Arkema S.A. (AKE) Earnings Call Transcript & Summary

Welcome to Arkema's Full Year 2023 Results and Highlights Conference Call. For your information, this call is being recorded. [Operator Instructions] I will now hand you over to Thierry Le Henaff, Chairman and Chief Executive Officer. Sir, please go ahead.

Thank you very much. Good morning everyone. Welcome to Arkema's Full Year 2023 Results Conference Call. Joining me today are Marie-Jose Donsion, our CFO, and also the Investor Relations team. As always, the slides used during this conference call are available on our website. And together with Marie-Jose, we'll be available to answer your question at the end of the presentation. So in 2023, Arkema delivered a solid set of results in challenging macroeconomic conditions. Our teams demonstrated their agility and their commitment as we managed to achieve a performance within the range of the full year guidance we gave a year ago despite a much more difficult backdrop than initially anticipated. I know many of you are already focused on 2024 and we'll talk about the outlook later, but it's important to appreciate the robustness of our performance in 2023, which really highlights the strategic and operational work we have accomplished over the past several years. So here are some key points I like to emphasize today. In 2023, we achieved a solid EBITDA at EUR 1.5 billion, of course lower than last year's exceptional performance and also slightly above the pre-COVID level. This highlights the quality of the performance of several of our businesses, particularly in Adhesives and Performance Additives which have counterbalanced those product lines that were more impacted by the macro environment. I will let Marie-Jose go through the segments in greater detail later on. Our EBITDA margin proved resilient at 15.8%, so close to 16%. Also supported by good demand for higher value added solutions linked to megatrends including [ green ] energy as well as biobased and recycled products. We are pleased to have delivered an excellent recurring cash flow of EUR 761 million, one of our best ever, thanks to our team's hard work in keeping CapEx and working capital under control. We came out of 2023 with an outstanding financial performance. It was in 2022. And we had highlighted already in September 2022. We saw reversal in 2023 of around EUR 400 million EBITDA [ over earning ] as a result of the normalization of PVDF and acrylic. [ This, you knew ]. What no one had foreseen, however, at least at this level, was a persistence of a low underlying demand across many end markets for the chemicals industry. As we have shown in the past, we were able to adjust to the challenging environment in particular with a strict discipline on operational cost, pricing and stock management. We also benefited from our expertise in material science and from the shift towards higher value-added high performance materials. After 2022 when our high performance polymer and Coating Solution drove very strong performance, in 2023, we were very pleased to see that some of our businesses stepped up and delivered goals. Adhesives are an increasingly significant part of our business as they now represent nearly 30% of group sales and they played last year an important role in Arkema's resilience. Performance Additives also performed well, highlighting our solutions in new energies like biofuels and solar energy that are critical for our customers. These businesses, which stood out in 2023, fuel our technology metrics, which will drive our future growth in the fast-growing submarket we spoke about at the last Capital Markets Day. This is the strength of Arkema's business portfolio with different product lines that can address different environments and are built around 3 simple and coherent segments. Beyond these financials, last December, we achieved a new step in the strengthening of our Specialty Materials profile with the closing of the acquisition of a 54% majority stake in PIAM, PI Advanced Materials, which is a global leader in ultra-high performance polyimides. As you know, current momentum is soft, given the weak end market, but we are convinced that PIAM's performance will pick up significantly when the electronics market recovers and we believe we'll see some good progress from Q2 this year. This acquisition provides numerous and significant synergy with our polymer, Adhesives and Sartomer. And our teams have already started to work hard to deliver those synergies. On the organic CapEx front, we are finalizing some important project, as you know, to support our customer sustainable growth. The expansions of Sartomer and of PVDF in China and Pebax in France are up and running and are starting to contribute. For Nutrien, we have just started up. And for polyamide in Singapore, we have still some adjustment to undertake. Polyamide delivery took more time than expected, we recognize. But as I've said in the past, it's really a unique proprietary process which needs a lot of fine tuning, but it should really ramp up from the beginning of Q2. Overall, we can confirm that we expect an EBITDA contribution of EUR 60 million to EUR 70 million in 2024 from all those project, including the startup in the U.S. in the second part of the year of 1233zd, a new generation low emission fluorospecialty used notably in insulation foams for building and in batteries. We are also pleased by our progress in our ESG performance in 2023. We strengthened our commitment for the climate on the 1.5 degree trajectory by 2030, and this trajectory was validated by SBTi. Last year, we reduced greenhouse gases by 7% for scopes 1 and 2 and by 9% for scope 3 versus 2022. And our commitment remains well recognized by external agencies. Developing our employees is also at the forefront of our priorities. And in 2023, we are very proud to have been certified as top employer in [ new ] countries, also gaining the Top Employer Europe label. We are equally proud to have increased significantly the share of women in management position to 29%. This is not an easy task in the chemicals industry, but further progress in this area remains clearly one of our long-term priorities. Finally, a word on the important topic of the dividend. As a result of our solid financial performance in 2023 and the Board's confidence in Arkema's outlook, a 3% increase in the dividend to EUR 3.5 per share we will propose at the next AGM in line with our progressive dividend growth strategy. The payout at exactly 40% is in line with what we indicated at the 2020 Capital Markets Day. Over the past 5 years, the dividend has grown on average by 7% per year from EUR 2.5 in 2019 to EUR 3.5 in 2024, which is a strong achievement, given the declining volume environment we have been facing and is testament to Arkema's ability to withstand different macro context and create value for shareholders. I will come back to the outlook at the end of the presentation and will now hand it over to Marie-Jose, who will review in more detail our Q4 and full year results.

Thank you, Thierry. So I'll start with the revenues at EUR 9.5 billion. 2023 sales were down 18% year-on-year. Volumes were 10% below '22 level with destocking and weak demand throughout the year impacting some important end markets across all regions, especially Europe and U.S. The price effect of minus 6.1% reflects the normalization of PVDF and acrylics mainly as well as the decline of raw material prices in the second half of the year. We had a limited 0.7% parameter effect linked mainly to the contribution of Ashland adhesives in January and February, as well as some bolt-ons and the consolidation of PI Advanced Materials in December. This was partly offset by the divestment of Pebax at the start of 2023. Currencies had a negative impact of 2.2% on sales, mainly linked to the weaker U.S. dollar and Chinese yuan against the euro. EBITDA came in at EUR 1.5 billion, in line with the guidance we gave at the Capital Markets Day last September, and it reflects our efforts to maintain a solid pricing and cost discipline in a low volume environment. In Q4 EBITDA grew 14% year-on-year to EUR 331 million supported notably by slightly better volumes and a strong contribution from Bostik. Indeed, looking at the profitability of the different segments, Bostik achieved a good performance with a yearly EBITDA of EUR 380 million, up by 4% year-on-year despite a 8% drop in volumes. Focusing on the second half EBITDA, it was even up by 16%. The key drivers were our ability to hold on to pricing in a lower cost of raw materials context to control cost and to deliver operational excellence initiatives. We also got some support from acquisitions. EBITDA margin was up 140 basis points to 14%, a record high for Bostik, which constitutes a good base from which to expand the margin further in 2024. In Q4, EBITDA rose strongly by 25% to EUR 94 million in Bostik, confirming the improving margin dynamics. Moving on to Advanced Materials, EBITDA came to EUR 666 million, 29% down on last year's, given the absence of last year's exceptional profits in PVDF, while Performance Additives add an excellent second half. In Q4, EBITDA was stable year on year at EUR 149 million, with Performance Additives offsetting the lower results of high performance polymers. EBITDA of Coating Solutions was down sharply to EUR 327 million, which represents a margin of 13.6%. This was mainly driven by less favorable conditions in upstream acrylics in Europe and in the U.S. Downstream activities were impacted by lower volumes, but margins held up better thanks to pricing discipline and improved mix. Q4 EBITDA for the segment rose by 10% to EUR 69 million thanks to improved volumes off a low base. Finally, EBITDA in Intermediates fell 30% to EUR 213 million with the less favorable conditions in Asian acrylics only partly offset by the good momentum on the refrigerant gases. With depreciation and amortization at EUR 562 million in '23, recurring EBIT amounted to EUR 939 million and the REBIT margins to that 9.9%. Financial expenses at EUR [ 70 ] million reflect the bond issues we undertook last year. The average coupon on Arkema's debt stands at 2.1% at the end of 2023. The recurring tax rate came to a 21% of recurring EBIT. This rate should remain relatively stable going into '24. All in all, adjusted net income came to EUR 653 million, which corresponds to EUR 8.75 per share. Moving on to cash flow, you saw we delivered a strong recurring cash flow of EUR 761 million in '23, which is equating to a bit more than a 50% EBITDA to cash conversion rate. This includes EUR 170 million working capital inflow linked to the price effect, notably on receivables, and to the quality of our management of inventories. The working capital ratio on annualized sales stands at 13.4%, which is actually a pretty good level. Capital expenditure totaled EUR 634 million, reflecting lower exceptional CapEx of EUR 26 million as the construction of the Nutrien and polyamide 11 plants were being finalized. Free cash flow amounts to EUR 625 million. It includes a non-recurring outflow of EUR 110 million, linked primarily to the startup costs of the Singapore platform, as well as Bostik restructuring costs. Taking into account the net cash outflow of EUR 708 million from the portfolio management operations, linked essentially to the acquisition of PI Advanced Materials, net debt at the end of '23 stood at EUR 2.9 billion, including the EUR 700 million of hybrid bonds. And the net debt to last 12 months EBITDA ratio stood at 1.95x. Thank you for your attention. I will now hand it over to Thierry for the outlook.

Thank you, Marie-Jose. So the environment at the beginning of '24 is similar to what we have experienced in the latter part of 2023 with across all key regions a weak demand. And in Q1 2024, as we said in the press release, we expect EBITDA to be rather similar to the Q4 2023 level, which was a good Q4 by historic standards. And for the year-on-year comparison, please also note that in the first quarter market condition were still particularly favorable in PVDF and upstream acrylics last year. Beyond the potential recovery, demand later in the year and the integration of the PIAM acquisition, Arkema will benefit, as you know, from the contribution of new organic projects at the level, as I said before, which we can estimate at EUR 60 million to EUR 70 million in terms of EBITDA. This number is quite consistent with we already said last year in the fall. The phasing will clearly be H2-weighted with a ramp up from Q2 onwards. By segment, we see the following dynamics. In Adhesives, first, we'll continue to drive synergies linked to Ashland and a few recent bolt-ons and will benefit from our ongoing operating excellence and cost control initiatives. Adhesives, if you remember, were the first segment to suffer from destocking in 2022. And as you could see, the dynamic has now turned positive, driven by higher margins. The contribution of new project that I've mentioned before will be in fact mostly concentrated within Advanced Material, as a matter of fact, within high performance polymers. This includes notably Singapore, Nutrien and PIAM, for which we are working hand in hand with the management to ensure we implement synergies as quickly and efficiently as possible. As for Performance Additives, they will aim to consolidate the strong 2023 performance. In Coating Solution, upstream acrylic remains soft for the time being, but we expect growth in the downstream resins and additives. Our strategy is focused on delivering more eco-friendly and bio-based solution. This includes the decarbonization of our acrylic plant in France. It also includes the participation with the other segments in the One Arkema platforms of battery, electronics and bio-based products. So all in all, we aim to achieve in 2024 an EBITDA of EUR 1.5 billion to EUR 1.7 billion, depending on the dynamic of the recovery in demand, which is still unknown at this stage. Overall seasonality in 2024 will be more H2-weighted, given the elements I've just mentioned. The lower end of the range assumes no real demand recovery. While the high end of the range assumes a clear recovery from the spring. We don't control the macro, so as always, we will focus on what we do control, managing our business strictly, which has worked out rather well for us in the past. In addition to managing the short-term, our teams will deploy the longer term roadmap, which we unveiled at the recent Capital Markets Day. We have many new important projects on the way. I mentioned the decarbonization of acrylics, but we have also started to work on the new DMDS capacity in the U.S. from biofuels and also our organic peroxide in China for new energies. Our balance sheet, as mentioned by Marie-Jose, as we enter 2024; remains solid with a net debt to EBITDA ratio below 2x, including the acquisition of PIAM. So we'll continue to look for small targeted M&A opportunities, notably in Adhesives. Last but not least, we'll maintain our innovation drive in high performance Specialty Materials with a focus on sustainability, which provides a powerful tailwind for longer-term ambitions, as defined at the Capital Markets Day. I thank you very much for your attention. And together with Marie-Jose, we are now ready to answer the question you may have.

[Operator Instructions] The first question comes from Matthew Yates of Bank of America.

Couple of questions, please. The first one just on the Q1 guidance. Correct me if I'm wrong, but I'd usually assume that there's some favorable seasonality sequentially as demand picks up, particularly in construction, which is a big-end market for you. So what is holding back the sequential profit development? Is there some incremental price pressure, or is there cost going back into the business after the temporary savings that you made last year? And maybe one for Marie-Jose, just to clarify, the PA11 startup cost, I think last year, were treated as an exceptional in Q1. Do those simply go through the underlying numbers? And then the second question, bit more midterm, but around Adhesives, as you say, very good development in Q4. The CMD, you talked about, I think it was EUR 1 billion of sales in 4 key platforms by 2028 or about EUR 300 million incrementally. What does the journey look like between now and 2028? Is that a fairly linear progression of EUR 60 million or so a year? And what is the incremental margin on these platforms? Does that continue to be accretive to the mix?

Okay, thank you. Thank you, Matthew. So with regard to the Q1 guidance, so in fact we made 2 comparison, one is with Q4 which was more to give you the order of magnitude; and then the Q1, which is more traditional, I would say, of last year. So with regard to the -- if you compare to the Q4, in fact the Q4 of -- if you look at history, and I think we mentioned it quickly, but it is true when you compare that history, the Q4 was rather strong. You have a bit -- what EUR 30 million more what usually what we were achieving in Q4, and we did that last year despite still a rather weak environment. So it was a very good Q4. So when you compare, you have to take that into account, and so you have a little bit of seasonality that you see if you take a more normalized [ Q1 ]. Now you mentioned construction, but in fact construction in Q1 normally, at least for Arkema and our type of business, is still low. It's really starting in Q2, this construction business, to develop traditionally, and this is what we have seen. Maybe what I can add on the Q1 -- because for me -- for us it was -- I think this is more or less what we had in mind since a certain time for Q1, is that when you compare to last year, we had last year a sort of end of this gap with normalization PVDF, acrylic, which started last year, but which was progressive. So we have about, let's say, EUR 30 million, mostly weighted on acrylics, which explain also versus last year why we would be below. So for us it's rather mechanical. And now it's true why we -- it's our duty also to mention it. But when I look at the -- our peers that have, let's say, released their comment or either American which started early or some European recently, I mean, we are all aligned on the fact that the start of the year is, in terms of demand, rather soft. So all in all, it makes a consistency of the Q1, let's say, seasonality versus the full year guidance that you have. You mentioned the polyamide 11 startup cost, no, we will be consistent with what we did last year. We still have little bit of startup cost starting the year because plant have not fully started, and it should fade rather quickly after that. With regard to the Adhesives, I think with regard the main technology platform you have, it's not completely linear. And because it is a start of a new cycle, of new business development cycle with investment either organic or acquisition, we mentioned PIAM but is HPP [ Ashland ], the development, and we have PMP, we have Polytec PT, some others, and we have also the new innovation investment of [ Adhesives ]. So I would say -- I don't know the word in English, but you start a bit slower and you accelerate over the period.

The next question is from Aron Ceccarelli of Berenberg.

I have one on your '24 EBITDA guidance. So if I take the PI Advanced Material contribution, which should be something around EUR 50 million plus the major projects around another EUR 65 million, so I'm already at [ 1.6, 1.5 ]. I was wondering, what kind of assumption are you guys making for the low end of your guidance? That would be the first question. The second one is on PVDF. I see that volumes are coming up again. Prices have collapsed last year, so I just wonder if you can provide a little more color also in terms of what capacity you're expecting from Chinese players in PVDF. And the final one is on CapEx. If I remember correctly, you gave a guidance of around EUR 4 billion at the Capital Market Day for the next 5 years. Can you provide a little bit more color around the CapEx phasing in 2024, please?

Okay. So with regard to -- as we mentioned, we have a range. For the '24, you are mentioning the low end of the range. So the low end of the range means no recovery. So no recovery means a little bit more pressure on pricing. You have this gap that we have mentioned on the Q1 on PVDF of acrylic which is EUR 30 million. You have some FX also that mostly looking at last year euro, dollar and also RMB, I was checking with Marie-Jose. So all in all -- and you mentioned the organic project, but if you have less recovery, the ramp up of the project is by nature, since they are expansions, is less quick because of the macro. So all in all, it's -- by nature, it's a low end of the range, but it takes into account this element, while on the other side, the 1.7 plan recovery, which is stronger. So it makes sense. And 200, I mean I compare also with some peers in terms of size of the range, is okay for this kind of environment. So we are at ease with this. With regard to PVDF, I would say that we have still a little bit of pricing gap on the start of the year compared to last year for the reason we have mentioned. It was a progressive decrease last year, but we -- I think we have reached something which is now more stable clearly. The volumes are up, you're right to say that, little bit up. We don't have unlimited capacity because we have never had any program of softness on PVDF. It was more a topic of price. So in fact, the volume we can add are the volume which will come from the capacity addition we had in, I would say, China and in France where we have 6 more months this year. With regard to the capacity from Chinese, it's not a completely transparent market, but they have been significant, especially for the battery side. But I think it's already rather factored and we stayed with good profitability on PVDF. But it has been normalized compared to the exceptional 2022 landscape. With regard to CapEx in 2024, so I think we have been quite clear at the Capital Market Day, there will be a ramp-up compared to, let's say, an increase compared to what it was in the previous 4 years period of '22-2023. So it gives you something for 2024, which is a good 100 in addition compared to what it was in 2023, okay, but consistent with what we say -- even if we take the trajectory which has been expressed during the Capital Market Day, it's even a bit higher, but then it depends at which speed and with which magnitude we confirm certain projects which has not been yet completely announced. So no surprise there.

The next question is from Alex Stewart of Barclays.

Congratulations on your performance last year, very good in the context. I had 2 questions. The first one is on the PA11 plant. I gather you haven't built a new asset like this for a long time. So probably everybody who worked on the last one is no longer around, and that may explain the delays. But could you perhaps give us a little bit more information about the technical challenges you've had? Because we're now probably almost 12 months delayed in ramping up compared to your initial guidance. It'd be very interesting to hear that. And secondly, in Adhesives, I think in the wording in the presentation was that you're expecting good growth. Could you just clarify what would good look like to you and whether you're talking about top line or bottom line growth? Just give some more context around that given the strong performance last year.

So first of all, thank you for your kind message, Alex. On the polyimide 11 -- by the way, and as you know, we are very transparent to you, et cetera. But we have -- on the technology, which is, I would say, the competitive technology to polyimide 11, polyamide 11 is superior in performance, but they are long chain polymer, which is PA12. 2 of our competitors have done important expansion on the PA 12 and they were more than a year -- largely more than a year late. So this means that, in fact, this technical challenge, which is partly due to the complexity of this -- you don't have many players of this kind of process and to the tension on engineering, manpower, et cetera, is shared by many companies. You have more projects which are like now. With regard to Arkema, it's not so much the size of the investment because we did also in Malaysia, some investment, which is more the fine-tuning, in fact, because the plant was on time and on budget. It's more the fine-tuning, which we recognize took more time because there are a number of equipment, which is 3x superior, so maybe we underestimated that, 3x superior to the one of normal technology inside Arkema, okay? And the second thing, which is very special, it's a completely in-house process, which really has been improved year after year since the past -- even before Arkema time in the past 40 years and -- which make it more difficult than a more standard process, I would say. So nothing -- at the end, nothing very significant. It's a little bit of sometimes matter of millimeters or nanogram or whatever, but -- which, I would say, make this delay. So we have to live with it, but we'll make it. We are very confident. And at the end, it's also what protects the technology that it is very complex. So let's take this positive point. On the Adhesives, so with regard certain -- it will be, I would say, in '22, maybe -- in '23, what's the best way to express this in '23, it was more a bottom line growth than a top line growth. In '24, it will be more normal, I would say, more normal growth, which means that the bottom line growth will be supported by the top line growth. You see what I mean? So we are now -- there will be some recovery in volume, which we start to see in Adhesive because we suffered -- we have been suffering on destocking by 18 months. So this will disappear. So we start to see that and the unit margin are quite okay. So this is why we will be growth. And on top of that, we have a little bit of bolt-on that helps. You have the Ashland acquisition where you get the synergies still. We have still 2, 3 years of synergy to implement. So for all these reasons, we grew in Adhesives, and we are happy to see that because we -- as you know, it has been a bit of Arkema long time ago. We have invested a lot. And it really -- now Bostik is really playing his role of something resilient with low CapEx. So good cash generation, and we appreciate.

The next question is from Chetan Udeshi of JPMorgan.

A follow-up on the comment you made about the low end of the guidance, sort of not assuming any recovery because the way I was thinking about it, you were saying Q1 is, let's say, EUR 330 million. If I annualize it, I get to EUR 1.32 billion, I add all the contribution from new projects, maybe I get to EUR 1.4 billion. So clearly, from EUR 1.4 billion to EUR 1.5 billion, which is the low end of the guidance, needs something, which could be a bit of seasonality, I guess. But -- so I'm just curious, what sort of assumptions you make from Q1 to low end to reach that number of EUR 1.5 billion? The second question was just going back to the contribution from the startup of the project. And I appreciate all of these are complicated projects, and that probably drives the differentiation. But I'm also curious, given that you are missing essentially a quarter of start-up contribution, how are you still aiming for the same contribution for the full year? Because I would have thought you are sort of ramping up in phases. So if you don't start up on time, you essentially lose the contribution for that particular quarter. So just curious, how is the number not lower, given that it's been delayed by a quarter? And the remaining 2 questions are just financials. One, I didn't hear the CapEx guidance for this year. So I appreciate if you can give that. And second, what is the depreciation number that we should have in mind as all of these projects start up in 2024?

Okay. We'll let Marie-Jose on the third one. So on the first one, it's quite easy, the seasonality. I think Q1 is always one of the 2 lowest quarter, and this year is even compared to Q4 because the project and -- will ramp up over time. So I think it's quite consistent. What you don't do is you don't take any seasonality. So it's a wrong calculation. If you do that over the year, if you take the past 5 years or 6 years, you will see that the math is working. So I think it's quite consistent. On the second one, so first of all, the EUR 60 million to EUR 70 million contribution is a sum of 5, 6 main projects. So it's not just one. Secondly, on the polyamide, anyway, we took quite a low assumption in the first quarter because it's a quarter of ramp-up. Don't forget, it's an expansion. So you need to have the sales beyond what we are doing from our plant in Marseille. So at the end, it doesn't make a material difference over just 1 quarter. So we are confident on the EUR 60 million to EUR 70 million. And on top of that, we have some projects which will deliver more than we thought they would deliver. So with this addition, we are really confirming the EUR 60 million, EUR 70 million, knowing that we are always cautious when we give guidance on projects. So I think that you can be confident on that. On the guidance of CapEx, I think I already commented, and I say a good EUR 100 million more compared to '23, but I will let Marie-Jose complete and comment on the depreciation charge if you want…

Okay. So yes, I'll just confirm what Thierry mentioned. So the CapEx are expected around EUR 750 million, EUR 760 million for the year, so which is roughly a linear approach compared to our CMD 5-year term plan. And regarding the depreciation, we would be expecting to have progressively Nutrien and polyamide 11 injecting some depreciation charges. So the amount of amortization and depreciation should be around EUR 600 million versus EUR 560 million in '23.

The next question is from Andreas Heine of Stifel.

I actually want to learn a little bit more about the special expenses. In Arkema standards, this almost EUR 260 million on EBIT to recurring EBIT is quite high. Could you split that out a little bit and give some guidance what we should expect for these special items going forward into 2024? Obviously the CapEx guidance of '24 is very much in what you have planned in this range, '24 to '28. However, looking on how many large products you had, I'm not aware about any really big size [indiscernible] what you are still undertaking in 2024. Maybe you can explain a little bit where this EUR 750 million will be spent more broadly? And then lastly, the acrylic acid margins in U.S. and Europe were probably not [ least ] down because of pressure from Chinese exports. Do you see some relief on that? Or is the pressure from China -- from exports from China still as high as we have seen it last year?

Okay. So Marie-Jose, you can start, and then we'll do the last 2.

Okay. So regarding the nonrecurring expenses, as you know we have -- basically it's half-half between the amortization of the purchase accounting that we have on the M&A objects that we've acquired. So roughly EUR 130 million in '23 are attached to those amortization of purchase price amortization mechanism. You should expect an increase of that linked to the PPA of PIAM that we will be doing in the year. So at this point, we have a preliminary goodwill and a preliminary PPA assumed. But of course, the exercise has not yet been fully concluded. So I have no precise number to give you, but let's say, if you add EUR 30 million or EUR 40 million to this amount, it is probably not a bad assumption. Regarding the other items outside of the purchase accounting depreciation, we would have still some start-up cost of Singapore at the start of 2024. Roughly, the trend we've had is between, let's say, EUR 15 million to EUR 20 million per quarter. So you should still assume there will be impact in the first quarter in terms of start-up costs for Singapore. And then basically, the rest of the amount is pretty similar year-on-year. It's different restructuring and transactional restructuring that we do in Arkema. And despite it's, let's say, different projects, all in all, we traditionally spend EUR 30 million to EUR 40 million in terms of cash on various restructuring operations we do in the company.

Thank you, Marie-Jose. So on the CapEx, you have already a big part of the information. In fact, actually, Andreas, so we have the -- as you know, we have the big decarbonization project in France in the site of Carling for acrylics, which is one. From memory, you have the additive for biofuel in the U.S., and they were all in the Capital Market Day presentation, which is we ramp up quite quickly. We have the organic peroxide in the Performance Additives in China for new energies, which is another one. You have the completion of the 1233zd project also, which is not finalized, which is also -- and we have more -- also more turnaround. Turnaround is not equal every year. It depends really on the legislation. So it's true that we have a bit more in turnaround this year. So all in all, it makes the math, knowing that last year, we are pretty much advanced on the big projects, so we didn't spend so much on that. And as you know now, we -- in CapEx, we don't split between exceptional and recurring CapEx. So all in all, it includes everything. With regards on acrylics margin, U.S. Europe, we see now -- we start to see some stabilization, but not so much because of the demand booming. It's more because of the Middle East logistics topic, okay, Suez Canal, et cetera, where it limits the imports. So you start to see now stabilization and some customers which start to see that it's not so easy to get product from China. So you have a little bit of relief, but it's moderate. So wait and see, I would say.

The next question is from Jaideep Pandya of On Field Research.

Yes, first of all, congrats on my side as well, Thierry, for predicting the results exactly to the EUR 1.5 billion for '23. I have 4 questions. First question is on Intermediates actually. Could you tell us how much inventories do you have for 22 in the U.S.? Obviously these days you're hardly spending any money in CapEx in this division. So the cash flow is very exciting. So just want to understand, how much can we go forward? And really, if I look at the valuation of this business of fluorochemicals, I get to a figure of around EUR 800 million to EUR 1 billion before you even entertain a buyer. So am I crazy or am I not? That's my first question. Second question is on PI actually. The management in PI is guiding for a sharp rebound in 2024. And it looks like the '23 downturn was really just top-line driven. So when you did your due diligence, how much did you challenge on the top line side? I'm just wondering if there is competitive pressure or was it just an end-market issue? That's my second question. The third question is on performance. Marie-Jose, you described this as the second half was very good. Could you tell us what [Audio Gap] in Performance Additives? And the last question is really on high performance polymers. I saw a Q4 versus Q3 sales increase in high performance polymers. What was driving this, considering probably pricing in PVDF was Q-on-Q down? So what is really driving the increase Q-on-Q?

So no, '22 now is quite low. So the value are completely out of scope. So it's really -- we come to the end on this '22. So this is not -- if it is your question, is that what makes the profitability of fluorogas, by far, no, okay? And on PAM, yes, we challenge release when we have the due diligence. So it's really linked to the macro only. It's the electronics is rebounding, there will be a sharp rebound of PM profitability. It's not a matter of competition. They are very strong. I can tell you, technically, they have a superior products at a reasonable price. What is really encouraging us beyond the macro to peak is really the fact that we have now -- and we were very fast, we have organized a lot of customer visits, starting with Europe and then U.S. and -- because they are very small in these 2 regions and the welcome by all these customers that we have inside the company for other products was very strong. So we see a lot of potential for this superior polymer. So to make the story short, mostly macro driven in terms of rebound, not a problem of competition and a lot of potential beyond the normal PRM business with all the commercial synergy we see with them and technicalsynergy. Okay. Thank you. Thank you, Jaideep, for the question. So no, 22 now is quite low. So the value are completely out of scope. So it's really -- we come to the end on this R22. So this is not -- if it is your question, is that what makes the profitability of fluoro gas, by far, no, okay? And on PIAM, yes, we challenge release when we have the due diligence. So it's really linked to the macro only. As the electronics is rebounding, there will be a sharp rebound of PIAM profitability. It's not a matter of competition. They are very strong. I can tell you, technically, they have a superior products at a reasonable price. What is really encouraging us beyond the macro is to peak is really the fact that we have now -- and we were very fast, we have organized a lot of customer visits, starting with Europe and then U.S. and -- because they are very small in these 2 regions. And the welcome by all these customers that we have inside the company for other products was very strong. So we see a lot of potential for this superior polymer. So to make the story short, mostly macro driven in terms of rebound, not a problem of competition and a lot of potential beyond the normal PIAM business with all the commercial synergy we see with them and technical synergy. So with regard to Performance Additives on the third part of the year, I would say the 2 areas which performed very well were Thiochemicals, especially -- and you will not be surprised in the world of energy, either bioenergy or traditional energy. And also, we had a good development and growth in -- if you remember well, this -- I'm sure you remember well because you know the detail of the ArrMaz acquisition on surfactants with mining and nutrition, which are 2 of the end market, which is in the '23 challenging economy performed well. And ArrMaz, beyond also all the work we are doing, benefited from these 2 markets. With regard to HPP, what -- the last question was on...

Yes. It's just -- if I just -- you guys provide the detail on the split by quarter. And if I just look at Q4 versus Q3, you grew actually, I think, by EUR 16 million quarter-on-quarter in sales in HPP. So just curious, what was driving this?

It was -- maybe it's linked to one of the previous comments made. It was really the volumes in Asia, which were up, and we benefited from it compared to last year. It's again a year-on-year comparison. But compared to last year, we had a good rally, I would say, in volumes in Asia with Performance Polymers.

Okay. And sorry, if I can just come back to my first question on Intermediates, you started the process of divesting fluorochemicals. And I guess the market underappreciates the value of this. So do you -- how is the process going? And do you think that a number of sub-$500 million is something you're not interested, given the cash flow this business generates these days?

So I will make you softer. The priority, I think, as we say, at the Capital Market Day, we confirm the intention to dispose off the business, but we say we'll take our time. And for the time being, we enjoy a good profitability of this business, which is really our best way to create value for our shareholders. So the intention remains the same, but we take our time on that. And don't forget that it's a business which for certain lines will decline because of the legislation, okay? So this has to be factored in whatever value [Audio Gap]. So I would not speculate at all on valuation. What is important is that we enjoy a good cash generation from this business. And with that, we continue to do what we have done so well so far, is really to continue to invest in the other businesses.

The next question is from of Geoffrey Haire of UBS.

Most of my questions have been asked. I just had one, you comment on volume recovery in the second half of 2024. I just wondered, what gives you confidence that you'll see that?

If I may, Geoff, if -- we made the 2 scenarios because we have a range, 1.5 to 1.7. So the second scenario, I would say the end of the range, the higher end of the range assumes a recovery and the lower range assumes no recovery. So we are clear about that. So we have no crystal ball. What we think is that maybe 2 elements, what could support the recovery beyond the overall macro on which everybody can have the opinion. The first one is that the stock are low in the chain. I believe that. So this means that you don't need so much recovery to start to have certain tension. This is our feeling. Again, it's always difficult to know exactly where is the stock because the chain are long, but it's our feeling the stocks are not too high. And secondly, but you are more experienced than I am, when I look at the time for destocking and for really negative growth in chemicals, it's really a long time compared to our standard. So for these 2 reasons, it's beyond the overall macro, which is a shared topic. But more specific to chemicals to what we have seen in the past 2 years, I think these 2 elements should be taken into consideration. And the message -- maybe to complete the message to my team is that we have to be ready when there is a recovery, if there is recovery, but please focus on the -- as we did well in '23 and before, focus really on our organic momentum. It's really what we control.

The next question is from Laurent Favre of BNP.

Just one question for me. On PVDF, you had flagged that you're looking at a significant expansion in the U.S. for the CMD and that the [ FID ] was spending. I'm wondering given all the uncertainty on the IRA and the elections, whether we should be assuming that the FID can -- well, will be postponed at least to next year.

It's a good question. What we flagged at the Capital Market Day was an expansion. We didn't say significant expansion, but it's true that in our CapEx envelope for the 4 years, it was meaning that it should be rather material. Beyond what we say, one of the elements we are monitoring is also the speed at which gigafactory is the same for Europe, but also for U.S.; will get implemented. So because of that, we take our time in order to -- now we have a scenario which is more and more refined, which is reasonable and likely to create strong value. The timing, I agree with you, depends on a certain number of factors. So we will -- my feeling is that we should be able to announce in the course of this year our plan, is my feeling, but we will not spend too much money on that. It will be limited money this year on this U.S. expansion. So wait a little bit. We take into account the evolution of the macro, the evolution of the speed at which gigafactory will get implemented, certainly IRA, election, et cetera. But we want to grow in PVDF. So we have a plan. Normally, we should announce this year.

The next question is a follow-up from Aron Ceccarelli of Berenberg.

I have one on pricing. If we exclude Intermediates for a second and we assume there's a recovery happening in -- from Q2 onwards in the second half, how do you think about pushing pricing at group level by different segments? Is this doable, you think, in the current environment?

I think you mentioned the answer more or less in your question I would say it depends really on the strength of the recovery. If you have -- the difficulty when you have this kind of environment is that you never anticipate what could be the impact of any recovery and when -- at which speed it comes. So this means what we have seen in the past is that sometimes when the stocks are low, you have a sudden recovery, not necessarily very significant, but being there. And then you have some pricing power. But if you exclude the Intermediates, our policy is not to leverage too much a period of tension as is able to have a pricing, which is more stable, whatever the macro is. So your question, and it's a paradox should more apply to Intermediate than the rest of the portfolio. You have more stability of the net pricing in the rest of the portfolio than you have in Intermediates, where it's more cyclical, as you know. So -- and we prefer resilience than cyclicality. So to answer your question, we'll see. It will depend on the recovery. If you have the combination at a certain point of recovery and low stock, it will help pricing, but I would say mostly Intermediates.

The next question is a follow-up from Jaideep Pandya of On Field Research.

It's just on Coating Solutions. I asked this question, I think, for the last couple of quarters. A lot of destocking last year in the value chain. Now your customers are all talking about volume growth this year of 1% to 2%, maybe even a bit more. You did 12 on a low comp. What sort of volume growth do you think the chain will do this year? And is there any link between the volumes for your customers in coatings versus Bostik, so I'm just trying to understand if the paint and coating guys do 2%, 3% volume growth, is it fair to think that you will do 2%, 3% volume growth in Bostik as well?

So it's very difficult to give precise number because first, it depends on the macro. As we say, we have different scenarios. And you have yourself mentioning different scenarios. So the growth will be different, depending on if you have a rebound in the market or not. Now when you mentioned 1%, 2% as a sort of Intermediates scenario, yes, I think -- but it's not the scenario only for coating, it's a scenario for other businesses. Is there a link between Coatings and Adhesives? It depends really on the mix of market. Yes, they are both downstream. So you have some element of comparison. But then you need to look at what the weight between construction, outside of construction. And then some markets of Adhesives which are big, which are smaller in Coatings. Adhesives is everywhere. Coatings is not really everywhere. So this is why they are. But I would say, normally, yes, you have correlation, but not only between Coatings and Adhesives, but coatings and also all our businesses. If the world is growing a little bit, then you have in sort of medium scenario, yes.

This was the last question. I will now give back the floor to the speakers for the closing remarks.

Thank you very much for attention. We try -- I hope that our answers were helpful, and I wish you a very nice day. Don't hesitate if you have any complementary question to come back to Beatrice and Peter for any other questions. Thank you very much.

Ladies and gentlemen, this concludes this conference call. Arkema thank you for your participation. You may now disconnect.