Ladies and gentlemen, welcome to the Arkema's Results Conference Call. I will now hand over to Terje Loehenhof, CEO. Sir, please go ahead.
Thank you very much. Good morning, everyone. Welcome to Arkema's Q2 2021 results conference call. With me today are Marie Jose, our CFO and the Investor Relations team. As always, you will be able to download the set of slides used during this webcast from our website.
And together with Marie Jose, we'll be happy to answer your question at the end of the presentation. After an already strong start of the year, We are very pleased with the way this Q2 has developed. Actually, we consider this quarter To be another significant milestone in the development of the company, consolidating all the growth ingredients Which were steadily implemented over the past years. Market dynamics stayed very well oriented with a combination of strong Underlying growth and tight supply chains. On top of that, we benefited from a clear acceleration in the demand For sustainable solution and from the strength of our innovation pipeline.
We really took advantage Of our unique positioning in high performance materials, the demand for which will definitely continue to expand On the back of powerful megatrends like climate change, resource scarcity, urbanization and clean mobility. In the first half, we have many very exciting examples of high growth application such as battery, But there are many others, and this will continue over the coming months years. Our performance was, therefore, excellent this quarter With an EBITDA of €478,000,000 up 67% year on year, Despite a negative combined scope and currency effects of around €30,000,000 EBITDA margin reached a record level of 20%. Just as importantly, the EBITDA was well Above the pre COVID level of Q2 2019. This reflects also the soundness of our decisions Made during 2020 not to cut R and D investment and CapEx project and this now allows us to capitalize on our recent Additions and to capture the growth.
We are strongly encouraged by the quality of this performance. Importantly, it was driven by all segments, each of them showing strong EBITDA progression, Supported by high volumes and robust pricing power. With volumes up almost 20% compared to last year And 3.5% above 2019 level, specialty material, which now represent around 85% of our sales led to growth. In the continuity of Q1, underlying demand was still very solid in most of the group's end market. And as I said just before, we also benefited from the accelerating contribution of new development driven by sustainable innovation in attractive and promising areas like battery, bio based materials, 3 d printing, Engineering adhesives or eco friendly paints.
As you certainly know, the raw materials environment was quite challenging this quarter. This is part and parcel of the economic recovery. We faced a sharp increase of input costs, including energy and logistics, Which will continue in Q3. Thanks to our pricing actions, we managed to completely offset This negative impact at group level, including in our most downstream businesses. Of course, there are Yes, depending on activities and geographies, but the net impact was neutral to positive in all the segments of the group.
At Bostik, pricing versus raw materials net impact was neutral, which is quite an achievement given the context. It is highly positive in Coating Solutions benefiting from good pricing power in the downstream businesses As well as tight market conditions in the acrylic chain. This pricing action will continue in Q3, So that despite further significant increases in input costs, the net pricing impact will be again at least neutral for Q3 for the group. Our Specialty Materials EBITDA reached €417,000,000 almost 40% above Q2 19 pre COVID levels, back on track with our 2024 ambition. The EBITDA margin was also excellent By the raw materials inflation, high performance polymer and Kotexa achieving a historically high performance above 20%, while Bostik Delivered on his promise and reached 14.3% despite the dilutive mechanical effect of price increases of around 15 bps, 50 bps.
This is in line with Bouygues' confirmed objective of 14% for the full year despite the ongoing challenge of raw materials. Intermediates showed also a strong progression year on year despite a negative scope effect into the PMMA disposal on the back of more favorable market condition. Given the strong set of results and the dynamics of the market, we remain rather positive on the outlook Even if we stay attentive and agile with regard to the evolution of both the public health situation and the difficult for material environment. Please also note that last year H2 already showed a good recovery. So the base of comparison with the higher will be higher than in H1.
On the qualitative front, I would like to shed some light on several developments and projects, which reinforce our commitment to sustainability And strengthen our positioning in high performance materials in line with our 2024 ambition. Firstly, I wanted to highlight some examples of our eco friendly innovation. As I said before, The demand for sustainable solution is accelerating, driven by megatrends, and we are ideally positioned to benefit from it. Our high performance material are a good example with our PVDF in batteries, serving clean mobility or bio based consumption Aviobate Polyamide 11 used not only in transportation to replace metal parts and reduce energy consumption, but also in customers' eyewear For its ease of design. In construction, we have developed low VOC powder coatings, mainly for automotive application, Our new eco friendly adhesive solution for insulated glass sealants.
All this is really very exciting for the coming months and years. We also recently announced 2 new organic projects supporting our commitment to sustainability. The supply of 1233ZD, Which is part of the new generation of Fluoro specialties with minimal and massive impact and the launch of our new renewable PVDF grades for battery, Which will allow an almost 20% climate change impact reduction using the residue of wood pulp manufacturing As a source of carbon, in parallel, we are significantly progressing With the construction of our 2 major CapEx project also directed to our sustainability, we have launched the final phase Our integrated bio factory in Singapore for Polyamide 11, and we are on track to start mid-twenty 22 The production of HF in the U. S. From an innovative process allowing to reduce CO2 emissions by 20 times compared to the traditional process.
Last and not least, on the M and A side, as you know, we finalized in Q2 the PMMA disposal Ahead of an already ambitious schedule. We also made a few bolt on acquisition and equity investments in Specialty Materials To strengthen our positioning, for example, in the circular economy, with the acquisition of AGI plus which is a leader in the regeneration of Hi, Performance Polymer, and which is or was an historical partner of Arkema in recycling operations. We reinforced our Adhesive segment with 2 button acquisitions in the start of the year, and we also took minority stake In innovative company like recently Verkor to accelerate our battery strategy in Europe or Air Force 3 d to extend our expertise in 3 d Printing. So as you could see, a very positive quarter. I will now hand it over to Marie Jose and will comment then on the outlook at the end of the presentation.
Thank you, Philippe. Let's review some financial metrics together, starting with the sales bridge. At €2,400,000,000 sales are up 26% year on year. So in organic terms, they grew 35% Versus the Q2 2020 and 12% versus the pre COVID quarter 2019 level. Relative to last year, organic growth was evenly split between volume and volume growth and price effect.
And relative to 2019, the 12% organic growth is split between 3% volume growth and 9% price. From a regional perspective, Europe and Asia were particularly strong With North America a little below, partly due to some raw material shortages constraining growth. The strong price effect is linked to our actions to increase prices in the face of a much higher input costs, but we also We benefited from favorable conditions in the acrylics chain in all three regions. There is a negative 4.5% perimeter effect In the quarter versus 2020, which is attributable to divestment of functional polyolefins last year and the sale of PMMA in May of this year, With some offset from the acquisitions that we made on Specialty Materials, when comparing to 2019, this elemental effect is only 2% as Armag integration only took place in July 'nineteen. Currencies also had an adverse effect On sales in the Q2 to the tune of 4.2% negative.
The same effect applies when compared to 20 2019, since it comes mainly from the stronger euro versus dollar, U. S. Dollar, Which stands basically at around 120 in the Q2 'twenty one versus 110 In the Q2 of 'twenty or 'nineteen. The number of growth allowed Arkema to achieve a very strong 7% growth in quarter 2 EBITDA to €478,000,000 Looking at it in the different segments, We are first in Bostik, an achievement of €82,000,000 EBITDA, up 64% year on year And by more than 15% relative to the Q2 2019, Adidas benefited from strong volumes in construction, do it yourself and industrial markets as well as from the integration of acquisitions and pricing created in the face of higher raw materials. The EBITDA margin was a strong 14.3%, fully in line with our full year target that we confirm at 14% for 2021.
Advanced Materials EBITDA is up over 40% year on year and up 25% versus Q2 'nineteen, And the EBITDA margin is at a record level of 24.4%. High Performance Polymers Had a very strong quarter indeed, with volumes boosted by accelerating demand in most end markets, including construction, Batteries, Electronics, Consumer Goods and Transportation, Performance Additives were less dynamic given the decline in oil and gas and a high comparison base in animal nutrition, detergency and EBITDA of Coking Solutions of €157,000,000 It's much higher than last year and even than the Q2 2019 level, which was at €91,000,000 This is driven by higher volumes across all major markets, including decorative paints, 3 d printing and industrial coatings. With an acceleration of the front door eco family offerings, such as powder coatings and water based paints, We also implemented price increases to reflect higher raw material and energy costs. The price versus raw materials impact was clearly positive For the segment overall, as we benefited from favorable conditions in the acrylics chain for activities that are not integrated downstream, so Finally, intermediate EBITDA grew 32% €87,000,000 in spite of the negative perimeter impact from the divestments of PMMA and functional polyolefins, The segment benefited from good market conditions in acrylics in Asia, in particular.
With depreciation and amortization at €133,000,000 recurring EBIT came to €345,000,000 Versus the €144,000,000 in Q2 2020. And the REBIT margin stood at 14.4%, She's up almost 8% versus last year. After the particular year linked to COVID in 2020, our performance this Here places our return on capital employed back above our long term target of 10%. Non recurring items amount to a positive €732,000,000 This mainly reflects the pretax capital gain Of nearly €906,000,000 into the sale of PMMA and also include PPM amortization, one off charges and restructuring expenses. Financial results stands at €13,000,000 negative, thanks notably to the benefits of Refinancing our bonds at a lower rate and lower interest rate coming from the debt swap into U.
S. Dollar. At €280,000,000 the tax charge includes the tax linked to the capital gain on the sale of PMMA that will be mostly debursed in the second half For 2021 and also reflects improving profitability. In the first half, the recurring effective tax rate Came to 20% of recurring EBIT, which is a bit lower than last year's level of 22%, Thanks to a more favorable geographic split of profits. Consequently, Q2 adjusted net income Wasn't really multiplied by 3 to €267,000,000 which corresponds to €3.5 per share.
Moving on to cash flow and net debt. I would like to flag first that in order to facilitate comparability the cash performance indicators, we have defined recurring cash flow metrics that include that excludes actually the positive variance And working capital coming from the tax liability on disposals, this recurring cash flow amounted to €245,000,000 in Quarter 2 2021 versus €284,000,000 in quarter 2 2020, the year on year variance includes, first, The increased cash generated from our operations, consistent with our improved profitability and second, The working capital rebuilds in the context of higher volumes and higher raw material prices. I'd like to flag that the working capital ratio on annualized sales, Excluding PMMA activity now, stands at a very low level, just below 12%, Virtuous 16.5 percent of sales last year. This is well below our normative level, which would be more around 14% of Thanks for a normal working capital ratio. The high level of demand did not really allow the various businesses to rebuild stock at this point, We would therefore expect this working capital level to rise in second half as we rebuild some inventories in a continued price inflation context.
Capital expenditure totaled €157,000,000 in the quarter versus €122,000,000 last year, Partially reflecting higher exceptional CapEx of €64,000,000 in Q2. And this is as a result of the acceleration in the construction of the Polyamide 11 plant in Singapore and the new 3N project in the U. S. Total recurring and exceptional capital expenditure is still expected to amount to around €750,000,000 this year. 2nd quarter free cash flow amounts to €330,000,000 including A nonrecurring amount of €132,000,000 due to the timing of tax disbursements linked to the PMMA sale.
The net debt at end of June 2021 amounts to €1,300,000,000 and that includes €700,000,000 Of hybrid bonds. The net debt also includes the totality of the €300,000,000 commitment Linked to the share buyback program that we launched in May, our balance sheet remains extremely solid with an ADAPT To EBITDA ratio at 0.9 times. Thank you for your attention. And I'll now hand it over to Thierry from your group.
Thank you, Marie Jose for your explanations. Again, we were very pleased by the result of the first half, Which reflects the increasing strength of our portfolio. The positive dynamics that we saw in H1 Are continuing with good demand across the majority of our end markets. Our specialty materials In particular, we'll continue to strongly benefit from our sustainable innovation drive and recent capacity expansions we made To leverage the accelerating demand linked to global megatrends, we are also keeping a close eye On the evolution of the public health situation and raw materials inflation. This is why we remain nimble And in particular, ready to further increase prices when needed.
Our raw materials index will continue to increase material in Q3, But we have demonstrated, as you know, our pricing power so far this year, and I am quite confident that we will at least neutralize the impact in H2. Given the strength of our first half results and are confident in the unique quality of our portfolio and Of our gross levers, we decided to raise for the 2nd time this year our full year 2021 guidance for Specialty Materials, Which, as you know, now constitute the vast majority of our scope. We now expect Specialty Materials EBITDA To increase by around 30% year on year in 2021 at constant scope and currency versus Plus 20% announced when we raised guidance at the Q1 results publication in May and plus 10% When we gave the original guidance in Feb. This would mean a very robust H2 for Specialty Materials With an EBITDA slightly above H2 2019 despite a negative currency impact Of around €30,000,000 All in all, this means that for the group, We expect an EBITDA of around €1,400,000,000 in 2021. At constant currency, Our EBITDA would then be close to the 2019 2018 levels for the whole group, Despite the disposal of functional polyolefin and PMMA for 8 months and the significant decline In Fluorogases' contribution over the prior year, so with a much better mix and also much lower debt.
And it was the whole aim of our new vision for the company, which we announced last year in April, And this is very value creative for our shareholders. Beyond delivering on our financial results, We'll continue to execute our strategy, accelerating innovation and new development in megatrend, continuing bolt on acquisition in specialty material, Implementing the strategic review in Fluorogases and above all, making further progress on our policy of corporate social responsibility To which our employees are fully committed. So I thank you very much for your attention. And we are now together with Marie Jose Ready to answer the question you may have.
Thank you. We have a first question from Mathieu Hayes From Bank of America, sir, please go ahead.
Hey, good morning, Thierry and Marie. The first one around standing by your margin guidance for Bostik this year. Forgive me, it's a bit unfair, but we've spent the last week hearing from AkzoNobel and some of the coating companies that they are not able to fully protect their margins this year. So is there something Inherently different about the adhesive business model or its raw material basket? Or should we more see this as a function of how Arkema itself He's executing.
And the second question may be around the materials margin. I think Marie said that's A record 24% and obviously higher than 2019. I promise if I'm wrong, but I think your midterm guidance is 22%. So are we looking at a perhaps a seasonal peak in profitability for this business? Or there's some sort of start up costs Coming into the company next year with Singapore?
Or is though, again, the way you're executing, are you trending above that Mid-twenty 2 percent mid term guidance that you've previously talked about.
Okay. Thank you for your question. Mathieu, overall, it's a good thing and I think it's important that we can raise Debate about this figure or that figure, what is very important and thank you for recognizing that is that This semester and this quarter and even the full year guidance, Let's say confirm that we are really fully on track for 2024 ambition. And you can take All businesses, all parameters, we are already confirming and this is the fruit, The benefit of our whole strategy and the execution, thank you for mentioning execution. I think we execute very well the strategy which is value creative.
So and we are really fully on track and this Q2 is demonstrating that pretty much. With regard the adhesive, it's very difficult to compare businesses which are not the same, and I will not comment For the paint company, which are partners and customers of us. On the adhesives, clearly, as you mentioned, I mean, the raw material challenge is a big one for two reasons. The first one is the value, in absolute value to compensate Raw material, which are increasing far more than what everybody was expecting at the beginning of the year. And also, when you are able to compensate the absolute value of the impact Of raw material, you are, by definition, a dilutive impact on the margin because you divide the same number By a number which are the top line, which is higher because it's Inflated by the pricing increase that we passed to our customers.
Despite of that, we maintain, we confirm Our EBITDA margin target of 14% for the full year. So far, we are above that. But as you know, the last quarter is a raise lower because it's you have December months. And even in the Q2, you have the August months. So normally, you have a seasonality Which make our margin percentage lower in the 2nd part of the year.
And as you know, In the Q1, we benefited from a delayed impact of raw material. But overall, we consume our 14%, which is Which would be quite an achievement in this inflated context of raw material. So we remain confident to make the story short On this, let's say, demanding target, And the good thing of it is that if we deliver this target, we'll be very well positioned to deliver the 16% For 2024, for Bostik, knowing that the current raw material environment is not completely normalized and it's above the norm, So if we deliver the 14% in this environment, this give us a good hope for the longer term. With regard to the I think your question was on Advanced Materials. Yes.
Clearly, we are more than in line Long term target, which is good. Can we do more? We'll see. I think let's first deliver what we have promised, which is, I think, Again, very demanding, but we are really more than in track with and it's coming, Mathieu, I would say with sort of acceleration of our HPP growth coming Both from PVDF and from polyamide, long term polyamide. I would say PVDF With clearly battery, but also other market, and it's not only battery story, but we are clearly very well positioned For battery, but it's more than that.
We see in electronics, in coatings, in the short coating, some very good areas of growth supported by And on polyamide, particularly polyamide 11, which is one of our start product, It's amazing to see that, in fact, difficulty with polymer is that some of them are not well positioned For this clean mobility and some are well positioned. And Polyamide 11, beyond all this Incredible prospect in biosourced polymers, in sport shoes, we could quote Plenty of new businesses accelerating. On top of that, with regard to clean mobility and automotive, It's a fact that this polymer is particularly well positioned. So we sell more, for example, polyeleven In automotive, in electrical vehicles, significantly more than we were selling internal vehicles. So it's Quite a good element.
So to make the story short, strong quarter in HPP, which is supporting the whole Advanced Material, Quite good hopes for the long term. So we are very well positioned to deliver at least what we have promised for the 2024 ambition, which was already very demanding. And the ambition, as you mentioned, is clear.
Thank you. Next question from Emmanuel Matot from ODDO BHF. Sir, please go ahead.
Hello, Thierry, Marie Jose and Investor Relations team. Several questions for me, please. First, do you think the recovery is too strong, meaning that it's going to be difficult for Arkema to Further increase your EBITDA in 2022, notably in H1 due to this very high basis of Hi, then, of this year. 2nd, do you face some shortages of some Raw materials, which could impact your H2, are you well protected again against that risk? I have also a question about corporate costs this year.
What shall we expect because those costs have doubled in Q2, maybe it's related to the PMMA disposal. And maybe a question about acquisitions. We have seen Several bolt ons since the beginning of the COVID crisis. Do you remain confident to achieve also some mid sized deals? Do you have some opportunities in the pipe?
Thank you.
Okay, Emmanuel. Different elements, maybe Marie Jose will answer corporate costs if you want. You want to do it now or at the end?
Yes, I can Actually, quickly confirm that corporate costs are coming back, let's say, to pre COVID levels. So despite we are not fully recovering in terms of traveling, but let's say, Most of the marketing, advertising and events are back on track to support, in fact, the volume Recovery that we are facing. The second aspect is we have, Kelly, some initiatives in terms of digital That we want to accelerate and contribute to this trend. So for this year, I'm targeting, let's say, to be at the level
2019 corporate cost overall. Thank you, Marie Jose. And this confirms that and you know it was
one part of our discussion last year. We recognize that.
We have never been last Last year, we recognized that we have never been last year the company which has cut more cost. We cut a lot. And we have already had in mind to make sure that the company was really positioned for the growth. We are now Entering, as we mentioned several times, a new area of growth for Arkema, organic growth. You know how we are free from cost, but sometimes you need to spend money Because you believe that you're already on the right wave for growing, and it is the case for Arkema, it is the case in Adhesive, it It is a case in HPPE.
It is a case in Coating Solutions where sometimes and we had discussions in the past, the potential of growth has been underestimated, including Profitability improvement and we are in this very nice period And we should not be underestimated and recognized really because we feel it good from this Growth endpoint and sometimes you need to put some cuts and this is what we are doing. And thank you, Marie Jose, for confirming that We go back to 'nineteen level, but maybe with a mix of cost, which is more oriented towards growth and modernization The company, which is good. With regard to recovery, It's interesting what you say because sometimes we get the question, are we becoming cautious for the 2nd semester? So we have to show what the right question. But No, I think at the same time you need to be positive, but also to recognize that risk do not rise to the sky.
So I think we are fully On track with our 2024 target, which is good. We delivered very solid 2021, a result above what everybody had in mind. So, I mean, It's great. I mean, it's fantastic. But it doesn't mean that you need to think that you need to recognize On that, the different element of the performance, you have some in fact, you have Two phases of the coin of the recovery.
You have stronger demand, but at the same time, raw material is a challenge. And when I say raw material, it's also supply chain Constraint that we need to manage and this supply chain constraints that you are mentioning, including shortages of raw material, we got them Already in the Q2 and they will be there also in the Q3 and certainly in Q4. So you have a combination of different elements. Some are supporting you like growth And some are challenges like raw material shortages that you are mentioning, and I think we are good at managing It helps us also on some value chain like acrylics, okay, and some other value chain. It's more an obstacle.
So, we have The combination of different element, but overall it's positive for the company and I confirm that We are fully on track, which was not obvious because we got the COVID in the middle of announcing our long term target of 24, so don't forget that. Despite of that, we are fully on track with this 24. This means we completely swallow and more than swallow The crisis level and we are able to rebound more than others because we are uniquely positioned in this megatrend. So This is positive, but positive that means that trees are right to the sky. So everybody has to be At the same time, confident, positive, but realistic.
Then On acquisition, because I think I answered the first two at the same time, no?
Yes, you're right. Thank you.
Yes. So I can go to acquisition. Acquisition, so certainly I will not comment since we are in the pipeline marked by this initiative. No, I think we're still on what we say. Some have bolt on and we have good ideas on small ones and there will be new ones which will be announced in this year.
Well, we have possibility some bigger deals, let's say intermediate size and maybe one big size In the next 3 years, so nothing is different from what we have said so far. So, we really as you know, half of our growth will come from acquisition and it's still the pattern that we are So nothing new on this side, but we are determined to make acquisition as part of our growth On top of the organic growth, which, as I mentioned, is going in the right direction.
Thank you very much.
You're welcome.
Thank you. And next question from Muthasa Chaudhary from Citi. Sir, please go ahead.
Hi, Tia. Hi, Tia. Hi, thank you for taking my questions. Just coming back to your comments on the Bostik margins, So it seems like you're doing quite well with the price increases to offer the raw materials in 2021. But looking further out, Should raw materials normalize, should we expect the pricing to decline as that happens or are you expecting to hold on to the Pricing as the new machines come off, let's say for example in 2022, therefore presenting a margin expansion opportunity looking further out.
And then second question is also a bit of a follow-up on the M and A side of things. I think when we when you did RMAS, you said that was kind of the Very, very high end of the bolt on size that you'd be looking at. Is that still valid or are you Given the PMMA proceeds and given where the balance sheet stands today, you're willing to look at something around the $1,000,000,000 mark or something around the bigger size For acquisitions, obviously, if it matched with your criteria and was in line with the strategy, Is that something that would be on the card or would you completely write off just to cover the slides? Thank you.
Okay, Mubasher. On the first one, you would tell me if I answer because I'm not sure I got the whole question, but I will try to do it. First of all, we have to manage first By step, as and it was, I think, the nature of the first of the initial question At the beginning of the question session, On BOSSIC, we have glad so far to have a set raw material and beyond that to maintain the percentage of Margin, at the level of the guidance that we gave you. We have another challenge, not only us but all All specialty chemicals raw materials company, which is coming with Q3 because there is a new wave of raw materials. For the time being, before talking about normalizing, everybody has to be aware that there is Another wave of raw material which will come.
And as we say, despite of that, for Bostik for the full year, We maintain our 14% objective of this year, which is Quite a strong objective. After that, when the raw material will normalize, You will get some normalization of pricing by definition because, I mean, you cannot ask whatever business To offset raw material increase, which are quite significant and just to keep it for yourself, this means you are not at all customer focused. So, no, I think there will be some normalization. But it's true that an environment for a downstream business Like adhesives, it's always more challenging when raw material go up, especially significantly than when they go down, Which means that if we are able to deliver the 14% margin for Bostik this year, it certainly put us, and it was my message, in good position, Quite in a good position for the 16% for 2024. So it reinforces our, I would say, our guidance.
But it's important that you appreciate The work that Bostik has to do to deliver the 14% in this kind of environment and so we are very pleased Thank you, Q2. And now we move to the Q3. With regard to M and A, we are open by definition to larger Acquisition, to the extent that the opportunity makes sense, so there is no religion on that. I think we are opportunistic on acquisition. We are our bread and butter are bolt on acquisitions, small size.
We know it's nearly statistic. We have A large number of possibilities and from time to time, let's say, 3 to 5 times a year we deliver some. After that, if you go down the list, We are open to medium sized ones. For example, we had Denver a few years ago, which was Medium size, I would say. And but they don't come every year.
So, let's say, we plan to make, let's say, 2 of them Appentive 24. Okay. And then we have the financial flexibility To make a bigger one, but we'll do it only from a strategic standpoint and value creation, it makes sense. And this, it's impossible to say it's for sure because it depends on opportunity and it would be a mistake to say I want to do it. For the sake of it, we do it because it makes sense.
And we are at the same time determined, but also patient because it So we have the financial flexibility, but the financial flexibility is not enough. It has to make sense from strategic standpoint And from a value creation standpoint, and we gave you, I think, the record on acquisition of since the start of Arkemaar, You have seen how much value we can create. And it was on a total of €4,000,000,000 I think. So we are really strict On what we buy, but at the same time, I think we have proven that we were able to create value with acquisition. So These are opportunities.
We will look at them. So, I cannot be more specific as you can imagine, but I'll try to answer as best as I could to your question, I will now share.
Thank you very much. That's all very helpful. Thank you.
You're welcome.
Thank you. Next question is from Daniel Cheng from Redburn. Sir, please go ahead.
Hi, Thierry. Hi, Marie Lehner. Yes, firstly,
while I'm on
the impressive results, just 2 from me. So first off, How do you view the development of the supply tightness in acrylics given plants are ramping back up? And what are your On potential normalization, maybe we can touch on the sustainability of demand as well in Coating Solutions, especially with Thanks for coatings. And then secondly was you touched earlier on high performance polymers. It would be really helpful to To get a picture on how big the growth was for PVDF and maybe in PA 11, whether that was due to No customer wins or market share gains?
That would be very helpful. Thanks.
Okay. We start with the last question and go backward. On the PDDF and polyamide 11, yes, the growth was Well, they're especially good in PVDF, as you know, because the battery segment is growing very well. But beyond that, I think we have so I would say the suppression It's tight and we have a lot of innovation. So we are let's say, PVDF on average is growing 7% a year.
And if I take the average of the 2 years because PBE 2020 is not sufficiently meaningful as a reference, I would say, If you take 2019 2020 2021, so far we are above this 7% With the acceleration in batteries, which is good and this is why you have seen some new investment in PVDF Recently and we'll continue to invest in this. So we are in pretty good shape. But as expected, when we published Capital Market Day, and it's really our sustainability innovation which is there. On Polyamide 11, in fact, we grow quite well with regard to 2020. But in fact, you know, we are up until we have the Singapore plant, we are limited in capacity.
So it's tight I will get back. So, we are significantly above 20%, but we go back to the level of 2018, 2019 Just because but with better mix, this means that more and more we are focusing on niches. So you can see that In the pricing also, because we can add really a lot of value in an issue like for example, Sport shows is quite a good example, but I could name or in medical, I could name even in some For automotive, but related to clean mobility, okay, high pricing Businesses, because you have a lot of innovation behind that. So the mix is evolving in a very positive way. But in terms of volume themselves, We don't have flexibility so far up until we have the Singapore plant.
So the Singapore plant will come really at the right moment from our standpoint and then we can talk again About growing. So different pattern for PVDF and polyamide 11, but polyamide 11 should join PVDF Once we have the Singapore plant starting. With regard to Coating Solutions, the sustainability of demand in Coating Solutions, I would say Q2, the Q2 level, you have some restocking, but not only for us and for our customers, for our competitors. So it's True. So, don't think that the growth in volumes that we enjoy will stay forever.
But I think the growth We stay quite robust for a simple reason is that with this Green Deal, this new habit Of consumption, people renovating their house, we believe that the demand for construction related business will stay good For the 2nd semester and for the next years, also with this stimulus package which come On stream in Europe and U. S, so you have plenty of elements which we believe should support This kind of business, this coating business, also constructional disease, they are more or less in The same area, so don't extrapolate Q2, which was absolutely outstanding, but consider that we are positive for the 2nd semester And the coming years on this acrylic demand. On this coating solution demand, with a lot of innovation in low VOC, Tea powder resin for powder coating, powder paint, it's this new type of demand is really Great. Supported by sustainability and this green deal. With regard to the acrylic value chain, So I think you mentioned also the monomer part.
Clearly, we benefit from but this is also the beauty of the portfolio. You have appreciate that, we have different elements on our portfolio between the Adesis, which have a pattern Advanced material, which is another pattern, and then we have a third pattern with coating solution. In an environment of tight Raw material, I would say that Bostik, even if they resist well, is suffering more. But on the other side, Cotech Solutions He's enjoying more this kind of pattern. And then you have to look at the whole group performance, which is Really more and more resilient because of this quite complementary pattern.
With regard to acrylics, again, don't extrapolate Let's say, the margin support that we will get in Q2 forever, it will certainly normalize more With all capacity begun stream on the 2nd semester, but it will stay at a good level Without extrapolating the condition of the Q2, but it will stay at Quite a good level. So, I think we are what is very good and I will take advantage of your question to extrapolate a little bit The answer, what is good really on the Q2, on the Q1 and on the full year, what we will deliver on the full year That is not the contribution of one element. It's really the contribution of different element, different business units, Nearly at equal levels, and we are very pleased about that because it's a very balanced development Of the year not only compared to 2020, but also compared to 2019 and compared to 2018. And for us, what is very important that have in mind is that we build a long term project.
It's not
a matter of 1 quarter or 1 semester or 1 year. What is very important is to Deliver ongoingly, and this is what we are doing, thanks to this portfolio reshaping.
Great. Thanks, Thierry.
Thank you, mover Daniel, sorry. Thank you, Daniel.
Thanks.
Another question?
Thank you. Next question, Alex Trois from Barclays. Sir, please go ahead.
Hello. Hello, Alex.
Hi, there. I think I
heard you say that the raw material
Alex, we cannot hear you. Sorry. The sound is very weak.
Okay.
Sorry for that,
but the
idea is better, yes.
Sorry. I think I heard you said the raw material net pricing balance And Adhesives in the 2nd quarter was neutral. I just wanted to confirm that that's correct. And if it is correct, Can you comment on whether you think that the second half will also be neutral or whether you'll see some Absolute earnings lost because of the war pricing balance, that would be very helpful. Thank you.
Just an Adhesives rather than the group.
[SPEAKER JEAN PIERRE
CLAMADIEU:] Okay. As we mentioned, we confirm first the 14% because we have some question on that, on the 14% EBITDA margin target for the full year. We still think that in terms so clearly, the raw material escalation is significant, But we confirm that we should be it's not very close to compensating the whole raw material in absolute terms. But because of that, you have a decision On the margin percentage, this means that we would have done better, in fact, than the guidance in a normal environment, which is quite an achievement. But then you have some division as a percentage.
But in value, we should be at par or close Even in the 2nd semester, which means a lot of effort, as you can imagine.
That's great. Thank you. You're welcome.
Thank you. Next question comes from Credit Suisse. Sir, please go ahead.
Thank you. We don't hear the sound, sorry. I'm ready to answer the question, but I need to ask the question.
Next question is from David Pandia from 1P Research. Please go ahead.
Thank you. So I give you questions in theory, if you're ready to answer. First question is really around your project with Nutrien, where you're taking a different route To the Fluoropolymer Chemistry. Could you just give us a little bit more information around the HFS Raud, and also in terms of just patenting this technology or just sort of getting Some exclusivity around this technology. How exclusive is it for you worse with Nutrien because I'm reading that there's also some projects In China, which are using HFS route rather than HF route.
So do you think in the future, this will be the way to sort of manufacture sustainable Fluorochemicals. And also, yes, if you can give us some color on how much You're going to use within PVDF versus your new low GWP gases like 1, 2, 3 For YF for 1233, ZD. That's my first question. The second question is really around M and A. So obviously, DSM went to Covestro and recently Alnex has also gone to Asian player.
And both those multiples were not Significantly, Panchi, 10 to 12 times. So I mean, what is your view around resin assets these days? I mean, was there a particular reason why you, again, chose not to go for LNX? And how is your own portfolio developing, especially with regards to water based coatings versus solvent based coatings In that regard, thanks a lot. And congrats on getting Thierry Palenkol on your board, but don't let him take all the credit.
Okay. Thank you very much for the 2 comments and questions. With regard to Nutrien, so I will not do it too technically because we have many people listening, and I want to make sure that everybody understand what We are talking about in fact, you have basically the traditional route where you start from the mine. So you have You have the Fluor Spa, which is a mineral, the stone. And with this and you extract it from the mine.
And then with that, you treat this to make an HF, you treat this Minaret, in a traditional with an oven inside an oven and etcetera. So This process consume a lot of energy, as you can imagine, at the 2 stages and Strong then is a strong emitter of CO2. It's a traditional process which is used, I would say, nearly for More than the vast majority, it's nearly the process, I would say. So the process that we have been working on, I would not say it's not necessarily exclusive, but I think at the end of the day, you will not have many companies using it just because You need to find the right place to implement it. And the beauty of this process is that you don't you use a byproduct, which is an intriguing process.
So you don't And any emission of CO2, it's incredibly favorable because you don't have the emission of the CO2 coming from the mining And on top of that, you don't have the production of HF, which is coming from your own process, which emit again CO2 because it's you use in a positive way just by products. So you don't add any CO2 On top of that, so it's from this standpoint, it's very elegant. It's true that in Asia, you have some Comparable processes which have been implemented, but again, it's a very large minority of Of these processes, so and I think in the U. S, we will be the only one. Now in China, we use more traditional Processes, we cannot use it everywhere.
I will not spend this amount of money everywhere. Otherwise, you will then question us On our capital employed, so we try to find the right balance when it makes sense and clearly in the U. S. For different reasons, which is competitiveness, T of security of supply and sustainability footprint is very, very good. So we are very pleased about this new process.
With regard to M and A, this is not because you have things to be sold that we will buy everything. I think in coating, we have already Very good size. We are one of the strong leader worldwide. We are very happy about our portfolio, which has been built over the years. I would say and it was normal.
For many years, we have been challenged On the profitability of the segment, you start to see that we were right about the potential of the segment. In terms of profitability, I think sustainability footprint is really very good compared to some other Hector, so I think we have a good portfolio that will continue to improve, but we will do it through bolt on acquisition And we don't plan to make major acquisition in the Coating segment. Even if you will recognize That's a multiple which has been I think it was 12 times for the big acquisition that you have mentioned. The multiples that you have seen on coating solution clearly reflect the value of our coating solution segment as such. So I hope that you will appreciate that Well, you make some of the parts.
But I think our strategy on coating is still the same. We want to make bolt on acquisition And we'll find some good ones which will reinforce both our technology, geographical footprint and create value for our shareholders. We are not chasing the big target.
Great. Thanks a lot, Pierre.
You're welcome.
Thank you. We have next question from Sam Terry from Credit Suisse. Sir, please go ahead.
Hi. Can you hear me now?
Yes, it's okay. It's okay.
Hello. Great. So, just a couple of basic questions on PVDF fees. So, Prices in China have significantly increased from EV demand. Can you give an indication of your PVDF Capacity and how much of that is sold into China?
And is your entire capacity of high enough quality to be supplied into batteries? And apologies if I've missed it, but what were the capacity expansion plans over the next few years here, please? Thanks.
Okay. Obviously, I will not give you the detail, which would our competitors would love to know, Okay. So, we'll not give how much is in EV, how much is in China. The only thing that I can say is that For many years, we are one of the worldwide leader. It's not the leader worldwide leader in PVDF.
We are very strong, Techno Luigi speaking. We have traditional businesses which are behaving very well. And on top of that, we have the battery which is accelerating the demand. So, we are really well positioned for that. We benefited as one of element of the growth of HPP, which is One element of the Advanced Materials growth, okay.
So after that, you can make your own assumption of how much PVDF is contributing. You have some Interesting note, which has been published recently by some of your colleagues, so you can also benefit from it. But I would That is really one of the elements that I mean, we must have in our sustainability innovation, we must have Maybe 12 staff and PVDF for battery is 1 of the 12 staff and it's fantastic that we are positioned there, but we have some As are we, which are also very good now. As I mentioned, our base plan for PVDF growth was 7% Yes. We think we should do more than that now, but we try To have a capacity extension, which make us available Which make us, let's say, in position to follow this kind of growth.
So 7% in the past. So it will certainly be about 10% in the coming years. This year is far more than that even if we don't disclose it. But we are in good shape. And you have seen sequentially several investment in PVDF In the recent so you can take the announcements which we have published and it gives you a good idea of what we can do.
But Sorry, I cannot do that. I cannot disclose you confidential information. We disclose to nobody and that Other people will love to have, but it's one of the bright spots inside Arkema. As others, Fortunately, we have, as I mentioned, 10 of them at least inside our Welcome.
Thank you. Next question from Gerard Kerr from UBS. Sir, please go ahead.
Hi, good morning. Most of my questions have been asked, but I just wanted to have one last one. When I look at your guidance, Your implied guidance for the second half of this year, clearly, it's below the level of EBITDA for the second half of last year. You already said that some of that is to do with currency, €30,000,000 I think you said. But I'm assuming also that we have The contribution from PMMA in the second half of last year.
Could you possibly tell us what the amount of EBITDA For PMMA was in the second half of last year.
First of all, I'm sorry, but please you can check with Beatrice. We'll now do it in Everybody, but our guidance for the H2 for this year is significantly above last year, first of all, Okay. Secondly, what we said and what I said is that we will be slightly above 2019. And I remember the discussion we had at the beginning of the year where the question was how much time it will take for us to go back to 'nineteen. So what we say is that not only we delivered a fantastic H1, but on top of that, we confirm that we'll get a quite a robust H2 and it's a guidance.
After that, it's your duty and if you want to put more, you put more. It's up to you. But If you're even more confident than us, this means that there is upside and everybody will be happy. But the guidance that we gave, which is very robust, Means that for the H2, we'll be certainly well above 2020 despite exchange rate, but on top of that, We'll be slightly above 2019 despite on specialty materials. I am on specialty materials Despite the exchange rate, which we valued around €30,000,000 so overall is what I would call, after a very strong H1, Quite a robust H2, which is very good, which and I would also Make this note.
It's true that the more you are good on H1, the more when you look at the difference with the full year, You can get the impression that we are more conservative on these 2, but you have appreciate each one. And when you look at the full year guidance, which is very important, this is why we wanted to mention it, what we say Is that for the full year, we should be around €1,400,000,000 If you make the calculation at constant currency Thank you for asking the question because it's allowed me to explain it very clearly. At constant currencies, this would mean that we would be Back close to 2019 for the full group, 2019 and also 2018, which was the record ever, But with the difference, which is quite significant, is that PMMA has disappeared for 8 months, Functional polyethylene has disappeared for 12 months. Fluorogas, which was, as you remember, and it was weighing down on the Our EBITDA multiple was fantastic in 'eighteen, and we have lost on the Fluorogas. So it's with a lower
contribution of Fluorogas, which
means that we'll be at Turn of Luellas, which means that we'll be at par, at constant rate with what was 2019 2018, but with a far better mix of specialties. And on top of that, it's not just that, it's with the level of debt. Despite share buyback, where we have €300,000,000 in the debt of today, Despite of that, we have a level of debt which is significantly below what it was at that time. So, you have Comparable results, the far better portfolio with the transformation that we have implemented, far more specialty, far more resilient, Higher margin. And on top of that, you have far less debt.
So I think in terms of value creation for shareholders, it's quite significant. So we are far from what you have just described, which is 2021 H2 Our guidance is below 2020. It's not true. And if you look really in detail and I encourage you to discuss with Beatrice and Peter, they would be really happy to discuss with you. It's quite a very robust guidance, not only H2, but you have also to look at the full year.
Maybe I could finish also with that. We are building certainly and you know how focused we are on delivering quarter by quarter and the full year. But you should not forget the fact that we are building also a company for the long term, very solid, very resilient on very robust foot Siht, and this is also what we are doing. So, quarter by quarter is important. Full year, I think, is more important.
And certainly, the way we develop our ability to deliver 2020 Sure, year by year is very important for you because it's really the execution of the strategy that we have announced. And we are very proud of that Because in fact, we go back to record level, but we start better portfolio again and far lower that.
Okay. Thank you.
You're welcome.
Thank you. Next question from Andreas Heine from Stephens. Sir, please go ahead.
Thanks, Dan. Sorry, Anders. Just what I propose is that because we run out of time, maybe I take again a couple of questions And with pleasure and maybe we stop there and certainly Beatrice and Peter and myself If needed, and Marie Jose will be able to take questions separately afterwards in the afternoon. Okay?
Thanks for the opportunity to be the last. Thanks. I start with theochemicals. Could you outline a little bit what you expect as Trend sequentially going into the second half. So how is animal nutrition demand and the refinery part doing?
That's the first one. 2nd, you were talking about the new resin raw material price increases. Partly you're part of that with acrylics as far as I can see it, at least on average. Cruise rate seems to be even better in U. S.
And Europe if it comes to acrylic margins. I would like to have your thoughts on that. And last, Asia. At first, I think I missed to congratulate you on buying the second half of this site for €70,000,000 in 2019. So sorry for that.
And Asia, yes, we are looking for a partner. At least that was what I was taking from the strategic targets. Isn't that Now the right time to look for a partner as the market is very balanced and margins are attractive.
What was the next question, Andreas?
Whether you now would think that it is a good time To find a partner for Asia. Okay.
So many questions. I would say, first of all, thank you for the comment on the investment in acrylics In China, because we have we could have mentioned that, but we did not do it. But it's clear that the second French that we bought at a very discounted price in the context of today. I mean, Peybbat is incredible. So, I think even in a strategy of pure specialty that we have, You can see that what we have done on some intermediates like acrylic in China, we benefit from it and it's a From cash generation that we can re employ in our specialty.
So thank you for the comment. Is that the right time To find a partner, I would say, yes and no. First of all, we believe that even if there will still be some volatility in acrylics in China, Market conditions in the mid run should stay rather good In China, so we have some time to discuss and we can continue To develop the profitability there, as you know, we have in terms of Disposal program or deconsolidation program to make it larger, our priority now is to look at our Fluorogas. So it doesn't mean that we cannot manage 2 things at the same time. It's just that we have already managed acquisition and disposal Sequentially, and it has been very good for our ability to execute, to integrate on top of all the rest.
So we have contacts. It's not a bad time to develop contacts. I agree with you. Does it mean that it's necessarily the right time To execute the partnership, but we listen to the market anyway and our strategy is clear on that. So you were wise To mention this point through your question, I think you had a point on the animal nutrition demand In H2, we were and also refining, so we are more in the biochemicals segment.
Yes. Our feeling, to be frank, this Ontario chemical, it has not been one of the it has been okay, Sorry, but not the bright star of the 1st semester. And but looking ahead in the 2nd semester, it seems to us that refining is getting better. And I think it was one of your questions. Animal nutrition should be okay, but we don't expect necessarily It's a neutral, I would say, for the 2nd semester.
We are a little bit attentive to the development Of the health situation in Malaysia, you see that the COVID is again strong there. So depending on that, you can have some constraint About production for our customers and for ourselves. So we monitor that closely. But I would say beyond that, I would say More neutral on the 2nd semester for Animal Nutrition and positive on the refining, especially with biorefining. This what is interesting, it's not only Asia, but also U.
S, where biorefinery is developing and is good for Our products, did I check with my team if I answered the question, the local question?
That one was great. The last one was, yes, acrylics and hamilton.
How I
see that? As I mentioned, there will stay and see For the coming quarters, I have no doubt about that. But I would say that Q2 is a picker, is certainly a pick because you have What you have seen on supply chain, the fact that the world as a whole is constrained in terms of materials And you know it yourself. You can read it in the newspaper. Certainly, acrylic is a little bit in the same Texo would benefit from it in the Q2 and I would not call that normal condition.
So you can have some normalization, but still staying At a good level. So I have no worries there. But don't this is what I mentioned. I think Q2 Q2 is fantastic. Don't extrapolate the kind of growth in Q2 for on everything forever.
It doesn't work like that. But we remain confident and our results will continue to be robust overall. It's my conclusion fully in line with Our ambition for 2024. So the team is really quite excited, motivated by the quality of the result of Q2, confident On GH2 and for the coming years, and what is important for me, it will be my last words, it's not Okay. Macro is one thing and we appreciate when macro is better.
What is very important is what you do structurally. And I think the opportunity is coming from sustainability is megatrend for a company like Arkema, which has spent so much time, energy, resources To get positioned is very exciting. So, it's my conclusion. Thank you for your attention and I wish you all A nice summer and vacation for the one who took them now. Thank you.
Thank you, ladies and gentlemen. This concludes the conference call. Thank you all for your participation. You may now disconnect.