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Arkema Q1 net income falls

May 13/2019

MOSCOW (MRC) -- Arkema's first-quarter net income fell amid a drop operational margins and higher expenses, the French producer said. 

Sales rose 2.0% year on year to EUR2,215 million. Selling prices increased 1.3% thanks to continued actions to raise
prices in the High Performance Materials division and downstream acrylics. Volumes declined 2.5% compared
with the very high level recorded at the beginning of 2018. Coating Solutions benefited from good market
dynamics. In the High Performance Materials division, demand was lower year on year in the automotive,
electronics and oil & gas markets and overshadowed the success of innovations in several growing segments,
such as batteries and 3D printing. The currency effect was a positive 2.8% mainly attributable to the rise in the US
dollar against the euro. The scope effect was limited at +0.4%.

In a less favorable global economic context, EBITDA of EUR370 million remained at a high level, albeit slightly down
on the high comparison base of first-quarter 2018. The decrease in volumes was partially offset by the benefits of
higher selling prices, a favorable foreign exchange impact and the EUR13 million positive effect from the application
of IFRS 16. In this environment, specialty businesses, which made up 71% of Group sales, demonstrated their
resilience, reporting year-on-year growth thanks to the pro-active policy of raising selling prices, and despite the
significant decrease in the contribution from specialty molecular sieves. As expected, EBITDA for the intermediate
chemicals businesses was lower compared with last years record high comparison base in Fluorogases and the
MMA/PMMA chain. At 16.7%, EBITDA margin resisted well at high levels.

Recurring operating income (REBIT) of EUR247 million includes EUR123 million recurring depreciation and amortization, up EUR17 million against last year primarily as a result of the IFRS 16 impact and an unfavorable currency effect. REBIT margin stood at 11.2%.

Operating income came in at EUR226 million (EUR265 million in first-quarter 2018). It includes EUR12 million in net other expenses, mainly corresponding to restructuring costs, and EUR9 million in depreciation and amortization, mainly resulting from the revaluation of assets as part of the Bostik, Den Braven and XL Brands purchase price allocation.

The financial result represented a net expense of EUR27 million, in the continuity of last year (EUR23 million in first-quarter 2018). The income tax expense of EUR49 million reflects the geographic split of results. Excluding exceptional items, the tax rate amounted to 21% of recurring operating income.

Consequently, net income Group share totaled EUR147 million (versus EUR188 million in first-quarter 2018). Excluding the post-tax impact of non-recurring items, adjusted net income came in at EUR165 million, representing EUR2.16 per share.
Author:Anna Larionova
Tags:petroleum products, Arkema.
Category:General News
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