Ladies and gentlemen, welcome to the Arkema's r esults conference call. I will now hand over to Mr. Thierry Le Hénaff, CEO, and Madam Marie-José Donsion, CFO. Madam, sir, please go ahead.
Hello, everyone. Welcome to our 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 revised outlook. As always, we will answer your questions at the end of the call. Let me comment first on the highlights of the first quarter before letting Marie-José go through the financials in more detail. These first months of the year were important, since we clearly stated during the webcast of full year 2020 results, and following the roadmap announced at last year's Capital Market Day, that Arkema was entering a new era of development. We said that we were very well-positioned to deliver strong growth this year and beyond, supported by the exponential need for high-performance materials and the increasing shift towards sustainability.
We also said that we would make another significant step in our journey to become soon a pure Specialty Materials player. We delivered on that promise in the first quarter, and we are also confident on the outlook. As you could see, we had a strong start in the year. The economic environment has improved over the past few months. We strongly benefited from our pipeline of new businesses in this market driven by global mega trends, and we just closed two months ahead of schedule the PMMA disposal to Trinseo. I would like to take this occasion to congratulate the teams for executing this transaction smoothly, efficiently, and I wish, of course, all the best to the PMMA team for this new adventure. Of course, not everything is perfect.
The public health situation remains, as you know, a concern with the appearance of new variants and the particularly difficult situation in some countries like India and Brazil. We can expect that the current volatility of the environment and limited visibility will persist for a while. Nevertheless, as we were when we talked two months ago, we remained quite positive overall on the outlook, taking into account the acceleration of vaccination campaigns and the stimulus packages introduced by several large countries to boost the economy. Now, more specifically on the quarter, I would like to underline the following key points. First, Q1 results were very strong, ahead of our expectations.
Volumes were up nearly 8%, driven by solid underlying growth, some restocking by customers, more importantly, an acceleration of new opportunities from cutting-edge innovation in global sustainable trends such as batteries, lightweighting, electronics, 3D printing, and low-VOC paint, to give you a few examples. Growth in Asia was particularly strong, while Europe rebounded well, volumes in the U.S. were temporarily impacted by raw material shortages following Uri storm. Arkema EBITDA rose by 20% to EUR 358 million, in spite of a negative currency impact of around EUR 15 million, and the EBITDA margin improved by 170 basis points to 16.1%. We were very pleased with the fact that each of our three Specialty Material segments, Adhesives, Coating, Advanced Materials, showed a strong progression year-on-year, allowing Specialty's EBITDA to grow by 20%.
Intermediates EBITDA grew by 11%, at constant scope, because you know we divested functional polyolefins last year. Their growth reached nearly 20%, matching, in fact, Specialty's performance. We had, during the March roadshow, a few questions on Bostik's ability to increase margins and navigate an inflationary environment. You have, I believe, the answer, since Bostik's results were excellent, with EBITDA of 25% and EBITDA margin at 15.5%, fully on track to reach the full year EBITDA margin target of 14%. On a more qualitative front, beyond the finalization of the PMMA divestment, I would like to emphasize a few points which illustrate the way we are executing our strategy towards Specialty Materials. First, Bostik acquired Poliplas to reinforce our positioning in the fast-growing Brazilian films market, and we expect to announce more bolt-ons this year, and not only in adhesives.
Our two large industrial projects, our bio-factory for Advanced Materials in Singapore and the environmentally friendly project with Nutrien in the U.S., are progressing smoothly. We have accelerated our initiative in the very attractive market for batteries for clean mobility with several investments in our Kynar fluoropolymers in China. In addition, we are currently assessing further investment for electronics and 3D printing also in Asia. Finally, I wanted to highlight our inclusion in the CAC 40 ESG Index announced towards the end of March, which regroups the 40 largest companies listed in Paris with the best ESG practice. This rewards, once again, all the efforts that Arkema has made in this field over the past years. I will now comment on the outlook, but at the end of the call. I will now hand it over to Marie-José and come back to you.
Thank you, Thierry. I'll start with the sales bridge that you have on the page six of the document. At EUR 2.2 billion, sales are up 12.7% in organic terms. Volume growth of 7.7% was the main driver, as detailed by Thierry, together with a price effect of 5% on sales compared to the Q1 2020. This reflects good market trends in construction and consumer markets, as well as from a regional perspective, a strong economic recovery in Asia and improved European demand relative to last year. Please take note of the adverse perimeter and forex effect this quarter. They are due respectively to the disposal of the functional polyolefins in June last year, only partly offset by the integration of Fixatti and Ideal Work in the adhesives segment. To a stronger euro versus dollar. Euro is at $1.20 in Q1 2021 versus $1.10 in first quarter 2020.
Volumes were a key driver behind the 20% growth in Q1 EBITDA to EUR 358 million. Net pricing impact on EBITDA was neutral to positive across our various businesses, reflecting higher selling prices to pass on raw material cost inflation and as well reflecting an increased tension on the offer-demand balance. Looking at the different segments, Bostik achieved a record EBITDA margin at 15.5%, thanks to good volume growth in construction and DIY and continued improvement in industrial markets. This was coupled with our operational excellence initiatives, the integration of acquisitions, and the repositioning of our product range towards higher value-added applications. The strong volume growth this quarter also generated an exceptional level of operating leverage on fixed costs. Advanced Materials' EBITDA grew 16% with an EBITDA margin above 20%.
High Performance Polymers grew very strongly thanks to their positioning, leveraging global mega trends and in part thanks to some customer restocking in certain markets like transportation. Performance Additives were held back by the decline in the oil and gas market and a high comparison base in nutrition and healthcare applications linked to COVID last year. EBITDA in Coating Solutions grew 20% year-on-year with an EBITDA margin of 13.8%, driven by higher volumes across all major markets, including decorative paints and 3D printing, as well as higher prices. Please note that this segment experienced some shortages in upstream acrylics, in a high propylene price environment, a phenomenon that should progressively normalize as the year progresses. Finally, Intermediates EBITDA grew 11% thanks to a much improved market conditions in acrylics in Asia, while the market environment in PMMA and fluorogases was less dynamic.
Depreciation and amortization at EUR 735 million brings us to a recurring EBIT of EUR 223 million, which is up nearly 40% year-on-year. REBIT margins stood at 10%, up from the 7.7% in quarter one last year. Non-recurring items represent EUR 24 million and include PPA amortization, one-off charges, and restructuring expenses, sorry. Financial results stand at - EUR 13 million, benefiting from the refinancing of our loans at lower rates and from the lower interest rate on the debt swapped into U.S. dollar. At EUR 43 million, the tax charge reflects improving profitability. We confirm the full-year tax rate of 22% of recurring EBIT, which of course excludes the exceptional tax impact linked to the PMMA transaction. Consequently, the Q1 adjusted net income increased strongly, up 59% to EUR 159 million, which corresponds to almost EUR 2.1 per share. Moving on to cash flow and net debt.
Q1 free cash flow amounts to - EUR 16 million. This includes, first, the increased cash generated from our operations. Second, the working capital rebuild in the context of higher volumes and higher raw material prices. Third, the progress of our exceptional CapEx. Coming back to the working capital, the ratio on annualized sales stands at a very good level of 12.7% versus the 16.5% last year. Given the positive volumes outlook and associated working capital rebuild, we don't necessarily expect this level to be sustainable for the rest of the year. As I remind you, our normative level is more around 14% in terms of working capital ratio on sales. The capital expenditure amounted to EUR 125 million in the quarter, versus EUR 92 million in Q1 2020, reflecting higher exceptional CapEx of EUR 53 million.
As a result of the progress that we are making in the construction of the polyamide 11 plant in Singapore and the Nutrien project in the U.S., total recurring and exceptional capital expenditure is still expected to amount to around EUR 750 million this year. Net debt at the end of March 2021 amounts at EUR 2 billion, including the EUR 700 million of hybrid bonds. The net debt to EBITDA ratio stands at 1.6x , which means that our balance sheet remains extremely solid. As previously announced, we confirm our intention to implement the EUR 300 million share buyback program as we have now closed the PMMA transaction. I thank you for your attention, and I will now hand it over to Thierry for the outlook.
Thank you, Marie-José. As we said at the beginning, we remain attentive to the evolution of the public health situation, but we assume in our guidance that there will not be a significant worsening of the pandemic. The improved business dynamic that we saw in Q1 is continuing, supported by robust demand in construction-related markets and positive trends in most of the industrial markets that we serve. Our Specialty Materials will continue to benefit from strong new business and capitalize on growth opportunities linked to sustainability. Concerning raw material, cost inflation should accelerate in the second quarter, we'll continue our initiative to increase prices to offset the impact. Based on the strong start to the year and our confidence on our unique portfolio positioning, we decided to raise for the full year of 2021 our guidance for Specialty Materials, which constitute virtually all of our scope.
We now expect Specialty Materials EBITDA to increase by around 20% year-on-year in 2021 at constant scope and currency versus + 10% announced previously. As expected, Bostik's EBITDA target is confirmed at 14% this year. In Intermediates, we should be able to deliver EBITDA at least at last year's level at constant scope and currency. You can see in the press release, we give you the number for PMMA for this year and last year. Be aware that this is no longer a key aspect. Intermediates, as excluding PMMA, should represent less than 10% of the group's total EBITDA. The execution of the strategy will continue. You know us, we work short-term, mid-term, long-term at the same time. It will continue on four main levels. Firstly, the acceleration of innovation and new developments supported by global megatrends.
The strategic review in fluorogases, continued bolt-on acquisition, and further progress on corporate social responsibility. I thank you very much for your attention on this introduction summary of the highlights of the quarter. Together with Marie-José, we are now ready to answer the questions you may have.
Thank you. Ladies and gentlemen, if you wish to ask a question, you may press zero one on your telephone keypad. Ladies and gentlemen, I would like to remind you that if you wish to ask a question, you may press zero one on your telephone keypad. We have one first question from Mr. Martin Roediger from Kepler Cheuvreux.
Good morning.
Good morning, Martin.
I have three questions. Number one, what is your order book telling you about the demand at the beginning of Q2? Is the demand as high as in Q1, or do you see the restocking you have enjoyed from your customers fading? Second question is on the Texas freeze. Can you quantify the earnings effect on your business? Thirdly, you mentioned that the net effect between selling prices and raw materials was neutral or slightly positive in Q1. What is your expectation of the raw material price inflation in the course of this year? Do you think you will be able to fully pass on increasing raw material costs to customers without any time lag? Thanks.
Thank you, Martin, for these questions. Overall, I would say the order book and the macroeconomic context to answer broadly, is in continuity of the Q1. You're right to say that restocking will be less than in Q1, will certainly completely disappear in the course of the quarter. At the same time, we were impacted in the U.S., and as you mentioned in your second question, in Q1 by Uri. Less restocking, certainly, but no impact of Uri. You have also the seasonality, which will help Q2 versus Q1. Overall, like for like, the macro environment is really comparable. We don't see any change. We are lucky. We have no, in fact, market which has been structurally impacted by the COVID, which is good. We are nearly not in aeronautics. Our presence in oil and gas is quite limited.
For the rest, we continue to enjoy a solid and robust growth. We don't quantify the impact on the earnings of Texas freeze. Otherwise, we would have put it in the press release. What is clear is that you have integrated in the EBITDA of the first quarter the impact of this freeze, which is always difficult to quantify because you have direct elements, you have indirect elements, and clearly, we'll not have this impact anymore for the large majority of it in Q2. It's certainly positive in Q2, but as I mentioned, not this restocking effect we had in Q1. We are confident in Q2 to be the continuity of Q1. With regard to the pricing, which as you know, it's a challenge, but it goes with the demand.
This means that because we have an after-crisis demand really going up, it put pressure on the raw material. It helps also the acrylic evolution for Arkema. I would say Q2 should be another quarter of increased raw material. This means the inflation of raw material will continue to develop into Q2, especially with the time lag when you look at because of the stock and the P&L impact. We are also confident on the other side, in parallel, to see our pricing sequentially continuing to develop. Because of that, we are confident to achieve for the globally and for the company, at least a neutral impact of pricing versus raw material in the Q2 and beyond.
Thank you.
Thank you, sir. Next question is from Mr. Emmanuel Matot from ODDO. Sir, please go ahead.
Good morning, Marie-José. Good morning, Thierry.
[Non-English content] Emmanuel.
Several questions from me, please. First, which industrial markets have not yet recovered for Arkema? Second, don't you see any improvement in fluorogases except from the basis of comparison? You seem to remain disappointed by Asia and Europe regarding that business. What about U.S. also? Third, do you confirm you will launch the EUR 300 million share buyback program in the coming weeks following the divestment of the PMMA business last Monday? My last question, do you remain confident to achieve your ambitious program of acquisitions? How is the pipeline of opportunities at this time?
Okay. Thank you, Emmanuel. Maybe Marie-José, you want to take the share buyback, and it will be clear for everybody.
As I mentioned during my introductory speech, we confirm we will implement this share buyback program. As you know, we still have a shareholder meeting happening later in the month to allow us to increase, in fact, the limit at which we can buy the shares. If you remember last year, the limit was set at EUR 100, and we are fortunate to have exceeded this limit. We need a new vote to, in fact, lift this limit up so that we can actually implement and execute the program.
Thank you, Marie-José. Very clear. Quickly on the other question, I would say that nearly all industrial market which we serve significantly, you can always find in this fragmented world a market which would be very small for Arkema. I would say for the one which count, I would say it's either it has recovered or it's recovering, rebounding materially. I would say for us, the landscape is rather good these days. There are some nuances, but I think we have a good mix of businesses, which has been also an advantage. In fact, we have the same advantage last year than this year. Last year, because we had a good positioning on our end markets and a good diversity of end markets, we lost only 4% in volume, which in the COVID time was quite a good achievement.
This year, we benefit because we believe we are very uniquely positioned. We benefit from a recovery on nearly all our end market. With regard to fluorogas, I think as we told you, Intermediates, which is what acrylics in Asia and fluorogas will represent less than 10% of the EBITDA of the company. Will not be the story there, and we don't want to create any speculation there. This is why we say you have not to worry about it. We will be at least at the level of last year. Specifically on fluorogas, we are not disappointed because we are where we thought we would be. Maybe a little bit better in the U.S., Europe and Asia stay at low cycle, certainly upside midterm there.
Today is low cycle and fluorogases in the U.S. are a little bit benefiting from this anti-dumping legislation in the U.S., which have been in place. I would say not a big story there. The good thing with fluorogases is that we have a certain level of stability, which we certainly appreciate, while at the same time for the rest of Intermediates, acrylic in Asia are in good shape. With regard to, w hat was the last one? I cannot even read myself.
Acquisition pipeline.
Acquisition pipeline. My writing is worse and worse. It's terrible with these digital things. Acquisition pipeline. We maintain what we say, and I think it will be in the four years a combination than one or two measures. I would say the most of it will be some of bolt-on, and which is not only for Adhesive. Adhesive is a priority, but we look also at Advanced Materials and Coating, and we have some good ideas and a good pipeline. As you know us, we try to make things which create value. This is why sometimes we take our time, but I think we have quite a decent pipeline. We are on track with a good source on bolt-on acquisition.
Thank you very much.
You're welcome.
Thank you, sir. Next question is for Mr. Matthew Yates from Bank of America. Sir, please go ahead.
Hey, good morning, everyone. A few questions, please. Firstly, it's quite a short-term one just on thiochemicals. I think CJ is planning a six-weeks maintenance shutdown through the course of June, July. Can you just remind me from Arkema's perspective, do we see your own sales fall over that period, or does the contract structure help to smooth that out? The second question is just around PVDF, where I know you've been making a series of capacity expansions, but we heard Solvay talk yesterday about 80% demand growth. I guess the question is, are you actually investing enough to satisfy that demand over the coming years? How big a business do you think this could be in, say, three or five years' time? If I can squeeze in just a third one, just around Adhesives. I know you've reiterated the 14% margin guide for the year.
Having just done over 15, I wanted to ask if that increases your confidence in the 16% target for 2024, or is really Q1 just what I would call a freakish quarter that we shouldn't extrapolate too much from? Thank you.
Okay, Matthew, and hello. With regard to thiochemicals, we don't tell you specifically all our maintenance shutdown and all shutdown of a big customer. Otherwise, we would spend hours discussing that, and there is no point there. When CJ is getting maintained, we have less sales this month or this quarter or whatever. It happens for CJ every year, and you have plenty of customers stopping from time to time. At the end, for Arkema, I would say that not make a big specific event, and it's fully factored in our confidence on the year and the quarter. For us, it's not. But yes, clearly if CJ shut down, the contract is not protecting you. You will sell less. On the year, at the end, we sell good volume, so it's not an issue for us on a specific issue or whatever on the year.
On the PVDF, you have seen we have accelerated our investment. We are pleased to see with the demand growth, and there may be more to come. I think, yes, the idea is to be able to supply the whole demand. For us, it's one. It's not the only one by far. We have many elements of growth inside the company. This is why I say from the start, our positioning is becoming more and more unique. Hopefully, you'll start really to see it. It's incredible how many opportunities we have in terms of new business development. Battery is one. With what we put in PVDF, by essence, it will be tight because there is a big appetite for battery.
I think we have the project and the money to be able to follow, and this is why I am sure you were comforted by what we have announced in the first quarter. I would not be surprised to see other investment coming through. With the 14%, and the 16%, yes, clearly, when you see the Adhesive, because we had question, as I mentioned by introduction, we had a question in the annual call in March about maybe stretch for Adhesive in this inflationary environment to deliver 14%. We say, no, we are confident. Because even if we don't pass through all the material, at the end, with a combination of organic growth, operational excellence, synergy from acquisition, et cetera, we are confident to deliver the 14%. What the first quarter is showing is that we are on track.
Clearly there is a little bit of support of the strong growth, but we benefit of it like our competitors. I think the year will continue to develop robustly. Certainly, 15.5% is certainly a peak, which supported by excellent sales. It will not stay like that full year. There is also a little bit of seasonality at the end of the year. In August, we take all this into account to confirm our 14%. Clearly, it shows to you that the work that we are doing in Adhesive is really going in the right direction, and this 15%+ is certainly a good signal to tell us that 16% in 2024 is completely achievable. Yes, it make us even more confident, but we were already confident.
Very good. Thank you, Thierry.
Thank you, Matthew.
Okay, next question is from Mr. Laurent Favre from Exane BNP Paribas. Sir, please go ahead.
Yes, thank you very much. My question is actually slightly related to what has been discussed already on HPP. Sales were up 15% versus Q1 2019. I was wondering if you could talk about your utilization rate and if you have any more headroom to produce more, not just in PVDF but also on the polyamide side. Are you at full capacity? The related question, recently you confirmed that you are on track for the Singapore startup in H1 next year. I was wondering what prompted that release. Is it that you are in process of locking in some customers, and should we expect a positive contribution, post-EBITDA contribution in 2022 then? I'm assuming that there might be startup costs, but thanks for any color you may give.
Clearly, because the demand is good, in certain plants we reach our limit. In PVDF, we are implementing new reactors. There is some room for maneuver, even if it is tight. We have increased, as you could see, not in the monomer, but on the polymer, in polyamide in China with polyamide 12, for example, it will help to grow. Also, we work a lot on the mix, as we did in the past. It takes the average price up. It's clear that, to be honest, in terms of pure organic growth, beyond what we are doing today, which is quite good, as you could see this year. If you compare to 2019, which was already, at least for the first part of the year, a good reference point. Organic growth possibility are a little bit limited in HPP by our capacity.
We have growth. We get organic growth this year, which will be material. After that, on polyamide, if we start Singapore in early 2022, which is the goal, and so far we are really on track, then we should have positive contribution already in the second semester of 2022 of Singapore, despite the startup cost. I think this is very exciting, to tell you the truth, both our fluoropolymer and our polyamide. I've never seen, myself, and as you know, I've been in the company for some years and never seen such a promising pipeline of new business development because of this global megatrends. I think there is a sort of acceleration of high performance, innovative, sustainable polymers, and we are really well-positioned with our polymers.
It's true also for some polymers that you are less aware of, for example, the Pebax, which is an elastomer we're selling for shoes. The appetite for innovation from our customer has never been as large. Yes, up until 2022, some limitation in capacities, which will limit organic growth, but it doesn't mean that we'll not grow, as you could see this quarter, and also it will help on the mix and the pricing. Starting in mid 2022, both in PVDF and in polyamide, the biosource or polyamide 11, we'll get new capacities and the pipeline will be quite good. If your question is that do we secure a long-term contract with the customer? We do it from time to time, but it's minority of our business development. It's not the way the industry works.
For the specialty product, you have new opportunities all the time. This means that you need to be confident your ability to find these new opportunities every quarter. We are confident. We have the right opportunity, the right talent. There is a clear difference between where we are today and where we were two, three, four years ago.
Thank you, Thierry.
Thank you, Laurent.
Thank you. The next question is from Mr. Jaideep Pandya from On Field . Go ahead.
Thank and congrats first on inclusion in the ESG Index, Thierry. First question is really around your project with Nutrien. Assuming that this sort of goes through successfully and you're significantly improving your environmental footprint, will this be a project which will stay with you, or is this something that's going to be part of the initiative part of fluorogases in your discussions to whichever way you want to exit the MSA part of fluorogases? If you can just talk about what this actually means for PVDF as well from a food chain, environmental point of view, in case it is staying with you. That's my first question. The second question is around 1234yf. I know you don't want to talk about fluorogases, 2023 is when patents expire in U.S., Europe, and Japan. For the two big boys. What's your plan for 1234yf?
Have you been, sorry to use this word, cheekily producing a little bit in China in preparation for entry in 2023, if possible? The third question really is around molecular sieves. Haven't discussed much in recent times about this, but xylene production is going up, paraxylene production is going up a lot in Asia. What's the pipeline for molecular sieves in 2021, 2022, 2023? Thanks a lot.
Okay, Jaideep. Thank you. Very specific question. Clearly, the large majority of HF supply is for what I call specialty chemical numbers, so w hat goes into PVDF, what goes into gases which go into our partners, which make themselves specialty polymers. It goes also to our specialty chemicals that we will keep. I would say at the end of the day, most of the supply will stay with us. After that, it depends on the company which will acquire a majority of the full of our fluorogases will need or not HF. To a certain extent, we'll be a seller of HF. All scenarios are possible, and as of yet, we have not defined the scenario because, as you know, we are just starting the reflection on the fluorogas disposal. It's just really now that we take that into our action plan.
It's too early to say. I think we are flexible, and what is more important is that we get the environmentally friendly and competitive supply to our specialty fluorochemical business that we keep, and this is what is most important. We are very proud of this project because economically it makes sense. In terms of safety of supply, it makes sense. In terms of environmental footprint, it's very, very good compared to the traditional mining extraction. After that, we'll do what is clever when we take into account that it's good to have flexibility. With regard to 1234yf, just to be clear, we don't sell, because we are not authorized to sell, so we don't sell. After that, certainly when the patent will have expired, and we'll have the possibility to sell. Normally at that time, we should not be far from disposing of, having already disposed.
I don't think it's a big element in our own business plan for what we keep inside Arkema. It's certainly an upside for owner of our fluorogas business. With regard to molecular sieves, yes, the consumption, but there is a lot of capacity. The consumption increased. I don't think that molecular sieves will make a big difference in the Arkema business plan for 2024, in the coming years. We mentioned them to you. We have plenty of elements of new growth for Arkema. Incrementally, molecular sieves can contribute, but I would not say it's a material element. Don't build your story on molecular sieves. Okay.
Thanks a lot. Just sorry to come back to the Nutrien project. Would you say that at current floor spot prices, the payback is less than four years for your investment?
We're not-
Yes or no will do.
I know, but as we say for all our organic project, and it is one, a development and growth project. This one is one. When you look at the EBITDA generated after ramp-up, let's say after three, four, five years, depending on the size of the project. You take the CapEx, and you divide by 3.5 and four, and it will be the case for Nutrien, the same as for the other. I think certainly the price of HF currently reinforce the quality of this project, yes. Yeah. No, I think it's a good project.
Thanks a lot. Thank you.
Even we did not do it only for economics, and mostly for sustainability and safety of supply long term, but it's also good from an economical standpoint.
Thanks a lot.
Organic project. Thank you.
Thank you. Thank you very much, Thierry. Thank you.
Thank you, sir. Next question is from Mr. Rob Hales, Morningstar . Sir, please go ahead.
Hi, good morning.
Good morning.
Just wanted to ask about engineering adhesives and your accelerating development there. When you talk about engineering adhesives, are you referring to the very high margin, highly specified business, similar to what Henkel is kind of specialized in? Is there any sales in that business right now? What are your aspirations?
Okay. You have two definition of engineering adhesive in the market, in fact. You have the one of Henkel, which is purely electronics, mostly. You have the one of Fuller, which is more what we call ourselves durable goods. The durable goods is, for us, about 20% of those six sites. Okay. While engineering adhesive purely with the definition of Henkel. With the definition of Fuller, it's 20%, and it's a high margin business, but not as high as what Henkel has in their definition of engineering adhesives. If we take the definition of Henkel, we have just started on this new line, and we are very excited, but it will take time. The sales are really minimal. It's rather small today. It depends on your definition, but if you take the one of Henkel, we have just started.
As you know, we have made a second acquisition. Each time they are small acquisition. Really to reach 100, it will be a matter of five years. We need time, but we knew that it's an entrepreneurial project on a business which is quite monitored. Now, if you extend the definition to the same as Fuller, which is another good definition, in durable goods, we are including this electronic adhesive. We are really growing at twice the GDP, and our EBITDA margin potential is above 20% EBITDA margin, just on these durable goods. It's quite exciting, very interesting. We have some unique possibility. It really depends on your definition.
Okay. Thank you.
You're welcome.
Thank you, sir. Next question is from Mr. Alex Stewart from Barclays. Please go ahead.
Hi there. Good morning.
Good morning, Alex.
Two questions. Hi there. They are both on margins. Can I just clarify a comment you made at the beginning where you said that you thought that the balance of pricing of raw materials would be at least neutral? Were you talking about the full year? Was that the comment you made?
Full year, quarter, whatever you want, yeah.
Okay.
I would say it's true for Q1, it will be true for Q2, and it will be true for the full year.
Okay. That's my question. In Q2, you expect actually not to have any negative impact from high raw material?
No. Globally for the company, you can have pluses and minuses depending on the momentum of each business. On some business, it takes more time, some other it's more quicker. Overall, for the group, yes, will be pricing at least neutral, if not positive, yes. We are confident on that.
Okay. That's fantastic. Thank you. The second part of that question, in the first quarter in Coating Solutions, can you tell us whether the balance of better unit margins in the monomer business and any impact on margins in the resins downstream, was that a net positive? If I look at unit margin, were they higher or lower than the year before when you take both the upstream and downstream into account? Thank you.
First of all, maybe to enlarge the question. Coating Solutions, as you could see, we had quite a good growth, EBITDA growth. It could have been even better if we had not had Uri, because it is certainly one of the business which has been the most impacted by Uri in the U.S. We had a strong performance in Europe and Asia, but more challenging in the U.S. because of Uri. It is nothing to see with us. It is just the case for everybody. First of all, it could have been, in fact, even better, even if it was already excellent. In terms of net pricing, yes, on the whole Coating Solution, it was a net pricing positive. More than neutral, it was positive.
Certainly, the downstream was under pressure because this is beauty of the integration, so we benefited from our integration. It was overall, for the segment, pricing positive. On top of that, we had good volumes, especially on the downstream. We were happy about the performance of the Coating Solution. As you could imagine in Q2, it will be in good shape without the impact of Uri.
That's really helpful. Thank you, Thierry.
You're welcome.
Thank you, sir. Next question is from Mr. Andreas Heine from Stifel. Please go ahead.
Thanks for the opportunity to ask questions. Three very minor ones. The share buyback program, you said that you need the extension on the annual general meeting to get to the EUR 300 million. The EUR 100, is that something you would start immediately, or will you wait until the AGM to start the program? Secondly, on the acrylics in Asia, you have three lines there. Are all of them running or is one shut? Because I think you could not place everything in the market in region. Just want to know where you are in this more tight market. Lastly, on Advanced Materials, I do understand that the HPP is the main driver and it's really a strong driver of the business. You have already talking about the molecular sieves.
The other parts, also beyond this HPP, are they also, let's say, a more kind of resilient, stable business, or do you expect them to contribute to the growth midterm?
Okay. Maybe Marie-José, again on share buyback, if I may. You want to answer?
Sure. Probably my first answer was actually not very clear, so I'll repeat my answer. The program is EUR 300 million. This value is not changing. Right now, the authorization I have from the shareholder meeting is I can only buy shares up to EUR 100 stock price. Since the value of the share is higher than that, I actually cannot buy anything.
Understood.
I need the shareholder meeting to increase the limit price by share so that in fact, I can execute the EUR 300 million share buyback plan.
Understood. Thanks.
Okay.
Thank you, Marie-José. Very clear. Acrylic in Asia , we run the three lines. Advanced Materials. You have, let's say two sub-segments. One is HPP and the other one is Performance Additives, which I understand is more your question.
Yeah.
Overall, I will answer for the companies, and it will be clear for everybody. I would say the organic growth, I don't talk about acquisition. In terms of organic growth of the company in the coming years, I would say, because you cannot have everything growing at the same speed, it depends also on the momentum of the previous years. I would say it's mostly coming from Bostik, from HPP, and from the downstream of coatings. Which means that Performance Additives is more in cash flow generation mode because we have grown so much in the previous years that we came to a point where we will more manage the stability and the resilience. Okay. This is more the rest of the portfolio, these three components, which are very big inside our portfolio, which will grow supported by megatrends.
Mm-hmm. Thanks.
Clear? Yep.
Yep.
Yep. Okay. Thank you.
Thank you. Sir, next question is from Mr. Geoff Haire from UBS. Please go ahead.
Good morning, and thank you. I just had two clarification questions. First of all, could you just tell us what the FX impact was at the EBITDA level? I think I missed that in your commentary at the start. Secondly, when we look at the Specialty Materials guidance of 20% growth in EBITDA, if you're expecting the net price delta to be flat, is all of that coming from volume, or what else is driving that?
Okay. Geoff, hello. Marie-José, you want to answer on FX? Yeah.
What we say is that obviously, we have a significant portion of our business, which is conducted in U.S. dollars. You should assume that any time the dollar to euro varies 10%, there is a yearly effect on EBITDA in terms of conversion of EUR 50 million in our accounts. Here, basically, clearly, when you look at the dollar rate last year at $1.10, and the rate of this year at $1.20 in average for the first quarter, what we are saying is we have nearly a EUR 15 million adverse EBITDA impact for the quarter. My recommendation is that you need to assume the same for quarter two, since in fact, the dollar started depreciating mid-year last year. I expect second half-year to be comparable and the impact to be only in the first semester.
Thank you.
Thank you, Marie-José. On Specialty Materials, clearly, and I think I mentioned that in my introduction we are entering with Arkema an era of growth. Profitability is really sustained by growth. It doesn't mean that we don't do anything on the pricing mix and operational excellence. I would say the big difference will come from our organic growth, while costs are quite controlled, and we want at least to offset raw material with our pricing and our mix. This is what will be the story for Arkema. It's very important because it shows that the portfolio of Arkema has significantly evolved from the past and where we had a limited organic growth. Now this time is over. We move forward. We have good pipeline of innovation supported by megatrend. Last year, I think something, hopefully, you could see it.
Last year, you had many company which cut costs, including structurally. We did it, but not structurally. We did it really travel, as one-off costs, et cetera. We really continued to invest. It was also true in CapEx for the growth. I said that it was very important to do that because the world would rebound, and this is what is happening, and Arkema is very well-positioned, and this is why in Q2, you will see again the benefit of this preparation we have done last year, be ready for the growth. Specialty Materials, yes, it's a growth story which is nice to have because it will drive the value of the company.
Okay, thank you.
You're welcome.
Thank you, sir. Next question is from Mr. Chetan Udeshi from JP Morgan. Sir, go ahead.
Yeah. Hi. Thanks. Two quick ones. First, given the momentum you see at the moment, which is, of course, strong in the Asian acrylics business, should we expect any update anytime soon in terms of the strategy of better integration with downstream, or is that still likely to take longer time? That's first. Second question, I know there is no specific Q2 guidance but i f I were to strip out the impact from the MMA business, would you say Q2 should be at least similar to Q1 in terms of EBITDA, or will it be higher and lower just in terms of direction? Thank you.
Okay. With regard to the Asian acrylics, you know our strategy, which will not change. We have two strategies, two folds. To reinforce integration by organic growth, and this is what we do, for example, in 3D, in electronics. I mentioned that we have some thoughts for further downstream investment there, but also in coatings. On the other side, we still consider, despite the fact that acrylics in Asia seems to be quite easy this year, we still are thinking about reducing our upstream volumes. To concentrate, we see how much we need, but really on our big long-term customers and our downstream integration.
We need to reinforce our downstream integration to continue to serve our global customers in each part of the world, but also to implement, but we are not in a hurry, finding the right partner, implement this reduction of the upstream volume in Asia. There is value there for us, and clearly we have a very good site, very competitive. We continue to do that. With regard to the Q2, I will not guide quarter- by- quarter. Basically, when you say that in Q2, the macro context is in continuity, that we don't have Uri anymore, but on the other side, restocking will more or less disappear. You have the effect of seasonality. We lose EUR 20 million because of PMMA, because of the divestment in May. All in all, yes, we should be at least like the first quarter.
Thank you.
Thank you, sir. We have no other questions. Ladies and gentlemen, I would like to remind you that if you wish to ask one, you may press zero one on your telephone keypad. We have no other questions, sir.
Okay. I think it was long, but very interesting. I would like to thank you for spending the time with us, and it's always a pleasure. Hopefully, Marie-José and myself were able to answer the question as you were expecting it. Thank you. Have a good day. Talk to you soon. Bye-bye.
Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.