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Arkema Drops Most in 8 Years as Targets Delayed

Arkema SA fell the most in more than eight years in Paris as the French maker of composites and coatings set back profitability and sales targets by a year after earnings missed estimates.

The company will achieve its targets of 8 billion euros ($10.7 billion) in sales and a 16 percent margin for earnings before interest, taxes, depreciation and amortization in 2017 rather than 2016 as initially planned, Arkema said today. The stock dropped as much as 24 percent, the biggest decline since May 2006.

Arkema said 2014 will be another transition year before a notable pick-up in growth next year. Chief Executive Officer Thierry Le Henaff is deepening an efficiency drive to glean an extra 50 million euros in savings in the next three years and boost the profitability of struggling segments such as fluorogases used in air conditioning.

“The story of chemicals is not often a straight line story,” Le Henaff said on a call. “We have very powerful projects that are going well.”

The stock dropped 23 percent to 53.50 euros at 12:07 p.m., taking the decline to 37 percent this year.

Evonik Effect

Arkema predicted about 800 million euros in Ebitda for the full year, compared with an average analyst estimate of 899 million euros, weighed down by challenging market conditions in fluorogases and polyamide 12, used to make nylons, and unfavorable exchange rate moves.

Arkema suffered as Evonik Industries AG, one of four suppliers in the polyamide 12 market, increased production as it brought a factory back on stream. Ebitda in the second quarter declined to 206 million euros from 273 million euros a year earlier. That missed analysts’ average estimate of 234 million euros.

Le Henaff said he feels under no pressure to make acquisitions that are part of the company’s transformation toward higher-margin products and materials. The mergers-and-acquisitions pipeline is “solid,” he said.

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