Arkema clocks Q4 net loss on customer de-stocking and sharp decline in demand

09-Mar-09

Arkema, France's leading chemical company, swung to Q4 net loss posting EUR 72 mln as against EUR 18 mln net income for the comparable period of the previous year due to a sharp decline in demand in several sectors and unprecedented inventory de-stocking across supply chains. The sales for the period amounted to EUR 1,182 mln against a EUR 1,318 mln in same quarter of 2007. "In the face of the strong degradation of the environment, immediate measures were taken to adapt production to the decrease in demand and cash management was further reinforced. In this circumstance, the teams of Arkema mobilized themselves very quickly and took the necessary actions to adapt to the Situation," said Thierry Le Hénaff, Chairman and CEO of Arkema. The Q4 period saw the 23% volume drop and the businesses most particularly affected by the sharp decline in automotive and construction were PVC and its downstream, PMMA and Functional Additives. As far as FY 2008 is concerned, the company posted net profit of EUR 100 mln, a 18% decline compared the net profit of FY 2007. The sales for the year sales plummeted 0.7% to EUR 5,633 mln against EUR 5,675 million in 2007. The company projects the market to remain very difficult and expects further de-stocking by customers. Expecting a lack of visibility in 2009, the first priority of Arkema in 2009 will be to manage its cash flow and reduction in its working capital to generate between EUR100 mln and EUR150 mln of additional cash. Accordingly, Arkema will reduce the capital expenditure by 20% relative to 2008.