Good morning, everybody. Welcome to Arkema's full year 2025 results conference call. With me today are Marie-José, our CFO, and the investor relations team. As always, the slides used during this webcast are available on our website, and together with Marie-José, we'll be available to answer your question at the end of the presentation. In 2025, the macroeconomic environment was, as you know, particularly challenging, probably one of the most difficult our industry has faced in the last 20 years. The second part of the year, in particular, was marked by subdued demand across many end markets. The slowdown in the U.S., while Europe remained at low levels. This reflected ongoing cautiousness of economic actors, as well as tighter end inventory management at many of our customers.
On the other hand, Asia continued to be the most dynamic region for the group, in particular China, where we could see an acceleration in certain sectors like electric mobility, advanced electronics, and sustainable consumer goods as well. As you could expect in this context, the group focused on its fundamentals of customer proximity and innovation, while strengthening its cost and cash initiatives. The teams have been fully mobilized on a daily basis to best address the environment and strictly control the operations. As a result, we generated a high level of cash at EUR 464 million, well above our revised guidance of EUR 300 million. This performance was also better than last year's level, despite the significant EBITDA decrease.
EBITDA stood indeed at EUR 1.25 billion, with a margin of 13.8%, so close to 14%, not living up to our expectations at the beginning of our year, but not different from what most of our peers have experienced. We were able to offset fixed cost inflation and delivered around EUR 90 million of fixed and variable cost savings in 2025, nearly doubling our initial annual target set at CMD. This work will be pursued in 2026, as we strive to offset against the inflation, and we should therefore be able to deliver the 2028 cumulative cost savings target of EUR 250 million, two years in advance.
As you can see in slide seven, the group has launched a number of new initiatives to make the organization even more efficient, leading to more than 2% headcount reduction in 2025. We anticipate a further reduction of around 3% per year over the next three years. Our performance continued to be supported by several of our key attractive markets, namely batteries, sports, 3D printing, healthcare, and new- generation fluorospecialties with low global warming potential, which benefited from strong dynamics with sales up 16% year-on-year. This market will continue to grow in the future and contribute to the ramp-up of our major projects listed on slide five. These projects delivered around EUR 60 million additional EBITDA in 2025. We expect this trend to continue in 2026.
The group will benefit from the ramp-up of the recent investment in the U.S. and Asia, successfully started in 2025 and early 2026, namely our new 1233zd and DMDS unit in the U.S., as well as the recent clear, transparent polyimide capacity downstream of the Polyamide 11 plant in Singapore. In addition, our investment in PVDF in the U.S. is planned to start up in the first half of 2026, increasing our capacity by 15% in the region. PIAM should continue to benefit from the launch of new smartphones, notably foldable and ultra-thin models, in which polyimide is becoming essential to answer the higher requirements in terms of reliability and thermal management. PIAM should also start benefiting from successful diversification into new high-end application in industry markets.
After this important wave of organic projects offering significant room for growth midterm, Arkema will further reduce its CapEx envelope to EUR 600 million in 2026. This level will enable the group to continue investing in targeted projects with high returns and fast payback. We did not only focus on the very short term, but continued to build Arkema for the future by developing strategic partnership with leaders in their domain in order to strengthen our positioning in key markets, such as batteries or sports. Maintaining our efforts in R&D is key in order to stay differentiated and accelerate our growth in high-end applications. We stay focused on sustainable innovation. We leverage our competencies by collaborating with startups. OOYOO in carbon capture is a good example.
Coming back to our 2025 EBITDA performance, outside of the negative currency impact, the low cycle in upstream acrylics and the decline of old generation refrigerant explained most of the decrease. The rest of Arkema's business was far more resilient, but this performance, to a certain extent, was overshadowed by these other activities. In order to improve the reading of the group's results, we have decided to implement a new segmentation starting in 2026 to better highlight the distinct dynamics and business models of the resilient and fast growing platforms within Specialty Materials, compared to the more cyclical and large scale industrial activities, which will be regrouped in a new segment called Primary Materials. The global acrylic monomer business will be included in this new segment.
This business has been much more volatile in recent years than it used to be, as you can see in slide 21. Looking back since the acquisition of our American asset in 2010, this activity has been tremendously cash generative, largely contributing to fund the growth portfolio transformation over the past year. We will continue to leverage our strong industrial and commercial position in acrylics to generate solid cash generation and capital returns over the cycle. The new segmentation will also bring more visibility to our next generation low GWP solution for air conditioning, which we are actively managed to enhance their prospects. They will now be integrated into the fluorospecialties portfolio and will benefit from accelerated growth in applications like heat pumps and data centers.
Old generation refrigerants that have been a highly profitable and cash generative business since 2020, probably exceeding potential proceeds from a disposal, will join the Primary Materials segment. This business will quickly fade over the coming years, Arkema will benefit on the other end and within the Specialty Materials from the ongoing growth of the low GWP solution, generating substantial value. I believe this new segmentation will provide the financial community with greater transparency on Arkema's portfolio, business drivers and Specialty Materials performance. I think it's important, I'll also want to quickly highlight some of our CSR results, where we made against strong progress and achieved quite good performance in 2025. This is a case for our climate plan, where the group's numerous initiatives to reduce its carbon footprint are paying off.
We use our Scopes 1 and 2 emissions by 48.7% at the end of 2025, compared to 2029, fully in line with our target. We have also decided to strengthen our emission water withdrawals and introduce a new target on waste treatment, another key priority for Arkema. Lastly, given the strength of the group's balance sheet, the board has decided to propose a stable dividend of EUR 3.60 per share to the annual general meeting, despite the challenging macro, which is a sign of confidence both in the quality of the portfolio and in the relevance of the strategy. Thank you for your attention. I will now hand over to Marie-José, who will review in more details the financial results before I come back to discuss the outlook with you.
Thank you, Thierry, and good morning, everyone. As commented by Thierry, 2025 was a challenging year, starting with revenues of EUR 9.1 billion. Sales were down 5% year-on-year, impacted by a negative 2.9% currency effect, reflecting mainly the weakening of the U.S. dollar against the euro, but also from other currencies, including the Chinese yuan and the Korean won. The scope effect at +1.6%, reflected the integration of Dow's laminating adhesives. Volumes were down 1.6%, reflecting the overall weak demand environment in Europe and North America, as well as the tight inventory management by customers in the fourth quarter. On the other hand, we continue to benefit from a positive dynamic in Asia and more particularly in China, mainly driven by High Performance Polymers.
The price effect was a - 2.1%, impacted essentially by the acrylic cycle and by the refrigerant gases that are transitioning from old to new generation. Our other activities showed a more limited price decrease of 0.9% in a context of declining costs of raw materials. The group EBITDA came in at EUR 1.25 billion, including EUR 40 million negative currency effect. Let's mention first Q4, which is seasonally a low quarter. The decline in EBITDA in the fourth quarter reflected the overall weak demand environment in Europe and in the U.S., as well as the strong destocking due to tight year-end inventory management at our customers and ourselves, actually, which impacted particularly our Adhesives and Advanced Materials segments.
Looking now at the full year performance by segment, Adhesives margin came in at around 14%, if we exclude the dilutive effect of Dow's laminating adhesives business, still in its integration phase. Full year, EBITDA reflected the weak demand in industrial adhesives and the slowdown in the U.S. in the second half, notably in flexible packaging, transportation and construction. The performance continued to be supported by our ongoing work on efficiency and our price discipline. Advanced Materials resisted well with a broadly stable volumes and prices, delivering an EBITDA margin of 17.9%. High Performance Polymers in particular, showed a 2% organic growth on the year, supported by new business developments in batteries, sports and 3D printing, and the ongoing positive dynamic in Asia.
The segment, EBITDA, was nonetheless impacted by the negative currency effect by an unfavorable mix in Performance Additives, as well as by lower volumes in Europe and in U.S. In Coatings, EBITDA was impacted by the low cycle conditions in the upstream acrylics, as well as by the weak demand environment in coating market. Construction and decorative paints markets in Europe and U.S. were subdued. The performance of the segment was therefore significantly lower than last year, despite the resilience of downstream activities. Lastly, Intermediates EBITDA was mostly impacted by the decline in refrigerants in the first half of the year, while acrylics in Asia improved slightly. The group recurring EBIT amounted to EUR 564 million, which corresponds to a recurring EBIT margin of 6.2%.
It takes into account EUR 687 million of recurring fixed asset depreciation, higher than last year due to the integration of Dow's laminating adhesives, and to the starting amortization of new production units, which came online during 2025. Non-recurring items amounted to EUR 276 million. They include EUR 144 million of PPA depreciation and EUR 132 million of one-off charges, notably the restructuring costs linked to the hydrogen peroxide site in France. Financial expenses stood at - EUR 125 million. The increase versus last year reflects the increased interest costs of our bonds on one hand, and the lower interest on invested cash, on the other hand.
All in all, adjusted net income amounted to EUR 328 million, which corresponds to EUR 4.34 per share. Moving on to cash and debt, Arkema delivered a strong cash flow generation, with recurring cash flow standing at EUR 464 million. This reflects our continuous initiatives to tightly manage our working capital. Working capital ratio on annualized sales reached 12.5% on EBITDA, the EBITDA to operating cash conversion rate stood at 88%. Our spending capital expenditure amounted to EUR 636 million, below the level of our recurring depreciation in PNR. Free cash flow amounted to EUR 390 million, including a non-recurring outflow of EUR 74 million, linked essentially to restructuring costs.
Taking into account these elements, Arkema net debt and hybrid bonds were slightly down at EUR 3.2 billion, which includes a EUR 1.1 billion of hybrid bonds. The group continues to enjoy a strong balance sheet, with a net debt to last twelve months EBITDA ratio of 2.5 times. Note that our 2026 maturities were all pre-financed in 2025. The EUR 300 million outstanding hybrid bond issued in January 2020, was redeemed in January 2026. Our portfolio of hybrid bonds at end of this month, end of January, is back at EUR 800 million. It over back to Thierry now.
Thank you, Marie-José, for this explanations. We exchange on the outlook for this year. At the beginning of the year, the environment remained, and there is no surprise to find the continuity of the second half of last year, with limited visibility and a weak demand. The currency effect, you saw it, continues to be headwind following the further weakening of the USD and Asian currencies against the euro. In this context, as we said already, our first priority will continue to focus, and I think we did a good job last year, and we'll continue to do a good job this year on the elements under our control. This means particular optimization of fixed costs, optimization of variable costs, CapEx, and working capital.
Besides, we continue to rely on the progressive ramp-up of our major project, and it's slower than expected because of the macro, but it's still material for the company, and it will support the Arkema's growth in the long run. For 2026 versus 2025, we expect this project to contribute around EUR 50 million of additional EBITDA. It will continue to help us this year and in the following years, to reinforce our geographical footprint, since we anticipate more long-term development potential in Asia and in the U.S.
In light of these elements, for 2026, the group aims for its EBITDA to grow slightly at constant FX. We prefer, obviously, to reason at constant FX, given the unusual volatility of exchange rates against the EUR, not only the USD, as I mentioned, but also most of the Asian currencies. The year-on-year comparison will be more challenging in H1 and more particularly in Q1, since last year profile was more weighted on the first semester, with significant restocking in the second half. Besides, the currency effect on Q1 should be negative, estimated at EUR 25 million. If we put the currency effect aside, we expect in 2026, the macro more or less similar to 2025.
The comparison with last year should ease progressively until the end of the year, including specifically to Arkema, the ramp-up of our major project. As a result, we anticipate a performance of the two halves more balanced in 2026 than in 2025. Thank you very much for your attention, together with Marie-José, we are ready to answer the question you may have.
Thank you. If you wish to ask a question over the phone, please press star one on your telephone keypad. If you wish to withdraw your question, please press star two.
Again, please press star one on your telephone to enter the question queue, and wait for your name to be announced. The first question comes from Thomas Wrigglesworth with Morgan Stanley. Please go ahead.
Thanks, Thierry, thanks, Marie-José, for the opportunity to ask questions. Two, if I may. Firstly, could you talk a little bit about the construction end markets by region? You know, how, and kind of help us understand how much step down you saw in the U.S. in the second half, and how much weight that weighs on 2026. Conversely, there are expectations that construction refreshment improves in Europe in 2026. Do you see anything in your order books or in your discussions with customers, that kind of talk to that? Secondly, if I may, just around, obviously, very strong free cash flow, in Q4.
How much of that was your decision to really cut the working capital versus the pricing element rolling through working capital, i.e, as we look at working capital for 2026, if we do start to see some volume improvement at some point, do you need to see a rapid increase in working capital to meet that demand? Thank you.
Okay, I will let Marie-José answer on the working capital. On the construction market, it's an interesting question. Because as we have, compared to other peers, we are more weighted in construction, especially Europe and U.S., and in Asia is less than that. I would say, it joins your question, in fact, to certain extent, the answer is in your question. Europe, we have reached certainly a bottom. I'm quite cautious on the signals, because we have been caught several times by surprise. My feeling is that, let's say there is a little bit of incremental improvement, but to be confirmed. Okay?
Europe is like the bottom, it does not decrease anymore, and if there was a trend, it would be incrementally slightly better. In the U.S., clearly in second semester, it was one of the bad surprise we had on in terms of business development. I know the elasticity and the agility of the U.S. economy, so I would not extrapolate necessary what we saw in the second semester in the U.S. with what it could be this year. What is clear is that, and this is the difference with Europe, U.S. decreased second semester of last year in construction, while Europe gives the impression it was more at the bottom and with little bit more positive.
U.S. will see, I know that the administration, Trump administration, is trying to put in place some measures in order to support construction-related activities. We'll see if it brings some support, but there are so many variables that are difficult to know today. I would be cautious as I am on the macro, overall macroeconomy. Let's take month by month and see how things are developing. I.
On the cash-
Yeah, on the cash, yeah.
A few comments. Basically, you saw the working capital landed at 12.5% of our annual sales, frankly reflecting the similar work that our customers have been doing on their end. For 2026, at constant macro, I would expect frankly a flat working cap. In case of a rebound, for sure, working cap should increase in a commensurate way versus those 12.5% or 13% of our sales.
Okay. Thank you both. Just as a quick follow-up, I mean, do you think that the industry, or the supply chain, is over-cut inventories and working capital? It just feels like everybody has cut aggressively at the end of last year, and then, has then aggressively cut again in the end of 2025, sorry, 2024 and 2025. You know, I guess investors are surprised as to how much de-stocking has taken place.
Any commentary or color there as to the level of inventories in the system would be very helpful.
Certainly, this question is worth a lot of money. The difficulty, as you know, and as much as I know, Tom, is in the supply chain in chemicals, they are complex, and they are long, so is and fragmented, it's very difficult to have a clear view. What is sure is that, and it has been, to certain extent, a little bit of a mystery for all of us, because normally when you have a cycle in chemical, it doesn't last so long. It's clear that we see destock now, we are already talking about end of destocking, 18 months ago. We thought it was already long. It's clear that the stock for most of the chain seems to be rather low, but they are low if there is a rebound. If there is no rebound, certainly the chain can live with that.
My theory is still the same, it does not change. Is that at a certain point, you will get a rebound. We don't know when it will happen, we don't know when, and when the rebound will come, the chain will be under big pressure. This is obvious, but we don't know when, and there will be nuance depending on which region, which end market, which product line, etcetera. Basically, this is a typical cycle of chemicals, where you have volume and pricing on the both direction, depending on the, if it goes down or it goes up, always amplifying the industry.
Then, we have to be a bit patient, but it will come at a certain time. We don't know, we'll see. Your question is valid. Certainly stock are less, at the end of this year, than they were at the end of 2024. 2024 was less than end of 2023. Now this is a demand which will be the main driver of the stock.
Thank you.
You're welcome.
The next question comes from Matthew Yates of Bank of America. Please go ahead.
Hey, good morning, everyone. Thanks for taking the question.
Very much.
I'd like to ask about the new structure, the divisional restatement. Not the first time the company has done that since its creation. And I heard your introductory remarks about the benefits of transparency, but I would put it to you that there is an argument that it highlights a lack of industrial logic to the portfolio, that you can move things around so frequently. It hurts investors' ability to track performance over time, because we lose that transparency. Can you just elaborate a little bit more as to why you think this is a good decision? By association, have you changed reporting lines or management structure?
I had a quick glance at your exec committee on the website, which hasn't changed, but is there gonna be a change in roles and responsibilities that may help us bring some better operational performance and some genuine benefit of this move? Thank you.
Look, first of all, Matthew, we don't change so often. Here we are talking about an incremental change. I think the difficulty we had, and hopefully it was well explained in our, and we are completely open to discuss more with you and who want. The difficulty we had was two things. The first one, we got the impression that on the Specialty Materials business, which is, whatever definition, by far the large majority of Arkema portfolio, we are really doing a great job. This year, we are frustrated by the fact that we could not read it, and you could not read it simply. The reason was that we have, things have changed over the past three years.
The world has changed, and I think maybe we changed, but I think it's good to be agile and to try to be as transparent and as clear as possible in a world which is changing a lot, where yourself, ourself, all of stakeholder, are trying to understand what is happening, and on what you can really rely and build for the future. What we saw is that, in fact, on the refrigerant gas, while we saw that we were mostly old generation gases and little development in new generation, and this is why we wanted to sell it, because we saw that there was no future, and it was far from our sustainable strategy.
What we saw is two things: that the old generation, that we knew already, we are phasing out, or fading out, and with an acceleration in the past two years. On the other side, we're far stronger, far better, far quicker, in the development of new generation, not for the traditional application in refrigerant, but for new application, heat pump, data center, energy efficiency in the buildings, which are really completely core in terms of the strategy of Arkema, with some of niches, same end market, same kind of growth pattern, et cetera. We wanted absolutely to recognize that, and this is why, a part of this field, we split between old and new generation, and it make completely sense from a portfolio standpoint, that this new generation joins them.
We have already started to do it, join the HPP. The second thing with regard to acrylics, for a long time, and we had, I know, discussion together on that, we are absolutely convinced that we would be able, for Europe and U.S., to stabilize their volatility by developing the downstream. It was true for Asia we knew that it would be quite limited. Europe and U.S., we thought we could go at further on the, on this path to balance the upstream and the downstream. We have seen that the targets were not so many. We built already most of the, this target with Sartomer and the Coatex.
The second thing was that not only we decided when we bought Bostik to put most of our allocation of cash flow acquisition for additives. The second trend that we see, which is linked to the fact that the world is becoming far more volatile than it was in the old time. Now, you can see on every parameters, FX, the macro figures in this or that market, et cetera, of the brand evolution. In fact, it reinforced the volatility of the acrylic acids, the acrylic monomers.
We wanted to also to, so we decided to put back China, Europe, and U.S. together, and to recognize that in the portfolio, we have a minority, a small minority, which around 15% of the portfolio, which is really, in nature, more volatile. Even if from the, over the cycle, it still generate a lot of, a lot of cash. For acrylic, it's normal, because the upstream goes with the downstream, but the upstream is a basic material. We know that, the acrylic monomer is a basic material.
We think that, with this evolution of the world that we want to recognize, more volatility of what is now in Primary Materials, we are able really to show you that all the job that we have been doing on the Specialty Materials is really bearing its fruits, with quite a resilience and the growth over time. It was in this context of 2025, which was completely atypical and unexpected, they were able to deliver a -5% EBITDA evolution, which frankly speaking, given the level of the context, of the challenge of the context, was quite a good performance. For us, it was far easier to explain it like this, so you have to take it as a better reading. This is why we did it.
Hopefully it will, and we are ready to discuss with any of you. For us, it reinforce the quality of the reading of the performance and also of the benefit of the strategy we have been leading over the past 10 years.
Thierry, can I ask a follow-up? From your answer, it sounds like the concept of integration across the value chain hasn't worked and is no longer valid. This goes above and beyond simply the way you're reporting. It questions the actual strategy of the company. Are you open to the idea of exiting the three upstream acrylic plants, if there were to be a possible buyer out there, or are they still core to the broader group?
No, I would say that we have to take it for what it is, which is a better reading and reporting of where we are. Acrylics remains the backbone, which is important, of the downstream. So far, I would say it's really part of the portfolio. Anyway, the results are quite low, so it's not at all, even beyond what you say, the topic of disposal. As you say, and you have seen the history of Arkema, there is never any taboo, so I think that, for the time being, is quite a reporting topic, and we have to take it as such.
Thank you, Thierry.
You're welcome.
The next question comes from Laurent Favre of BNP. Please go ahead.
Yes, good morning. Thanks for taking the questions. My first question, I guess, is on HPP, where we had stable Q2, stable Q3, Q4, I think a bit of a collapse down, sales down 15%. We saw something similar with your peer this morning. I was wondering if you could talk about what you're seeing on, beyond, I guess, destocking, what you're seeing on competitive pressures, and in particular, maybe some kind of commoditization risk? That's question number one. The second one, just to echo the comments from Matthew, I think best practice for us, especially if you're talking about adding transparency, would be to have restatements for the divisions going back to at least 2023.
That would be really, I think, helpful for investors and for us. A question related to that restatement is around acrylics, EU, U.S.. I think, it looks like you had EUR 13 million of EBITDA in 2025. I was wondering how you're thinking about this going forward, as it seems that we still have capacity additions in the industry in 2026, and maybe 2027. Are you expecting acrylics, EU, U.S., to still be around that break-even EBITDA for 2026 before we eventually see a recovery? What did you bake in the guidance? Thank you.
Okay. With regard to the first question, I really think that the end of the year, and you mentioned also our peers on the HPP, is really driven by the destock of customer. When we saw in detail, you can imagine the dynamics and to really understand the results, beyond the fact that the impact of the FX was more important in Q4, don't forget that. What we saw is that the impact of destock was quite high. Destock, it happened less in Asia, where by culture, they don't stock a lot, but in Europe and U.S.
In fact, not only we have the destock globally, but the fact that the destock was more pronounced in Europe and U.S., where culturally our customers have more stock, changed the geographical mix, okay? It weighs on the profitability evolution. The geographical mix was especially these low sales in the U.S., was a little bit of a surprise, and but was linked to this destocking. We have spent a lot of time, as you can imagine, in this kind of contact with our customers. We knew, we understood that they would be very cautious in terms of stock at the end of the year. This destocking topic is not just a matter of the chemical industry.
Our customers, they destock, our suppliers, they destock, everybody tried to finish the year with stock, which was, I would not say minimal, but more reasonable than they were, given the level of the demand. For me, it's not a matter of more competition or anything special, sort of change in evolution we would have seen in Q4. It was, it's really a matter of customer by customer of destock. As you can imagine, we check our market shares very precisely also. No, so, and Q4 is the last quarter of the year, so sometimes you can have certain years, you can have a little bit of amplification of the low demand. I would not consider this a new trend at all.
It's not my feeling. As you know, in FPP, we put a lot of efforts on the new business development, innovation, I think this is a paradox. I think we have been good on that. The growth is there. We are able to differentiate versus competition, the market is not easy, we are not particularly concerned for the next few years. On, yes, restatement, I pass the message to the investor relation team. We do what we can, the idea is certainly not to lose you, on the contrary, is to help you. Don't worry on that, we'll do our best.
We are willing to support.
Yeah. With with acrylics, yes, EBITDA, you could make the math. At least, maybe we are not. It's complicated for you, but as you could see, you could try to make some, find some new information that you had not before, huh? It helps you also. I can see you have started to work on the acrylic. Clearly, we are surprised by the let's say, the depth of the cycle of acrylics. In fact, we have to go back to 2010 and the acquisition of the acrylics from Dow, where the cycle were more or less that one. I don't know if it makes you more comfortable, a year after, it was one of our best product lines.
I think everybody has to be modest on anticipating. I think that acrylic was under in Europe and U.S., was more under pressures than expected, clearly in 2025. We expect for the time being, maybe something in hopefully a little bit of improvement, but something not far from what we saw in 2025.
Okay, thank you.
You're welcome.
The next question comes from Emmanuel Matot of Oddo BHF. Please go ahead.
Hello, Thierry. Hello, Marie-José. Three questions for me. First, does that make sense to believe that H2 could be in line with H1 in terms of EBITDA? Is that the seasonality you are factoring into your guidance for 2026? It's quite unusual historically. Second, given the ramp-up of your mid... Why do you expect those projects to have a lower additional contribution to the group's EBITDA in 2026? You are mentioning only EUR 50 million contribution compared to EUR 60 million last year. It seems to be cautious. Last question, do you feel that the authorities in Europe are more willing than in the past to help you and the sector regain competitiveness significantly and protect you more from unfair competition, in particular from China? Thank you very much.
Well, thank you, Emmanuel, for the question. On the first one, we didn't say it would be equal. We said it would be more balanced. Because on the contrary, in 2025 was atypical in terms of seasonality, but we not say it would be at par, H1 and H2. It's just the imbalance we had in 2025 would be more back to normal, I would say. On the project, no, it just. In fact, there is no maybe it's counterintuitive, but it's not because you do 60, one year and 50 the following year. We are talking about incremental, as you know, additional EBITDA, okay? It depends on the momentum of the project.
In 2024, you had a project which was started with the first step, in 2025, with the first step, which was very high in terms of contribution. The year after, the same project can deliver far less on top of it. You can deliver on a project, I don't know, I will give you an example. You deliver on five years, EUR 100 million. You can have the first year of 40, the second year 20, and then 10, et cetera. It's not linked, what is important is the cumulative, and it depends on the phasing of the project. Some have started three years ago, some will after, have just started at the end of last year. Don't, there is no ratio, I would say.
What is important is accumulation. If we are cautious, so much the better, it will depend on the macro, but I think that we should count on the EUR 50 million, I think it's reasonable. The project are what is more important beyond the figures, is that we confirm that the positioning of the project is still completely valid, from a strategic standpoint, from a geographical standpoint. I think this is good news. This means that since the world is changing, your question could have been also, do you think that some of the projects are not relevant anymore because the world changed? It's not the case. We reconfirm the quality of the projects.
They are all meaningful, even if it takes more time to develop than we would have thought at the beginning. On the last question, yes, first of all, we are a global company. This is not Arkema protected. This is the assets of Arkema in Europe, but we have assets everywhere. We will be pragmatic at the end, even if we like our region, our country, we put our money where we believe we can be competitive and we can develop. With regard to Europe, yes, authorities have understood the danger for the industrial assets of chemical company, but also beyond chemicals in Europe. There seems to be more aware of the danger, more protective, think more about competitiveness.
In terms of, let's say, awareness and intent, I would say it's positive. In terms of act, for the time being, we see nothing. Little.
The next question comes from Chetan Udeshi of JPMorgan. Please go ahead.
Yeah, hi. Thanks for taking my question. I had maybe two, maybe three, I don't know, but well, I'll try. The first one was just I'm looking at your Advanced Materials Q4 numbers, and, I mean, you're saying you had destocking, but then your revenue in Q4 is actually above Q3, and your EBITDA has been, I mean, it seems revenue is up EUR 10 million versus Q3, EBITDA is down EUR 40 million versus Q3. I'm just curious what happened there? Maybe just to challenge your comment, that Arkema is doing very well in specialties. You know, it doesn't seem like when I look at your numbers in Adhesives or Advanced Materials, that's really coming through in terms of numbers. The EBITDA in both these divisions are down quite dramatically year-on-year.
Just curious why you think we should think Arkema is doing well, and there's not a competitive pressure that is coming through in the business. The last question I had was just in Q1, sorry, Q1 guidance. You know, historically, if I go, like, many years back your typically Q1 will be up 20%-30% versus Q4. You know, in the last two years, we've had a more modest improvement of 1-5. What should we think in terms of the magnitude of that seasonal rebound that we should have in mind for Q1? Thank you.
Okay, Chetan, I try to understand your the rationale of your question. Where you compare a Q4 with Q2 with on Advanced Materials or. No, I think on Advanced Materials, this is the answer to Lauren. This is a destock. The destock, as I said, which was not the case in Q3, happened mostly in Europe and the U.S. We are strong destocking in the U.S., this is where in terms of added value, we are higher than in Asia. The geographical mix is working against us. That's all, very, you have all the figures, at the end, it's more, it's really the destock and the geographical mix.
We have some high-value application in Europe and U.S., which really completely distock. You know, sometime in, just in December, you have no order because your customer are just optimizing their stock, so this is what happened. From what I see with other peers that I know, that you have some peer you specially follow, you can see that we distock was all across the board by many peers. I would say, no, I confirm what we say. Your second question, Beatriz?
It's the seasonality between Q1-
Oh, there was another one?
No, there was guidance?
We said we are doing well in specialty.
Oh, yes.
She doesn't seem to flag that adhesives and materials are not so great.
Okay, yeah. No, I think what we said. I don't really understand what your question. What we say is that I'm sure you are referring to my point to Matthew on the transparency, why we change segmentation. I think what we say very clearly is that the EBITDA of the Specialty Materials over the year have declined by 5%, which we consider in macroeconomic, which is one of the worst we have seen in 30 years, is a performance which shows the quality of this portfolio. That's all. For the rest, you have your own opinion as always.
We consider that to have - 5% EBITDA in really more than tough conditions on 85% of the portfolio is performance which need to be appreciated and to be highlighted. This is what we do. This is... We think it was worth doing it. With regards to Q1 guidance, we'll not enter into precise figures. The only thing that we can say is that Q1 will be above Q4. There is a seasonality. The macro is comparable. Certainly, the stocking should be less, and the seasonality, typical, is better in Q1. We agree that in the recent years, it has been a bit less higher compared to Q4 than it was before. You have some reference points that you can take.
I think this is a qualitative element that it will certainly not be the kind of seasonality you could find a few years ago. It's more typical of the more recent years. Q1 will be above Q4, no surprise there. The macro should be quite comparable, but the de-stocking will be less also. Okay?
Thank you very much.
Don't forget the FX. Don't forget the FX impact of EUR 25 million that we have mentioned.
Got it. Thank you.
The next question comes from James Hooper of Bernstein. Please go ahead.
Hi, good morning. Thank you very much for taking my question. Can we go into a little bit more detail around the outlook, please? Specifically, kind of division through division, if that's possible. Another thing I'd like to try and understand is, obviously, you're guiding for the EUR 50 million cumulative effect from the projects. But is there a cannibalization impact on some of the existing revenues? 'Cause I'm just trying to bridge to the kind of how this and also the kind of impact of the specialty groups versus refrigerants. Thanks very much.
With the outlook, I think we got our, you got our press release, and what we can say at this stage on the outlook. We are not given, and I think we have never given any guidance by division. We give a guidance for the whole company. Now, I would say the macro, and this was our feeling in 2025, especially if you look at the new segmentation, I would say the macro is similar for each of the business. There is their geographical footprint is quite comparable. The end market are a little bit different, but they are all diversified in terms of end market. I would not make a big difference by divisions.
There was a question of Lauren on the primary products, materials with the weight of acrylics, et cetera, where we think it will stay at least for the first part of the year, at a low level. For the rest, I think the macro should be similar. On HPP, you will benefit more of all this material. You will benefit more from the projects than the rest, than the other division. You could see that in, if you take the list of the project is more in Advanced Materials and in Adhesives, but certainly, Advanced Materials than the other division. The construction in Europe, we mentioned that, I think should more help the Adhesives and the Coatings.
I'm sure you factored also old generation refrigerant on the Primary Materials. You have some new in season, depending on which division you are talking about. Overall, similar picture, but with some nuances that you know pretty well if you take our slide, because you have where the projects are located, you have discussion on construction, this discussion on old generation refrigerant and on acrylics. On the project, the EUR 50 million, I don't know what you mean by cannibalization, but there is no cannibalization, this means this is a re. At least it does not cannibalize other product line, if it is your question. A new product line would replace another one. No, it's not, it's not the ca- except with the refrigerant.
Refrigerant is, first is one project, in fact, is not for us. In the case of the new refrigerant, business, the end market is not the same, so it's not a cannibalization. We all know that, old generation disappear, new generation are coming. For the rest, no, I don't see any cannibalization coming from the projects.
Thank you very much. Can I just ask a quick follow-up as well, in terms of the cash outlook as well? You know, I don't think you can formal guidance for cash.
On the cash outlook, as we said, at, let's say comparable macro, cash performance should be quite comparable, let's say, provided, you take into account that the working capital would remain flat. You see, in fact, for 2025, the contribution of the working capital variance, if we assume, macro, remains comparable, then there is no change in working capital expected interest.
Thank you. That's helpful. Thank you very much.
Mr. Le Hénaff, there are no more questions registered right now. Back to you for any closing remarks you may have.
Yes. First of all, thank you very much for your attention. I think this new year will be quite interesting as well as the previous one. I think the team is really focused on the two time horizon, as you know, and as you could appreciate the efforts, cash, fixed costs, which are very important. We'll continue them with a lot of engagement, and we still are confident on our major projects, and it's a very important part. It takes more time than expected to develop them in the current macro, but it will be a very material contributor in the coming years.
For the rest, we confirm that we have a really strong positioning on most of our business line, even if the macro for the time being remain rather weak, we think that our leadership position is really a support in this kind of environment. Looking forward to meeting you at different occasion, have a good day. Thank you.
Ladies and gentlemen, this concludes this conference call. Arkema, thanks you for your participation. You may now disconnect.