Ladies and gentlemen, welcome to the Arkema first quarter results conference call. I now hand over to Mr. Thierry Le Hénaff, CEO. Sir, please go ahead.
Thank you very much. Good morning, everyone. Welcome to Arkema's Q1 2022 results conference call. With me today are Marie-José Donsion, our CFO, and the investor relations team. To support this conference call, we have posted on our website a set of slides which detail our first quarter performance and updated outlook. I will quickly comment the highlights of this quarter before letting Marie-José Donsion run through the financials in more detail. As always, we will answer your question at the end of the call. We were actually very pleased with the Q1 results. They were very strong indeed, ahead of our forecast and well ahead of market expectation. Despite, as you know, and this is not specific to Arkema, a challenging operating environment marked by high inflation, geopolitical events, and the resurgence of COVID in China, which our teams managed to navigate well.
During the quarter, Arkema certainly confirms the benefits of its unique positioning in Specialty Materials, which now represent over 90% of group sales, supported by the exponential need for high-performance materials and the accelerating shift toward more sustainable solutions. Since we last spoke, we have also taken a decisive step to strengthen our adhesives platform with the finalization of Ashland's Performance Adhesives business as of 1st of March. We are excited to have welcomed Ashland's teams within Arkema, and we are very happy with the business' initial contribution, which confirms the huge growth potential that lies ahead. More specifically now, I will mention the following key points. First, Arkema's EBITDA rose by 73% to EUR 619 million. The first time ever that we have achieved a quarterly EBITDA above EUR 600 million and, as a matter of fact, also above EUR 500 million.
The EBITDA margin improved by over 500 basis points to 21.4%, keeping in mind that the prior year quarter was somewhat impacted in the U.S. by the Uri storm. All segments, and this is quite important, contributed to the strong group performance. Specialty Materials EBITDA rose by more than 80%, thanks to two key drivers. Firstly, our pricing power and proactive pricing policy across all business lines to offset the very significant inflation in raw materials, energy, and transportation costs. Secondly, an improved product mix reflecting the execution of our strategy and the increasing development of high-value-added applications linked to sustainable megatrends, such as in lightweighting, clean mobility, 3D printing, electronics, and eco-friendly paints, demonstrating the strength of our innovation. We can also mention, as a positive element, the contribution of the more favorable market conditions in Upstream Acrylics.
Another reason for satisfaction, and it's more qualitative but as important, are the synergies between the three specialty materials segments. They are increasingly important, both from an innovation viewpoint and a commercial aspect, as we continue to present our One Arkema strategy and cross-business product offering to major customers across the key end markets I just mentioned. As I underlined previously, during this first quarter, all segments achieved strong performances. Bostik, and this is what we expect from Bostik, delivered a solid result despite some key raw materials missing and a high inflationary environment. Advanced Materials were boosted by our new business developments linked to sustainable megatrends. Coating Solutions was very strong, both on the upstream acrylics, which represent around 1/3 of the segment sales, and the downstream, which represent 2/3 sales. Intermediates managed to more than offset the disposal of PMMA.
During the quarter, we also had some exciting highlights in sustainability and CSR, including our partnership with Morrow to develop solutions for next-generation batteries, the completion of the first ever 100% recyclable wind turbine blade, and celebrating the fifth year of the Pragati Sustainable Castor Crop program in India. On the strategy front, we are getting closer to reaching our ambition of becoming a pure Specialty Materials player by 2024.
Over the next few months, we will be starting our two exceptional CapEx projects focused on decarbonization, namely our PA11 BioFactory in Singapore and the hydrofluoric acid plant with Nutrien in the US. Over the next two years, we have a rich pipeline of high-return projects that should strongly contribute to our earnings, such as PVDF expansion in China and France, 1233zd, near zero emission fluorospecialty in the US, Sartomer in China, Pebax in France, all serving very attractive market. This will boost our ability to support customers growing demand in high-performance polymers. On the M&A front, we expect to announce a couple of small bolt-on this year to strengthen our specialty materials.
Despite the integration of Ashland, our balance sheet remains strong at 1.4 x last 12 months EBITDA, which means this gives us ample flexibility to implement our growth strategy. After this introduction, and before commenting the outlook at the end of the call, I will now hand it over to Marie-José.
Thank you, Thierry. I will start with the sales bridge. At EUR 2.9 billion, sales are up 30% in organic terms. Volumes were down 2% compared to last year's elevated levels, impacted by logistics disruptions and raw material shortages, in particular in adhesives. Overall demand remains very well-oriented, with some weaknesses in automobile and construction in Europe. The price effect at +31% was significant, reflecting the pass-through of very strong input cost inflation. We also benefited from the product mixed improvements, as well as favorable conditions in upstream acrylics across all regions. From a regional perspective, we see positive trends in the U.S., while Europe is slowing down and Asia was impacted toward the end of the quarter by COVID-related lockdowns in China.
The scope effect is negative this quarter, take a -5%, as the impact of the disposal of PMMA was only partly offset by Ashland's one-month contribution. The currency effect is a +5% on the opposite direction, driven by a stronger dollar versus euro. Q1 EBITDA came in at EUR 619 million, with growth across all business segments. Bostik EBITDA is at 5%, at EUR 90 million. This is a good performance in the context of lost volumes from logistics and procurement disruptions, and reflects the benefits of our active price increase policy to offset strong inflation, as well as limited M&A contribution. The EBITDA margin at 13.4% was impacted by the mechanically dilutive effect of price increases. In addition, we will, of course, benefit from the integration of Ashland's adhesives in coming quarters.
Advanced Materials EBITDA nearly doubled year-on-year to EUR 274 million with an EBITDA margin above 22%. High Performance Polymers grew strongly thanks to a very positive product mix linked to their positioning on sustainable megatrends. As you know, our innovation enables higher value-added solutions, meaning that we are generating a greater amount of EBITDA per unit produced. In this segment, performance additives also perform well, helped by the oil and gas market's gradual recovery. EBITDA of Coating Solutions stood at EUR 192 million versus the low base of EUR 78 million last year, which, as a reminder, was impacted by Winter Storm Uri in the US in the first quarter of 2021.
Both our upstream and downstream activities grew sharply, thanks to strong pricing, but also higher volumes on the back of good demand in decorative paints in the US in particular. EBITDA margin was at a high level of 22.3%, driven by tight conditions in the upstream and a better product mix for downstream activities. Demand for higher value-added products is growing, including UV curing, powder resins, solutions for electronics, and 3D printing. Finally, Intermediates EBITDA grew 25%, thanks to improved market conditions in fluorogases, namely in the US, and acrylics in Asia, more than offsetting the negative scope effect linked to the disposal of PMMA, which was finalized in May 2021.
Please note that as from first quarter 2022, we have included the upstream of the PVDF within the Advanced Materials segment in the High Performance Polymers business line instead of the Intermediates segment, so in line with the strategy we announced in the 2020 Capital Markets Day. Continuing on the P&L, depreciation and amortization stood at EUR 131 million, which leads to a recurring EBIT of EUR 488 million, more than double last year's level. Recurring EBIT margin stood at close to 17%. That is 10% in Q1 2021. Non-recurring items amount of EUR 54 million. This includes actually PPA depreciation and amortization, one-off charges, restructuring, and legal expenses. Financial results stands at EUR -8 million euros, benefiting from lower interest rates from the debt we swap in US dollar.
At EUR 95 million, the tax charge reflects the group's higher results, of course, and is in line with the full year tax rate guidance of 21% of recurring EBIT. Consequently, Q1 adjusted net income jumped to EUR 376 million , which corresponds to nearly EUR 5 per share. Moving on to cash flow and net debt. The first quarter recurring cash flow amounts to EUR 26 million. This reflects the cash generated from our operations, offset by higher working capital. Indeed, working capital ratio on annualized sales stands at 14% versus the 12.7% last year and 16.5% in Q1 2020. The working capital level is linked to a higher raw material and selling prices, as well as a usual seasonality of the first month of the year.
The current level, I would say, is more in line with what we consider our normative level. Total capital expenditure amounted to EUR 112 million in the quarter, reflecting decreasing exceptional CapEx of EUR 40 million versus the EUR 53 million last year. Since we are now entering the final stages in construction of the polyamide 11 plant in Singapore and the Nutrien project in the US. In 2022, we still expect the exceptional CapEx envelope to be finalized with an amount of around EUR 130 million and recurring CapEx to come to around 5.5% of sales. This quarter, we also had an outflow of around EUR 1.5 billion linked to the payments for the acquisition of Ashland's Performance Adhesives.
This leads us to have a net debt at the end of March 2022 amounting to EUR 2.7 billion, including EUR 700 million of hybrid bonds. The net debt to last 12 months EBITDA ratio stands at 1.4 x, as Thierry mentioned. I thank you very much for your attention and I'll now hand it over to Thierry for the outlook.
Thank you, Marie-José, for this explanation. While our Q1 results were very strong, this is clearly not the time to be complacent. We remain attentive to the environment, in particular the war in Ukraine, its consequences, inflation trends, logistical disruptions, and more recently, the evolution of COVID in China, which will all weigh on demand in the coming quarters. In this demanding environment, we remain really focused on managing supply chains and actively adjusting selling prices, and more broadly, on remaining committed to the execution of our long-term strategy and on leveraging our innovation and positioning on sustainable megatrends. While visibility is, as you know, low, market conditions remain, for the most part, generally positive for us as we speak, but with differences between regions and markets.
In particular, we expect a temporary weakness in China linked to the COVID lockdowns, and the global volumes in automotive will continue to suffer from a lack of components. With all this in mind, in Q2, the group's EBITDA should increase significantly year-on-year, driven in particular by the strong organic growth of Advanced Materials and Coating Solutions. Adhesives should continue to be impacted by some residual raw material shortages, but still a solid result, while benefiting from the integration of Ashland. Intermediates should perform well, but will be specifically impacted by the slowdown in China acrylics due to lockdowns and mechanically by the absence of PMMA.
Following our strong Q1 results, we are adjusting positively our full-year 2022 guidance and now expect Specialty Materials EBITDA and Group EBITDA to increase likely versus a record 2021 at constant scope versus our previous guidance of Specialty Materials EBITDA to be comparable to the 2021 record level at constant scope. We are still, as you know, early in the year, so we will aim as every year to be more precise when we publish Q2 results and have a few more months under our belt. Moreover, the execution of our strategy will continue with our major CapEx project, the strengthening of our R&D investment in our five innovation platforms, the ongoing strategic review in fluorogases, continued bolt-on acquisitions, and further progress on corporate social responsibility. I thank you very much for your attention, and we are now together with Marie-José ready to answer your questions.
Thank you, ladies and gentlemen. If you wish to ask a question, you may press zero one on your telephone keypad. The first question is from Mr. Laurent Favre from BNP Paribas Exane. Sir, please go ahead.
Good morning, all, and thanks for taking my question. Thierry, I'd like to go back to Advanced Materials and the margins there. It's unusual for a specialty business to see a nearly doubling of EBITDA on a lower volume. I understand that what you said on the mix and I guess on strong pricing. I was wondering if you could perhaps tell us in a bit more granularity where you think some of the improvement is structural and sustainable, and where you think you may have benefited from some areas of shortages or temporary strong pricing, for instance, in PVDF. Thank you.
Thank you, Laurent, for your question. I think your question is valid for all companies which are publishing in these days because the environment is so special, with the shortages, with strong input cost increase, with some economy drawbacks like in automotive or now in China. It's such a special world that to identify which is more structural or more linked to the macro is really a gamble for everyone. What is very important first, and then I will come back more in detail on your question, is that in the same environment as everyone, we really outperform many of them. It's really an element of proudness for the whole company. It was the same in 2021 in a different environment. It was the same in 2020, completely different environment.
I think we are really on the right track, and we are very proud and pleased about that. I think the company has really a very strong positive momentum. Now, Advanced Materials, the good thing is that is pretty much supported by megatrends. The difficulty that we have is that our capacity are limited, as you know, because we have grown so much in the past. Our capacity become limited, and we are reinvested. You have seen the Singapore plant coming, Nutrien, PVDF new expansion, so we will regain capacity available. For the time being, most of the work that we are doing is really to arbitrate between our different volumes because we cannot supply more. We focus Arkema more and more on these high-value businesses which really drive the mix.
To answer your question, certainly, as everybody, there is a part which is linked to the macro, some tensions, et cetera, but there is a significant part that is linked to the product mix because of this innovation of megatrend. I think we outperform peers and competitors on that. This is why you see such a development of Advanced Materials for Arkema. I think we are very agile, as you know, and I think we adapt well on this kind of environment that I've never seen so far.
Thank you. As a follow-up, I guess the carve-outs of the upstream of PVDF for this active quarter, it seems that you're making progress on the, I guess, on the strategic review and on, well, the CMD commitment to get out of fluorochemicals, the emitted part. I was wondering if you could tell us now that conditions seem to be improving in the US, should we assume that you are closer to an exit, or should we assume that the conditions are now better and so therefore there's no rush to exit? Thank you.
No, I would answer that it changed nothing for us. That the process we have always mentioned that we would take our time, like a couple of years, and that it's clear that there is no specific rush. There was no rush before. I think we can only be pleased on the fact that fluorogases, particularly in the U.S., are getting better. I think our determination to make the disposal is still intact, but we'll take our time as we said before. I would say, Laurent, no change on this side.
It's clear that to mention the small— It's a small point, which is to transfer the integration which was in the upstream, which was in the Intermediates to put it to have the full line and the full vision for the PVDF. I think it's an element which shows you that we are going in this direction. I would say it's a specific accounting point which clarifies the situation.
Thanks, Thierry.
You're welcome.
Thank you, sir. Next question is from Mr. Matthew Yates from Bank of America. Please go ahead.
Hey, good morning, everyone. I'd like to follow up on Laurent's question, actually. I mean, the very strong profit results we're seeing clearly doesn't look like a function of volume leverage given the traction you have, but rather the efforts you've been making around the mix. I wondered if you could just talk a little bit more about that in the three different divisions. Specifically, are there any products or end markets that have become more important in the mix? Conversely, what are the areas you scaled back? Maybe as an aside, you touched on the One Arkema strategy in your introductory remarks. Thierry, forgive me if I'm wrong, but I can't recall you being so vocal about this reorganization benefit in the past.
I'm very intrigued if you think the innovation and the customer traction you're seeing is really validating the strategy you put in place to focus around these three platforms. Thank you.
Thank you, Matthew, for your question. I would say that to a certain extent, your two questions are linked, because if we get such a good mix and so much new business development replacing more commoditized product, this is because on the global key accounts and on certain markets, we really benefit from this One Arkema strategy, where we present ourselves not as a sum of a business unit, I would say, which are defined by, as you know, by product line, but really as a company which offer a full package from a raw material, from the adhesives to the coating, through the introduction of new materials, substitution of material. In fact, we see more and more in paints, in electronics, in 3D, now in batteries, in light-weighting for biosourced.
This real combination and synergies of approach between the different segments. This is very positive. In fact, this is the same answer for the mix. In fact, what we see is that we have a strong traction on everything which is linked to this megatrend sustainable development. Our customer asking for more and more solutions where we can really position Arkema on high-value product, which was not the case in the old path. Because we had not the range, we had not the innovation, and it was too early in the execution of the strategy. Now, and a little bit, we are because of the constraint we have on some capacities, we have no choice than pushing the mix in order to continue to develop the EBITDA.
Up until, as we will have on the second semester and next year, new capacities coming on stream. Mix is important in the development, as I mentioned to Laurent, of our EBITDA. Certainly, there is an element we benefit from tensions on the differentiation. It's not only true for Arkema, it's true for everyone, and not only in the chemical sector, but outside of the chemical sector, and we have to confirm that. For Arkema, I think we made a significant difference because of this momentum on this innovation pipeline, and we really fully appreciate that.
Great stuff. Thanks, Thierry.
Thank you, sir. Next question is from Mr. Andreas Heine from Stifel. Please go ahead.
Yes. Maybe you can help us a little bit more with these reallocation from the Intermediates to the Advanced Materials. My understanding is that the fluorogases business has two components. One is more the specialties and one more the commodity gases. The second one you want to exit.
Yes.
Now you talk about the precursors of the PVDF. Is my understanding right that these precursors reallocation did not affect sales, only with the longer value chain, the margin? That is my first question. Maybe you can give an update of, as of today, how your Asian acrylics plant is affected by the lockdown. Does it still run and at a reduced rate? Some more flavor in this regard would be helpful. Yeah, basically, these are my questions.
Okay. Maybe, Marie-José, on the first one.
Okay. On the Intermediates, fluorogases, you are correct. We have basically two components there. One which is basically the emissive gases that go into the air conditioning and refrigeration applications mostly. This is basically the scope that is for sale. If you go back to our capital markets presentation back in 2020, this is clearly explained there. We have obviously the upstream, the fluorochemical chemistry, let's say, upstream of the PVDF product, which is a specialty product, and on which we always have said we think it's virtuous to have a vertical integration there.
Basically, we just implemented in the reporting, basically what we stated back in 2020 in our strategy, which is reclassification of the assets of this fluorochemistry upstream of the PVDF back into the PVDF, so that you have a comprehensive view, both in terms of, you know, because the margin was basically already there, but at least you have a comprehensive view, in particular, in terms of asset classification, supporting the PVDF product line.
What was the impact then exactly on the, on sales? There was no sales impact in the reallocation, but there was a margin impact. Is that correct?
We obviously have transfer prices within the company, so that's why basically the impact you see on sales is marginal impact only concerning sales that we do third party, so it's minimal. Mostly, let's say the effect is the asset reclassification into the PVDF product line.
To make the story short, the P&L impact is quite limited. It's more asset reclassification than it's completely clear for everyone. The fact we have the integration is very good on the PVDF. Because it's also one of the advantage of Arkema, I think, in the fluoropolymer segment, we are quite well integrated upstream, including the Nutrien HF plant, which will be part of this integration in the coming quarters, and which is really an asset, a strong asset for us to support the chain. With regard to the acrylic plant, yes, you're right to mention it.
This means that our contribution, and it's factored in the guidance for the Q2, the contribution in China and acrylics will be certainly less than it has been in the first quarter because we cannot produce full speed. Recently we were at one third of capacity only. It changes week after week, and maybe in early May it will be better. Then it's also the question about our customers and because you have a lot of customer which have closed. Frankly speaking, visibility is quite limited on development, the way the COVID will be managed in China. April has been painful, as expected, nothing more.
We'll see for format should be a bit better, but we'll see. Difficult to give you a precise answer. The only thing that I can say is that we were just applying one sort of the capacity in April, which is not a lot, but with customers which were not there anyway. Hopefully it will come back. Again, it's factored in the guidance.
Mm-hmm. Thanks.
Thank you, sir. Next question is from Mr. Jaideep Pandya from On Field Investment. Sir, please go ahead.
Thanks a lot. First question is on polyamide 11, actually. Can you just update us, Thierry, about your plant? You know, when is it gonna start? If I'm not wrong, back in the day, when oil and gas was booming, you know, this had a pretty nice application, especially with, you know, oil service companies like Technip Energies. In the meanwhile, I suppose you've moved a lot of the business away from that. You know, assuming that oil and gas CapEx comes back, which is likely to be, you know, do you think that, given you have newer capacity in the next one and a half year, there is a big opportunity here to go back into that business, which was back in the day driving margins? That's my first question.
Then the second question really is also sort of around your other project, around the Nutrien project. If you can give us some color on, you know, progress there and also on sort of the sustainable version of PVDF, that you're working on. Just finally, if you can just tell us what is the percentage of sales or volumes these days that you're selling into the battery versus the non-battery market for PVDF, 'cause if I'm not wrong, a lot of the volume is shifted away from the non-battery into the battery market. Thanks a lot.
Okay, Jaideep. With regard to Symphony, which is the name of the project, in Singapore, we should be on time. I think mechanical completion early summer, start up late summer. It's, let's say, midyear, as we said. I think it's really, it will be really a big success because you can imagine with managing the COVID in Singapore, with a subcontractor has been really difficult. Despite all that, in terms of cost and timing, we are really where we said we would be. Really, for the team is a big recognition. In terms of end market, I think clearly we have gone a long way and since the time where oil and gas was a big part of this business.
For us, it's becoming an incremental business. You know, it depends also on the technology shift. We don't count more than that on it. For us, it's really the megatrend. It's sport, it's medical, it's luxury goods, it's consumer goods. It's really where we benefit from this biosourced high-performance polymer, and we have a lot more and more requests from different markets. I would say oil and gas, why not? I mean, it's coming back, but we don't count specifically on it, but we will present if they need us. It's becoming now more and more incremental. I think all these businesses that I've mentioned, these new businesses, new application, will really drive the growth of the Singapore plant.
With regard to Nutrien, same story as for the plant in Singapore. First of all, it's a nice example of partnership. I would like to mention it because we like to work with partners, and Nutrien is one. Together we have built a plant which should be a fantastic technological start on a technology which is very different, but far more sustainable, being the extreme of PVDF. But again, in terms of cost and timing, we are really where we said we would be. This means that the plant should start before the midyear. Certainly in June, start up of the plant.
With regard to the split, we don't give it exactly, as you can imagine, between, for PVDF, between batteries and non-batteries. What we can say is that we are attached to protect our customer, which are also non-batteries, because for them we are important, we are key. We try to get certainly a sort of balance between what is non-battery, batteries and to stick to it. We will not discuss precisely the figures.
Thanks a lot and well done on the results.
Yeah, thank you very much, JD.
Thank you, sir. Next question is from Mr. Adrian Tamayo from Berenberg. Go ahead.
Hello, good morning. Thank you for taking my questions. I have two. First in Europe, for your acrylic acid plant, can you tell us how should we think about possible embargo on Russian oil from the EU and your ability to source the raw materials, if the refiners you source feedstock from cannot produce?
It is your question, or you have another one?
One. I can ask up to one if you like.
As you want.
Okay. Yeah.
No battery. Generally, it's not. I will answer the first one. For us, first we are attentive to what is happening, and it's never the raw material we buy, it's whichever is oil or gas coming from Russia, embargo, whatever, it can impact our suppliers at different levels. Our understanding and belief so far is that it can impact the pricing of the raw material we buy, so it will contribute among other factors to inflation. Then we will pass the price increase to our customers. We don't think that we will get shortages of raw material linked to this situation. It's our feeling. So far it has been true. We'll see if it is true in the future.
We think that we will manage to get, so for Acrylic, it's mostly propylene, and we should get our propylene. Now, the risk is that it continue to increase. We'll manage that as we have been managing the very significant increase in the past 12 months.
Okay, thank you. The second one is for your comment on the European construction activity that you say is slowing down. Is it mainly do-it-yourself normalizing from tough comparison base in Q1 2021, or you see activity slowing down further in the start of the war in Ukraine?
In fact, I don't have the answer to your question. In fact, I don't know exactly. For me, it's clearly there was really a very strong quarter last year in do it yourself and even in construction. We are more in distribution, construction distribution, and we are not directly selling to OEM and construction in Europe. To my feeling, I would say my preferred answer is that we had a strong base last year. Now, if you look at the influence of the war in Ukraine on the European economy, and the inflation on the European economy, I think, for me, there is a risk that it's also linked to that. It's people think that the prices are too high, they buy less.
I'm not a macroeconomist, so I think maybe you know more than I know. My feeling is that, we have to be attentive to the second point, but clearly, at least in the first quarter, the first answer, which is a high base last year, is certainly the majority part of the answer.
Thank you.
Thank you, sir. Next question is from Mr. Geoff Haire from UBS. Please go ahead.
Good morning. Most of my questions have been asked, but I just had one small one. Could you just give us an update? Obviously, you've told us about the impact on the acrylic acid plant in China. Is there any more exposure you have in China to lockdowns across the rest of the group?
Since I answered already, so I will complete my answer. On China, we were running recently at around 1/3 of the capacity, so this is the impact. It seems to be a bit better now, but the question is our customers. If they are locked down, you can have the capacity. If you don't have the customer, it doesn't show any improvement. I think we'll get an impact on the second quarter, but depending on the scenario, it is really difficult to quantify. The only thing that I can say is that in our guidance for the second quarter, it is integrated.
Now, the same for the rest of the group, in China, the lockdown, again, there is uncertainty depending on the scenario, and nobody knows how long it will stay, with which magnitude. Is that moving from Shanghai to Beijing, which is what is being said right now? For us, it would be favorable compared to our scenario. Yeah. I think there are plenty of scenarios on the table. We have a median scenario in mind, which is, we stay more or less at least than being in April, and then this is what we believe. It concerns, I would say, mostly acrylics, but also customers from every business line of the group.
In fact, because it's not so much the issue of Arkema in terms of capacity as what our customers are ordering because their plants are getting shut. I think you have to be prepared for China in the second quarter to have a quarter with a decline, which can be notable. Overall, when you look at the dynamics of the whole group, because every quarter is different, we talk about China, maybe tomorrow it will be Europe and then another region. You need to be diversified and to have a strong momentum on your megatrend. This is the case of Arkema. This means that these uncertainties are factored in the Q2 objective, and they are, to a certain extent, factored in the whole guidance for the year.
Thank you.
Thank you, sir. Next question is from Mr. Chetan Udeshi from JPMorgan. Please go ahead.
Yeah. Hi. Thanks. A couple of questions. First, can you help us understand if there was any inventory write up in the EBITDA number for Q1? And if so, what was the magnitude, if at all? The second question, just going back to your previous comment about being capacity constrained. I mean, how should we think about that from a perspective of CapEx beyond this year? Can you maybe confirm if you guys are thinking about some other large exceptional project or CapEx beyond this year that we should be keeping in mind? Thank you.
Okay. On the first question, Marie-José, can you answer?
Okay. As you've seen, basically, we have increased our working capital, let's say, month to date with the significant increase in sales, which, as you have seen, it's mostly driven by price. I would say in total, most of the variance in working capital is definitely driven by customers. Regarding inventory valuation, we apply a weighted average cost on the inventories and not standard costing. In reality, let's say the price increase in inventories is kind of spread over the duration of the inventory in our stocks. Let's say around between three months or six months, depending on the product line. No particular write-ups. It's not material for us.
Thank you, Marie-José. On the CapEx, as I mentioned, we have a lot of CapEx already ongoing that you know. There is no surprise there. We have the Nutrien startup. We have Singapore, which is so these two were considered exceptional by ourselves. But we have also, which are in the current CapEx, you have Sartomer in China. You have the PVDF expansions in China, et cetera. You have a certain number of CapEx coming on stream, which are completely factored already. Now, beyond that, it's too early, actually, to say. Maybe it will be one of the topics of the next capital market day.
Our feeling is that, in terms of exceptional, certainly there will be at a point, but it's not for tomorrow, the doubling of the plant in Singapore. This, we will not be able to put it in our ongoing CapEx. It will be something specific for three years, as was the first one. I would say beyond that, the only comment I would make is that, based on the appetite of growth we have on megatrend, it's good news for you because normally these kind of CapEx are really a high return. It seems that the 5.5%, but I mentioned it already, several times, is becoming a little bit short.
We are more in the range of 6% if we want to be able to drive our promising organic growth on the CapEx. It's not a big deal, but it's important for you to know. It goes in the right direction because all this growth CapEx, they are really very attractive for you as shareholder.
Thank you.
Thank you. We have another question from [Inaudible] . Go ahead.
Thanks a lot. Just a question, which I suppose maybe you, it's a bit difficult to answer for you. I appreciate that. You know, you're on track this year. I don't wanna put numbers in your head or mouth, but you're on track this year to do close to EUR 2 billion EBITDA. You've just highlighted you've got so much CapEx coming in the next, like, two years, which will allow for growth in PVDF, in PA11, in Sartomer, et cetera, et cetera. You know, should we now think that you're not overearning this year and therefore Arkema is really switching gears and joining the EUR 2+ billion club? Or, as usual, you're gonna be cautious, and we have to wait for the next CMD for new goals from you?
Frankly speaking, I don't know which comment I can bring. I mean, I think you can dream yourself, and I appreciate that. No, I think what is important is that you appreciate the strong result of the first quarter first. I mean, they are really outstanding. Appreciate the fact that we outperform in exactly the same kind of environment, our peers and competitors. I think it's important for you because I know that you arbitrate in your choice. I think that everybody, there is a combination, and it will not be honest not to mention it, between what is structural, and there is a lot inside Arkema, but also coming from the macro with some tension. It's true for acrylics, but acrylics upstream, as we mentioned, is one-third of the Coating Solutions.
Sometimes people ask us a question that there are still two-thirds remaining. Okay, so it's a combination of factors, like for everyone. For the year, I think you got our guidance, so I will not mention any figure different. You can make your own math, but it certainly does not give you the kind of figures that you have mentioned. It's better. If it is better, it's better. So far so good. No, I think we have really to build the company as we have been building since now 15 years step by step. We're going the right direction, very strong quarter, good outlook for Q2, reasonable and solid guidance. We should start with that and stick to that. If we can do better, we'll see.
Don't forget that all scenarios are on the table for H2 on your side. It's not ourselves. It's on your side. I mean, if I discuss with each of you have different thoughts for what could be the macro in the second semester. I think our guidance in this context is quite solid. Let's appreciate it, and let's continue to work well to continue to build the incredible company which we are building step by step, and hopefully it will be more and more recognized. Clearly, we make a difference since three years in the market, and clearly with our strategy.
Okay, thanks a lot.
Thank you, sir. We have no other questions. Back to you for the conclusion.
Okay. Thank you very much all of you for your attention. It was a pleasure to share this good result with you. Don't hesitate to ask Beatrice or Peter if you have any further questions in the afternoon. Thank you.
Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.