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Arkema S.A. (ARKAY)
OTHER OTC:ARKAY
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Arkema SA
(OTC:ARKAY)
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Rating:57Neutral
Price Target:
$60.00
â–¼(-2.72% Downside)
Action:ReiteratedDate:03/01/26
The score is held back primarily by weakened financial performance (lower margins/returns and higher leverage) despite continued positive cash generation. Technicals are supportive with an uptrend and positive momentum, while valuation is a drag due to a very high P/E even with an attractive dividend yield. Earnings-call guidance modestly supports the outlook via cost savings, disciplined CapEx, and slight EBITDA growth expectations, tempered by macro and FX uncertainty.
Positive Factors
Strong cash generation
High recurring operating cash and very strong EBITDA-to-cash conversion provide durable financial flexibility. Over the next 2–6 months this supports stable dividend funding, targeted deleveraging or selective reinvestment into high-return projects and cushions cyclical EBITDA swings.
Exposure to high-value markets
Material growth in higher-margin, secular markets (batteries, healthcare, 3D printing, low‑GWP fluorospecialties) improves long-term revenue mix. These end-markets are structurally growing and help de-risk cyclicality tied to commodity chemical segments.
Cost saves & project ramp-ups
Accelerated cost efficiency and project-driven EBITDA provide sustainable margin support. Ongoing €250m target savings and capacity ramp-ups (eg PVDF) should incrementally raise recurring EBITDA and returns, improving structural profitability over coming quarters.
Negative Factors
Revenue and margin deterioration
Persistent top-line decline and sharply compressed net margins weaken the firm's ability to generate profits from sales. If revenue and margin pressures persist, reinvestment, ROE recovery and long-term return generation will be hampered despite positive cash flow.
Rising leverage
Leverage rising meaningfully over recent years reduces balance-sheet flexibility. Higher net debt and outstanding hybrid bonds constrain capital allocation choices, increase interest sensitivity and limit the pace of buybacks or large growth investments during weak cycles.
Cyclical segment exposure
Significant exposure to cyclical and transitioning businesses increases earnings volatility and risks structural EBITDA erosion as legacy refrigerant lines shrink. This reduces predictability of margins and lengthens time to stabilize returns during sector downturns.
Arkema SA (ARKAY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.43B
Dividend Yield7.04%
Average Volume (3M)520.00
Price to Earnings (P/E)64.8
Beta (1Y)0.83
Revenue Growth-0.85%
EPS Growth-56.84%
CountryUS
Employees21,150
SectorBasic Materials
Sector Strength58
IndustryChemicals - Specialty
Share Statistics
EPS (TTM)0.52
Shares Outstanding76,060,830
10 Day Avg. Volume0
30 Day Avg. Volume520
Financial Highlights & Ratios
PEG Ratio-0.79
Price to Book (P/B)0.65
Price to Sales (P/S)0.45
P/FCF Ratio12.12
Enterprise Value/Market Cap1.58
Enterprise Value/Revenue0.78
Enterprise Value/Gross Profit2.07
Enterprise Value/Ebitda6.04
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)5.47
Revenue Forecast (FY)$10.46B
Arkema SA Business Overview & Revenue Model
Company DescriptionArkema S.A. manufactures and sells specialty chemicals and advanced materials worldwide. The company operates through Adhesive Solutions, Advanced Materials, Coating Solutions, and Intermediates segments. It provides adhesive solutions for construction, renovation of buildings, DIY, durable goods, and packaging and non-woven applications; and supplies technologies used in building activities for businesses and individuals, including sealants, tiles, flooring adhesives and waterproofing systems, and technologies used in industry, which include automotive, textiles, glazing, flexible and rigid packaging, and hygiene markets. The company also offers advanced materials consisting of specialty polyamides and polyvinylidene fluoride; and performance additives, such as specialty surfactants and molecular sieves, organic peroxides, thiochemicals, and hydrogen peroxide for use in automotive and transportation, oil and gas, renewable energies, consumer goods, electronics, construction, coatings, animal nutrition, and water treatment sectors. In addition, it provides coating solutions comprising EU/US acrylics and coating resins; sartomer photocure resins and coatex rheology additives; decorative paints, industrial coatings, and adhesives; and solutions for applications in the paper, superabsorbents, water treatment and oil and gas extraction, and 3D printing and electronics industries. Further, the company offers fluorogases and acrylics; and industrial intermediate chemicals used in construction, refrigeration and air conditioning, automotive, coatings, and water treatment sectors. Arkema S.A. was incorporated in 2003 and is headquartered in Colombes, France.
How the Company Makes MoneyArkema makes money primarily by manufacturing and selling specialty chemical products and materials to industrial customers worldwide. Its revenue model is largely business-to-business: the company produces chemical intermediates and specialty formulations and sells them directly to end manufacturers and, in some cases, through distributors, with pricing driven by product performance, application requirements, and raw-material/input costs. Key revenue streams include: (1) Advanced materials: sales of high-performance polymers and specialty materials used in demanding applications (e.g., lightweighting, durability, chemical/heat resistance), where value is tied to performance and qualification in customer processes; (2) Coating solutions: sales of resins, additives, and related technologies used in architectural, industrial, and protective coatings and adhesives, with demand linked to construction and industrial activity; (3) Specialty additives: sales of additives that improve performance characteristics (e.g., processing, durability, surface properties) across plastics, coatings, and other formulations. Earnings are influenced by volumes shipped, product mix (higher value-added specialties vs. more commoditized products), contract and spot pricing, and the spread between selling prices and costs of feedstocks, energy, and logistics. Additional contributors typically include service/technical support tied to product adoption (application development, formulation support) and ongoing customer relationships where products are integrated into qualified applications, supporting repeat sales.
Arkema SA Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 06, 2026
Earnings Call Sentiment Neutral
The call presents a mixed picture: Arkema faced notable top-line and EBITDA pressure in 2025 driven by macro weakness, currency headwinds, destocking and cyclical stress in acrylics and old-generation refrigerants. Offsetting those headwinds, the company delivered strong cash generation (EUR 464m), high cash conversion (88%), accelerated cost savings (~EUR 90m), project ramp-ups that added EBITDA and maintained a stable dividend. Management is focused on efficiency, targeted CapEx, and further project ramp-ups in 2026 while signaling continued macro uncertainty. Overall the positives (cash, savings, project momentum, balance sheet strength and sustainability progress) balance the operational and market challenges.Q4-2025 Updates
Positive Updates
Strong Cash Generation
Recurring operating cash flow of EUR 464 million (above revised guidance of EUR 300 million) and free cash flow of EUR 390 million despite a challenging year; EBITDA-to-operating-cash conversion rate of 88%.
Resilient Balance Sheet and Deleveraging
Net debt including hybrid bonds slightly down at EUR 3.2 billion with net debt to last-12-month EBITDA ratio of 2.5x; outstanding hybrid bonds reduced to EUR 800 million after a EUR 300 million redemption.
Material Cost Savings and Efficiency Actions
Delivered around EUR 90 million of fixed and variable cost savings in 2025 (nearly double initial annual target); launched efficiency initiatives including >2% headcount reduction in 2025 and planned ~3% annual reductions over the next three years; targeting EUR 250 million cumulative cost savings (to be delivered earlier than planned).
Project Ramp-Ups Contributing to EBITDA
Major projects delivered ~EUR 60 million additional EBITDA in 2025; management expects projects to contribute around EUR 50 million additional EBITDA in 2026, with PVDF U.S. start-up planned in H1 2026 (increasing capacity by ~15% in the region).
Targeted CapEx and Capital Allocation
CapEx reduced to EUR 636 million in 2025 and guided down to EUR 600 million for 2026 to focus on targeted, high-return projects with faster payback.
Growth in High-Value Markets
Strong dynamics in key attractive markets (batteries, sports, 3D printing, healthcare and new-generation low-GWP fluorospecialties) with sales in these areas up 16% year-on-year; continued focus on R&D and strategic partnerships to support differentiation.
Stable Dividend Demonstrates Confidence
Board proposed a stable dividend of EUR 3.60 per share despite the challenging macro environment, signaling confidence in the portfolio and strategy.
Significant Progress on Climate Targets
Reported a 48.7% reduction in Scope 1 and 2 emissions at the end of 2025 (versus the stated target baseline) and announced strengthened ambitions for water withdrawals and waste treatment policies.
Negative Updates
Revenue Decline
Group revenues of EUR 9.1 billion, down 5% year-on-year; volumes down 1.6%, price effect negative by 2.1% and currency headwind of -2.9% (notably USD weakening vs EUR).
EBITDA Contraction and Margin Pressure
Group EBITDA fell to EUR 1.25 billion with a margin of 13.8% (close to 14%), a notable decline relative to prior expectations and prior-year levels; recurring EBIT of EUR 564 million (recurring EBIT margin 6.2%).
Negative FX and One-Off Impacts on Profitability
EBITDA included approximately EUR 40 million negative currency impact; financial expenses increased to -EUR 125 million due to higher bond interest and lower interest on invested cash.
Cyclical Weakness in Acrylics and Old-Generation Refrigerants
Low cycle in upstream acrylics and a decline in old-generation refrigerants explained much of the EBITDA decrease; company expects these activities to remain volatile and some old-generation refrigerant business to fade over coming years.
Seasonal Weakness and Customer Destocking
Q4 was seasonally weak with strong destocking across customers (notably in Europe and the U.S.), which amplified the sales and EBITDA slowdown in Adhesives and Advanced Materials; management warned of limited visibility going into 2026.
Nonrecurring Charges and Restructuring Costs
Nonrecurring items totaled EUR 276 million, including EUR 144 million of PPA depreciation and EUR 132 million of one-off charges (notably restructuring costs linked to a hydrogen peroxide site); a EUR 74 million nonrecurring outflow reduced free cash flow in 2025.
Price Pressure and Lower Realized Prices
Group price effect down 2.1% (impacted especially by acrylics and refrigerant transitions); other activities saw price decreases of 0.9% reflecting declining raw material costs.
Lower Depreciation and Cost Base Pressures
Recurring fixed asset depreciation increased to EUR 687 million (higher than last year) due to integration of acquisitions and start-up/amortization of new production units, pressuring recurring EBIT.
Company Guidance
Guidance for 2026 is for slight EBITDA growth at constant FX versus 2025 (2025 EBITDA €1.25bn, 13.8% margin; revenues €9.1bn), with major projects expected to contribute around €50m of additional EBITDA in 2026 (after ~€60m in 2025); CapEx will be reduced to €600m (2025: €636m); the company expects working capital to remain roughly flat at ~12.5% of sales and recurring cash generation to be broadly comparable to 2025 (recurring cash €464m vs revised guidance €300m; free cash flow €390m including a €74m non‑recurring outflow), with an EBITDA→operating cash conversion of ~88%; Arkema plans continued cost and cash discipline—having delivered ~€90m of fixed/variable cost savings in 2025 and targeting cumulative savings of €250m by 2026 (two years ahead of plan)—together with further headcount reductions (>2% in 2025 and ~3% p.a. over the next three years); financial posture includes net debt + hybrids of ~€3.2bn (net debt/LTM EBITDA 2.5x) and €800m hybrids outstanding after a €300m redemption, while management flags a Q1 FX headwind of ~€25m, expects a more balanced H1/H2 in 2026, and will propose a stable dividend of €3.60/share.Arkema SA Financial Statement Overview
Summary
Financials reflect a clear downcycle: revenue fell ~5.7% in 2025 and profitability compressed sharply (net margin ~0.7%). Leverage has increased (debt-to-equity ~0.89) and ROE is low (~1.0%), but operating cash flow (~$0.93B) and positive free cash flow (~$0.32B) provide resilience.Income Statement
Profitability has weakened materially versus prior years: net margin fell to ~0.7% in 2025 (from ~3.7% in 2024 and ~8.4% in 2022), and operating margin also compressed. Revenue declined ~5.7% in 2025 after being roughly flat in 2024, highlighting a softer top-line environment. Positives include still-solid EBITDA margin (~13.8% in 2025) and a track record of strong earnings power in 2021–2022, but the current downcycle and sharp earnings drop weigh on the score.44
Neutral
Balance Sheet
Leverage has risen: debt-to-equity increased to ~0.89 in 2025 from ~0.61 in 2024 and ~0.45 in 2022, reducing balance-sheet flexibility. Equity remains sizable (~$6.0B in 2025) relative to the asset base, but returns on equity have compressed to ~1.0% in 2025 (from ~4.7% in 2024 and double-digits earlier), reflecting weaker profitability rather than a thin capital base. Overall, the balance sheet is still workable, but the direction of leverage and returns is a concern.55
Neutral
Cash Flow
Cash generation remains positive: operating cash flow was ~$0.93B in 2025 and free cash flow was ~$0.32B, with free cash flow up ~28% year over year. That said, cash conversion looks weaker versus earlier years, with operating cash flow covering a smaller share of revenue (~41% of revenue, down from ~61% in 2023), and free cash flow is modest relative to reported earnings in 2025. The company is producing cash through the cycle, but consistency and conversion have softened.58
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 8.71B | 9.54B | 9.51B | 11.55B | 9.52B |
| Gross Profit | 1.55B | 1.94B | 1.96B | 2.58B | 2.14B |
| EBITDA | 1.20B | 1.31B | 1.33B | 1.81B | 1.87B |
| Net Income | 60.51M | 354.00M | 418.00M | 965.00M | 1.31B |
Balance Sheet | |||||
| Total Assets | 14.24B | 15.21B | 14.52B | 13.51B | 12.30B |
| Cash, Cash Equivalents and Short-Term Investments | 2.20B | 2.01B | 2.04B | 1.59B | 2.29B |
| Total Debt | 5.36B | 4.55B | 4.28B | 3.26B | 2.76B |
| Total Liabilities | 8.01B | 7.45B | 7.06B | 6.17B | 5.95B |
| Stockholders Equity | 6.04B | 7.53B | 7.20B | 7.30B | 6.30B |
Cash Flow | |||||
| Free Cash Flow | 323.70M | 353.00M | 593.00M | 766.00M | 152.00M |
| Operating Cash Flow | 934.60M | 1.12B | 1.27B | 1.50B | 915.00M |
| Investing Cash Flow | -591.69M | -940.00M | -1.35B | -2.34B | 473.00M |
| Financing Cash Flow | -251.66M | -207.00M | 516.00M | 168.00M | -652.00M |
Arkema SA Technical Analysis
Negative
61.68
Price Trends
65.43
Negative
62.76
Negative
65.93
Negative
Market Momentum
-1.75
Positive
36.93
Neutral
40.43
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARKAY, the sentiment is Negative. The current price of 61.68 is below the 20-day moving average (MA) of 65.83, below the 50-day MA of 65.43, and below the 200-day MA of 65.93, indicating a bearish trend. The MACD of -1.75 indicates Positive momentum. The RSI at 36.93 is Neutral, neither overbought nor oversold. The STOCH value of 40.43 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ARKAY.
Arkema SA Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $7.45B | 15.45 | 8.09% | 5.33% | -3.33% | -19.59% | |
68 Neutral | $21.73B | 14.71 | 33.60% | 2.71% | -12.98% | -11.34% | |
63 Neutral | $11.94B | 21.09 | 22.70% | 1.96% | 3.09% | 12.25% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
59 Neutral | $23.62B | -18.77 | -6.63% | 12.78% | -19.65% | -157.13% | |
57 Neutral | $4.43B | 64.83 | 0.90% | 7.04% | -0.85% | -56.84% | |
57 Neutral | $17.02B | -46.13 | -2.49% | 2.41% | -3.01% | 82.30% |
* Basic Materials Sector Average
ARKAY
Arkema SA
58.30
-19.93
-25.47%
EMN
Eastman Chemical
65.33
-19.21
-22.72%
IFF
International Flavors & Fragrances
66.62
-9.38
-12.34%
LYB
LyondellBasell
73.32
7.83
11.96%
PPG
PPG Industries
97.22
-10.67
-9.89%
RPM
RPM International
93.23
-18.87
-16.84%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.