which we successfully issued our first ever green bond of EUR 300 million to finance our new plant in Singapore. The last example I wanted to highlight is the ZEBRA project, the collaborative innovation scheme to develop the first 100% recyclable wind turbine blade. A major innovation, given the real challenge that blade recyclability represents for the wind power industry. Furthermore, we have decided to strongly reinforce our commitment to diversity by increasing our ambition to reach 30% of women in senior management by 2030 and 50% of non-French individuals. We received strong recognition in 2020 for our initiative in this corporate social responsibility space, bearing testament to the focus that we are placing on this critical area. I won't list everything we have achieved.
I'll just mention one that we are particularly proud of. Joining the Dow Jones Sustainability World Index, the DJSI, in sixth place in the chemicals category among 140 companies assessed. This validates our position as a best-in-class company in the chemical sector and reward our years of efforts to improve our CSR profile. Benefiting from our intense efforts on innovation and commercial excellence of the past five years, I believe the company is at the start of a long period of robust organic growth, which will be supported by selective and high return investment. All the industrial plants launched or announced in 2020 relate to growth opportunity driven by mega trends in line with our sustainability commitment. As an example, the recent extension of our PVDF capacity in China is dedicated to the high-growth battery market for electric mobility.
Beyond batteries, the superior potential of PVDF led us to announce two days ago a further increase by 35% of its capacity in China. We are, as you know, very excited about two high return exceptional CapEx, which broke ground in 2020. Those include the biosourced polyamide 11 capacity in Asia and the hydrofluoric acid production unit in the U.S. Since the spinoff, the mobilization and solidarity of our teams has always been a strong element for Arkema's successful transformation. It was particularly true this year, given the context. We quickly assembled dedicated crisis management cells centrally and in each region to ensure that Arkema was strictly implementing the required safety measures across all sites, ensuring protection of our employees while making sure that supply chain and deliveries to customer were not materially disrupted. As we have said many times, the safety of our employees is our first priority.
In 2020, we sharpened our focus on safety through the pandemic, and I'm pleased to say that the results speak for themselves. We reached the lowest injury rate ever with the number of accidents per million hours worked at one. During this period, we also supported the local communities in which we operate, giving time and resources to support local initiative focused on combating COVID, such hand sanitizers gifts to hospitals and donation from the Executive Committee and managers. Finally, the financial performance of the year was very solid and benefited from our ability to quickly and significantly adapt our level of operating expenses, CapEx, and working capital to the context.
Before I hand over to Marie-José, I'm pleased to say that in line with our policy to increase shareholder return progressively and in line with the guidelines presented during the Capital Markets Day back in April, the board of directors has decided to propose a dividend at EUR 2.5 for this year to the next annual general meeting. This is an increase of 14% versus 2019 and back at the 2018 level. Also, we have decided to allocate EUR 300 million to a share buyback program to be started following the closing of the PMMA disposal scheduled mid-year. We'll give further details regarding the implementation of this buyback program before we launch it. These provisions include the restitution of the EUR 0.50 per share portion of the dividend retained last year in the context of the pandemic.
This dynamic cash allocation is reflective of the strength and resilience that Arkema demonstrated in 2020 and is in line with capital market guidelines. Now I will pass over to Marie-José to present the financial performance of the year to you in more detail.
Thank you, Thierry, and good morning, everyone. Let's take now a look to the full year results for 2020. Annual sales, as you can see, amounted to EUR 7.9 billion, which represented an organic variance of -8% compared to 2019. We saw a strong rebound in the last quarter of the year, enjoying a positive organic sales growth at 2%. EBITDA reached nearly EUR 1.2 billion, with an improved momentum in the second half and in particular in the Q4. Actually, last quarter, EBITDA of EUR 289 million was broadly stable versus last year's level and grew when looking at the scope of our Specialty Materials platform. This led to an adjusted net income close to EUR 400 million, representing EUR 5.1 of earnings per share. Regarding the cash generation, Arkema delivered EUR 651 annual cash flow, representing a strong 67% ratio of EBITDA conversion into recurring cash.
It allowed us to decrease the net debt, including hybrid bonds below EUR 2 billion. Looking at the sales bridge, the evolution of 2020 volumes was uneven across the year, with a very strong decline in the second quarter as a result of lockdowns in key markets. We then saw a sequential improvement in Q3, especially in construction and decorative paints, and a much better Q4, leading to an overall decline of 4.3% in the year. The price effect of -4.7% is mostly linked to a lower propylene price and to unfavorable market conditions in intermediates. The weaker USD versus EUR generated a negative 1.7% currency impact concentrated in the second half of the year.
The scope effect was positive at 0.9%, taking into account the contribution of ArrMaz in the first half of the year and that of bolt-on acquisitions in adhesive Solutions, offsetting the impact of the disposal of the functional polyolefins business in June 2020. Focusing on the sales bridge of the last quarter, organic sales were up 2.1%, with volumes growing 5.2% on the back of a good momentum in construction decorative paints, battery markets, as well as the improvement of industrial markets, notably in transportation. The price effect of -3.1% remained impacted by the lower propylene prices in Coating Solutions and the difficult market conditions in fluorogases, while Adhesive Solutions and Advanced Materials were resilient.
The scope effect of -1.3% relating to the disposal of functional polyolefins will partly continue over the first half of 2021. The negative forex impact coming from the depreciation of the US dollar and emerging currencies versus the euro came to a 4.1% in Q4. We expect this forex impact to continue to be negative in H1 of this year. Now, following slide. Looking at each segment, we can see that 2020 ended up being a robust year for adhesives. After a very challenging Q2 when construction activity was heavily impacted by lockdowns, EBITDA eventually reached the same level as 2019 at EUR 261 million and 13.1% EBITDA margin, therefore proving its resilience in a challenging environment. In Q4, sales were up 2.4% to EUR 512 million with the momentum in construction remaining positive, be it in flooring applications, sealants, and DIY.
Industrial adhesives continued to improve as well. As a result, Q4 EBITDA was up 15% to EUR 69 million, boosted by the contribution of acquisitions, good cost control, and a better mix. Q4 EBITDA margin reached 13.5% and was up 150 basis points compared to Q4 2019. Looking now at Advanced Materials. 2020 was challenging in terms of volumes due to the decline in a number of end markets, namely transportation, oil and gas, and consumer goods. Prices were resilient and margins remained at a high level at 19.6%, which reflects the good positioning of our product portfolio in the value creation for our customers. In Q4, organic sales showed an increase of 0.8% year-over-year, which reflects a very strong sequential improvement compared to the previous quarter. As a reminder, Q3 organic sales had declined nearly 12% year-over-year.
This is a result of strong growth in batteries and much improved momentum in industrial markets and notably transportation. Looking now at Coating Solutions. Prices were down strongly in 2020, driven by low propylene prices, which directly impacted the non-integrated acrylic-based activities that we have in Europe and U.S. EBITDA margin was, however, resilient at 13.7%. Q4 showed a significant volume growth of 14.5% year-on-year, driven by decorative paints, industrial coatings, 3D printing, and graphic arts. The price effect on sales was a negative 8.4%, consistent with lower propylene prices again. Yet higher volumes led to a 19% rise in Q4 EBITDA, with the margin rising nearly 200 basis points to 14.1%. Finally, for intermediates, 2020 was very challenging overall, given the difficult market conditions linked to COVID, especially in fluorogases and acrylics Asia. EBITDA dropped 40% and EBITDA margin was down to 16.2%.
Q4 sales variance mainly reflected the scope impact from disposal of functional polyolefins represented -13% compared to Q4 2019. Volumes rose more than 6% thanks to the strong momentum in Asian acrylic monomers and good demand in PMMA, while fluorogases remained weak. Q4 EBITDA was down materially to EUR 42 million on the back of the deconsolidation of the polyolefins business and lower unit margins, notably in fluorogases. Moving now to the cash. Our cash flow generation was once again outstanding in 2020. Our free cash flow amounted to EUR 651 million, and our EBITDA to cash conversion rate reached 67%. This performance was achieved thanks to a sharp decrease of our working capital. That came from a combination of mainly two factors. I would say on one hand, a proactive and effective management of our inventories and customer credit management.
On the other hand, as a result of a mechanical effect attached to decreasing sales and decreasing raw material prices. At the end 2020, working capital represented 11.8% of sales. Considering the current trend that we see in sales growth and in raw material price increase, it is reasonable to expect an increase in working capital in 2021. The tight monitoring of our capital expenditure contributed to the cash generation as well. For 2021, we expect recurring CapEx of around EUR 500 million, plus exceptional CapEx of around EUR 250 million, since we will be at the peak of spending in both our polyamide 11 greenfield plant in Singapore and our HF plant in the U.S.
The excellent cash generation and the resilient margins have allowed Arkema to maintain its financial strength intact, to weather this crisis in a strong position, and to retain a very healthy balance sheet. It gives us flexibility to carry out the organic growth investments and the bolt-on acquisition strategy, while maintaining our solid investment grade rating. From a financing standpoint, we have successfully refinanced our senior debt at attractive rates, lengthening our average maturity to 5.6 years now. At the end of 2020, our net debt, including hybrid bonds, amounted to EUR 1.9 billion, representing 1.6 x EBITDA. It was down from EUR 2.3 billion at the end of prior year. This decrease came from the free cash flow generated, which was only partially allocated to exceptional CapEx for EUR 140 million and to cash return to shareholders in the form of the EUR 168 million dividend payment.
As you can see for M&A, the net impact was basically zero, since the divestment of functional polyolefins offset our bolt-on acquisitions in adhesives in the year. I will now pass over to Thierry to present our 2021 priorities and outlook.
Thank you, Marie-José, for your explanations. Turning to the year ahead, while we aim to deliver good earning growth, a key priority will also be to continue to execute our sustainable strategy on the road to 2024. This strategy is based on the combination of organic growth supported by sustainable innovation, strengthening our footprint in high-growth regions and acquisition to reinforce our leadership in Specialty Materials. As you all know, since 2006, Arkema has undertaken a profound transformation, vastly improving our portfolio and building on our areas of strength. We have grown and advanced our areas of focus and expertise around materials. The depth and range of materials capability, in particular in terms of bonding materials, protecting their surface, reinforcing or substituting traditional materials for lighter or bio-based one, makes us a leading Specialty Materials player.
The combination of these skills is unique in the industry and brings synergies in innovation, operation as well in the commercial field. The combination also provides us with a differentiated ability to serve our customers across attractive end markets. We are now strategically organized around our core strengths into three highly coherent and synergistic growth platforms centered on Specialty Materials: Adhesive Solutions, Advanced Materials, Coating Solutions. Based on this and on the fruit of our innovation, we are aiming for mid to high single-digit organic sales growth in 2021 for our Specialty Materials. In a world of powerful global trends, such as driving, increasing urbanization, resource scarcity, climate change, new technologies, Arkema offers its customers a unique range of cutting-edge technological solutions. To capture further growth, the group concentrates its research efforts on innovation platforms linked to the United Nations Sustainable Development Goals.
We have decided to set an ambitious target with 65% of our sales contributing significantly to these goals compared to 50% today. To reinforce our focus on the circular economy, we also decided to launch a new platform dedicated to natural resources management. We expect the products developed thanks to these five innovation platform to generate around EUR 400 million of new sales by 2024 and up to around EUR 1 billion by 2030. Finally, and I believe it's very important, at board level, an innovation and sustainable growth committee is also created to support this major pillar of our strategy. Looking now at the priorities of the different segments for this year, beginning with Adhesive Solutions.
The second half of 2020 was characterized by the positive momentum that is maintained in the early part of 2021. In the past few years, our volume growth was held back by, as you know, our strategy to discontinue low-margin product line. This program now is over, and Bostik organic growth will come from the reinforcement of the high-performance platform. First, in construction sealant, you know we enjoy a solid growth in high value added solution with capacity expansion in the Netherlands, France, U.S. for high added value products, the launch of high performance PU sealants worldwide, and the launch of a new offering in do-it-yourself with a Pure Fix range. In flooring, we keep expanding our offer globally. There is a new site we start in the U.S. to benefit from the post-COVID U.S. market. We continue to reposition our offer with the launch of the new Bostik Academy.
We have a digital service to train our customer. We made the acquisition of LIP, as you know, which is really ramping up well. Industrial adhesive will benefit from the launch of a full sustainable solution range in packaging and hygiene. We also enjoy strong growth in engineering adhesive. You have seen the expansion of our Born2Bond range. We have a unique offering in film, in web, in powder, coming from recent acquisition, Prochimir and Fixatti. We also ramp up the new industrial adhesive plant in Nara, Japan, which started last September. Many news coming on stream. Still on Bostik, after a year of strong resilience in 2020, we are really more confident than ever in the potential of our adhesive platform over the long term, really.
We aim to increase this year our EBITDA margin to 14%, starting from 13% in 2020, which was very stable despite the COVID. This 14% is a new step forward in the direction of the 16% margin target by 2024. We'll do this, as you know, by three drivers: high margin solution, operational excellence, and bolt-on acquisition. Also, our objective is to recover this year the higher cost of raw material through price increases, which is a traditional work. Regarding organic growth, we cover this topic in the previous slide. I just would like to mention one point on operational excellence. We will continue to roll out our integrated worldwide IT system for Bostik. It's working well. We'll continue also to deliver strong cost synergy that we implement with the rest of the group.
We work very significantly in reformulation in order to continue to improve our competitiveness. Regarding M&A, you know it's one of the key priority of Arkema. Three to four small bolt-on every year, it should be the case again this year. From time to time, a bigger acquisition. The market is still very fragmented. Our market share, despite the fact that we are number three, is still low compared to the whole size of the market. Many possibilities that we'll continue to implement in the near future and in the longer term. I would like to mention that the impact of efforts are high. You can see them really in the evolution of the margin percentage over the years and starting from the acquisition. Some could argue that it's really alpha point by alpha point.
We know that, at the end of the day, in a crisis like the COVID, the EBITDA of Bostik was really completely stable, which was remarkable, really. We move to Advanced Material. After a year that has been up, until Q4, significantly impacted by the lack of volume and in our larger industrial market, as you know. We see now a better momentum and clearly with a recovery of volume in our end market and with really a lot of opportunities going further with strong push of society and most political leader for sustainability with these stimulus packages. We are confident. Also, as you know, the Advanced Material segment is an innovation powerhouse, and we are really particularly well-positioned with our technology and application now in the areas of clean mobility, sports, electronics, bio-based, and 3D printing market.
In 2021, to be more specific, our growth will be supported by several recently started industrial investment in Asia. You could see a few days ago a new investment announced in PVDF following a start of a plant early January. This is to follow the strong growth in battery, not only, but in majority on battery. We have also the benefit of our expansion in Malaysia one year ago and our recent expansion in polyamide web in China. Batteries, I will not comment in detail this slide, but you know it's clearly an area where Arkema has unique expertise, product offering. We see enormous potential in this field. We are very well positioned for the use in electrical vehicles, but also e-bus, e-bike, consumer electronic, energy storage. We are the leader in the Kynar PVDF for battery, for separator and binder.
We are recognized as a supplier of choice among key players in the field everywhere in the world. We are very optimistic there. We have recently opened a new battery lab in Lyon, in France, after the one in Philadelphia. We are also present in electrolyte salts. You could maybe read, a few weeks ago, the release of a project recognized as an important project of common European interest by the European Commission. We are really on the right track with regard to batteries. Singapore quickly. I don't need to tell you how strongly we believe in the strategic importance of 100% bio-based polyamide 11 investment in Asia. It's a fantastic really polymer, exceptional properties, flexibility, durability, lightness. We are speaking about an outstanding advanced biocircular polymer. This is the most important organic project Arkema's ever done. You could argue that it's a big investment.
It will weigh on our CapEx. On the other hand, it's really strategic. It's long-term oriented, very attractive return. We spend EUR 450 million of investment, but after five years, we'll get an expected annual EBITDA of EUR 100 million. The end market are many, but specifically electrical vehicles, 3D printing, sport, lifestyle, consumer electronics, medical devices, wearable devices. The main plant, as you know, will be in Singapore, financed by our first ever green bond of EUR 300 million. With regard to Coating Solutions, quickly. Really, you can see, I'm sure you can feel the progress in Coating Solutions platform. We had many questions on this platform over the past year, but you could see that a lot of work was done with the beginning of the implementation of the integration of the three components of the platform. Monomers, resin, additive, with a strong emphasis on customer intimacy.
You could see the growth in the last quarter, in Q4, taking advantage of the rebound and specific innovation focus on 3D, on adhesive and other market. We will benefit from the second phase of the ramp-up of the new Clear Lake reactor. We could not benefit of it up until Q3. Now it's time really to fully benefit of it. We have the Indian powder plant we started in 2019 or so. We have beyond 3D and adhesive, also the rapid emergence of 5G, of electronics, and will benefit from it. Many things going on for our Coating Solutions. With regard to intermediates. Clearly, since the Capital Markets Day, a lot has been accomplished. You know we have moved very quickly on the functional polyolefins and the PMMA. The process on PMMA for the closing, which should take place in mid-year, is going as expected.
The next step now for us is fluorogas. Our attention is to define the path to deconsolidate their emissive part, which represent around 75% of the business. We'll do it either, as you know, partnership or disposal. The regulatory and competitive landscape is different from region to region, so it could be a differentiated strategy by region. We are open on that. What is more important short-term is really to refine the scope between what we deconsolidate, what fluoro specialties we keep to start to prepare the carve-out, investigate potential interested parties. Now we really start this process.
A good news that you could see recently, this is why the timing works out rather well, is a recent clarification in the regulatory HFC landscape in the U.S., imposing tariffs on important R-32, as well as the new administration willingness to implement the Kigali Amendment with quota phase-down. Fluorogas will be certainly a year of progress in 2021. Last and not least, some word about 2021 and beyond. Of course, for you, for ourselves, for competitors, for everybody, the global environment remains uncertain. It remains volatile. There is still newsflow with regard to the pandemic. Our feeling, because it's more a matter of feeling, nobody has a crystal ball. Our feeling as a management is that the development of the vaccine and the benefit of the stimulus plan will create a positive trend this year.
As I mentioned, for us what was very important was really that Arkema emerged stronger from last year crisis, and that we'll be positioned really well to benefit from the current rebound. It will make clearly a big difference between different specialty chemical company. You could see that in the Q4, which was already better, and we have a good feeling for the Q1, and this is why. We don't do it often, as you know, as a management, we don't really guide quarter- by- quarter, but we wanted to pass a positive message on the Q1, despite still the uncertainty, is that we estimate that our EBITDA in the first quarter could grow by around 10% relative to first quarter 2020, despite a negative currency impact that we estimate at EUR 15 million.
Arkema estimate at this stage that in 2021, the EBITDA Specialty Materials, we wanted, since the future of the company is clearly Specialty Materials, to guide separately, for our Specialty Materials and intermediate. We would have not done it, you would have asked us, so we prefer to say to you right away. We believe that EBITDA of Specialty Materials could grow at constant currency significantly by around 10% at constant currency, which would mean if you do the math, more or less returning to the pre-COVID level of 2019 at constant currency. The dynamic of these growth will be supported by Bostik, Advanced Materials, Coating Solutions. It's not only one. It's really the three. You can see the benefit of our strategy. I will not come back to the specifics of the three because it was well developed in my speech.
I will move to the intermediate segment, where we expect to be so far at a level comparable to 2020 at constant perimeter and currency. We mention constant perimeter because we have the finalization of the disposal of PMMA, which is still expected mid-2021. What we recommend in your forecast, if we may, is that you take, at this stage, six months of PMMA contribution. In parallel, because short-term is important, but long-term is also very important for a company like us, I think it's part of our DNA. The execution of the different elements of our midterm strategy will continue to become a pure Specialty Materials player. We are really on the right track. The pieces of the puzzle are really gathering together.
We are very excited, and this includes the construction of our two major plant in Singapore and the U.S., the rollout of our M&A strategy, and also the strong focus on innovation and corporate social responsibility. I thank you for your attention. We were a little bit longer than usual for the quarter, but this is annual results with a lot of qualitative elements. I think it was worth the time spent. Marie-José and myself will be happy now to answer your questions. Thank you.
Ladies and gentlemen, if you wish to ask a question, you can press zero one on your telephone keypad. We have a first question coming from Matthew Yates from the Bank of America. Sir, please go ahead.
Hi. Good morning, everyone. Thanks for the presentation. A couple questions, please. The first one around the adhesives margin guide of 14%. Just wondering to what extent you factored in raw material inflation here, particularly with all the disruption in Texas. I recall a couple of years ago, you got hit pretty hard in this business. Is there anything now about the portfolio or the way you're managing the operations to better deal with any raw material volatility? The second question, maybe for Thierry. Just curious about your approach to innovation and that creation of a new kind of board role to have oversight on that. How are you thinking about the absolute spending level of the company? This is a slightly outdated number, but I think it was about 3% of sales in the past.
How do you anticipate that translating into the organic growth going forward in the context of that billion-euro incremental number you talked about? Thanks.
Okay, Matthew. First of all, on adhesives, I would like to mention again that we were stable in the year of one of the worst crises that we have experienced in the past 20 years, and the EBITDA was stable. I would like to mention that, really to underline the progress that we make step by step by the adhesives and all the benefit of having bought Bostik and make further acquisitions since the start. It's really, I think, we are on the right track. You could argue that to go from 13% to 13% margin between 2019 and 2020 is not sufficient. On the fact, if you say that it was in the challenging time of the COVID, this was quite a performance, and I wanted to mention it again. Now we say we want to go from 13% to 14%.
Certainly, there is a part of catch up of what we didn't get in the COVID. We should not forget. After that, there is a raw material inflation for everybody. On your point on, I know that there has been question on the, I think it was the period 2018 you are mentioned on the raw material inflation. I would be really ready to share some figures with you, how we behave at that time versus competitor. It's true that during one quarter, we lost a point of margin because you have raised some timeline, but shortly after, we came back on the track. It was not so bad. Okay, I accept the point and the challenge. Now, yes, clearly the 14%, to answer shortly to your question, include the environment. We should not forget that you have no perfect environment.
This means that when the demand is shrinking, you benefit from lower raw material. When you are restocking and demand is improving, you have good volume, but higher raw material. At the end, it's a package. We strongly believe that with all this package, higher raw material, but better volumes, some restocking, benefit from our innovation, operational excellence at the end, the 14% is quite a good target for Bostik. The team and myself, we are confident to deliver it. Clearly, Texas, but short-term and not for the full year, create some more pressure. This is why not only in the adhesive and not only for Arkema, for all of us, will push us to increase prices stronger and quicker than maybe it was expected a couple of weeks ago.
It's part of the game, but again this raw material problem before beyond Texas is really coming from the fact that the world is changing for the good, which you have better volume, you are restocking. I think, let's take the package with the pros and cons, and at the end, I'm confident that if we were able to deliver 13% stable margin 2020, we should be able to deliver 14%. The team has really a lot of initiative, as you can imagine, for that. Approach to innovation. Yes, as you know, 3% is an average. It's between 1.5% to 5%, 6%, 7% for certain specific segment, especially battery, it's even above 10%, as you can imagine.
I would say that if you look at the organic growth, half of it is more supported by GDP, increasing our presence in higher growth geographies, customer intimacy, and the other half is coming from innovation, which is EUR 1 billion that you mentioned. I would say it's half and half. Half of our organic growth will come from our innovation. The good thing is that year- by- year, the pipeline is better and better. Even if we don't disclose to you all the figures in detail, we have really a number of prospects in batteries, in lightweight, in sport, in electronics with 5G, for example, 3D, which is really very interesting, very concrete, and will contribute to this innovation. I want also to mention that the innovation is mostly driven by sustainability.
This is not just an innovation to add growth to Arkema to increase the sales. Most of it, the large majority, is really by answering the key concern of the society of today, and we are very glad to have the right technology for that.
Thank you, Thierry. Take care.
Thank you.
A new question coming from Laurent Favre from Exane BNP Paribas. Sir, please go ahead.
Yes. Good morning, all. Thank you. Two questions, please. The first one, Thierry, if you could provide us a bit of, I guess, context around the efforts you've made on temporary savings. I think initially you talked about EUR 100 million gross savings for the year. Where did you end up in the end? How much of a reversal are you expecting for 2020? Against that, can you talk about the progress on phase two of operational excellence initiatives? Also what you're doing in coatings? I'm trying to understand if the net picture for costs is a big headwind or not. That's the first question. The second one is around the late cycle market, which I think was still quite low in the second half of last year, in particular oil and gas. What are you seeing there?
Do you think that the recovery in prices is enough to see a recovery in activities back to 2019 levels, or are we still very far from that? Thank you.
Okay, Laurent. Thank you for your question. With regard the savings, we finish, we were more than 100. I think we mentioned it, maybe 120 to tell you something, in 2020. Most of it or the larger majority, we are honest and transparent as usual with you, is coming from the fact that there was less volume, traveling were far less, and that we just adapt. The focus of the company is really to accelerate organic growth. These savings, by definition, they are temporary. I would not consider them to be a win because, again, if the growth was not there, which is fortunately not the case for Arkema, which is quite well-positioned. You could see that in Q4, you will see that in Q1. We would be able to maintain these savings. It is not a problem.
The problem is that we want to reinvest in the growth. The growth will come. Fortunately, we'll be able to travel again. As you know, we are quite clean also. We don't think that the 2021 story, it's a story of biggest cutting. We'll continue as usual. It's our reputation to cut costs, and we don't market too much what we are doing. I think beyond that, I think product value, mix, pricing, organic growth is absolutely critical for this year, and I think we are well positioned on that. I think same with CapEx. When we need to gain, to cut, we do it. I think we are very reactive, but at the end of the day, you don't build a company long-term just by cutting. If you are well positioned, you could benefit of your organic growth.
We'll continue to be strict on the cost, and this is our DNA. On top of that, our organic growth is better and better. Hopefully, I answer your question, and you tell me if I don't answer. With regard to oil and gas, I would not mention particularly oil and gas because as you know, we are not a very big player on that. Most of our energy now is in other fields than oil and gas. I would say the market will improve, not today. I would not say today it's really improving in terms of demand. It's a bit better, but not very significantly. Other markets which recover far more like automotive, for example, which is an obvious example, and plenty of other electronics is far better.
Oil and gas is not a very big market for Arkema, and I would say you don't have so far a strong recovery, but normally, the second part of the year should be better just because the pricings are increasing. It's not, for me, top of my mind when I think about mega end market.
Okay, thank you. Maybe if I can sneak in one, going back to Matt's question on margins in adhesives. Can you talk about what kind of raw material inflation you're actually factoring in? In particular, given that some of the annual contracts, I assume, have already been negotiated, do you think that you could actually renegotiate some of those annual contracts given the new picture on raw materials?
You mean a contract of raw material or?
No, I meant selling prices.
Okay. No, I think not only us, but the negotiation of the contract in terms of pricing and in terms of volume are now, I would say. You have all kind of contracts. You have contract where you have an index on raw material, you have contract where you have spot, you have in terms of pricing, you have contract where you have clause. You have plenty, I would say. Clearly we have flexibility, fortunately. Not only us, everybody on that, and we push price significantly. It's not, as I mentioned, just a question for adhesive, it's a question for, and not only for us, it's a question for the industry and for all market segment. Clearly in adhesives, we push strongly.
As you know, the magnitude, first is different from raw material to raw material. It depends on which end market for adhesives. Adhesive is really at the end of the chain. When you start very high on, for example, propylene, the impact on adhesive is fortunately smaller at the end because, but it's still a percentage and it's a top priority in these days for us.
Thank you.
Now we have the next question coming from Jaideep Pandya from On Field Research. Sir, please go ahead.
Thank you. Firstly on polyamide 11 and 12. If I can just ask, there is quite a lot of capacity coming in polyamide 11 between you, Evonik, and Wanhua also is going to enter the market in polyamide 12, in 2022, I suppose. Thierry, if you can just give us your confidence on both these products and how you're so confident in terms of polyamide 11. You've given us a lot of color on this, but just in terms of your customers, how much pre-orders or rather, which are the different end markets that you've developed applications for polyamide 11 versus polyamide 12? Just to sort of give us a bit more information around this topic. The second question is around Nutrien, the CapEx projects you are doing with them.
I'm just trying to understand how this is gonna benefit Arkema long term, given if you're going to look for strategic options for 75% of your fluorogas exposure, how is it that backward integration in spar is going to help you in that regard? Just final question, really, you gave us a strategic update not so long ago. If I just look at the sort of midterm sales of EUR 10 billion-EUR 11 billion, even if I'm giving you aggressive organic growth, I'm still missing about EUR 1 billion-EUR 1.5 billion of sales. Do you think that the intensity of mid-size add-ons will increase in the Arkema story in 2021 and 2022? Thanks a lot, Thierry and Marie-José.
Okay, Jaideep, thank you for your question. Clearly, polyamide 11 is a unique product. It's lightweight, it's renewable, it's bio-sourced. There is more and more demand for. It's unique because it's, at the same time, high performance and sustainable. It's very important. We believe that in the areas of sport, 3D printing, clean mobility, consumer product, consumer electronic, bio-based textile, the opportunities are many. We have this unique positioning where we have the two, polyamide 12 and 11. This is why we position polyamide 11 completely different from polyamide 12. These are two different stories. Now, a pre-order, it does not exist in our world. To pre-order years ago, wherever, polyamide 11, it doesn't work like that. There are plenty of applications that we will supply in 2024 that we don't know today, by definition.
What is clear is that this product is very promising by its sustainable qualities and its performance. Each time, we have been under significant tightness of polyamide 11 because we had only one site, and with some time it was a site on which we had some technical issues, et cetera. It was very necessary to have a brand-new site to complete. Each time we had availability of this product, it was sold out. This is why we have exactly done the same, if you remember well with PVDF, where we decided at a certain point to add new capacity every year or two. Different from polyamide 11, where it's one big project. PVDF is reactor by reactor, so small project each time. At the end, it was really a fantastic growth for Arkema.
We are very confident on the polyamide 11. I know it's a big investment, nearly like an acquisition, but the opportunities will be certainly incredible. You can see that the market has been very challenging because of what Laurent called this late cycle end market in 2020. Starting since Q4 November, you could see that the market was coming back and then polyamide 11 is already growing a lot. No, I think we are confident. I will confirm this confident, even if we are very attentive what is happening to P12. Not only PA12, you have other polymers. This demand for megatrend is really supporting polyamide 11. Nutrien. First of all, this is not because we want to deconsolidate the majority of our fluorogases that we don't want them to be competitive.
I think the value of fluorogas is also on the fact that long-term and mid-term will remain competitive. This is why this project, even if it will benefit 50% fluoropolymer and 50% fluorogas and fluorospecialties, it is very important also for fluorogas. Why it is important? Today, and this is where I just want to correct you, it is not an integration in spar. It is integration on the main raw material of fluorogas is after spar, and it will not come from spar. It is a by-product with a strong CSR profile where you reduce the emission of CO2, the consumption of energy, because you don't start from the mine, but it is a by-product of a plant which is doing something else. It is really very positive from a sustainability, it is quite competitive and it is long-term security.
For all these three reason, it's really a very, very good project. With regard to midterm sales, you're right. I think that we have never hidden the fact our strategy is a balanced one between organic growth and acquisition. In acquisition, it's a balance between a small bolt-on and bigger one. As we have done in the past, we'll continue to make bigger acquisition. After that, I cannot tell you the year. By definition, the bigger one are opportunistic, and it depends on the possibility on the market. We are confident and we have the financial flexibility to do it, which is quite important. I think you're right to say that organic growth will not be sufficient and that M&A will be important also.
Just to follow up on to polyamide 12. Does that concern you that Wanhua was entering the market, and there could be a period of oversupply? Or you think there's enough demand in polyamide 12 as well for all of you to survive because of a strong customer push or pull rather?
First of all, we'll see when exactly Wanhua is entering, with what they are entering, I mean, on the value chain, from the monomer down to the polymer down to the compounding, the expertise in application. It's a very long chain. We'll see exactly what it is. It's a specialty product, so to build a market expertise takes a year, sometimes decades. Also, we believe that as for 11, but on different application, the growth is rather sustained on the very solid growth coming from megatrends, again, for the need for lightweight and high performance material. For us, it's more a complementary product and we are attentive to what can happen with Wanhua, but we have many limits of answer.
Thanks a lot and well done on the buyback. Thank you.
Okay, thank you.
Now we have a next question coming from Mubasher Chaudhry from Citi. Please go ahead.
Hi. Thank you for taking my questions. Just one clarification, please, and one on Coating Solutions. On the guidance, in the Specialty Materials guidance, you talk about 10% up year-over-year on constant currency, but not on constant scope. Does that include the incremental bolt-ons that are likely to happen in 2021, or will those bolt-ons be on top of this guidance? Just related to that, for the 1Q 2021 guidance, does that include the headwinds or any impact from the Texas outages? That's the first question. Then secondly, on Coating Solutions, the volumes were quite strong, and I think you've already mentioned the restocking. Do you think these high volumes or high demand is likely to persist through 1Q and 2Q? Then kind of how are you seeing the margins develop in Europe, especially on the acrylic acid side?
On a spot basis, they look to be tracking up quite sharply. I was just wondering if that's something that you're seeing as well coming through the contracts. Thank you.
Thank you. With regard on the first one, guidance on Specialty Materials does not include new bolt-on in 2021. If we make new acquisition, you can add them to the guidance. It's normal, and we do that all the time, and it's better like that. On the Texas, which is an external meteorological event, in fact, it will be covered by our insurance. On the coatings, the trend in Q1 is still a good one, it's really a good one in volumes. After that, the restocking will disappear at a certain point, maybe in the course of the Q1. We believe that there will be normalization of the volumes in the course of the year. You compare to last year, which was low for at least in the middle of the year, so there will be growth.
On the underlying demand, we are, as I mentioned, with this plan launched by the states, and we are confident. Beyond that, restocking for me is temporary by definition, but we have still some restocking in Q1 that will certainly disappear in Q2. With regard to the margin of acrylic acid, I think it will remain tight for a while, and Texas will help also on that. By definition, this tension will continue. Some time it helps to have still some acrylic acid, as you can see, so we'll enjoy it. After that, to which level, you should not extrapolate spot, because spot first, the big customers are not on spot, and we want to support them. It's clear. It's part of our long-term strategy.
We are not there just to price at spot, but it gives you an indication that the market is tight, and our feeling that, at least on the first semester, the market will remain tight on acrylic acid.
Thank you. Very clear.
We now have a next question coming from Rob Hales from Morningstar. Sir, please go ahead.
Thank you. Good morning, or good afternoon, I guess I should say. Question, please. Can you just talk a bit about how pricing power varies among the sub-segments in adhesives? The second question is, how should we think about exceptional CapEx over the cycles on a longer term period, maybe five years or something? Should we add to the sales as kind of a long term average for exceptional CapEx?
Okay. Pricing power between sub-segments in adhesives, I would say, or it's rather between construction and industry. When the raw material are increasing as much as it is increasing today, I would say pricing power first is a necessity. It's followed by every competitor. I would say it's solid, and it's rather shared between the different sub-segments. Now, it's clear that in distribution, when you are do it yourself, you have something which is more spread all over your range. Okay. Not completely linked to product by product, raw material. You have something which is more even, whereas for industrial adhesive or even some construction adhesive, you really have a direct link between your pricing and your raw material, product by product. It's more the way it is implemented, which is different.
I would say on the more you get to the end consumer, the more your increase is spread all across your range and this is the average which counts, while for other businesses which are more far from the more B2B, it's really product by product, depending on the raw material input. At the end, there is pricing power all across. Again, it's clearly the adhesive, but not only for us. You can take all our competitors. In terms of marginal variable cost, it's behaving better when raw material are low than when they are high. We all know that. It's a package. I mentioned it at the beginning with the question on material. It's a package.
This means that you have to take into account, at the same time, the volume, the pricing, the raw material, the operational excellence, and this is why we are confident to deliver the 14% margin for Bostik. Exceptional CapEx over the next five years. No, I think we come at the end of the exceptional CapEx for 2024. If we take 2024, which was what we published on the Capital Markets Day, we have been very clear what we are considering on the exceptional CapEx. You have EUR 420 million of exceptional CapEx for 2025 on the period 2024. We have already spent on that. We have still between EUR 350 and EUR 400, about EUR 380, EUR 390 to spend.
I would say these are the exceptional CapEx that you know. There is no other, and we don't anticipate any other up until 2024. Long term, I think we'll done what we have done. You should have in mind, beyond 2024, we use a 5.5%, all included on CapEx as a percentage of sales. Pretty consistent with what we have said so far. Was I clear, or?
Yep, that's great. Thank you very much.
Okay. Now we have a next question coming from Chetan Udeshi from JP Morgan. Sir, the floor is yours.
Hi. Just a couple of questions from my side. Number one, just the Q1 guide of 10% on a reported EBITDA basis, and if I strip out the effects, that would imply 15% growth in constant currency. That is the first question. The second related question would be then, why are you talking about approximately 10% growth through rest of the year when frankly, the comps will be much easier in second quarters? Was that guide for full-year based on that assumption you've mentioned previously that some of this is driven by restocking, which will probably come to an end at some point later this year? One question I had was on fluorogases. The import duty that you mentioned on R-32, which is, I believe, the fluorogas involved.
It seems Arkema today is the only producer of that fluorogas in the U.S. Is it possible for you to give us any feel in terms of financial impact? Is that material for Arkema or is that relatively small? Thank you.
With regard to the Q1, in terms of guidance, we do something that we don't do often, which is not only to give something for the full year, very early in the year, which is a big sign of confidence. We add guidance on the Q1. We don't want to give more. I think the intermediates will grow. On after that, between Specialty and intermediates, we don't want to comment too much. I will see how the Q1 develop and at the end, this is a group. What is clear is that Specialty will have an excellent growth on the Q1 and we appreciate that. I think the key message, and it comes also to your second question. I think the key message is a message of confidence. First of all, we give a guidance and not every European company do that.
We give a guidance which is ambitious, which is significant growth. It confirms all the benefit of what we have said about Specialty Materials, because not only we are more resilient on Specialty Materials than our intermediate, it's obvious, but also than many other company. Also on top of that, when the rebound is coming, we are well-positioned for this rebound. We take the wave from the Q4 and then the Q1. It's very encouraging for our shareholders. This mean that we have a strong quality of our portfolio. Now, why is Q1 a little bit above versus last year than the full year? First of all, because in terms of seasonality, year on year is never exactly the same. Don't put too much meaning to that.
As I mentioned, you have restocking in Q1 that will not end forever, so we'll benefit from it. The good news is that we'll benefit from it. It will not be the case of everybody. I think we are well-positioned to benefit from the restocking. Restocking is not the full story, it's part of the story in Q1. Beyond that, we are confident to deliver the full year guidance on the company. Please retain the fact that we give a precise guidance for the full year, which is a very positive one, which is solid, robust, and we give you visibility on a world which is still volatile. These are good news, and it's very important for us that you take the good news as they are. On R-32, yes, it should be positive.
The fact we only producer is not the main thing because the world is open. You can get product from everywhere in the world. To get duties on China import was very important because the price were not reflecting the true cost. I think we are happy about that. It will normalize the pricing in R-32 and we will benefit from it. After that, we'll not guide on R-32 in fluorogas. I think we already guide on the full company EBITDA will not go, but it's one element which will participate to the stability of intermediate in the full year, as we mentioned in our guidance.
Thank you.
Okay, we have no more question. Back to you, Mr. Le Hénaff.
Okay, I would like to thank you for your attention. I was very pleased to spend some time with you on what we did. Hopefully you recognize that not only the work, but I think the quality of the positioning, the portfolio, the cash allocation. I think many good news, many positive points. I will be glad to follow up with you, with the team in the next weeks during the roadshow. Again, thank you for your attention. We were pleased together with Marie-José and the team to share this time with you. Thank you.
Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.