Morningstar | Arkema Reports Decent 1Q Results; Shares Fairly Valued
No-moat Arkema reported first-quarter EBITDA of EUR 370 million, down 3% over 2018 but broadly in line with consensus. The 3% drop in EBITDA is tracking below full-year guidance for EBITDA to remain flat, but the company expects an improved second half. We are somewhat more conservative, forecasting a 6% decline in 2019 EBITDA given our pessimistic outlook for fluorogases. We don’t expect to make a material change to our forecast or EUR 88 fair value estimate. At current levels, the shares look fairly valued.Coatings solutions was the only segment contributing positive EBITDA growth with a 15% increase over 2018. Volumes were strong, confirming the gradual improvement in acrylics while price increases in the downstream business helped to restore margins.
EBITDA was down 8% in high-performance materials. Volumes declined primarily because of a tough comparison in molecular sieves. Furthermore, demand fell in automotive, consumer electronics, and oil and gas. On the bright side, Bostik was reported to have improved through a better product mix and price increases.
Industrial solutions saw a 3% decline in EBITDA primarily because of normalization in the MMA/PMMA chain, which started in the fourth quarter. In addition, demand was lower in automotive and in China. We have been waiting for a similar normalization to occur in fluorogases. For the first time in many quarters, fluorogases were reported to be down in the first quarter, particularly in Europe, which was affected by illegal HFC imports.
Arkema is engaged in the global chemical industry which is a processing industry based on the transformation in one or several stages of raw materials (oil derivatives, gas, minerals, natural products) into more or less complex chemical products, or into plastics obtained by polymerization. In addition, Co. manufactures a wide range of products for other major industries: construction, packaging, chemicals, automotive, electronics, food manufacturing, pharmaceuticals, etc. Co. operates in this industrial context with a business portfolio focused on three segments: High Performance Materials, Industrial Specialties, and Coating Solutions.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.