Ladies and gentlemen, welcome to the Arkema Second Quarter 2019 Results Conference Call. I will now hand over to Terry Latina, chairman, and CEO. Sir, please go ahead.
Thank you. Good morning, everyone. Welcome to the second quarter 2019 results conference call. With me today are Marie Jose Donsion, our CFO and also as usual, our team. Otherwise, we have posted on our website In addition to the press release, a set of slides, we detailed the 2nd quarter performance that I'm happy to present to you today.
Obviously, and it should be the case for the whole year. This has helped us up for our peers, the opportunity to test optimal. In a more challenging environment. The kind of environment in which the strength of the business portfolio, the balance of the geographical footprint and quality of execution make a difference. As you have seen from the press release this morning, in the second quarter, Ascaler achieved a very solid performance in what remains a volatile and complex macroeconomic environment.
And I will start the conference call by highlighting a few key points of the strong set of results. Firstly, Arkema continues to demonstrate a good resilience at high levels, both from an EBITDA and operating cash flows in an environment, which has become since the fall of 2018, increasingly complex and volatile. As you know, geopolitical tensions continue to weigh on global demand and amplify volatility in the oil price. In this context, customer remain cautious. They continue to manage tightly their inventories.
This and the specific weakness in certain areas such as Automotive and consumer electronics explains that we have continued to see this quarter on lower demand compared to last year with what we consider to be some inventory adjustment from customer and along the whole value chain. As far as Akamai is concerned, this observation was particularly true in the mobile train businesses, namely the HPM segment. In this context, Arkema achieved in Q2 an EBITDA of 1,000,000 close to the record performance of Q2 twenty eighteen. And as you mentioned, this is the 2nd best performance in the quarter and inside the second time Aquilmart quarterly EBITDA exceed EUR 400,000,000. If we were as we know facing more adverse conditions and CMST normalizing versus last year, We would like to see that the large majority of our portfolio grew overall.
EBITDA margin resisted well above 18% and free cash flow was quite positive for the 2nd quarter, more than twice last year's level. 2nd key point is a confirmation of the progress we are making at Bostik. Since the start of the year and as expected, but has really changed gears and managed to deliver strong increase in EBITDA with EBITDA margin at 13% and EBIT margin at 10%. As expected, this is a result of the number of factors our successful price increase strategy, the network of the placements in 2004 15 to prune botox portfolio, modify the organization and enhance operational efficiency, And also our targeted acquisition strategy is the latest example being last week's announcement of the proposed acquisition of Proxima and Hyperpharma bonding films. So as you can see, Bostik is well on track with its roadmap and we are confident in our ability to further increase its profitability and top line in the coming years in line with our ambitious mid and long term ambition for this business.
So overall, I'm rather pleased with the mix of this quarter. It's a good mix with Bostikropping up, as I was mentioning, Coating Solutions, confirming this year after year of grade, resilience, and margin percentage increase. Florida shrinking. Advanced material, resisting quite well and versus peers with net pricing coming through. Circuit point is a confirmation of our full year guidance and our mission to achieve this year, an EBITDA comparable with the 2018 record level.
Lastly, beyond the day to day 4th of the team to cope with the current market condition, we have continued and this is very key. To actively implement our long term strategy focusing on our well known growth pillars. 1st, organic growth in the U. S. And Asia with a startup of expansion in China and of April.
And for the longer term, the announcement of the legislation for our flagship probably by the 11 site in Asia in Singapore. And by the way, we are also in the process of starting just now. In fact, setting our new acrylic acid reactor in Clear Lake in the U. S. Segment Technology Partnership we have announced, as you know, in the quarter, through recent developments with the opening of an R and D joint global lottery together with excess for composite for the aerospace industry and in three d printing with a 20,000,000 U.
S. Dollar investment in the California and carbon 3d. They will both participate in our full dynamic in the area of lightweight materials. Finally, bolt on acquisition in Hyper Performance Materials, With the 2 announcement of the last few days, the planned acquisition of Proximi in adhesives is from lump sum inter form of additives. These are 2 small size acquisitions, bringing unique technologies, fitting perfectly with our portfolio of hot metal design for Bostik and new recurring raising for Fatima.
These two announcements are the opportunity for me to come back on our acquisition philosophy. We believe in fact that small streams make these rivers. Oceania is a high performance but free as a different specialist. Beijing France. It is a technology leader in the fast growing market and is therefore an exciting addition to our other business.
Offering double digit standalone growth and strong synergy potential. This type of a small acquisition with high returns done on a regular basis at Proxima, CEMPA, XL brand, Lita, to name the recent ones. Otherwise, in fact, to double the pace of plastics organic growth. On top of that, we still intend to carry out some mid size ones such as an oven I regard to lump sum. It is a photo initiative specialist whose business will perfectly implement and end our short form of product offering of UV curing resins at the time when the global supplier for initiators is in fact very tight.
This 2 small acquisition nicely complements the last year acquisition of RMAT, which was completed early July, I'm missing a very short time frame. So far, I must also confirm to be quite promising. All these recent announcements, both organic and in MMA, M and A, sorry, that I've just mentioned, we mark another step towards our ambition to achieve more than 80% of our sales in faculties by 2023. Let me now hand it over to Marie Jose, for a more detailed look at Q2 results.
So hello everyone. Let's take a look some of our financial indicators for the second quarter 'nineteen. As you could see, sales are close last year, I took €2.25,000,000,000. Salesbridge, shows a slightly negative 0.6 percent price effect, with, declines in industrial specialties and hoodings solutions and volatile raw material environment. Largely offset by our strong pricing actions in the high performance materials division.
We continue with the start of the year, volumes declined in 2.4%. In high performance materials, demand remained lower in markets such as automotive, Customer electronics and oil and gas, while volume growth remain very positive in Coating Solutions. Finally, we had a policy of 1.9 percent currency effect mainly reflecting a stronger US dollar situation. So as a reminder, dollar rate is at 112 for the second quarter this year. That's just 1.19 same period last year.
Product effects was rather limited at the 0.4 percent impact. EBITDA of EUR 407 1,000,000 was slightly down on last year's record performance. Despite weaknesses in a certain office end markets, high performance materials received well. Thanks to a strong focus on pricing and mix, as well mentioned by TV. Coating solutions continue to progress with quarter, thanks to increased demand levels and pricing actions on the downstream activities.
Our industrial specialist performance is lower as expected, impacted by market conditions in fluorogases, and to a lesser extent by normalization in MMA. EBITDA margins remain high. Up 18.1%, slightly down on last year comparable to the second quarter 'seventeen performance. Depreciation and amortization reached 1,000,000, as a result, recurring income amounted to 1,000,000 and rigid margin stands at 12.3%. Nonrecurring items, include €10,000,000 of PPM authorization and €11,000,000 is nonrecurring charges.
Corresponding mainly to restructuring expenses and asset write off. Financial results to that minus 1,000,000 This increase stands, mainly for the interest rate impact on our net debt swapped in U. S. Dollar. And non cash actual losses on certain employee benefits provisions.
The tax rate exception license is at around 20% of recurring operating income, for the semester. So overall in line with our full year guidance of 21%. Consequently, the 2nd quarter adjusted net income amounted to €192,000,000, which corresponds to a €2.52 per share. You will note that's important to get this quarter was impacted by the partial refinancing of our hybrid bonds. With a 1 off impact of EUR 37,000,000.
So let's now go through the performance of our 3 business divisions. 1st, in high performance materials, it stays amounting to €1,000,000,000, so close to last year. Price is increased by about 4.7%. Thanks to continued price actions and actions to optimize the product mix towards high value applications. Volumes are down 8% reflecting softer volumes in the end markets I previously mentioned.
And with some destocking activity visible in some of those chains, this overshadowed good growth in batteries and 3 d printing where the momentum is very positive. We expect volume declines to moderate over coming quarters as the destocking gradually comes 29. The 0.9% scope effect the cost of the integration of bolt on acquisitions in Abidis from last year. Consequently, EBITDA, which €170,000,000 with a 17% EBITDA margin, which is close to last year's record level with a significant contribution from both detailed mentioned by Thierry. Regarding industrial specialty, sales were down around 5% year on year.
Its volumes down 1.3%, mainly due to fuel gases, And, as expected, the minus 5.7 percent price effect reflects lower prices on both MMA and M and A and Fluorogases compared to the record high, let's say, of last year. At 1,000,000, the division is down, reflecting the impact, mainly of the illegal HFC imports into Europe. As already flagged earlier this year. It continues to weigh both on volumes and pricing of Fluorogases. MMA PMA, we continue to see the impact of normalization, but this remains in the continuity of both a quarter 4 quarter 1 and fully in line with our assumptions.
Meanwhile, both higher chemicals and H202 delivered a solid performance this quarter. And overall, the EBITDA margin of the division remains at a high level at 26.6%. In Koteland Solutions, sales were up 5% on year, mainly sales to volumes up 6.7 pant driven by the acrylic monomers. The price effect mainly reflects lower propylene prices while quantitive in downstream activities are broadly stable. EBITDA rose sharply, so up to 20% to 1,000,000,000 compared to last year, thanks to just gradually improving market conditions in acrylic monomers.
As well as the cognitive recovery of unit margin in the industrial activities. Now, conclude my comments with a few words on cash flow and net debt. Free cash flow was positive at €90,000,000, which is a fee increase relative to, quarter to 18. So this stems mainly from a lower increase in working capital compared with last year due to strict management the positive impact of lower raw material costs and also the lower activity level. At 16% working capital ratio on annualized sales improved slightly compared to the 16.5% ratio at end of the 1st semester 2018.
After an expenditure of 1,000,000, which includes both recurring and exceptional investments are in line with our ambitious investment policy to support our future growth. For the full year, we continue to confirm assumption of around EUR 610,000,000 total capital expenditure. Net debt reached EUR 1,300,000,000 at the end of the first half, including the €119,000,000 dividend payment. The 1,000,000 cash outlink to the hybrid bond refinancing and, 1,000,000 of share buyback. This concludes my comments.
Thank you for your attention. And I'll now hand over back to Thierry for the comments on
the outlook. Thank you, Marie Jose. So now I will, as Marie Jose mentioned, come back to the on the outlook, which was mentioned in the press release, but in the second half of the year, we expect price and liquidity environment to remain volatile and complex with geopolitical uncertainties continuing to weigh on global demand. However, and this is for us a difference. We expect inventory adjustment, which has been quite significant from our customers in the first half to meet compared with what we have seen.
In the semester. In this context, I mean, the continuity of what we have done so far this year We've continued to focus on what we control, which is our internal momentum, and also because we have to be for the long term in our land, the execution of our long term strategy. In the second line, we expect in particular to benefit from new startups in your customer, technical polymers, Acree also, I have mentioned the PRX startup currently, as well as the contribution from acquisition, namely Armaz and also Sanket, which is a bit less, but we should expect to close into 3. So taking into account all these elements, our operational excellence program, also our pricing actions, which is going through as you could see in the past semester, we confirm our full year guidance to achieve in 2019 and EBITDA comparables in 2018 withdrawal level. Thus consolidating our financial performance at high levels.
Thank you very much for your attention and we are now ready together with managers to answer your questions.
The first question comes from Emmanuel Madhu from
Good morning, Marie Jose. Good morning, Thierry and Investor Relations.
Hello, ladies.
Several questions for me, please. First, what makes you confident to see less inventory adjustment during H2 and which end markets are you thinking about? 2nd, in printing solutions, do you think the situation is sustainable for having at the same time EBITDA growth in absolute monomers and in downstream activities, historically, both activities used to go in opposite directions. And my last question, we have seen Arkema very active on acquisitions since the beginning of the year. What are the main reasons according to you?
Would you say that the current micro environment is helping to make deals and you feel therefore comfortable to achieve your M and A projects for the 2020 roadmap. Thank you.
Okay. Emmanuel, so with regard to the inventory adjustment, I would say your two things. And you have the underlying demand, you know, so in the electronics, in our NPLs, and I could, as you know, we have could diversify the the set of, of, in the market. I'm it's a decent underlying demand. I think we continue the same pace in H2 than H1.
I don't see any improvement, but what we have seen in H1 is clearly and we have a lot of practice on the mobile tenure of to 15 years of managing, asking all that when you start to have change of trend in end market, you have a very significant adjustment along the chain, which goes far beyond what the end market suffer. For example, if you are automotive at minus 6%, say something, then you will, offset, you will have to minus 30% by definition. This is just adjustment of value chain of stock around the chain. It typically takes between 6 months by now. So we started in the fall of last year.
So that's the best step. And so we believe we will internal our carriers where uh-uh this inventory adjustment will get lower. I don't say there would be no more inventory adjustment, but compared to the 1st semester, which was a significant My belief is that this will be far less and I think it's reasonable affection. I think a lot of stock has been adjusted in the past 9 months. And with regard to the end market, a little bit everywhere.
I'll clear up that electronics, we can achieve our angles, but we are not the only one to say that. Has been certainly. And we have not lost market share. I've been quite more significant in terms of inventory adjustment far beyond the trend of this of the end market themselves. So that also has a market can be concerned.
With regard to cost inflation, 1st of all, it's not only external condition, as you mentioned, and you know, the the market itself is, today is a global economic challenge here. So Yeah. You cannot achieve what we have achieved in, in protein solution just by waiting for the environment. And so, so, in terms of momentum, is quite strong in both, quick monomer and according to the shall I'm happy to prove to you a year after year with this business, which was certainly underestimated by, by some, is ready, getting upgraded criteria if we look at the past years. And so it's really a good element of mix.
And so we benefit not only from lower copyrights, for example, for the downstream, for the acrylic millimeters, some gradual improvement that we consume, and we project is now 3 years and we have been right to do it. So all in all, we are in a satisfactory position. The environment, which remains challenging, but on which I think we are well positioned, and I think our strategy is clean off, I would say. With regard to the pace of acquisition, I think we continue at a place, which is really affecting what we have done in the pastures. So Some of you may think that we are a bit slow, some may may think that we are a bit too much, but I think it's a reasonable place with a combination of small acquisition and bigger one, is the environment more favorable?
If you look at the map call and you look at the medical, I would not say it is okay. If we I look at the interest rate, I think it's more favorable. But at the end, this is not what makes the difference. So what makes the difference is really our strategy to make a bolt on acquisition with high synergy, high quality of technology. And once the opportunities are coming, we look at them and we are very selective, as you know, And I think all acquisitions that we have made in the start of Arkema has been quite quite good in terms of return to our shareholders.
And so we try to stay selective. So after that, what will we do in 2020 wanting to see. It depends on the opportunity. We are very selective, not because we have a full financial flexibility is that, is make acquisition for the sake of it. I think we're not shy, but at the same time, we are more cautious about balance sheet and about the acquisitions that we are making.
So we'll continue at the same pace, hopefully, as we have been doing in the past year.
It very useful.
Thank you.
Next question is from
Yes. Good morning, all. And two questions here. The first time Gary is on HPM value cost. So it looks like you are seeing less inflation.
It's still a lot of inflation nevertheless. So I was just wondering if you could help us understand what's happening on raw materials, this is non raw material costs. And whether or not you're starting to see some raw materials deflation or you're expecting raw material deflation in an couple of courses. So that's the first one. And the second one on technical formulas, from memory, you had been you had that each issues around available availability of the CASK, especially in 2911.
And then what's happening to volumes, I'm just wondering how the business mix has changed. And whether you've repositioned the the business utilization rates high, but on lower mix, And as you get more, assuming you've got more available, like, capacity, because, you know, you can slow down the Asian CapEx as we are in a slower
question is completely different. So on the first one, we believe and we start with our guidance that raw material will continue to be a little bit. I will not say massively, but a little bit on the second part of the year. It's certainly good for a part of HPM. You have all kind of raw material, you know, with exception of ethanol, but before is increasing, but again, which is decreasing.
So one of the things younger, I would say for the rest, we have some raw materials, which increase some of them decreased, but the net is a little bit in favor of Arkema, and especially with for, for Bostik. So, I think, it's typical of this kind of the global market when the demand is slowing down, but normally you have a plus on raw material which helps you to mitigate the lower volumes. This is what we got. I mentioned our competitors got the same. And for the second semester, we are not pessimistic of the material, but it's not massive, it's incremental, but it's more in the position we're going to get to either.
With regard to technical preliminary, you're right that, at least from the 1st semester, but it really will not be so much the case in the 2nd semester. We got some, release of, capacity for polyamide, delivered, but, you know, last year, we finished, with very low stock. So it was important for us to reduce some stock because, let's say we were more than In terms of the sleeves, the business mix, I changed overall. I take the call, technical polymer in the right direction. As you know, we continue to tools from a business series of a unit launching of continue to increase because we are very selective in enough, portfolio development, and so benefit of innovation.
I'm such a good, value, business. So I would say again, it's incremental like for raw material, but this I see mix is continuing year after year to increase a little bit. So no, no significant share, but I would say if you have to fill a little bit improvement, on the Asian CapEx except this. So there is a Huawei Economy collection, but this is the case for me, just a reassessment. I think, no, we'll maintain second there on the full EMI delivering in Singapore because, you know, we don't bid for tomorrow.
We bid for the day after tomorrow. It's, it's CapEx, which start end of 2021. We have plenty, pipeline of innovation is very strong. It's too simple to make a trend. In, in, in battery, lightweight materials.
So we have to be there. And frankly speaking, over 15 years, polyamide delivered has been far more tight done a long in terms of supply demand. So it's a unique product. No. No.
We need to to make any of that. You know, we always been in terms of CapEx, reasonable, and manage well as a calendar. But, fields of Italy, we are we stick to our completely our calendar on polymer delivered and the sooner would be the better.
Next question comes from Mubasher Chaudhry.
Two questions, please. First one on the bolt acquisition. Now I just wanted to I know the growth rate has been communicated and it's quite positive, but could you just comment on the EBITDA margin of 2 at least to our physicians and whether they are accretive to our team. And if not, then what is the the longer term plan for these acquisitions and how they like to, incrementally benefit policy going forward. First question.
And then the second question is a bit more nearer term. How have you seen such mines pay out in June July. And then are you seeing bottoming of the inventory management that you see might come through or maybe improvement into mine?
Thank you.
Okay. So on the first one, first of all, there are important acquisition that they have to see as a package, this means that it's not a lump sum or a arsenic stand alone. We don't change the world from a sticker afternoon, but when you make the addition of many small, as I mentioned, at the end, we have really something very solid. In terms of margins, they are above the average Okay. They are, participate with the online target, the long term target for start to May and honesty, but they are above the high value businesses, even if we don't disclose the margin, they are above the average So we are quite comfortable on this quality of this asset and synergy would be on top of significance.
So at the end, typically, the kind of acquisition we like, strong margin, strong synergy, unique technology, high risk pattern. So, and, we just need to to continue to make more of them. With regard to June July, the June was a week month, I think, for listening to my day of it was a place for everybody, but if I, if it comes a number of days, finally, there was 2 days delays compared to last year. In fact, it's not so different. So it's clear that it was maybe a little bit weaker than expected.
But overall, the quarter is more meaningful and the quarter is what we we told you. And we don't see that it is a change in trend. In June. If it was your question, underlying question, for us, it was just the fact that June were at less months or less days and that it's the last month of the semester with a very volatile price materials. So our customer identity could be cautious in, in restocking.
In July, it's growing normally So no change in trend. So nothing special on July.
Next question from Sivan Pudeeshi from JPMorgan.
Just
couple of questions on offtake margin. It's hard to see improvement there, but I was just looking and comparing mostly to few of the listed years. And it feels like there's a big gap in margin and it's not like Bostick is small in terms of top line anymore. You are probably close to 1,000,000,000 if my calculation is correct. So what is needed to close that gap you think in terms of improving the Boston margin more from here?
That's number 1. And number 2 question was on on fluoro. Maybe if you can just update us on shorter term dynamics on pricing, but the question is more structural a long term question, which is can you help us understand what is the mix? And I guess maybe this is the question might might have been asked in the past calls, but what is the mix of legacy products in terms of earning earnings contribution which are at some some extent that this will be replaced by by HFO. So let me just look into this model that you're calling me over the next 3 4 years.
Thank you.
Okay. With regard to so first of all, before talking about margin, let's take a look at value creation, where, sequentially was to buy a company which potential in terms of technology, in terms of geographical footprint in terms of what Arkema could bring down. And step by step to improve it knowing that the starting point was low because the margin was around 10%. So in fact, what what we are doing is that next year, with the 2 server acquisition and 1 server organic gave the value, €1,000,000 of boutique should have more or less doubled compared to the starting point. Okay?
And the EBITDA percentage would have gone from a bit more than 10% for next year. Certainly, so this year should be certain pressures and we'll continue to improve. So in terms of it's really a great story because said by step, the boutique is really, improving with an EBIT margin, which is now at 10%. Okay. Which we're very resilient.
And, so we are already in, in what we wanted, to do and is very encouraging. Now if you compare to peers in terms of margin, if you compare with Ncare, you have to take out their unique position nobody can be engineering a disease, which is huge with margin. We don't know exactly that, which are more in the range of 25, 30%. It should take the traditional, margin of, and scale on the the kind of businesses we have or actually have there are totally more even if we don't know exactly in the range of 15%, which consider to be a good benchmark for almost 6, which is where The sale of mid term target for the stick is to be at 15%. 1,000,000 of EBITDA in value for 2020 and a little bit after to reach a 15% EBITDA margin.
Filler is already there or although, but filler before the acquisition of Royal, after 10 years of restructuring and the improvement. So we're not a 3 year for you, the 10 year. So we are more in the range of of 13% of 22%, 13%. So, I think the ticket is really, in Europe, quite quickly. And, now, the entry level is not achievable because of that, that, in terms of, we still get quite good strong margin, which we can get 15% and certainly after a little bit ago, And in terms of value creation, it would be fantastic.
So we are really pleased with what we are doing with the specific. And in terms of raising here, and so you can see that this year, for example, it's, compared to many clinical business. It's, it's really, quite favorable. On the Fluent gas, it depends what you call the legacy. If it is a legacy legacy, we have a launch, a big number of new products, which will continue many years, including the CHFC.
Okay. We have done that in the US and in Asia. Now if you take, you can do it on the traditional HFC, the CFC, that is the HFO. Today's HFO are quite small in our portfolio. You know that we are not in the press 34 YF specifically for automotive, but we have some parts we are playing that we have announced in, for other HFO and other application.
So as we also mentioned, we are not positioned as, Honeywell and came up, which has a specific access to 1st 44, yes. That is, I would say, is a group of all the player for Fluorogas, we are, well positioned with the HFO, not in automotive, but on the rest of the business, which will nicely complement our current efficiency with, which are if capital that's just significantly down, but still at good levels. And we'll continue to do so for many years. So we have not changed our, what we say on the flow here, the performance of the coming year will be a combination of HFC, which we continue to deliver to good play roles, certainly not at all what we had in 'eighteen, but, come back to more kind of 17 level and, what will start to lose from this HFC, we should be able to offset with access to HFO that we have. You're welcome.
Next question comes from Georgina Ewan Manto from Thanks. Hi, Carrie. Hi, Marie Jose. Thanks for taking my questions. I've got 2.
And the first one is on ATM. I was just hoping you could give us a little bit better understanding of the dynamics that we saw in the second quarter. I kind of summarized what we've said on the call so far for this division. We have better pricing and better mix which will continue to improve, yet because of margins deteriorating. So does that mean that actually operational leverage on the negative represent volumes was pretty high?
And if you could maybe help us understand And what happened to volume sequentially? Was it the customer inventory adjustments which were worse in the second quarter versus the first or the underlying demand? And then the second question, I'm afraid I've got a repeat from the first quarter results. Could you please help us understand the volume strength and coaching solutions? And give us an update on what you expect for the acrylic acid market, especially in light of the profit warning from the gunshot by last night, and given that in lots of industry articles, site and demand weakness and rising input costs in Asia?
So, Joshina, on the on acrylics, we are very end cutting solution, which is a downstream we are very glad about the result. And I think you appreciate the ability of this volume, which was one of your questions in the past quarter. So I think we have a positive answer. So we are all very pleased. And this is really the result of all this strategies that we are for a leading in a coating solution, which is quite resilient at the end business.
It's a big difference with Nippon Chukubai, but you know it. So, you know, the answer to your question is that Nippon Chukubai is selling efficacy only super absorbent and super absorbent maybe this year available, but I cannot comment a decrease. With regard to Arkema, as you know, continue different businesses, from a decorative pain to a neurological additive to a disease to oil and gas to super absorbent, etcetera. So it's a very diverse. And we benefit, Imaging from this time more, more resilient, even if I cannot comment on the, what we are doing here, but it's quite element of this, of this second quarter release, which is showing quite a good mix.
As I mentioned, I'm sure you share that. With HPM. So with Advanced Materials, quite resilient, with the Bostikramp in Europe, with Coating Solutions, confirming is upgrading year after year. So we have very good news to share with you. With regard to HPM, I think that, no, I think, I have different readings that, what is your reading?
I think the volume, on Advanced Materials are quite, down compared to last year, but not different from what I see from, all the peers. I think it's a paradox of this, current context. It has the more downstream you are, the more specialized you are. The less volume you are, is because it's certainly a business looking. So if you're actually an electronics and automotive, there will be a thermal down, than when you are, a stream, driven.
So we have a a volume that you put in high performance material down 8%. That prices and the work on the lift on the pricing is allowing us to offset a big part of it, which means that, in terms of, because you are talking about the operational leverage, my reading is that it's very good because despite this, very significant, a decrease in volumes, gene in high performance material has gone down only of 17.6% to 17%. So I think it's quite a good performance.
Okay. Thank you very much.
You're welcome.
Next question comes from Jan Luke Praman from CMC CSC Market Solutions.
Good morning. I have two questions about the Mercitors You Can you talk a little bit louder? Because we don't hear you. Thank you very much. My question relates to to the 2 acquisitions you announced over the last few days.
Should we infer from the, from the the the EBITDA margins, you you you signal with child users and and the rest of the HPM Business. But after, synergies, the, is it with the day you paid for those acquisitions? Would be about the same as what you usually pay, I. E. About six times?
So, I mean, all, nearly all acquisition, that we are making in this one on that exception, after after synergy, we go down after 4, 5 years that six seven times, so depending on which acquisition, but yes, you can see 7, but we are in this range. And this one, our note section. You're welcome.
We have no further questions. Let me remind you that if you wish to ask a question, you need to press 1 Next question
is from Geoff Ah from
you.
Good morning and thank you for, opportunity to ask questions.
I just wanted to ask, in Q1, you said that you hope that the EU would be able to stop the
legal imports of fluorogases into Europe.
I was wondering if you
could update us on when you think that might happen possibly this year or next. But can you also just confirm what is the last like sounding for hybrid bond? So,
Ajay, we don't
No problem. So, basically, we're refinanced 400,000,000 out of the, initial 700,000,000 Euroite bond. So the new maturity of the 400,000,000 is 24. And the maturity of the remaining SEK 300,000,000 is actually the same as the initial one, which is basically second half of twenty twenty.
Okay. Thank
you. So on illegal import, which is, as you know, a still applying not only for for that, but for all the all the industry. So we continue to work with the industry on the coordinating all efforts. That's what was issued by, supporting investigation, building public awareness, sharing very close cooperation with the European Commission. And so we do that also with a member state and non member state with everybody.
So we still have a lot of time on that. So what we see is that some concrete action, which has been already implemented on the field by customs authority of several countries, it's still not enough. So we continue to push very significantly. So your question, when is that fully implemented having effects? It's too early to say, for the time being, we go to a few very significant change up until the end of the year.
We prefer to be cautious and that we follow carefully and we put a lot of efforts on it together with because it's not It's fully application of blue and it has nothing to see with our business legislation, whatever, not just playing at all.
So So are you still sort of happy with the guidance that you gave at Q1, which was for EBITDA and Fluorogases to be back at 2017 levels, or are things cost worse?
No, we are, yes, we are, we are still, planning to be close to 'seventeen, around 'seventeen, So but it's clear that we we mentioned it already to to question which we are at. The second semester will be in the same vein the first semester on Florida. So we see predictive elements return from all the other business lines more than a full gap
that is obvious for everyone.
Next question comes from Jean Baptiste Plinal from Bank of America.
Have one question follow-up on the question regarding Fluorogases. Since you just said that these volumes are illegal in Europe. Is there a possibility or do you expect that you could potentially seek a compensation against against the players who are selling illegally in Europe. That's my first question. And second question, I was just wondering if you could remind me what sort of pricing lag, you have in, in PMMA versus the, versus the acetone, raw materials?
Thank you.
So with regard to on your first question, the answer is no, you cannot what you can between, it's a law, which is not applied by other people. So it's really zero contribution as a mental state. To oblige and to, to penalize these people who are doing that you cannot in the years no, you cannot ask compensation on that. It doesn't look like that. Maybe unfortunately, but Zulu is like that.
It's an indirect impact and you cannot, ask compensation. It's really a matter of just having losing the price. And the estimates PMMA, a result. As I told us, a little bit, for an MAPMMA, But overall, what you manage is not so what you look at is not so much for material or pricing is what we call the spread which is an edge between the pricing and the raw material, which is reflecting the supply demand. So I would say MFPNMS overall, He's aligned with our assumption since the beginning of the year.
So what we told you when we started the year, in fact, was well well defined and, was and we are already online with that, including the pricing raw material within the machine volumes, which are challenging too much. But overall, we are really in line with, which was, expecting. So I would say overall for the portfolio of Akerna, we have some lines like those which is really developing quite, positive from that is what are the challenges that we sought. I mean, the PMM is in line. So you have some of the plus minuses, but overall, as we mentioned, we're already comfortable on our guidance.
We have no further questions. Ladies and gentlemen, let me remind you that if you wish to ask a question, you need to get a 1
Okay. So if you have no further questions, I would like to thank you for your, for your increasing question. And, certainly, we show a nice amount because I'm sure everybody is is waiting for some some work. And, don't hesitate if you have any further questions to ask the airline team, which is there to answer your question. Thank you very much.
Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation. You may now disconnect.