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Arkema’s FY guidance looked broadly the same between the Q2 and Q3. The range was however condensed to single figures and the wording was changed a bit. This looks like a guidance revision in our view but was so well done that the management was not questioned about this in the conference call. The Q3 figures were a slight beat to consensus at the profitability level (sales: -3.4%; adjusted EBITDA: +2.7%).
Companies: Arkema (AKE:EPA)Arkema SA (AKE:PAR)
AlphaValue
As expected, Arkema reported lower figures compared with the boom, but margins proved resilient reflecting the high share of the specialty chemicals business. However, Intermediates (earmarked for divestment) did better than expected. Interestingly, unlike some of its peers, Arkema did not warn the market about a guidance cut. The company clocked 50% of its guided FY adjusted EBITDA in the first semester confirming our strong view on the stock.
Despite the consensus-beating Q1 profitability, the management was not overly enthusiastic. Interestingly, the Specialty margin fell by less than that of Intermediates, but both parts of the company faced the same triggers for this development. Sales were missed by -1.2% and consensus on the the adjusted EBITDA was beaten by +12.2%.
We had feared that there would be no decent catalysts in 2023 as the change in CEO might not happen this year. There will however be an Investor Day at the end of September, when the management will roll out its new ambitions for the period beyond 2024. The management is very confident that it can reach its 2024 goals as there is only a minor percentage of sales (9%) remaining to be divested. For us, the challenge will rather be the management’s ability to find the right speciality chemicals
The management fully confirmed the FY guidance despite the fact that it was reached after nine months. In the call the management flagged some uncertainties which overhang the performance in the Q4. As destocking seems to be becoming the common denominator in the chemicals industry, we understand why companies are opting for caution. Sales (+6.2%) and adjusted EBITDA (+4.4%) were a clear beat to consensus. The FY consensus currently stands at €2,093m very close to the company’s guidance.
Arkema is now much more fun to cover after a long period of high cyclicality and poor results. For the moment all this is behind us and the management is currently basking in the results of all its hard work. Thing could change rapidly however. Q2 was another consensus-beating quarter (sales: +22.9%; EBITDA: +16.0%), giving the management enough headroom to again raise its guidance after the most recent upgrade in Q1.
Arkema is ‘sailing’ ahead of the cost curve. In our view, this was the main reason for the management to raise the bar. In the call, the management shed some light on the Q2, expecting strong growth at EBITDA level. We are struggling a bit with the low consensus as the beat was substantial (+7.7% to sales, +42.6% to adjusted EBITDA and +52.2% to adjusted EPS). Other companies would have released preliminary figures.
The headline does not imply that Arkema is taking a nap, but another record race should not be expected and the step up is an inorganic one. The 2021 figures were a beat to consensus (sales: +4.2%; adjusted EBITDA: +6.0%). Against the background of the war in Ukraine, we became less optimistic than management.
Arkema was in a position to implement (strong) price increases even in businesses where the company had a ‘tradition’ of suffering from higher raw material prices. We believe availability was also a strong argument. Interestingly, Adhesive Solutions did not benefit as strongly as the other divisions. Q3 figures were above our cautious expectations and beat consensus expectations by +16.4% (top line) and +13.9% (EBITDA).
… to become a speciality chemicals company by 2024, by acquiring something pharma-like. Basically, Arkema plans to acquire the US-based adhesive platforms corralled together at Ashland’s Performance Adhesives business. The charm of the acquisition is that the acquired technologies will be globally rolled out, giving Arkema’s portfolio a broader stance. Management is quite optimistic it can generate substantial synergies including some positive tax effects, which should make the high valuation a
Arkema surfs the chemicals wave well, being carried along by the strong recovery. Supply availability is one side of the coin. On the other, stands cash collection and the company was good at this. Business-wise, the paved path seems to be a well-chosen one. We appreciate the guidance increase, but do not understand that it is based on an unchanged scope after the closing the PMMA divestment. Consensus was beaten by +5.7% (top line) and +21% (adjusted EBITDA).
The top line has already matched the Q1 19 level, but profitability could not fully catch up, despite the optimised business structure, which might be related to the strongly rising raw material prices. Additionally, management managed the organic momentum of the growth well as NWC outflow remained quite stable. Management has become more optimistic after the clear beat in its Q1 guidance. Figures were slightly above our expectations and beat street estimates.
Arkema’s increasing footprint in speciality chemicals helped to protect profitability. Furthermore, management has taken the next steps towards the mid-term target, even in a crisis. By divesting PMMA, its has taken advantage of a special situation, allowing for a decent valuation. Unfortunately, the company still fully consolidates the to-be-divested business showing up our estimates. Consensus was clearly beaten as it still included the PMMA business.
Like other chemicals companies, Arkema had to manoeuvre in challenging times, but the adhesives business was an anchor with its quite resilient business. The other divisions were in rough seas, as expected, giving a mixed picture from a variety of impacts. Intermediates was negatively affected by all factors. The newly-provided guidance looks like a strong commitment. The Q3 figures were a notch stronger than expected, but matched well with the street’s expectations.
Companies: Arkema SA
Like other chemicals, Arkema could not escape from the developments in the customer markets. Nevertheless, the speciality side of the company did quite well despite some meaningful declines in volumes, whereas Intermediates was hit by lower volumes and lower prices. All divisions saw a strong drop in profitability. The divestment proceeds of Functional Polyolefines were a tonic and helped profitability to beat our expectations. Consensus was also beaten.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Arkema SA. We currently have 0 research reports from 3 professional analysts.
Re-issued to correct for typographical errors.Invinity’s major equity fundraising is targeting a minimum of £56m with £25m already committed by the UK Infrastructure Bank (UKIB). A second strategic investment of £3m has been committed by Korean Investment Partners. The raise will see Invinity to net cash generation, with over £30m of the raise supporting the company’s scale up ahead of this year’s launch of the next generation Mistral flow battery. The raise will boost the balance sheet, reduci
Companies: Invinity Energy Systems PLC
Longspur Clean Energy
OPG Power has released a positive trading update for the year ended 31 March 2024, and now expects to exceed previous market expectations at the EBITDA and revenue level. The company continued to benefit from a stronger revenue run-rate during H2/24 compared with FY23, reflecting greater availability of profitable supply contracts, which in turn have enabled OPG to run at higher levels of plant utilisation. We are raising our revenue forecast for FY24 by 22% to £162m, and our EBITDA by 34% to £1
Companies: OPG Power Ventures Plc
Cavendish
Todays trading update confirms revenue for FY22 at £5.3m and a result in-line with market expectations. With the benefit of the IPO proceeds Aurrigo has hired a further 18 employees in the UK and internationally, mainly to deliver its autonomous aviation solutions following the start of the second stage of development with Singapores Changi Airport Group in October 2022. The Company also reports growing engagement with other airport groups both for Auto-Dolly and Auto-Sim, its sophisticated airp
Companies: Aurrigo International PLC
Singer Capital Markets
17th May 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: Scirocco Energy (SCIR.L) has left AIM. UK Commercial Property REIT (UKCM.L) has left the Premium Segment of the Main Market. What’s baking in the oven? ** Potential**** Initial Public Offerings: 7th May: Time To ACT plc, an engineering business focused on tech
Companies: PIP RNO ORCP HUM CNR UKOG ENET
Hybridan
Companies: ATOME PLC
Canaccord Genuity
Companies: Yu Group PLC
Liberum
In a Trading Update for the twelve months to 31 March 2024 Supreme expects to report revenue of c.£225m, and (adj.) EBITDA of at least £38.0m, in line with market expectations, which had been revised upwards during the course of the year and represents almost double the FY23 level. The Group closed the year debt free. Our outlook highlights the extent to which Supreme has expanded, through both acquisition and organic growth during the period. From 2020 to 2024E the Group will have grown sales
Companies: Supreme PLC
Equity Development
Economic and industrial data has started the second quarter on slightly weaker grounds than Q1 as Manufacturing PMI in the UK, Eurozone and US all reported April indexes below March levels. Cracks seem to be appearing as recent drops in new orders and rising input costs are quickly dampening confidence. Inflation did, however, fall MoM across the board with the exception of the US, where volatile energy prices caused a modest MoM increase in the inflation rate.
Companies: TAND AVON RCDO TRI SYM ABDP KETL
Zeus Capital
Aurrigo is developing autonomous solutions to automate airside baggage and cargo handling operations that are otherwise labour intensive, costly, inefficient and critically understaffed. The business case and projected economics are compelling. Management is expecting to begin live flight testing at Changi Airport Group (‘CAG’), its lead customer, in late 2023 followed by airport rollout in late 2024. September’s IPO has provided the funding to scale Aurrigo’s operations to complete the remainin
The Group has delivered full-year results that are in-line with expectations. Key highlights since September’s IPO include: the signing of a multi-year partnership agreement with Changi Airport Group for the joint development and testing of autonomous baggage vehicles and the Group’s airport simulation software; development of next generation Auto-Dolly and Auto DollyTug Mark 3 vehicles; and investment in personnel to scale operations. FY2023 holds the promise of further positive news flow with
The formal partnership with Changi Airport Group (‘CAG’) has re-enforced Aurrigo’s leading position in autonomous vehicles for the aviation sector with ground testing of both Auto-Dolly and Auto-DollyTug in Singapore. This has enabled the Group to showcase its technology to other airport groups and stakeholders that has delivered an acceleration in interest for future deployments within Europe and North America. This should hopefully deliver additional partnerships in due course, as envisaged at
Companies: Judges Scientific plc
Shore Capital
ATOME’s decision to focus on industrial scale green fertilizer reflects the strong progress it is making in that direction in our view, notably at the 145MW Villeta project. The effective exit from the smaller 1MW hydrogen mobility project allows the company to focus, removing any risk of distraction. We see the impact on valuation as de minimis and the return of the electrolyser deposit means there has been a clean exit.
Companies: FOG PEB KBT EMR TIME GETB JNEO
In a significant development, Aurrigo has signed a formal partnership with International Airlines Group (‘IAG’) for the deployment and demonstration of its autonomous aviation solutions at a large UK airport. This follows the recent announcement of a collaboration with UPS to develop and deploy Auto-Cargo and is further important validation of Aurrigo’s technology and its autonomous vehicle capabilities. The partnership is expected to follow a similar phasing to that at Changi Airport Group in S
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