Arkema S.A. Earnings Call: Resilience Amid Challenges

Arkema S.A. ((ARKAY)) has held its Q2 earnings call. Read on for the main highlights of the call.

The recent earnings call for Arkema S.A. painted a picture of resilience amid a challenging macroeconomic backdrop. Despite facing headwinds from currency fluctuations and a decline in the Coating Solutions segment, the company showcased its strength in cash generation and growth in Advanced Materials. The Adhesive Solutions segment also demonstrated robust performance, underscoring Arkema’s strategic focus and operational efficiency.

Solid Cash Generation

Arkema reported strong recurring cash flow exceeding EUR 110 million in Q2 2025. This achievement highlights the company’s effective working capital management and cost-cutting measures, which have been crucial in navigating the current economic landscape.

Advanced Materials Volume Growth

The Advanced Materials segment recorded a 6% increase in volumes, driven by expansion in Asia and new business development in high-value markets such as sports, battery, and 3D printing. This growth underscores Arkema’s strategic focus on innovation and market diversification.

Adhesive Solutions Resilience

Despite volume pressures, the Adhesive Solutions segment maintained strong performance through efficiency improvements and strict price discipline. This resilience reflects the segment’s ability to adapt to market challenges while maintaining profitability.

Strategic Expansion and Investment

Arkema is actively expanding its capacity in the U.S. and China, with significant projects in biofuel additives and organic peroxide. Additionally, the new greenfield plant in Singapore for biosource polyamide 11 has reached breakeven, marking a milestone in Arkema’s strategic expansion efforts.

Weak Macro Environment Impact

The challenging macroeconomic conditions, characterized by low demand and unfavorable exchange rates, have notably impacted Arkema’s performance in the U.S. and Europe. These factors have contributed to the overall decline in sales and EBITDA.

Coating Solutions Segment Decline

The Coating Solutions segment experienced significant underperformance due to low cycle market conditions and disappointing downstream volumes, particularly in North America. This decline highlights the segment’s vulnerability to macroeconomic fluctuations.

Currency Headwinds

Arkema faced a negative currency effect of EUR 50 million in EBITDA due to the weakening of the U.S. dollar and other currencies. This impact underscores the challenges posed by global currency volatility.

Lower Overall Sales and EBITDA

In Q2 2025, Arkema’s sales were down 5.6% year-on-year, with EBITDA decreasing to EUR 364 million. This decline reflects decreased contributions from refrigerant gases and Coating Solutions, highlighting areas for potential improvement.

Forward-Looking Guidance

Looking ahead, Arkema has set ambitious targets for the remainder of 2025. The company aims for an annual EBITDA between EUR 1.3 billion and EUR 1.4 billion, with a recurring cash flow of EUR 300 million to EUR 400 million. Arkema plans to achieve EUR 100 million in cost savings by the end of the year, doubling their initial target. Capital expenditures are expected to be capped at EUR 650 million, aligning with their strategy to maintain a healthy balance sheet.

In summary, Arkema’s earnings call highlighted both challenges and opportunities. While the company faces macroeconomic headwinds and currency impacts, its strong cash generation, strategic investments, and growth in Advanced Materials and Adhesive Solutions provide a solid foundation for future performance. Investors will be keen to see how Arkema navigates these challenges and capitalizes on its strategic initiatives.