Thank you for holding, and welcome to Arkema Second Quarter 2023 Results and Outlook Presentation. For your information, this call is being recorded. It will take place in a listen-only mode, and you will have the opportunity to ask questions after the presentation by pressing Star and 1 on your telephone keypad. I will now hand you over to Thierry Le Hénaff, Chairman and Chief Executive Officer. Please go ahead, sir.
Thank you. Good morning, everybody. Welcome to Arkema's Q2 2023 Results conference call. Joining me today are Marie-José Donsion, our CFO, and the investor relations team. As always, supporting this conference call, we have posted a set of slides on our website. I will now comment the quarter's highlights before letting Marie-José go through the financials in more detail. At the end of the presentation, as usual, we'll be available to answer your questions. In the context of numerous profit warning in the chemical sector over the past couple of months, amidst a very challenging economic environment, our Q2 2023 financial performance did not show any particular surprise and was relatively robust.
While our EBITDA was, of course, lower year-on-year, given the well-flagged exceptional profits in upstream acrylics and PVDF, it was comparable, in fact, to pre-COVID levels in a significantly lower volume environment, which, if needed, is a good indicator of the increased resilience of the group over time. Here are some key points of the quarter I'd like to highlight. We delivered an EBITDA of EUR 470 million, a little bit better than our expectations and consistent with our full-year EBITDA guidance. This performance was achieved in difficult macroeconomic conditions, marked by low visibility and weak demand, including continued destocking. This weakness was nearly all over the place, with nevertheless, a few exceptions, like automotive, energy, and batteries.
In particular, destocking in the battery chain in China continued in the early part of the quarter, but seems to have come to an end as volumes finally turned positive on the quarter. All in all, while group volumes were lower year-on-year, our pricing remained firm, for the most part in the context of general inflation, even if raw materials declined. Excluding the expected normalization of PVDF and upstream acrylics, I've mentioned before, we already had the opportunity to comment in the past quarters. The price effect was positive at group level, reflecting the execution of our dynamic pricing policy and also the positive impact of innovation and new business development on the product mix.
A highlight of the quarter from our point of view was our EBITDA margin, which stood at 17.1%, testament to the quality of our business portfolio and again, supported by positive mix and pricing discipline. Looking briefly at the performance of our specialty materials segments. Adhesives had a decent quarter with a stable EBITDA margin compared to last year, which was appreciated given the continued pressure on volumes. This performance of Bostik was supported by our mix toward more value-added solutions and benefits from lower raw material prices. In Advanced Materials, we had the reversal of the PVDF over-earning, but we benefited from high value-added new business developments, as well as resilience in High Performance Polymers in the U.S. and to a certain extent, also in Europe. Performance Additives again delivered a solid performance despite lower volumes, with EBITDA broadly flat year-on-year and high margins.
Our EBITDA margin was above 20% for the segment, which was a satisfactory performance in this context. In coatings, we were impacted by broad destocking and more challenging conditions in upstream acrylics, following last year's very high comparison base. Our downstream business, despite again, lower volumes, was clearly more resilient, with a rising share of more eco-friendly solutions and some benefits of lower input costs. Beyond the financials, we had, as you know, some exciting M&A news in the quarter, which will increase our exposure to high-growth markets like electronics and electric vehicles, finalizing Polytec in high-end engineering adhesives, and of course, announcing the acquisition of a majority stakes in PI Advanced Materials, which is really a unique opportunity to broaden and strengthen our high-performance polymer range with an amazing technology.
Regarding our major CapEx, we were delayed by a couple of months, both on the plant at Nutrien facility in the U.S. and on the bio-based polyimide 11 plant in Singapore. No important issues at all, but as you know, they are both proprietary and cutting-edge processes, many equipment, so we had to experience more minor corrections than expected. For this reason, we now estimate the EBITDA contribution from new project to be closer to EUR 30 million than the initial forecast of above EUR 50 million. You will see that in our conclusion, this delay will not impact our full year guidance for the group, since our first half performance was ahead of our forecast. We expected more benefit from lower raw material, as we anticipated a couple of months ago, and recently we launched a company-wide initiative, which should bring on the fixed cost around EUR 30 million benefits.
We are quite comfortable on our guidance, and we'll come back to that after I hand it over to Marie-José for a more detailed look at the financials.
Thank you, Thierry. To start with, quarterly sales were down 33% year-on-year at EUR 2.4 billion. This is mostly organic, since the scope and currency effects were rather limited. On the one hand, volumes were down 15% in the face of the continued destocking and low demand across a number of important markets, notably construction, coating applications, and packaging. On the other hand, the global price effect came in at a negative 6.6%, impacted mainly by the expected normalization of PVDF and upstream acrylics, while most of our other businesses were in positive territory. Quarter 2, EBITDA came in at EUR 417 million.
Thierry already commented the details by segment, that on a half-year basis, EBITDA came to EUR 784 million, with the 40% year-on-year decline linked mainly to the reversal of the windfall profits generated last year in PVDF and upstream acrylics. Depreciation and amortization stood at EUR 132 million. This is stable versus last year, as the Polyamide 11 Singapore plant and Nutrien project have not yet started being amortized, leading to a recurring EBIT of EUR 285 million and a REBIT margin of 11.7%. Non-recurring items amount to EUR 64 million. Around half is attributable to the PPA depreciation, and the other half to one-off charges, restructuring and legal expenses, as well as start-up costs for our Polyamide 11 plant in Singapore.
Financial expenses stand at EUR 16 million, and tax charges come to EUR 51 million. Consequently, the Q2 adjusted net income stands at EUR 207 million, which corresponds to EUR 2.77 per share. Moving on to cash flow and net debt. Q2 free cash flow amounts to EUR 115 million. It reflects our solid operating performance and includes a EUR 42 million increase in working capital. Our working capital ratio on annualized sales stands at close to 17% versus nearly 15% last year. The higher level being limited, sorry, being linked to some restocking following the low point of year-end 2022, as well as the weaker sales environment. Total capital expenditure amounted to EUR 135 million in the quarter, which is quite comparable to last year's level.
In quarter two, we had EUR 69 million M&A outflow linked to the acquisition of Polytec in Germany. Net debt at the end of June 2023, therefore, amounts to EUR 2.6 billion, including EUR 700 million of hybrid bonds, a little higher versus end of Q1 level, given the dividend payment. Our balance sheet remains solid, with the net debt to last 12 months EBITDA ratio standing at 1.7 times. I thank you for your attention and will now hand it over to Thierry for the outlook.
Thank you, Marie-José, for this highlighting of the financial details. It's no surprise to you, you had the opportunity to hear it from other players in various industries. The overall macroeconomic environment remains marked by low volumes and limited visibility. Nothing new there. This is the case both in Europe and in the U.S., while Asia is the most resilient region currently, even though they yet have to show signs of a tangible rebound. In this context, you know us, we are maintaining a strict operational discipline. Marie-José had the opportunity to mention our efforts still on working capital to make sure we generate a significant cash flow. We are focused really on managing fixed costs, particularly as a result of this weaker than expected macros in the start of the year.
We have recently implemented a new EUR 30 million saving plan on fixed costs versus what we had in the first half, and we initially budgeted. We'll continue to remain attentive to the macro. We think we are now at a low point. We don't see yet when the pickup, the pickup, will come, but as we said earlier, we expect the benefit of the saving plan. We expect benefits also from a stronger relief in raw materials and energy costs. We'll be a bit below, as I mentioned, on the contribution on new project, but on the other side, we have the benefit from the saving plan.
certainly, destocking, which has come to the high point still in Q2, is getting a bit weaker on the construction part, a bit higher on the industrial market. All in all, we believe that it will get a little bit lower in the second part of the year. This means that all in all, we are confident to confirm our annual guidance, aim to achieve in 2023 an EBITDA of around EUR 1.5 billion-EUR 1.6 billion. Beyond the current financial year, we continue to work on two time horizons, and we remain much focused on the longer term.
With our portfolio of cutting-edge technologies across three segments, sustainability-driven innovation, we believe we are really ideally positioned to capture the numerous growth opportunities in areas like batteries, electronics, 3D printing, home efficiency, or the circular economy. We still strongly believe that this strategy towards specialty material is really the right one. It was really for us quite satisfactory to have a 17% EBITDA margin in the second quarter, despite lower volumes. Really, the strategy is really reinforcing the profile of the company. We'll be discussing some of those areas in greater detail at our upcoming Capital Markets Day on September 27 in Paris, where you'll also be able to meet and talk to various members of our senior management team. I really so look forward to seeing you all there.
I thank you very much for your attention, and together with Marie-José, we are now ready to answer the questions 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 and two. Again, please press star one on your telephone to enter the question queue and wait for your name to be announced. Our first question comes from the line of Martin Roediger of Kepler Cheuvreux. Please go ahead.
Yes, good morning, thanks for taking my 2 questions. The first question is on the guidance. In the past, Thierry, you specified your full year guidance at Q2 reporting, but today you did not narrow the guidance range, although H1 is already in your pockets and just 6 months are left. The high end of your guidance implies a 4% EBITDA growth, while the low end implies a 9% EBITDA growth for the second half year-over-year. What are the parameters for the high end as well as for the low end of your guidance? In that connection, are you happy with the right now, the consensus? That is my first question. The second question is on PFAS.
In the last couple of days and weeks, we hear quite some noise about PFAS pollution to the environment at your Pierre-Benite plant in France. What is your view about the risks on this? Thanks.
Okay. With regard to the first question, I'm a bit surprised by your question, because really, we are talking about EUR 100 million on EUR 1.5 billion, which is really quite narrow and as narrow as we do every year. Maybe your comment could be that our guidance at the beginning of the year was not large enough. With regard to the second trimester, I think it's typical of what we do. Looking at some deviation from our peers, in the second quarter, I think the deviation has been far, far beyond this kind of range. I think we are comfortable about this range. I think it's from our side, it shows a good level of confidence.
I would not qualify that the guidance is not narrow enough, frankly speaking, it's not my feeling. As I mentioned, maybe, maybe, we could have started with a larger guidance at the beginning of the year, but we try to be as precise as we can, so this is our culture as you know. With regard to Pierre-Benite, there are some, some local noise on the, on this point. There are questions from authorities, with regards some pollution, which some concern past products, some concern product which have nothing to see with the site of Pierre-Benite. We are working, as you know, in full transparency with the administration.
We have always respected on the site of Pierre-Benite all regulations, and we have the answers that we that we share with the authorities. After that, as any topic, you have some press coverage and some some of the elements which are said in the press are right, some are are are wrong, as as as often. But we don't see... I mean, we continue to monitor this this topic, but we don't see a risk which would not be disclosed today in our communication including the reference document.
Thank you.
The next question is from Aron Ceccarelli of Berenberg. Please go ahead.
Hello. Hi, good morning. I have three. The first one is on Advanced Materials. It's nice to see volumes down 8% after being down 20% in Q1, despite, it's fair to say, slightly easier comps. Maybe can you comment a little bit on what are the moving parts here, and what should we expect going into the second half of the year? The other one is, again, on Advanced Materials. It's nice to see margins holding up well. Maybe, you know, it would be good to understand how much you should progress going forward here, especially considering that you're now talking about higher raw materials decline compared to original expectations. The second one is on working capital.
I still see that actually inventory is still quite high and receivable higher year-over-year. Should we expect working capital to remain at a similar level into H2? The final one is on your cost, excluding raw mat. I see SG&A as % of sales of 9.1%. You're talking now about further cost initiatives. Would be interested to understand really what are the levers you have here for further cost cutting. Thank you.
Okay. Maybe Marie-José, you can start with working capital, and I will.
Okay. As, as I mentioned, in fact, we, we clearly are at a, a kind of a higher point than, than, let's say, usual in our working capital ratio on sales. We, we were clearly counting on a better volume, market, starting the year, coming out of a, of a low point, volume, situation at the end of 2022. There has been some, some restocking happening in, inside the organization across various businesses. This is a point of attention that we are paying attention to. I would not agree with you that the receivables are at a high, at a, are at a high point.
We are actually pretty, pretty good at, at collections, and, the number of days of receivables in sales compared to my, last two months turnover is actually, at a low point, compared to my historical trend. I would say the main point of focus for us is the quantities in stock. We continue to enjoy some, price decrease in the valuation, but definitely quantities would be, something we would expect to come back down a bit in the second half of the year.
Thank you, Marie-Josée. Now, on the Advanced Materials, thank you for mentioning that the margin is quite good, given the, the, the context, 20% on the Q2. You're right also to say that, if you compare to the average of the H1, we are 1.5 points above, which means 3 points more, semester, quarter to quarter. Now, it's very difficult to extrapolate 1 quarter. What is clear is that in terms of seasonality, the 2nd quarter normally is better than the 1st one. It's 1 element. The 2nd element is that we got a little bit of release on the raw material, with, I would say, a good pricing policy.
I would mention, I think we did it, that the battery segment was really de-stocking in the first quarter. Now the demand is better, even if the pricing continue to, to decrease a little bit, I would say in terms of volume, it was far better in the second quarter, especially the end of the second quarter than the, than the first one. Overall, the Performance Additives, that maybe, you know, a little bit less than the HPP, has been quite stable, this is important. I would like to raise again the important to have a, still a certain level.
Even while being focused on specialty material, it's important to have some diversification because it brings more stability, and the performance additive has been a quite, quite impressive in its stability year on year. These are the, I would say, the, the moving parts to answer your question. I would not comment. We gave you a guidance which is rather precise for the whole group, as we do every, every year. Not commenting again on the question of Martin. I will not guide for every segment for the second part of the year.
Clearly, if you look at the whole group, you have a certain stability between the 2 semesters. It should apply more or less to Advanced Materials with some plus. You mentioned 1 with a lower raw material, some minus with a lower seasonality and normally in H2 compared to H1. You have a combination, but nothing significant, I would say, between the 2 semesters. Now, with regard to the cost initiative, I imagine you mentioned the fixed cost initiative. I think we are, and we are quite agile on that. As you know, we never launch really, as some company do, big measure plans suddenly. We are more ongoingly working on our costs, both variable costs and fixed costs.
With regard to fixed costs, the levels are normally quite traditional, strict management of replacement when people take retirement and when you have some people leaving. We hire every year 2,500 employees, which is more than 10% of the employees, just with a natural turnover retirement in the company. Because of that, it gives some opportunity to streamline, so we do that. Also, there are some discretionary expenses, as you know, including travel, to give you something that everybody will understand, but it's far beyond that, where we will be rather aggressive on the second part of the year.
Now, when you have lower volume, especially for the, not the continuous process, but the process in batches, for example, adhesive, even if we don't communicate externally more in a detail way on that, clearly we adjust our footprint in order to cope with lower volume. These are some examples of initiative we are taking, and we take on the accelerate on the second semester to deliver this semester on semester, EUR 30 million savings on fixed cost.
Thank you very much. Good luck.
You're welcome.
The next question is from Chetan Udeshi of JP Morgan. Please go ahead.
Yeah, thanks, morning. The first question I just wanted to follow up was, maybe not follow up, but just first question on the topic on fluorogases. I know we've not talked about it for a while, but just looking at some of the anecdotal data, et cetera, it seems the prices are very high this year or going up strongly this year on the back of the, you know, plan reduction in quotas, both in the U.S. and Europe. I think it's in 2024. I mean, in the past, we've seen this dynamic where, you know, the prices go up into the cuts to quotas, and then they fall post the initial buying wave.
Is this something similar we should be expecting this cycle, or is there a different pattern, you think, because of maybe changes in the market structure, et cetera, et cetera? Is this something a material driver to Arkema's earnings in intermediates this year? That would be first question. The second question was just around, you mentioned certain seasonality, and that seasonality typically, even for second quarter, you tend to see a softer, sorry, third quarter, softer third quarter versus Q2, just because of seasonality. Is that something you expect, or because of the project contribution and fixed cost saving, we should be not expecting that seasonal decline in Q3 versus Q2? Thank you.
Okay, the first one, the answer is rather easy. In the old time, our profitability was very shared between Asia, Europe, and the U.S. U.S. has always been very stable. Europe was, I would say, rather stable at a, with a low performance, with no quota implemented, except with one year, where we are disturbance because the regulation was not applied, it's not the case anymore, because it took some time for the European Commission really to make sure that this regulation was implemented, now it's done. Asia was a big contributor. Today, different. I would say the most of the large, very large majority of the contribution is between U.S. first, then Europe.
In Europe now, the, the quota scheme is, is, is respected, and we don't have the disturbance we had in the past. In the U.S., it's stable like it was. Now, when you say that, we seems to have a sort of elevation of prices and profitability in fluorogas this year versus last year, it's not the case. We have a rather stability in fluorogas, while maybe a little bit better than the last year, while we, we decrease in intermediate on the, on the Chinese acrylic, as we mentioned. Our feeling, and it's a strong feeling, we believe that fluorogas in the coming years will be rather stable.
The mechanism are different now than they were in the past, and the Asian part, which was really the volatile one, is quite small now. We have a far more stable positioning. With regard to seasonality, I, I will not, I will not comment really quarter by quarter, but what, what I say on the semester, and I say, I think I said that last time, is that the second semester normally is a little bit softer in seasonality than the first one, if you make the math, and if you look at several years of past for Arkema. This year, little bit different because we have still momentum, even if they are a little bit below in the new project contribution, this contribution will be there.
Secondly, as I mentioned, we have this fixed cost savings, so it make a difference of about EUR 30 million, and because the two, between the two quarters, it's not insignificant. You have the raw material dynamics. Don't forget also in raw materials that we have about 6 months delay between the impact of raw material decrease. This means that a big part of the decrease of the raw material index of the first semester will be seen as the second semester. These are good elements. I would say even if today we have no visibility, even if we have not, if we remain quite cautious, maybe end of the year a little bit incremental, less of destocking, it can make a difference also.
If you take these four elements, it's not a pure rational, there are still uncertainties, but all in all, it makes, I would say, a seasonality, not exactly the one we had in the past. Okay?
That's clear. Thank you.
The next question is from Matthew Yates of Bank of America. Please go ahead.
Hi, everyone. I wanted to take the opportunity to come back and ask a little bit more about the PIAM deal from a couple of weeks ago. Really just to understand, the longer term potential here, and, and therefore, why you are so excited about this business. It, it looks very dependent on smartphones today, but perhaps that, that changes in, in time. I see they make reference to Line 9 expansion, possibly being dedicated to electric vehicles. When you did your due diligence on the deal, were you able to understand how much visibility they have on orders or design wins into that market? Secondly, they seem to have quite a, a new strategy around varnish, where capacity today is de minimis, but they're talking about huge numbers potentially in 5 years' time.
Can you help me better understand what the sort of applications are for varnish, and what's changed as to why they're entering that business now that they haven't been in historically? Thank you.
Okay. Is your, your only question, or you have another one, Matthew?
I, I can, I can ask another one.
So, um-
Material basket.
Okay. On time, on time, on time, I will give you the, the general answer. I think we have organized specifically for you, because it would, we thought it would take too much time in this call, a specific answer to some specific questions. You will get the answer you want on the varnishes and smartphone, et cetera. Overall, we are very confident on this on this technology, because it really fits two of the major area of goals for Arkema on the long run. One is electronics, and electrical vehicle is also influencing a lot electronic, as you know. Also the second one is battery, which is really emerging very strongly. The technology of polyamide is absolutely important for this two business.
What we have seen even in this year, which this is why we wanted to buy it this year, because it was a lower point. We see a good momentum month after month of this new business, which is coming in battery and in advanced electronics. On this, the rationale, which I explained last time, is very clear from the standpoint. We give you, we take advantage of the capital market to come back on this acquisition. Even if we have not closed, we are limited in what we can show you, by definition, because the company is not with us yet.
We try to continue to explain what is PI, and then all this application, and they will be done by our expert. As I mentioned, since you had a, a few specific, question, we have organized for you, a little bit of, answer with our experts. You will get all these, answers.
Thank you. I appreciate the help. Just maybe a question on the adhesives business in terms of the raw material basket, which I would imagine has a lot of moving parts. We're now hearing from the coatings companies that they're seeing their basket down high single-digit, maybe even double-digit % year-over-year. When you look at the inputs for adhesives, can you give us a sense what sort of cost deflation you're seeing? I would imagine there's probably a lot more additives in that business, so maybe the numbers aren't exactly the same, but just curious how you're seeing raw material deflation on the adhesive side.
We don't disclose actually our strategic information, our raw material in index. I would say for adhesives, they are very close to the whole group. We don't see any specific difference. The raw material both are not the same, overall the index are comparable with the rest of the group. Maybe if with a, our cutting customer, for example, if you take the paint, if you compare a paint in an adhesive, which is basically the ground of your question. If you look over a long period, you have more volatility in margin for paint companies than you have with adhesive company.
This means that the margin goes up higher with paint company in peak years, and it goes down when raw material are decreasing, and it goes down more significantly when the raw material are increasing. You could see that in the past couple of years. You cannot directly compare adhesive and paint in terms of raw material influence, pricing versus raw material, et cetera. This is also one of the beauty of the adhesive, which is more stable from this, from this standpoint.
Thank you so much.
You're welcome.
The next question is from Jaideep Pandya of On Field Research. Please go ahead.
Thanks. I have a few questions. Firstly, on PVDF, Thierry, could you give us some indication of what sort of volumes growth do you see in the second half versus first half, and then into 2024, based on sort of your customer feedback? It seems like volumes have stabilized. You know, Chinese prices have, on a reference level, also stabilized. Do you expect price stability in your portfolio as well for H2 and into 2024? That's my first question. The second question is on coatings. We've seen now a few quarters where your volumes have been down in the twenties, where your customer volumes are stabilizing, and customers are also upgrading raw material guidances. Do you think that, you know, in the second half this year into 2024, we'll see some restock in coatings from your coatings customers?
Then the third question really is on the portfolio. I mean, you know, well done on the PI acquisition, but do you see any meaningful opportunities in either coatings or adhesives, which are sort of in the league of Ashland, which could come your way in the next sort of 12 months or so? These are my questions. Thank you.
Okay. Thank you, Jaideep. On the first, on the first one, we are already a good volume growth and between Q1 and Q2 are significant. It depends if you compare H2 to H1 or H2 to the trend of Q2. I would say, in terms of volume, we plan to have, we plan to have the H2 more is order of magnitude of the Q2, which is more comparable, while, as I mentioned, the Q1 in volume was more difficult. In 2024 versus 2023, just because we have the weakness at the start of the year, we continue to grow.
As you know, we have invested also, both in France and in China, for, let's say, to make the story short, midyear. One is a bit before midyear, the other part is more a bit after midyear. Which mean, all in all, we'll get more capacity overall in 2024 than in 2023. Because of that, because the market, we have a lot of new business, as you know, in battery, but not only in battery. Normally, 2024 should be above in volume, compared to 2023, and even compared to the second part of 2023.
In terms of pricing, we see for the Chinese pricing, it's clear that we got a big hit in the first part of the year. We continue to see decrease in the, in Q2. I agree with you. Normally we should be more or less stable, but again, wait and see, but everything is factored in our guidance anyway. Putting volumes, yes, you, it's a good remark. I did it to my team. I told them, I don't understand, we have some gap between what our customer are publishing and what we say. Yes, normally, if you are rational, we should get some restock at some point, but this means they have still some stock.
The good news is that it seems that the market is stabilizing, and that we come to a point where the stock are well optimized at our customers, and they should start to restock a little bit. We'll wait and see. Again, I don't want to have no crystal ball, but in terms of logistics, what you say should be true at certain point. I don't want to over emphasize that. Let's let's wait to confirm stabilization and then to see if there are some pick up before the end of the year.
Clearly, you know, when I mentioned the four factors that could influence this 2 compared to a normal seasonality, this was the last, the last one, if you remember what I just said a few minutes ago. With regard to portfolio, we, we had the acquisition of, we had the acquisition of PIAM, which is quite attractive. We had the acquisition of Ashland, which was also attractive and, and, I would say, significant. You understand that now we are re-chasing technology for this new world, for us, so different profile of acquisition compared to what we, we, we did in the, in the old years. Also I would mention Polytec, which is smaller, but exactly the same kind of thing, technology for our new megatrends that we are acquiring.
Now I think that with, to make the story short, with Ashland and with PIAM, we have already on our, in our plate, a good, set of acquisition to manage, develop, integrate. There is no urgency for us to make any meaningful opportunity. We continue to make small bolt-on, as we have been doing in the past, particularly in adhesives. We did one in Mexico in coatings recently. This kind of acquisition, yes, we'll continue to do, but for the meaningful one, let's pause a little bit and let's focus on the delivering the PIAM acquisition and the, the Ashland acquisition.
Thanks a lot. Well done for being the only company not to warn in the sector.
Thank you, Jaideep. Thank you very much. I appreciate. We appreciate, the whole team.
The next question is from Laurent Favre of BNP. Please go ahead.
Yes, good morning. Thierry, the first question is on the EUR 30 million savings program. Just to be sure, are we talking about a EUR 60 million annualized program, and therefore we have the carryover into next year of 30? Or is it more about phasing of fixed cost investments? That's the first question. The second question, I guess, trying my luck, could you talk a bit about how you're thinking about the trajectory for volume growth over the next 18 months, following 15%-20% volume declines over the last 18 months? I know that you don't have a crystal ball, but you do have an investor day in 60 days, and I'm assuming you will give us a 3-year view.
You probably have to have a bit of a view on what's going to happen in the next 18 months. Thank you.
Next 18 months is 3 semesters, huh? I will start with the saving program. What you did, if I understand well, you, you took the 30 on 1 semester multiplied by 2 to get to 60. In fact, it's not the calculation you should make. It's really short-term adjustment, not necessarily structural. Working on the discretionary expenses, on the hiring, on the adjusting the site for lower volumes. They are really corresponding on a conjunct contractual current macroeconomic. It's clear is economic coming back, they will disappear. It's not like the good thing, and this is why I wanted to mention it, because, as you know, we are completely transparent.
We say we are a bit, a little bit late on some of our projects, okay? Don't worry, because we have the offset with this extra savings. This, this was the message. I would say all in all, it's a, it's, it's a wash. Next year is the come back to your second question. If you can think that after volume decrease, we should have some pickup, to which level you don't know, I don't know, for 2024. I think that these savings will disappear, but don't worry, the ramp up of the project will be quite significant in 2024 versus 2023.
All the projects that we have accomplished in the recent three years, they will be really all having started before the end of the year, including the Sartomer at the, which would be at the end of the year. We'll communicate to you during the Capital Market Day, how much it will bring between 2024 and 2023, to confirm the guidance you know for 2024 and to project ourselves in a longer period. I would say, this savings is more something which is more temporary to cope with the current, the current environment. On the volumes, yes, I would say, it's qualitative, recognized, but nobody, I think, do, do better in terms of precision today.
I, I would expect the start of the 2nd semester to be in continuity really with the 1st semester. Maybe during somewhere the Q4 to have a little bit of pickup. JD mentioned, for example, coatings with destocking, stopping and some restock a little bit could come, and 2024 to be better. At which level, in terms of macro, it's more a macro question for expert than for yourself or myself. I think, given the length of the destock, is something you could you could expect even in a reasonable manner.
Thank you. When you look at the 15%-20% volume decline, what you're telling us, I guess, is that you don't think you've lost market share, or you haven't voluntarily-
No, no.
reduced volume that was uncomfortable?
Sorry, if, if it was your question, sorry, I missed it. No, no. We, we check market share all the time. We cannot accept to, to give up a little bit of market share when we consider that, the products are too much commoditized. We want to, to maintain our pricing power, but it's really, it's incremental, and really the, the value-added business, we don't do very much.
Thank you, Thierry.
You're welcome.
Mr. Le Hénaff, this was the last question. There are no more questions registered at this time. Back to you.
Okay, thank you very much all. Thank you for. I know that the end of the month is quite busy, and that some of you will take a summer break. I, I take the opportunity to thank you for your question all along the semester and and the support, and I wish you good, good break. Don't hesitate if, like Matthew, on a specific point, you want to have some deep dive, we are, as you know, always at your disposal. We'll do it with pleasure to finish, to convince you on our very attractive project. Thank you very much, and looking forward with the whole team to talking to you, especially at the Capital Markets Day, where we expect all of you to be present.
It will be a quite nice Capital Markets Day. Thank you very much.
Ladies and gentlemen, this concludes this conference call. Arkema thanks you for your participation. You may now disconnect. Thank you.