What has become an almost exclusive focus on speciality materials likely prevented a decline in earnings as early as mid-2022 at French chemicals group Arkema (Colombes; www.arkema.com).

The company said it was not until the fourth quarter that it experienced a significant reduction in volume sales. Higher prices were able to keep turnover just about positive, but they were not enough to halt the sometimes heavy declines in earnings. Only EBITDA for adhesive operations continued to trend higher.

In the first quarter of this year – and possibly the second – CEO Thierry LeHenaff also expects continued weak demand, above all in Europe. The company first anticipates a more significant improvement in business after the middle of the year.

This year, EBITDA is expected to be in a corridor between EUR 1.5 bn and EUR 1.6 bn, which seems conservative as it would represent a significant fall versus the record years of 2022 und 2021, but an increase compared with the pre-pandemic years of 2018 and 2019. At the same time, various expansion projects for high-performance polymers such as polyamide 11, PVDF, and elastomers are expected to come to fruition in the second half of the year.

In 2022, Arkema, which is now more in debt, saw EBITDA rise 22% to EUR 2.1 bn, with sales up 21% to EUR 11.55 bn. However, only around two-thirds of this growth was organic. The adhesive solutions unit in particular profited from acquisitions, including the acquisition of the performance adhesives division of US resin manufacturer Ashland (Dublin, Ohio; www.ashland.com), with sales of USD 360 mn, a deal completed in February 2022.

Sales volume fell in nearly all segments to average 7.8%. In the second half of the year, European converters in particular mostly worked from existing stocks, which consequently limited their purchases. The construction sector was especially hard hit.

Sales at the adhesives unit grew more than 27% to EUR 2.9 bn, half of which was from its own steam. Divisional EBITDA of EUR 366 mn was heavily impacted by the slump in the building industry, but nevertheless increased nearly 16% due to the Ashland acquisition.

Advanced materials operations, which includes high-performance plastics and additives, was the largest segment with 38% of sales. It benefited considerably from the growth trends in batteries, biobased polymers for consumer goods, and 3D printing. This manifested in a smaller volume loss of 5.5%. EBITDA rose 40% to EUR 941 mn, and at the same time sales were up 31% to EUR 4.3 bn. Among other things, a certain bottleneck with PVDF – now no longer under fluorine materials but part of high-performance thermoplastics – nudged both prices and earnings higher.

Coating solutions activity was not quite so strong with an EBITDA increase of only 13% to EUR 593 mn. Conversely, sales rose 18% to EUR 3.25 bn.

Following the 2021 divestment of its PMMA activities, it seems the break-up of the Arkema’s smaller intermediates segment has been postponed for the time being due to the general economic situation. Originally, the CEO had said the goal was to sell the remaining fluorine gas activities and to add pre-products for fluoropolymers to the materials segment. Turnover in this business fell nearly 12% to EUR 1 bn last year, and EBITDA was little changed at EUR 306 mn.