Ladies and gentlemen, welcome to the RQMAS Results Conference Call. I will now hand over to Mr. Thierry Dunant, our CEO and Madame Marie Jose Donshore, CFO. Madam, sir, please go ahead.
Hello, everyone. Welcome to our results conference call. With me today are Marie Gerald Edoncourt, our CFO and the Investor Relations team. So to support this conference call, We have posted on our website a set of slides which detail our Q1 performance and revised outlook. And as always, we'll answer your question at the end of the call.
So let me comment first on the highlights of the Q1 before letting Marie Jose go through the financial in more detail. These 1st months of the year were important. Since we clearly stated during the webcast of full year 2020 results And following the road map 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. And 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 Q1, 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 Is this market driven by global mega trends? And we just closed 2 months ahead of schedule, 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, concerned with the appearance of new variants has a particularly difficult situation in some countries like India and Brazil. We can therefore that the current volatility of the environment and limited visibility will persist for a while. Nevertheless, As we were when we talked 2 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.
1st, Q1 results were very strong, ahead of our expectations. Volumes were up nearly 8%, Driven by solid under buying growth, some restocking by customers, but more importantly, of new opportunities from cutting edge innovation in global sustainable trends such as batteries, light weighting, electronics, 3 d printing and Olivier C. Pen to give you a few examples. Growth in Asia was particularly strong, while Europe rebounded well, But volumes in the U. S.
Were temporarily impacted by raw material shortages following the euro storm. Arkema's EBITDA rose by 20% to €358,000,000 in spite of a negative currency impact of around €15,000,000 and the EBITDA margin improved by 170 basis points to 16.1%. We were very pleased with the fact that each of our 3 Specialty Materials segments, Adhesive, Coating Advanced Materials showed a strong progression year on year, allowing Specialty's EBITDA to grow by 20%. Intermediate EBITDA grew by 11%, but at constant scope because you know we divested functional productivity last year. Their growth reached nearly 20%, matching, in fact, specialties per month.
We had, during the March A few questions on Bostik's ability to increase margins and navigate an inflationary environment. You have, I believe, the answer since both these results were excellent, with EBITDA at 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 material. 1st, Bostik acquired PolyClass to reinforce our positioning in the fast growing Brazilian finance market, and we expect to announce more buttons this year And Nathalie, as you live. Our 2 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 kynarfluoropolymers in China. In addition, we are currently assessing further investment for electronics and 3 d 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 Artemas made in this field over the past years. I will now comment on the outlook, but at the end of the call. So I will now hand it over to Marie Jose and come back to you.
Thank you, Thierry. I'll start with the sales bridge That you have on the Page 6 of the document. So at €2,200,000,000 sales are up 12.7 percent 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 this quarter, they are due respectively to the disposal of the fractional polyolecins in June last year, only partially offset by the integration of Fixati and IdealWorks segment. And to a stronger euro versus dollar, euro is at 1.20 in Q1 2021 versus 110 in Q1 2020. Volumes were a key driver behind the 20% growth in Q1 EBITDA to EUR 358,000,000. 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 offset 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 megatrends and in part thanks to some customer restocking in certain markets like transportation. Performance additives We're 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 Coking 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 3 d 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, in Term ADEA, CBDA 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 €135,000,000 brings us to a recurring EBIT of €223,000,000 which is up nearly 40% year on year. And REBIT margins stood at 10%, up from the 7.7% in quarter 1 last year. Non recurring items represent €24,000,000 and include PPM amortization, one off charges and recurring restructuring expense.
Financial results stands at minus €13,000,000 benefiting from the refinancing of our bonds At lower rates and from the lower interest rate on the debt, EUR 42,000,000. At EUR 43,000,000, the tax 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. And consequently, the Q1 adjusted net income increased strongly, Up 59 percent to €159,000,000 which corresponds to almost €2,100,000 per share. Moving on to cash flow and net debt.
Q1 free cash flow amounts to minus €60,000,000 This includes, 1st, the increased cash generated from our operations second, the working capital rebuilds in the context higher volumes and higher raw material prices and third, the progress of our exceptional CapEx. So coming back to the working capital, the ratio on annualized sales stands at a very good level of 12.7% This is the 16.5% last year. Given the positive volumes outlook and associated working capital rebuilds, 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 €125,000,000 in the quarter versus €92,000,000 in Q1 2020, reflecting higher exceptional CapEx of €53,000,000 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 €750,000,000 this year. Net debt at the end of March 2021 amounts at €2,000,000,000 including €700,000,000 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 €300,000,000 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 Jose. So as we said at the beginning, we remain I can't see it 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 dynamics that we saw in Q1 is continuing, supported by robust demand in construction related markets and positive in most of the industrial markets that we serve. Our specialty material will continue to benefit from a strong new business and Capitalize on growth opportunities linked to sustainability. Concerning raw material, Cost inflation should accelerate in the Q2, but we'll continue our initiatives to increase prices to offset the impact.
So based on the strong start to the year and our confidence on our unique portfolio positioning, we decided to raise for the full year 2021 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 intermediate, we should be able to deliver EBITDA at least At last year's level, at constant scope and currency. And you can see in the press release, we give you the Number 4 PMMA for this year and last year.
Be aware that this is no longer a case spec. Intermediates As excluding PMMA, intermediate should represent less than 10% of the group's total EBITDA. Of course, the execution of the strategy will continue. You know us who work short term, mid term, long term at the same time. So it will continue on 4 main levels.
Firstly, the acceleration of innovation and new developments Supported by Megatrend, by Global Megatrend, 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 A summary of the highlights of the quarter. And together with Marie Jose, we are now ready to answer the questions you may have.
Thank you. Ladies and gentlemen, I would like We have one first question from Mr. Martin Modiglier from Kepler Cheuvreux.
Good morning. I
have 3 questions. Number 1, 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 Preeting. 2nd question is on the taxes freeze.
Can you quantify the effect, The earnings effect on your business. And 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? And do you think you will be able to fully pass on increasing raw material cost to Christmas without any time lag?
Thank you, Martin, for these questions. Overall, I would say the order book and macroeconomic context, to answer broadly, In continuity of the Q1, you're right to say that restocking We'll be less than in Q1. We'll certainly completely disappear in the course of the quarter. But at the same time, we were impacted in the U. S, as we mentioned in and as you mentioned in your second question, In Q1 by Yuri, okay?
So less restocking, Certainly, but no impact of Yuri. And then you have also the seasonality, Which will help Q2 versus Q1. But overall, like for like, the macro environment is really comparable. We don't see any change. We are lucky to have we have no, in fact, a market which has been structurally impacted By the COVID, which is good, we are not nearly not in aeronautics.
Our Presence in oil and gas is quite limited. And for the rest, we continue to enjoy the solid and robust We don't quantify the impact on earnings of Texas Credit. Otherwise, we would have put it In the press release, what is clear is that you have integrated in the EBITDA of the Q1 the impact of this Of this phrase, which is already difficult to quantify because you have direct elements, you have indirect element. And clearly, we'll not have this impact anymore For the large majority of it in Q2. So it's certainly positive on Q2.
But as I mentioned, Not this restocking effect we had in Q1. So we are confident in Q2 to be It's a continuity of Q1. With regard to the pricing, which, as you know, It's a challenge, but it goes with the demand. It means that because we have an after crisis demand really going up, it put I would say we Q2 should be another quarter of increased raw material. So this The inflation of raw material will continue to develop in the Q2, especially with the time lag When you look at because of the stock and the P and L impact, but we are also confident on the other side, in parallel, To see our pricing sequentially continuing to develop.
And because of that, we are confident To achieve globally for the company at least an inflow impact of Pricing versus raw material in the Q2 and
beyond.
Thank you, sir. Our next question is from Mr. Emmanuel Latto from ODDO. Sir, please go ahead.
Good morning, Marie Jose. Good morning, Thierry. Several questions from me, please. First, which industrial markets have not yet recovered for Arkema? 2nd, 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 QS also?
Sir, do you confirm you will launch the €300,000,000 Share buyback program in the coming weeks, following the divestment of the PMMA business last Monday? And my last question, do you remain confident to achieve your ambitious program of acquisitions? How is the pipeline of
Okay. Thank you, Emmanuel. Maybe Marie Jose, you want to take the share buyback and it will be clear Okay.
So 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. As you remember last year, the limit was set at €100, And we are fortunate to have exceeded this limit. So 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 Jose, very clear. So 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 market, which will be very small for RKMR. But I would say for the one which can't, I would say It's either it has recovered or it's recovering, rebounding materially. So I would say for us, The landscape is rather good these days. So there are some nuances, but I think we are We have a good mix of businesses, which has been also an advantage.
In fact, we have the same advantages last year than this year. Last year, because we had a good positioning on our end markets and good diversity of end markets, we lost only 4% in volume, which in the COVID time was a good achievement. But this year, we benefit because we believe we are very uniquely positioned to benefit from a recovery on nearly all our end market. With regard to Fluorogas, I think as we told you, I think now intermediates, Which is what, acrylics in Asia and Fluorogas, will represent less than 10% of the EBITDA of the company. So we'll update the story there, and we don't want to create any speculation there.
So this is why we say you have not to worry about it. We will be at least at The level of last year, now specifically on Fluorogas, we are not disappointed because we are where we thought we would be. Maybe a little bit better on the U. S, but Europe and Asia stay at low cycle. Certainly, upside midterms there, but today is low cycle.
And Fluorogases in the U. S. Are a little bit Benefiting from this antidumping legislation in the U. S, which have Being in place, but I would say that's a big story there. And the good thing with this is that we have a certain level of stability, Which we certainly appreciate, while at the same time, for the rest of intermediates, acrylic and Asia are in good shape.
With regard to What was the last one? I cannot even read myself. So you know? Accreditation
pipeline. Accreditation pipeline.
My writing is worse and worse. It's terrible, with these digital things. Yes, acquisition pipeline, no, it's We maintain what we say. I think it will be in the 4 years a combination than 1 or 2 measures, But I would say that most of it would be some of bolt on and which is not only for adhesives, this is a priority, but we look also at That's material and coatings. And we have some good ideas and a good pipeline.
So as you know us, we try to make things which Create value. This is why we sometimes we take our time, but I think we have quite a decent pipeline. So We are on track with good thoughts on bolt on acquisition.
Thank you very much.
You're welcome.
Thank you, sir. Next question is from 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 6 weeks maintenance shutdown through the course of June, July. Can you just remind me from Okema'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. Well, I know you've been making a series of capacity expansions, but we heard Solvay talk yesterday about 80% demand growth. So I guess the question is, are you actually investing enough to satisfy that demand over the coming years? And how big a business do you think this could be in, say, 3 or 5 years' time?
And if I can squeeze in just a third one just around Adhesives. I know you've reiterated the 14% guide margin guide for the year. But 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, Mathieu, and hello. With regard to thiochemicals, I mean, We don't tell you specifically all our maintenance shutdown and all shutdown of a big customer. Otherwise, we would stand out discussing that, and there is no point there. So when CEG It's getting maintained. We have less sales this month or this quarter or whatever, but it happens For CEG, every year, you have plenty of customers stopping from time to time.
So at the end, for Arkema, I would say that not Make a big specific element, and it's fully factored in our confidence On the year and the quarter, so for us, it's not but yes, clearly, if there is shutdown, the contract is not protecting you. You We'll sell less, but on the year, at the end, we sell good volumes. So it's An issue for us on a specific issue or whatever on the year. On the PVDF, you have seen we have our investment. So we are pleased to see with the demand growth and there may be more to come.
But I think, yes, the idea is to be able to supply the whole demand. So for us, it's one it's not the only one by far, and we have many Element of growth inside the company. This is why I say from the start, our positioning is becoming more and more unique. It's Hopefully, you start really to see it. It's incredible how many opportunities we have in terms of new business development, but 3 is 1.
And with what we put in PVDF, by a sense, it will be tight because there is a big appetite for battery. But I think we have the project and the money to be able to follow. And this is why I'm sure you were comforted by what we have announced in the Q1, but I will not be surprised to see other investment Coming through. With the 14%, so I think and the 16%, yes, clearly, When you see the adhesives because we had question, as I mentioned by the introduction, we had a question in the annual call in March about Maybe it's strange for Adhesive in this inflationary environment to deliver 14%, and we say no, we are confident. And because Even if we don't pass through all the material at the end with the combination of organic growth, operational excellence, synergy from acquisition, etcetera, We are confident to deliver the 14%.
So what the quarter of January the Q1 is showing Is that we are on track. And so clearly, there is a little bit of support Of the strong growth, but we benefit a bit like our competitors. But I think the will continue to develop a robust, certainly 15.5% is certainly a peak, which is supported by Excellent sense. So it will not stay like that full year. This is why there is also a little bit of seasonality at the end of the year.
And in August, we take all this into account to confirm our 14%. But clearly, it shows to you that The work that we are doing in Adhesive is really going in the right direction. And this 15% plus is certainly a good signal To tell us that 16% is in 2024 is completely achievable. So yes, it make us even more confident, but we are already confident.
Very good. Thank you, Thierry.
Thank you, Matthew.
Next question is from Mr. Laurent Favre from Exane Beparibas. Sir, please go ahead.
Yes. Thank you very much. My question is actually Sorry 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 rates and if you have any more headroom to produce more, Not just in PBDS, but also on the cordialite side. Are you at full capacity?
And then 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 positive contribution, positive EBITDA contribution in 2022 then? I'm assuming that there might be startup costs, but thanks for any color you may give.
Okay. So clearly, because the demand is good, in certain plants, we reach our limit. But in PVDF, we are implementing new reactors. So there is some room for Malueva 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. So it will help To grow also we work a lot on the mix as we did in the past.
So it takes the average price, But 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 This year, but if you compare to 'nineteen, which was already, at least for the 1st part of the year, a good reference point, OrganiVos possibility are a little bit limited in HPP By our capacity, but we have growth. We'll get organic growth this year, which will be material. After that, on polyamide, if we start Singapore in mid-twenty mid-twenty 2, which is the goal And so far, we are really on track. Then we should have positive contribution already in the 2nd semester of 'twenty 2 Of Singapore, despite the startup costs. So I think this is very exciting to tell you the truth, both Fluorant Polymer and our Polyamide, I've never seen myself.
And as you know, I've been in the company for over 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. And it's true also for some polymers that you are not you are less We're all, for example, the PBATS, which is an air customer we sell in sport shoes. I mean, the appetite for innovation from our customer has never been at large.
So yes, up until 2022, some limitation in capacities, which will limit organic growth, but it doesn't mean that we will not grow, as you could see this quarter. And also it will help on the mix and the pricing. But starting in mid-twenty 2, both in PVDF And in polyamide, the biosource or polyamide 11, we'll get new capacities and The pipeline will be quite good. Now 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 So it's not the way the industry work. 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, but we are confident we have the right opportunity, the right talent. So we are really there is a clear difference between where we are today and where we were 2, 3, 4 years
ago. Thank
you, Thierry.
Thank you, Thierry.
Thank you, sir. Next question is from Mr. Jadipo Pandrea from 1stield. Please go ahead.
Thanks. And congrats first on inclusion in the ESG Index, Thierry, first question is really around your project with Nutrien. So assuming that this sort of goes through successfully and you're significantly improve your sort of environmental footprint. Will this be a project which will stay with you? Or is this something that's It's going to be part of the sort of emissive part of Fluorogases in your discussions to sort of whichever way you want to exit the emissive And 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 1234 YF. I know you don't want to talk about Fluorogases, but 2023 is when patents expire in U. S, Europe and Japan for the 2 big boys. So what's Your plan for 1, 2, 3, 4 YF.
And have you been sorry to use this word, clearly producing a little bit in China In preparation for entry in 2023, if possible. And then the third question really is around molecular sieves. I haven't discussed much in recent times about this, but xylene production is going up. Paralyzed xylene production is going up a lot in Asia. So what's the pipeline for molecular seeds in 2021, 2022, 2023?
Thanks a lot.
Okay, Philippe. Thank you. So very specific question. Clearly, the large majority of HF supplied So what I call specialty chemicals numbers, what goes into PVDF, what goes into gases, which go into Our partners which make themselves specialty printers. And it goes also to our specialty chemicals that we will keep.
So I would say, At the end of the day, most of the supply will stay with us. After that, it depends on the what if The company which will be acquire majority of the fuel of Fluorogases will lead or not HX. So to a certain extent, we'll be the seller of HX. So all scenarios are possible. And As long as we have not defined the scenario because as you know, we are just starting the reflection on the Fluorogas disposal.
I just agree now that we would 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 program, clinical 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. So after that, we'll be we'll do what is clever when we take into account, but we'll go to our flexibility. With regard to Q1, yes, 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 be We'll have expired we'll have a possibility to sell.
But normally, at that time, We should not be far from disposing or having already disposed. So I don't think It's a big element in our own business plan for what we keep inside Arkema, but it's certainly an upside Owner of our Fluorogas business. With regard to molecular fees, Yes, the consumption but there is a lot of capacity. The consumption increased. So I don't think that molecular sieves We'll make a big difference in the RKML business plan for 2024 in the coming years.
This is we have And we mentioned them to you. We have plenty of elements of new growth for Arkema. I would not incrementally monitor fees can contribute, But I would not say it's a material element. So don't build your story on molecular sieves. Okay.
Thanks a lot. And just sorry to come back to the Neutroom project. Would you say that at current floor of spot prices, the payback is less than 4 years
I will not I know that as we say, For all our organic project, and it is 1, a development and growth project, and this one is 1. When you look at the EBITDA generated after ramp up, except 3, 4, 5 years, depending on the size of the project, You take the CapEx and you divide by 3.54, and it will be the case for Henriette Riggins the same as for the other. So I think certainly the price of HF currently We enforce the quality of this project, yes. Yes. No, actually, it's a project.
We did not do it Only for economics, but and mostly for sustainability and safety of supply long term, but it's also good from an economical standpoint Thank you.
Thank you. Thank you so much, Pierre.
Thank you, sir. Next question is from Mr. Rob calling staff. Sir, please go ahead.
Hi, good morning.
Good morning. I just
wanted to ask about Engineering Adhesives and you're accelerating development there. When you talk about Engineering Adhesives, are you referring to very high margin, highly specified business, similar to what Henkel is kind of specialized in. And is there any sales in that business right now? And what are your aspirations?
Okay. So you have two definitions of engineering and agitating the market, in fact. You have the one of Enkel, which is purely electronics mostly. And you have the one of filler, which is more what we call ourselves durable goods. So the overall good is about for us, about 20% of Of those 6.5, okay?
While engineering that is purely with the definition of NKS. So with the definition of fuel, it's percent. And it's a high margin business, but not as high as what Enkel has in their definition of engineering This is and if we take the definition of NPLF, we have just started on this new line, and We are very excited, but it will take time. Then the sales are really minimal. They are He's rather small today, yes?
So it depends on your definition. But if you take the one of Intel, we have just started as you know, we have made a second acquisition. This time, they are small acquisition. Really, to reach 100, it's a matter of It will be a matter of 5 years. So we need time, but we knew that it's an entrepreneurial project and some On a business which is quite monitored.
But now if you extend the definition to the same as filler, which is another good definition, In the humble goods, we are including this electronica disease. We are really growing at twice GDP, And our EBITDA margin potential is above 20% EBITDA margin, So it's quite exciting, very interesting. We have some unique possibilities. So it really depends on your definition.
Okay. Thank you.
You're welcome.
Thank you, sir. Next question is from Mr. Alex Turok from Barclays. Please go ahead.
Hi there. Good morning.
Good morning, Alex. My questions.
Hi there. Both on margins, can I just clarify a comment you made at the beginning where you said that He thought that the balance of pricing of raw materials would be at least neutral? Were you talking about the full year? Is that the comment you made?
Full year, quarter, whatever you want, yes. I would say, every call is true for Q1, it will be true for Q2, and it will be true for the full year.
So that's my question. So in Q2, you expect to actually not to have any negative impact from Hydro Materials?
No. Globally for the company, then 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. But overall, for the group, yes, it would be Pricing, at least in neutral, is not positive, yes.
We are confident on that.
Okay. That's fantastic. Thank you. And the second part of that question. In the first quarter Can you tell us whether the balance is better unit margins in the monomer business and any impact on margins in the Brazil in downstream, was that a net positive?
So 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.
So okay. So first of all, maybe to answer your question. So Coating Solutions, so as you could see, we had a good Quite a good growth, EBITDA growth. It could have been even better if we had not had Yuri because it's certainly one of the business has been the most impacted by Yuri in the U. S.
So we had a strong performance in the Europe and Asia, but More challenging in the U. S. Because of Yuri, it's nothing to see with us. It's just the case for everybody. So So first of all, so it could have been, in fact, even better even if it was already excellent.
Now in terms of net pricing, yes, it It was on the whole coating solution, it was net pricing positive, okay. And so more than neutral, It was positive. We benefited so certainly, the downstream was under pressure because this is beauty of the integration. So we benefit from our integration. But it was overall for the segment pricing positive.
And on top of that, we had good volumes, which especially on the downstream. So we were happy about the performance of the coating solution. And as you could imagine, in Q2, it should be in good shape without the impact of Yuri.
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.
Yes, thanks for the opportunity to ask questions. 3 very minor ones. The share buyback program, you said that you need the extension of the ENDRA meeting to get to the 300. The 100, is that something you would start immediately? Or will you wait until the AGM to start the program?
And then secondly, on the acrylics in Asia, you have 3 lines there. Are all of them running or is this One shot. And because you I think you had not the full Could not place everything in the markets in retail. So I just want to know where you are in this more tight market. And lastly, on Advanced Materials, I do understand that the is the main driver and it's really a strong driver of the business.
You have already talked about the molecular sieves. The other part also beyond this H50, are there also, let's say, more kind of resilient stable business? Or do you expect them to contribute to the growth Me too. Thanks.
Okay. Maybe Marie Jose 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. So the program is €300,000,000 So this value is not changing. Right now, the authorization I have from the shareholder meeting is that I can only buy shares up to €100, stock price.
Since the value of the share is higher than that, I actually cannot buy anything. Understood. So I need the shareholder meeting to increase the limit price by share so that, in fact, I can execute the EUR 300 €1,000,000, CHANDA
margin,
very clear. Acrylic KinAsia, we run the 3 lines. Advanced Materials, so you have Let's say, 2 subsegments. 1 is HPP and the other one is Performance Additives, which I understand is more your question. Overall so I will answer for the company, then 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 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 additive 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? And this is more the rest of the portfolio, these 3 components, which are very big inside our portfolio, Which will grow, supported by Megatrends. Clear?
Yes.
Okay. Thank you.
Thank you. Next question is from Mr. Jeff 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. And then 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, Jeff. Hello. Marie Jose, you want to
Okay. So what we say is that, obviously, we have a significant portion of our business, which is conducted in U. S. Dollar. So you should assume that anytime the dollar to euro varies 10%, there is a yearly effect on EBITDA in terms of conversion of €50,000,000 in our accounts.
So here, basically, Thierry, when you look at the dollar rate last year at €110,000,000 And the rate of this year at €120,000,000 in average for the Q1, what we are saying is we have nearly €15,000,000 EBITDA adverse EBITDA impact for the quarter. My recommendation is that you need to assume the same for quarter 2 since, in The dollar started depreciating midyear last year, so I expect second half year to be comparable and the impact to be only CFO. In the 1st semester.
Thank you.
Thank you, Marie Jose. So on Specialty Materials, clearly, and I think I mentioned that in my introduction, we are entering with Arkema an era of growth. And profitability is really sustained by growth. So it doesn't mean that we don't do anything on the pricing, mix and operational excellence. But 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 whole Pricing and our mix.
So this is what will be the story for Arkema. It's very important because it shows that The portfolio of Arkema has significantly evolved about from the past and where we had limited organic growth. Now this time is over. We move forward. We have Good pipeline of innovation supported by Megatrend.
And last year, I think something hopefully, you could see it. Let's say, you had many company which kept costs, including structurally. So we did it, but not structurally. We did it really travels as one off But we really continue to invest. It was also true in CapEx for the growth.
And I said that It was very important to do that because the year would raise as a world would raise on. 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 that year, really ready for the growth. So specialty material, 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. Yatin Odesi from JPMorgan. Sir, go ahead.
Yes. 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 of better integration with Downstream? Or is that still likely to take longer time?
That's first. And second question, I know there is no specific Q2 guidance, but if I were to strip out the impact From PNMF Instance, would you say Q2 should be at least similar to Q1 in terms of EBITDA? Or will it be I am lower, just in terms of direction. Thank you.
Okay. With regard to the Asian, Jean acrylics, you know our strategy, which will not change. We have 2 strategy twofold: To reinforce integration by organic growth, and this is what we do, for example, in 3 gs in electronics, I mentioned that we have some thoughts For further downstream investment there, but also in Coatings. And on the other side, we still consider despite the fact that acrylics In Asia seems to be quite healthy this year. We still are thinking about reducing our upstream Volumes, so to concentrate, we see how much we need, but really on our big long term customers And our Downstream Integration.
So 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. So there is value For us, and clearly, we have a very good side, very competitive. So we continue to do that. With regard to the Q2, I will not guide for quarter by quarter. But basically, When you say that in Q2, the macro context is in continuity that we don't have Yuri anymore, But on the other side, the restocking will more or less disappear.
You have the effect of seasonality. We lose €20,000,000 because of PMMA and because of the divestment in May. All in all, yes, we should be at least like the Q1. Thank you.
Thank you, sir. We have no other questions. We have no other questions, sir.
Okay. So 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. And hopefully, Marie Jose and myself were able to answer the question as you were expecting it. So thank you.
Have a good day, and talk to you soon. Bye bye.