Ladies and gentlemen, welcome to Artemos First Quarter 2019 Results Conference Call. I now hand over to Thierry Leena, Chairman and CEO. Sir, please go ahead.
Thank you very much. Good afternoon. Welcome to the first quarter 2019 results conference call. So with me today are Mauricio De Duignan, our CFO and our team. So I know you have a lot of results released to this, and we try to be shocked and straight to the point.
As usual, we have posted on our website in addition to the press release, a set of slides, which details the first quarter performance that I'm pleased to present to you today. As you have seen from the press release this morning, in the first quarter, Arkema achieved a very solid performance in a volatile and complex microeconomic context Obviously, market conditions are more challenging than they were last year at the same period. Uncertainties continue to weigh on global demand, and the oil price has increased significantly since January. In this context, our feeling is that customers remain such as managing technical inventories and this environment globally weighed on volumes and requires each of us to be agile and adapt quickly. Having said that, Arkema reached in Q1 an EBITDA of 1,000,000.
Only slightly below the record performance of first quarter 2019 and fully in line with the guidance we communicated when we published full year results back in February. We thus continue to demonstrate a good level of resilience as well as the quality our portfolio of businesses with the performance, which was close to the all time high in the first quarter and following the world based and to 2018. Before looking at this set of results in more detail, I would like to highlight a few important points. Firstly, despite sell volumes, EBITDA grew in our specialty businesses as a whole, As a reminder, they represent today more than 70% of Arkema's total revenues. This is a result of our pricing actions and the strong focus we put ongoing Lyon mix, which are really bearing fruit.
In adhesives, but also in other specialties, namely Advanced Materials, Thiochemicals and downstream acrylics. With a higher contribution year on year, specialties are starting to take over from our intermediate businesses in line with our stated ambition to further expand our share in our portfolio. And earnings. Secondly, as expected, we saw clear signs of normalization in MMA PMMA, no surprise there, And the market condition in Fluorogases were less favorable, both compared with a very strong buys of last year. On the other hand, our assumption of a gradual improvement in acrylic columnar was fulfilled.
This improvement in acrylic supported by solid volume growth is key to us as we get ready to integrate our partners production capacity in China as soon as we have closed the transaction to purchase the stake. Overall, the global performance of our intermediate businesses declined year on year, but the good news is that the EBITDA margin remained at a high level. In terms of cash generation, free cash flow is very positive this quarter at 1,000,000. I mentioned it because it is unusual for the fourth quarter, bearing in mind the traditional working capital seasonality. As a consequence, net debt was again under tight control, and the balance sheet remains very solid.
Finally, our teams are busy on the ground implementing our long term strategy to transform the company. They completed 2 significant startups in the beginning of the year. 1 was in the US. It was a new P AKK plant, which I remain remain new is a new high end engineering polymer resulting from 10 years of R And D Efforts. The second one is in UV curing resins, so Sartomer, for which we expanded our capacity in China by 30% early 2Q.
These two investments will support our development in electronics and footprinting. Lastly, we announced yesterday, finally, and we had many questions on this matter. The location of feature omega-five for the production of bio based polymer in Asia. So the plant will be built Now you know, in Singapore and construction is expected to be completed end of 2021, we are very excited about this project, as you can imagine. We knew that the start of the year will be a bit challenging for most chemical company given the current macroeconomic context and the company there in the base of last year.
So you have seen a different result and you can see that our resilience are overall performance is a clear positive signals in Q1. This was, as a conclusion of this introduction of supported by the growth in our specialty, the high level of profitability of intermediates, despite the normalization of market conditions, as well as the superior cash flow generation. All these elements together with a quite positive trend of results we have recently achieved since 2010, a testament indeed to the success of our transformation strategy as well as the balance and quality of our portfolio. I'd like to hand it over to Marie Jose for a more detailed look at Q1 results. Marie Jose?
Hello, everyone. I'll take you through some of our financial indicators for this third quarter 2019. So sales were up 2% versus last year at 1,000,000,000. The sales bridge shows a 1.3% positive price effect. Reflecting our strong pricing actions in high performance materials divisions in particular and in downstream acrylic as well.
The volumes declined 2.5% versus a strong Q1 twenty eighteen. In high performance materials, demand was lower relative to year in sectors such as automotive, electronics, and oil and gas, while on the other hand, cooking solutions enjoyed solid volume growth. Finally, we had a positive scope and Forex impact. Seeing a stronger U. S.
Dollar versus the euro compared to last year. EBITDA remains at a high level at 1,000,000. 3% below last year's high comparison base. This reflects the strong focus on pricing and margins in specialties, the good margin levels in industrial specialties, the positive ForEx and the million impact of IFRS 16. EBITDA margins stood as a solid 16.7 percent.
Depreciation and amortization reached 1,000,000. The 1,000,000 increase versus last year, mainly coming from the IFRS 16 and from currency in pants. So as a result, recurring operating income amounted to EUR 247,000,000 and the rebates margin was at 11.2%. Nonrecurring items included a EUR 9,000,000 PPM authorization and EUR 12,000,000 nonrecurring charges corresponding mainly to restructuring expenses. Financial results stood at 1,000,000.
So in line with Q4 2018, It included the cost of our financial debt in euro, as you know, as well as the cost of debt that we swap in U. S. Dollar. The tax rate, excluding exceptional items is at 21 percent of recurring operating income. So it's in line with our full year guidance.
Consequently, for the first quarter, adjusted net income amounts to EUR 165,000,000, which corresponds to a per share. Let's now go through the performance of our 3 business divisions. So I'll start with high performance materials where, sales amounted to €1,000,000,000, so up 1% on last year. Price has increased by 4.7% with a positive effect across all product lines, thanks to continued price actions and efforts to optimize the product mix. Volumes are down 6.7%, reflecting both last year's exceptional contributions of specialty molecules and softer volumes in certain end markets.
These two impacts overshadowed the success of our innovations in high growth segments such as batteries or 3 d printing. We expect the market momentum to progressively improve over the coming quarters. The 8% scope effect that you see in the bridge corresponds to the integration of acquisitions such as Natagelatin Industrial Additives and in Japan. Afinitica instantaneous that we realized in the second half of last year. Consequently, for this division, EBITDA reached 1,000,000 at 16.1 percent EBITDA margin is equal, let's say, to the full year 2018 level.
A notable point of that action is the EBITDA improvement in our disease, thanks to the progressive pass through of higher raw material costs. Regarding industrial specialties, sales were down around 3% year on year. With volumes down 3.4% due to lower demand in the automotive sector and in China. As expected, the minus 2.4 percent price effect reflects normalization in both MMAP and M and A and Fluorogases compared with the very high prices reached in 2018. At €157,000,000, EBITDA of the division reflects the normalization effect I I just described.
And in Fluorogases, the comparison with 2018 is also impacted by some high level imports in Europe. Yes, at the same time, Cyochemicals delivered an excellent performance this quarter. And as a result, the EBITDA margin of the division is flat at 24.5%. Finally, in Coating Solutions, sales were up 10% year on year, mainly driven by higher volumes, up 6.9%, which benefited from a good dynamic. In downstream activities, the group continued to actively raise prices as well.
So EBITDA rose 15% to 1,000,000, thanks to the good levels of demand in acrylic monomers and the gradual pass through of higher raw material costs in our in downstream activities. I'll conclude my comments with a few words on cash flow and on the net debt. So as mentioned by Thierry, the cash flow was positive at 1,000,000 with a significant improvement relative to to last year quarter 1, close to $100,000,000 improvement actually. This stems mainly from a lower increase in working capital for requirements compared to last year, as the effect, let's say the usual seasonality was mitigated by softer volumes and lower prices for certain raw materials. At 15.1% working capital ratio on annualized sales is comparable to Q1 2018.
Capital expenditure is in line with our ambitious investment policy to support our future growth. So for the full year, we reconfirm our guidance of around €610,000,000 total capital expenditure, both recurring and exceptional. Net debt reached 1,000,000,000 at the end of the first quarter, including the impact of the first time application of IFRS 18, which added around 1,000,000 of assets and of financial debt to the balance sheet. Thank you for your attention. I will now turn it over to Thierry.
Thank you, Marie Jose. So I will now of the outlook, but it was mentioned in the press release. Globally, we expect the macroeconomic environment to remain with the continuity of Q1, which is marked by this geopolitical uncertainties, which continue to weigh on global demand. In this context, we focus on what we control best, which is our internal momentum and the execution of our strategy long term. In particular, we'll further roll out our industrial project, which has some complementary start ups, which are expected in the coming months.
As you know, we have this Advanced Materials startup in Mounds, the south of France and also an important one in the acrylics. In the U. S. We also continue to work on our major growth project. We have 2 going on at least one is in thiochemicals in Malaysia is going pretty well.
And the other one is the one we have mentioned before, which our specialty polymer in Singapore. Together with the acquisition of our partner stake in Sankey as this project will continue due to our growth in the 2nd part of the year. We are still continuing to implement our initiatives as part of our operational excellence program as well as our proactive actions to raise prices selectively in particular, as I mentioned at the beginning in context of volatile oil prices. On the full year, our aim is, as we already mentioned in February, ready to continue in this complex challenging environment to demonstrate a good resilience. And this is what we believe we have done so far in Q1.
In Q2, we expect to correct in the economic environment, which is in the continuity of the start of the year. So the performance should therefore be below last year, we call high level. From the second part of the year, our feeling is that we should benefit from improved market dynamics in specialties, especially compared to the 1st part of the year. Further improvement of unit margin in downstream activities, which is something we have started to see in the first serve and the start up of our new capacity I just mentioned above. Consequently, we confirm our aim to consolidate our financial performance at high levels and to achieve in 2019 an EBITDA, which is comparable to 2018 record level.
So I thank you for your attention. And, together with Marie Jose, I'm ready to answer your questions.
The first question comes from Geoff Haire from UBS. Sir, please go ahead.
Good afternoon. I just had some 3 quick questions.
First of
all, you mentioned in the rule in the statement sorry, in the presentation that you have seen an improvement in Bostik margins at Bostik. I was wondering if you could help by quantifying that improvement, year on year or sequentially. And then just wanted to ask on, thiochemicals. I believe you'd made an announcement last year. That you're expanding capacity in fire chemicals at Beaumont, which I think you had said was to supply Novus with fire chemicals for their expansions in methionine, I know last week Novus announced that they would not be increasing the methionine capacity to the planned 440,000 tons.
I just wonder if you could help us understand what impact that has then on thiochemicals over the next couple of years.
Okay. You said, James, that you had a soft question, you said?
No, that's just two, sorry, just two miscounted
No, no problem. So, sorry on Bostie because we, for the timing, someday, we will certainly change, but we don't split the inside of HPL, but, as we mentioned, there was, an EBITDA increase of year on year, which was not just 1 or 2% and it was more than that, clearly, And if you look at the volumes, which were quite challenging, especially in advanced material, you can see that the boutique was quite solid with an improvement of unit margin, for the first time since a certain time. So I think it's quite positive message because for the one who may have some doubt, It really reflects what we have been saying all along last year. We were just trying to catch up with raw material increase. And once they have been a bit more stabilized, we have been able to really to see the benefit back.
So it's certainly a positive point in our release. And with regard on thiochemicals, as we said, we have said many times to the question which we are asking. On BMO, we said that when our partner of this announced their project, we said that we were there to to support them if they wanted to go through what they have said. As you mentioned, wisely, that they have I did to revisit their different scenario. So this means that the project we had with them or the reflection we had with them because there was nothing final, as we said, is, is clearly on hold and we follow what they want to do they have, said clearly that they wanted to revisit the financial for us in the coming years and, it changed nothing.
And because anyway, it was a very long term project. So I think we are quite confident to continue. We have plenty of ideas including the one in Malaysia, which will go through for next year. And, we are quite, dynamic in, you can recall once said that, we are there to support our partner when they want to grow and it will certainly be the case when, if no one wants to do something else.
Sorry, can I just confirm then you have on the ad, you haven't spent any additional CapEx just to port Novus in their plans, which they had up until last week? Is that what I'm hearing or?
If your question is have we, event like we had the spend CapEx and, we would, we had CapEx spend for nothing or the answer is no. Not at all.
Okay. Thank you.
Next question comes from Nubasher Shaliz from TD.
Hi. Just two quick questions for me, please. First one is on Fluorogases. Now it looks to have softened year on year. Could you just help us quantify the impact of the the illegal HFC imports and then how we should think about that being forward?
And then just second question, this is a bit more of a wider on post taken the bolt on acquisition. 1, how are the conversations going? And 2, do you think the or have you seen the urban macro potentially create opportunities for you from a valuation perspective?
So on the Fluorogases, as we mentioned, And I think, you had also a certain number of element from, from chemotherapy that you can also refer to. So the it's true that the right development of really good import at HFCs in europe. Our feeling is that this product in fact can come mainly from China by the way. So clearly, we have been reacting quickly as Arkema, but also as the industry, through the trade association. And the good news is that authorities and are both available as a member of the member state, but also as a European role, address the situation, which seems, for some reason, we're discovering it, completely, unexpected because it just, to apply the rule.
So, they are there to enforce legislation, So we are working on it actively. Basically, what we say to answer your question, fluorogases, so performance. So you remember certainly that what we said is that versus share after an extraordinary 2018 level. A very good 2017, extraordinary 2018, we say, 1, 2 months ago, that still is that our feelings that we should be somewhere in the middle between 2017, 2018. We believe that with the expected normalization of Fluorogas.
And now we believe that we could end up around 2017 performance, which is still a high reference a little below what we thought, a couple of months ago just because of this, development of really good import. I think it's, it's under control. But we are a bit more cautious on Fluorogases including in Q2 because it's, as you know, a big quarter for for Fluorogases, which means that because you could have the following question, which is on the full year guidance, which means that we have some other elements inside Arkema that will offset what we see on Fluorogases.
Yes,
on Bostik. So Bostik, on the acquisition. Do you see because of the macro some release of, I think you have seen recently, for what big, big movement. You could see, the announcement with regard to the acquisition of Lorna, which our niche disease, at a very high native problem. So, I don't think, it shows that multiple were decreasing.
So we are still, because there is a lot of money from, companies there, corporate and the finance equity still it's, from an administained part challenging. So I'll just say what we have been saying, in the past, in the past year, and we're selective. So we continue to make bolt on acquisition, but, we still believe that the for our shareholders, base deals, as we have shown already, at Arkema are the one who are paid that, reasonable prices on which you can have a significant synergy. So there is a room for us that will continue to be selective, but we don't see to answer precisely your question. Any change in multiple levels.
Next question comes from Laurence Salvo from Exane.
Good morning, all. Two questions, please, Thierry. The first one is on HPM. Could you help us understand, qualitatively, the drivers on the volumes decline for Q1? Between, the molecular sales comp, but also the product pruning that you've highlighted and the focus on pricing, And then just, Jenny, what's happening to the underlying environment?
And maybe is there any sense of destocking in there? And the second question on free or no, you've mentioned the gray market in Europe. We're reading that spot prices in the U. S. Have actually gone up a lot in the past few weeks.
Is it something that you're seeing in your business?
Okay. Thank you, Laurent, for the question. With regard to the review, so clearly there is a 9 identified point, which is HPM reference point, that we still have partially on the Q2, but not for the rest of the year. We have a little bit of pruning, but it's not, I would say, significant in the means minus 6%. Certainly HPM is about, let's say, one third to say something.
And then the rest is really the fact that you I think it's already difficult to know exactly, but because I on the full year, I think things will be more rational. But at the beginning of the year, you have a big barrier depending on which end markets we are talking about. And we have to recognize what is automotive and what is oil and gas and what is consumer electronics, we have a big discrepancy without losing any market share compared to last year. So it's fact of life, I think this is why we say we are more optimistic for the 2nd part of the year. It's going to be reversed to an extent that because at the end, at theendoftheyear, the variation will be far more normal.
But we have a sort of, you could call that distocking. I think, as you know, you have a long experience of chemicals when, on certain end markets, There are some negative, sales to consumer on the whole value chain, especially when you are at the clinical level. You have, distocking movements that can impact, one or 2 quarters. So I think we are there. Okay.
And this is why, but we are not losing any market share. And we still believe that this market, our IT market, on the long run. On Fluorogases, you're right to say that there are some spot prices in the U. S, which I've, I've gone out, I've gone out, So we need to see if it is long lasting or not. So it's too early really to answer.
What is clear is that, as we mentioned, also in Fluorogas and you have different elements of volatility, positive, negative. And clearly, we believe that Europe will be under pressure, clearly, for the next quarters. But, U. S, you will see some some positive point, but we still need to be confirmed, okay? So I prefer to be cautious, but, spot, it is true now.
We need to make sure that it is lefting. So we see we should know more in the coming months.
Okay. So when you said that you assumed offsets, in the guidance for the full year, it wasn't better US pricing in HSEs. It's
something else. Not control that we are talking about other markets.
Next question comes from Martin Rodija from Kepler Cheuvreux.
Is Sofia and team. And on Coating Solutions, you talk about path flow of higher raw material prices in downstream activities. While overall prices
in the segment were down by 0.5%. This implies lower prices in the upstream activities despite the fact that you mentioned good demand in acrylic monomers. How does that sit together? Is that the reason why last year, propylene prices were quite high at this time in Q1 lower and therefore, there was a pass through effect. And in connection with that, if the margin increase in the segment, Coating Solutions, did that come from upstream or from downstream or from both?
Thanks. Okay. First of all, I'm sure this is what is one message underlying we can all be a key of the performance of Coating Solutions. It's important. We have had many questions last year, many challenging.
Some of you thinking that Acrics could be quite a challenge for, for regular. And we say no, we don't think that, and we're happy to see that we were right. This, not a fantastic improvement, but gradual improvement as we have had in the past years on acrylics. So this is the first thing, and I think, thank you for your question, which gives me the opportunity to state this fact. With regard to the pricing, The difficulty, as you know, with pricing in Coating Solutions is and you have that in mind, you have a trim and downstream.
And the big part of the pricing is linked to the propylene move in upstream, which, and this is not because pricing would be down that, it has a positive or negative influence on the margin set because it's not a matter of supply demand. What is clear and what we see is we see 2 elements: the gradual improvement of the cycle in in the upstream, acrylic acid, which is confirmation of our assumption that we gave to you last year. And second thing, on the downstream after a very 2 difficult, challenging years in 2019. Some recovery of margin and the combination of the 2 make, I think, a quite a good improve our performance in the quarter in terms of EBITDA because we have an EBITDA improvement of 15%. So at the end, you're right to look pricing, volume, etcetera, but the EBITDA is the best indicator and it increased by 15%.
And I would say with a good momentum of the upstream, but also the satisfactory performance and rebound of the downstream. So both were contributing. Thanks.
Next question comes from Andreas Aimee from MainFirst. The floor is yours.
2 questions, if I may, please. The you stated in the outlook and that was not that much the case in the group form that you're looking for an improvement in these specialty markets. Is it something where you have any indications in your order book or, trends in the end markets? Or is it just the expectation that the Q1 was just too low start to be real and reality has to come back. And the second question on, Sanki and, the full control you will have of this extra legated, upstream plan Can you update us what you will do and change at, this site and what we can expect from this site as a contribution in the second half?
Thanks.
So with regard to the dynamic specialty. I would also refer to the answer to Laurent Faroe's question. And what we said in the press release of the outlook, which is that, with regard to Q2, we don't see any no change. And we said in the continuity of the context, or we don't say it will rebound, but what we say for the full year that the 2nd semester should be better. And then it's in fact the same answer as I did to know at your point is when you look and we have a good experience, I think, over 13 years, of a specialty where we are very diversified in terms of a market and we believe it is a strength we have never seen such level of decrease, which is not reversing at least to a good portion in the year.
So we believe it will be for the con semester. And certainly, because there is an element of destocking, it's my both my feeling and my experience. So It doesn't need necessary. At the end market, we suddenly, grew up strongly. It's just a soft Okay.
And, so it's our feeling. And, we believe this assumption is, is a solid one. With regard to 7 K, there will be progress here. We have to a certain extent is that new capacity is I think we will do what is necessary to supply the customers, the demand of customers, but to a certain extent, the same as what we will do in clinic. Normally, we try to ramp up on 3 years and we have new capacities in relayed.
So this is the case in the US in some case or so is we try to do something like that. So
Okay. Thanks.
Next question comes from Georgina Iwamoto from Goldman Sachs. Mr.
Hi, good afternoon, Thierry. Good afternoon, my usual C. Thanks for taking my questions. I've got 2. The first is on Coating Solutions volumes.
As we saw in the fourth quarter last year, Q1 2019 has had very positive volumes.
I
was just hoping you could give a little bit more color around what's driving that, and how sustainable it is. So maybe by region and end market, And then the second question is, on your very strong cash performance in the first quarter. How much of that is attributable to, kind of year on year change in working capital versus better cash generation given the strength in your stream businesses? And how are you thinking about the outlook for both of those, in the latter part of the year? It'd be very helpful to get your views on that.
Okay, Georgina. Hello, Marie Jose will answer the last questions first, and then I will go to Coating Solutions.
Okay. So on cash generation, as you could see, the main driver is the improvement that we have compared to the in terms of working capital, let's say, requirements for the first quarter. So we always have some seasonality impact on first quarter versus obviously the end of the year. Volumes are high, higher than in Q1 than in Q4. Hence, let's say the consumption of working capital Now when I look at the ratio, in fact, the management of the working capital remains, I think a good asset of the company and a clear focus point of focus of all the business units.
So in terms of ratio, working capital is actually quite comparable in terms of ratio of annualized sales of the quarter. And we are at 15% as I mentioned in my speech. So for me, we are in a sustainable environment where, basically, the work that has been done in terms of improving the management of the working capital last year remains and is sustainable across this year again.
Thank you, Marie Jose. So Georgina, on the Decoding Solutions, which to a certain extent is a geographic evolution. So first of all, I imagine it was a surprise to you, with regards to the volumes, to a certain extent, as I said, for high performance material, but on the other, In the other side,
we
are not going to grow at at 7% every quarter. If it is your question, that it clear that we have a good momentum in Asia. I think the work that we have been doing, yeah, notably in, in China, you know, there is more and more focus on the very well managed prongs, very compliant. So I think we benefit from it with our our customers. Certainly, the date of comparison of last year was not so strong also.
So we benefit from it. It's certainly a second element. And then we have, I would say, correct dynamic in a down for business. I would not say incredible, but I think quite quite cool, right? So I would say we certainly should continue to have a good momentum in coding solutions for the year around say really quarter by quarter.
But overall, we are relatively confident, but, we cannot say that we'll, deliver 7% volumes every bottle, it could not be true, but I think we are quite glad about the start of the year of Coating Solutions, which confirm our assumption on the acrylic value chain.
Yes, that's very helpful, Thierry. And thank you. Just to confirm, so what you're seeing is a lot of the volume strength is taking market share from the competitors that have had supply disruptions in Q1. You don't seem to have kind of pointed out whether coating demand or paints or any of the other end markets?
I interrupt you because, I think we have a conversation where the clear answer as Neder mentioned, any taking market share of competitors. So no, what I say is that We had a good momentum in Asia that we have a base of comparison of last year, which also add an overall, a satisfactory dynamic in downstream. So just take what I said and not incap rate. Thank you.
Next question
comes from Alex drops from Benchbank. Alex York from Deutsche Bank. I'm going to, to present the next person. It's Chetan Udeshi from JPMorgan.
Yes. Hi, morning. A few questions. Firstly, on 2Q, can you give us some color on how you think Q2 year on year decline in EBITDA versus maybe Q1 is that you want to write sort of, you know, year on year decline to think about in terms of 2Q when you talked about weaker 2Q year on year. That's number 1.
Number 2 question was on post unfortunate incident in Jangzhou province, it seems that the provincial government is taking a quite a stringent approach to safety and environmental aspect more than the past. And correct me if I'm wrong, but you do have quite a few sites in and around that province. So is there some impact that you guys are seeing or do expect from any of your sites there? And the last question is just clarification, when you said at the beginning of the call that, you expect the Fluorogases sort of performance this year now to be somewhere close to 2017. Is that just a comment around Fluorogases or the industrial specialties division as a whole?
Thank you.
So last point, I think I was very clear. It was a question on Fluorogases and I answered on Fluorogases. And again, I remind you that industrial specialties is PMMA, Fluorogases, thiochemicals, H202 with a combination of a specialty business and intermediate business, the twin cabinet business, normalizing and the other 2 specialty, as you could see from the point first quarter, behaving quite well. And so on your start point, it was clear it was an answer, which was to a question which was asked specifically on the on Fluorogases. With regard to the Yancheng province external incident.
It was a Chinese company, which has very big incident with material and human consequences, I think we have no impact at all. I think clearly, what you are mentioning is true, is that there is a lot of, let's say, protection on, Chinese local authorities or what is environmental and safety, which is I think is good for the industry. I think, it's normal. That we have that. And, this is why we permanently invest, upgrade our site to, have them remain state of the art, and I think we are well positioned Is that an element to come back to the question of Georgina of, let's say, good volumes in HR in acrylic, maybe a little bit.
We don't know. There are plenty of eleventh, which come with this kind of incident. It can be for a challenging or raw material. But on the other side, maybe you can help on certain end market. So we see that what is clear to answer precisely your question, we had no impact from this, from this incident and we are not on this platform.
Even if by definition, you have plenty of sites in Shanghai area. So everybody, to a certain extent, it's it's closed, but, you know, closing the chain. Either way, it's still a long, a long way. With regard, on the 2 Q, maybe a way to phrase it, is to say that more or less, we'll try to queue elements of, year on year of what you have seen in Q1 with one difference is that the for the Fluorogas, the Q2 is important one. This is when the distributor are talking for the season.
And so it's, this means that in, not in percentage, but in absolute terms, the impact of illegal, important of the normalization all that is more important in Q2 than it was in Q1. But with this exception for the rest, you have many elements of similarities between Q1 and Q2, And this is really the 2nd semester that we expect from a market condition standpoint, including this discussion we had on the stock in, should, should it really improve? I think this is the way we look at it.
Thank you.
Next question comes from Alex Gibbs from The floor is yours. Hi.
Can you hear me?
Yes. Sure.
Hi. Sorry. Seems to got lost in translation. I don't work at Deutsche Bank. That's all confusing earlier.
I apologize for that. Thank you for the presentation. I've got three questions and hope that they're quite easy. Quick to answer. First one, could you run through the reasons behind the particular strength in your biochemicals business.
What that means about the downstream methionine growth or perhaps the other uses for it? Secondly, can you just confirm or clarify your comments in the release that the Bostik EBITDA would have been above prior year period even without IFRS 16? And then finally, do you still have faith and believe in your 2020 revenue and EBITDA margin target, which has been deemphasized a bit over the last year or 2. Thanks so much.
Okay. So after you came across the there is momentum in market including methionine and in terms of volume was quite okay. So it's certainly an element of the performance. So methionine, as you know, there are some weakness in pricing, but the volume dynamic is quite okay and we depend on the as a supplier of an intermediate product. We depend on on the volume dynamic and the rest of the businesses for Tayo, sulfur chemical was was quite, was quite okay.
So and as you know, we are clearly there, so we benefit from a very strong position. With regard to boutique, yes, it's, above last year, including, ACRS. And, financially, excluding, if you, if you do it, electronomic. And in 2000, in 2020, yes, sure. I think, But as you know, it's a part of our in terms of what is your many contribution, we are there already since last year.
So it's really what is now missing. It's really the M and A let's say, evolution that we still need to complete. So as we mentioned, and I mentioned already before, We are quite selective. So we just not do M and A for the sake of achieving 2020 target, but we still believe it's achievable, as I'm talking to you, but the big part is M and A because if you look at the plan, you look at what we have achieved from an organic standpoint, what is remaining. And, it was through M And A, and we have the financial flexibility to deliver this M and A and to be exactly what we said we would be 3 years ago when we published 2020 target.
So everything is consistent from this standpoint.
That's great. Thank you so much. And sorry for the confusion earlier.
We have no further questions.
Okay. Maybe last question or Okay. So it's not. I, so I thank you very much for your time, your question. And, certainly, the Our team is open to answer any of the questions that could come later.
Thank you very much.
Ladies and gentlemen, this concludes the conference call. You all for your participation. You may now disconnect.