Welcome to Arkema's Q3 2023 results conference call. For your information, this call is being recorded. It will take place in a listen-only mode, and you will have the opportunity to ask questions after the presentation by pressing star and one on your touchtone telephone. I will now hand you over to Thierry Le Hénaff, Chairman and Chief Executive Officer. Sir, please go ahead. Thank you. Thank you very much. Good morning, everybody. So welcome to Arkema's Q3 2023 results conference call. Joining me today are Marie-José Donsion, our CFO, that you know well, and the investor relations team. As always, supporting this conference call, we have posted a set of slides on our website. I will now comment on a part of highlights before letting Marie-José go through the financials in more detail. A t the end of the presentation, we'll be able to answer your questions. So I don't want to sound like a broken record, but the economic environment in Q3 was broadly similar to what we experienced through this year, with low volumes, hopefully now at a trough, driven by weak demand and some residual destocking. In these circumstances, our Q3 2023 financial performance was robust, and our EBITDA was, in fact, comparable to pre-COVID levels, but in a much lower volume environment. Our resilient EBITDA margin versus last year and our high cash generation are also strong element of performances and are testament to the success of the group's repositioning in high-performance specialty materials. Here are some of the key points of the quarter I'd like to highlight. First of all, we delivered an EBITDA of EUR 386 million in Q3. Year-on-year, our results were impacted by the absence of exceptional profits in PVDF we had in 2022, as you know, as well as less favorable market condition in acrylics, and they also underline lower demand trend in most end markets. Although we continue to see a positive dynamic in automotive, energy, crop nutrition, and batteries. Again, these EUR 386 million of EBITDA was comparable to what we achieved in 2019, despite lower volumes. I'll let Marie-José go through the detail by segment afterwards. Our EBITDA margin stood at 16.6%, showing, we think, a good resilience given the economic context and reflecting the evolution toward higher value-added solutions, as well as our dynamic pricing policy. Group volumes were some 7% lower relative to last year. Europe and the U.S. bore the brunt of the decline, while Asia performed a bit better, benefiting among other elements from higher battery volumes. The lower price effects mainly reflects, as expected, the normalization of PVDF and lower upstream acrylics, and to a lesser extent, lower raw materials. Excluding the former, net pricing was globally positive, thanks to our disciplined pricing policy, as well as a favorable product mix, as we benefited from our innovation-led new business developments. Thanks to our team's efforts to tightly manage working capital and cost, our cash generation was solid, with recurring cash flow of EUR 312 million in the quarter, in line with our full year objective to maintain an elevated cash conversion ratio. As well as dealing with the challenging short-term picture, our teams are fully mobilized around the 2028 ambition we unveiled at the Capital Markets Day in September, which a number of you attended. On that day, you will remember we disclosed three new industrial projects, all geared towards decarbonization and aligned with our new ambition. They concern purification technology to improve the environmental footprint and efficiency of our acrylic production in France, the DMDS capacity increase in the U.S. to support the growth of biofuels, and organic peroxide in China for renewable energies. I won't go into them in detail, as we already spoke about them at length during the Capital Markets Day. Shorter term, a few important projects are expected to have a material contribution in 2024, namely our bio-based polyamide 11 unit in Singapore, which is gradually ramping up, as well as a plant at Nutrien and 1233zd for batteries and home insulation in the U.S. I will now let Marie-José go through the financials in more detail before we discuss the outlook at the end of the presentation. Thank you, Thierry. I'll start with the profit and loss, as usual. So at EUR 2.3 billion, Arkema's Q3 sales were down 17% at constant scope and currency. Volumes were down 7%, and the price effect, at -10.6%, reflected the trend on raw material prices, as well as the normalization of PVDF and less favorable conditions in upstream acrylics. The currency impact is at -4.5%, driven by the strength of the euro versus the US dollar and versus the Chinese yuan relative to Q3 2022. Our Q3 EBITDA came in at EUR 386 million, which demonstrates a good resilience of the margin at 16.6%, in line with last year's. This margin level was achieved through discipline in pricing management as well as strong control over fixed costs. Looking quickly at the performance of our segments, we have adhesives, which had a good quarter, growing EBITDA by 9% despite a 10% decline in sales, which equates to a 250 basis points improvement in the EBITDA margin to 14.4% for this quarter. With some help from lower raw material costs, this performance was driven by efforts to control costs over the weaker volume environment, a better product mix, and continued operational excellence initiatives to improve efficiency. In advanced materials, we were impacted by the reversal of the PVDF over-earning of last year. This overshadowed the benefits from new business developments, which drove increased volumes in high performance polymers, as well as a strong EBITDA in performance additives. In the current context, our EBITDA margin is holding well at 20%. In coatings, we face challenging conditions in upstream acrylics, all the more in the context of last year's high comparison base. The combination of lower unit margins and lower volumes explains the EBITDA decrease. The performance of our downstream business is more resilient despite slower demand and destocking. It's boosted by the success of eco-friendly solutions and more favorable raw materials. Finally, in intermediates, our performance is robust given the macro environment, supported by the resilience of refrigerant gases. For the group, depreciation and amortization stood at EUR 140 million, stable versus last year, leading to a recurring EBIT of EUR 246 million and a EBIT margin of 10.6%. Non-recurring items amounted to EUR 64 million, in line with Q2 level. Around half corresponds to PPA depreciation and amortization, and the other half to one-off charges, as well as the start-up cost of our polyamide 11 plant in Singapore. With financial expenses at EUR 9 million and tax expenses at EUR 54 million, Q3 adjusted net income stood at EUR 277 million, which corresponds to EUR 2.38 per share. Q3 free cash flow amounts to EUR 273 million, which includes a EUR 138 million inflow from working capital as a result of lower activity levels and lower raw material prices. This strong performance emphasizes the focus on cash generation across the company. Total capital expenditure amounted to EUR 137 million, broadly similar to last year's level. To finish, basically, net debt at end of September 2023 amounts at EUR 2.4 billion, including a EUR 700 million hybrid bonds. Our balance sheet remains therefore solid, with the net debt to last twelve-month EBITDA ratio standing at 1.7 times. Thank you for your attention, and I hand it over to Thierry again. Thank you, Marie-José. So as you know, the macroeconomic environment has not shown any signs of improvement, and the overall visibility remains limited. This is true across all regions, I would say, although Asia remains somewhat more resilient relative to Europe or the U.S., at least for the time being. In addition, as you all know, geopolitical tensions have risen over the past few weeks. We are therefore really focusing on what we control. So we maintain a strict operational discipline in this context. We manage fixed cost very strictly. We will deliver on this to what we said we would deliver, which is a EUR 30 million savings compared to our budget, and we spoke about it when we published Q2 result. We are also, as Marie-José mentioned, optimizing working capital to take into account the weak macro, to adapt to adapt permanently on the sales forecast, and to maintain a strong cash flow dynamic. So with Q3 results, which were, as you could see, in line with our expectation, and as we had indicated recently and during the Capital Markets Day, we confirm our target to reach an EBITDA of around EUR 1.5 billion in 2023. As we look towards the months ahead, we are actively working on the industrial projects that you are familiar with, both the ones which have started already and those which will shortly be finalized, as we expect those projects to contribute nicely to our growth in 2024. Beyond these short-term considerations, the Capital Markets Day was a great opportunity to focus the teams on our larger, longer-term ambitions. So we are all highly motivated, focused to achieve the financial target we set ourselves longer term for 2028. W e are convinced that with our portfolio of cutting-edge technology and sustainability-driven innovation, we are ideally positioned to ride the waves of the mega trends and capture the opportunities in the high-growth sub-market that we detailed during the event. So after this few words, I thank you very much for your attention, and together with Marie-José, we are now ready to answer your questions. Thank you. If you wish to ask a question over the phone, please press star and one on your telephone keypad. If you wish to withdraw your question, please press star and two. Again, please press star and one on your telephone to enter the question queue and wait for your name to be announced. The first question is from Jaideep Pandya with On Field Research. Please go ahead. Hi, thank you so much. My first question is on adhesives, on the, you know, margin performance, and, you know, well done on that. You're already at 14.4% margin for Q3, and obviously raw materials keep continuing to go down. So I just wanted to understand that, you know, when we look at 2024, how do we see margins for adhesives? S econd question really is on PVDF. When we look at the volume environment for PVDF, you've grown volumes marginally, it looks like in Q3. Again, when you look at dynamics in Asia, how do you see volumes for PVDF recovering in 2024? If you could give us some color. Finally, on coatings, it seems like your coating customers have started to buy more larger ticket, you know, more volume-oriented products like acrylic acid or solvents for that matter. So do you see that in 2024, the destock that we've seen in the coatings chain will be over, and we will see some normalcy in buying patterns? Thanks a lot for my questions. Hello, Jaideep, and thank you for your question. So the difficulty is that you are more than focusing on the what we publish, you're focusing on 2024, which is a bit early, yeah, frankly speaking, normally we talk about the following year. As you know, every year when we publish previous year, so it will be in effect. So what I can say so far. So first of all, we're happy, back to your first question, we're happy with the margin of adhesives, which reflect the huge work which is being achieved by the team, and also the evolution of this this segment. In fact, this segment plays really the role that we defined for it when we started to build an adhesive franchise. It's really more resilient overall in this kind of economies, and we like that. It's important to have this pillar. Now, with regard to the margin, 2024 is certainly too early to tell you in detail. The idea is to continue to grow year by year. So, as you know, we have a target for 2028, which is 17%. It should take a straight line between 2023 and 2028, you should be where we target for 2024, or something like that. W e try, you know, in the way we develop the company, and we try not to have too much bumps, but to do it really steadily. So take a straight line between 2023 and 2028. We'll benefit, for example, from the synergies on Ashland, and we'll continue to ramp up with some recovery. With regard to raw material, when you say they continue to decrease, they don't continue to decrease. So we have, we had in 2019 a certain point, then it increased pretty much. From this high point we had at the beginning of the year, it decreased, but we are still well above where we were in 2019, and we think that the point we have reached today is, from what we see, more or less stable. And because, don't forget that the oil price has increased recently for different reasons, including geopolitical reasons. And because of that, overall, you had some decrease on certain raw material, but some other have increased back. So I would talk more about stability at a level which is inflated compared to what it was in 2019, while below the peak of the start of the year. With regard to PVDF, actually, the volumes are there. So at the beginning of the year, they were not there. You remember we discussed on batteries, it was quite destocking. So but, I would say the volume are there. We are more because of the, what you know about Chinese capacities and also the reference point of last year, is more unit margin topic, where they have decreased, prices have well decreased, but volume are there. So next year, you know, we have had some project with some start expansion, which were implemented mid this year in China and in France. So next year we should benefit on our volumes, and we believe we will fully ramp up. We should benefit on our volume of the expansion of capacity we had in 2023. So in terms of contribution, nothing to compare to what will be contribution from Nutrien or from Singapore on polyamide. But there will be an incremental positive contribution of this few expansion we had, and we believe that the volume should be there in PVDF next year, just supported by in particular by battery, and also oil and gas, which is not bad. On the coatings, so clearly the destocking as getting more limited than compared to what it was at the start of the year. We are still some residual destocking, particularly in the U.S., because in the U.S., the destocking started later compared to Europe. Okay, so hopefully in 2024, there will be some recovery at a certain point in the year. This is at least our assumption now, when we will give you more granularity when we discuss in February the outlook for 2024. Okay, thanks a lot. You're welcome. The next question is from Aron Ceccarelli with Berenberg. Please go ahead. Hi, good morning. I have a question on PVDF capacity. My understanding is that this year we have got a quite good chunk of capacity additions from China, and it looks like there's more to come next year. Maybe can you elaborate around this, please? M y second question is on fluorogases. We continue to see strength in pricing in both Europe and the US. Maybe can you explain a little bit what is driving this? Thank you. So, two different, complete different dynamics and between PVDF and fluorogases. So with regard to PVDF, yes, you're right to say, and we have been quite transparent and to you on this, there have been significant capacity addition in China, which is... And why China? For two obvious reasons. The first one is that it's a country of fluorspar. It's with Mexico, is one of the two countries in the world where you have a lot of fluorospar. So it drive sort of fluorogas and fluoropolymer, is not only PVDF strategy by a Chinese player. And the second one is that the battery we are just at the start of EV not only in China, but also in the world. And as you know, electric vehicles made in China would not be made only for China, but also for outside of China. So because of that, you have two elements coming in parallel. The ongoing growth of PVDF demand, which will be quite significant in the next 10 years, and at the same time, significant capacities. So, based on that, what's the strategy of Arkema? As usual, we have a growth strategy, but which is reasonable. This is what we presented at the Capital Markets Day, and we try to have a qualitative growth. We try really to focus, and this include also what we do in battery, where we are not chasing for the whole market. We are really focusing on, what is the, high end of the range in order to continue to get differentiated. On the fluorogas, it's a different dynamic because it's not driven so much by the end demand. It's more driven by the replacement of old generation of fluorogas by new generation and by the mechanism of quotas. To make the story simple, this year is a solid, robust year for fluorogas, for Arkema, and we are optimistic that next year should be again, another solid year and robust in the fluorogas. You mentioned Europe and the U.S. You're right, they are the, for Arkema, the two main contributors for fluorogas. W e have also, beyond that, a few specialties that we are developing. We start to contribute nicely, and their position in the HPP segment. Perfect. Thank you very much. You're welcome. The next question is from Geoff Haire with UBS. Please go ahead. Good morning, and thank you for the presentation. I just wanted to just ask two related questions. First of all, when you look into 2024, what do you have in your control? That is, what do you expect from new project contribution to EBITDA, and also cost savings as well? Is there any other levers that you have control of that you could give us? That would be great. So, again, in practice, I try to be a bit shyer because it's more a discussion for end of February, when we'll publish our full- year 2023 results. But I will try to give you a little bit of substance already today. So in fact, for the growth on the cost savings, we'll do them, but it's more a mitigation of the inflation on costs. So it's different nature. I n terms of growth, we get more or less three, let's say, elements. The first one are organic projects, so you know them well, because we are quite transparent, including, but not only, the ramp up of the polyamide plant in Singapore, the ramp up of the HFO-1233zd for thermal insulation, the PVDF I've just mentioned to Jaideep at the beginning of the discussion. So again, we'll be more, let's say we confirm this number, but, shortly speaking, we should generate around EUR 70 million-EUR 77 million of additional euros in 2024 versus 2023 coming from there. Then we got the PI acquisition, as we saw nothing more than what we presented when we made the acquisition. By the way, we think we should close either before the end of the year or early next year. So we get close to a full contribution next year on PI, but we cannot be more precise on the number because we have not closed, and as you know, it's a listed company. W e'll discuss that again on the early 2024, February 2024. T he last one is there will be a rebound in 2024. The question is when. I t's too early to be more precise, and even yourself, you cannot be more precise. So, but that will be the third pillar of our goals for next year. Okay, thank you very much. You're welcome. The next question is from Angelina Glazova with JP Morgan. Please go ahead. Good morning. Thank you for the presentation and for taking my question. If possible, could you give us a bit more color on the full- year guidance and Q4? For instance, if we assume full- year EBITDA at EUR 1.5 billion, that would imply Q4 EBITDA of around EUR 330 million. So could you confirm if you're happy with this assumption for Q4 from our side, or rather, you're implying a certain range for the full- year guidance, and therefore, if this is the case, what would the range be for Q4? Thank you. No, by nature, and you know the answer, we are really very precise because we publish around EUR 1.5 billion, which I would say if I compare to my peers is already a very precise guidance. It is difficult to be even more precise than the euro, so I say no, we confirm what we said at the Capital Markets Day, around EUR 1.5 billion. We are happy with this around EUR 1.5 billion. S o you can make the math on the Q4 that you are doing. So this is, yeah, we confirm and reaffirm this guidance, and it will return in the press release. Thank you. You're welcome. The next question is from Matthew Yates with Bank of America. Please go ahead. Hey, good morning, everyone. Thierry, can I ask you about high-performance polymers? You had a really tough first half in that business, so, good to see volume growth returning in Q3. In your introductory remarks, you talked about business development and specifically auto and energy. Can you just elaborate a little bit more on where that volume growth has come from, be it the applications and even what type of polymer? Is this PA11 ramping up, or is this more broadly in the portfolio? And I guess I'm struggling a little bit here is with the volatility from quarter- to- quarter in the business. So does things like order timing really influence the numbers, or is this a more underlying or recurring business development that would give you confidence on growth into Q4 and beyond? Thank you. Okay. Thank you, Matthew. As you know, in terms of EBITDA, we publish on the segment, on Advanced Materials, which is made of two components, HPP and performance additive, which I would say two different dynamics. On HPP, you said tough. Okay, I accept that, but it's tough compared to last year, which was outstanding because of this over-earning in PVDF. If you come back on the longer comparison, I think given the macroeconomic, it was a good level of profitability, and you can see that with regard EBITDA, the whole segment, where we are above 20%, which given the macro context, which is challenging, obviously since the start of the year, is a good performance. So I say you have two different dynamics. On HPP, you have decent volumes, and they were growing actually on the Q3. But you have this on year-on-year comparison, you compare to this over-earning of last year. O n PVDF, I come back to the point of previous point of the conversation. You have some short-term pressure because of this new capacities. On the development, I would say PVDF volumes now after a start half of the year, the volume are okay. On polyamide, in fact, it's not the ramp up of the plant, it's really that we are sold out, because, as you know, we are starting the plant, so the volume are still quite limited as a new plant. I t's mostly based on the legacy capacity, on that we are still rather sold out. I would say rather stable volumes on the polyamide and a growing volume on PVDF. I will take advantage of your question to mention performance additives, which has a growing EBITDA, which is remarkable in the current context, not coming from the volume, but from the evolution of the product mix. We mentioned, because it was one of the assumption for the, future investment in the U.S., the development in, additive for biofuel is one element, or we mentioned also what we do in renewable energy in Asia, it's another element. This is a high margin business, okay? And supports the evolution of the mix up. Thanks, sir. Marie-José, can I ask a question about working capital? Thierry's introductory remarks suggested that the end environment wasn't getting particularly better. Do you expect to still reduce inventory further in Q4 or are levels now about normal? No, I think there is still the classical seasonality that we have in the business for Q4. We still have some decrease in raw material prices being factored progressively into the inventory pricing. So definitely I would still expect to reverse basically the negative working capital that we have here today. Perfect. Thanks both. As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is a follow-up from Jaideep Pandya with On Field Research. Please go ahead. Oh, well, thanks. Thierry, just on biochemicals, obviously the methionine market has been a bit difficult in the last 12 months. So how has biochemicals, which used to be very, very solid and stable business for you, how has that evolved in 2023, and how do you see it sort of on a forward basis? And then, just an add-on to that, you know, there is obviously backward integration capacity build, being built by one of key players in the U.S. So will that lead to lower earnings for you, you know, in 2024, 2025, when the sort of the capacity, you know, comes on stream? And then just a additional question around performance additives, is around molecular sieves, which used to be quite a nice, profitable business for you guys. We haven't spoken a lot about this in recent times. How do you see molecular sieves in current environment? Thanks a lot. Okay, Jaideep. So on biochemicals, without giving you all secret, because if I do that, I will share it with my competitors. But overall, you have, as you know, different businesses. On the methionine, it has been now a couple of years, which is more challenging. So we have been able to limit the pain, I would say, because of our positioning. I t's not what we have had for many years, which was a growing, a growing... and market is not the case anymore. But it's still a nice contributor, but performance has been a little bit reduced compared to what it has been. But on the other side, as we mentioned, we are developing some additives, including the one for biofuels, but also some application linked to oil and gas, which are doing very well. And because of that, overall, we are able to be stable at a high point, so it's a good position to be in. So it's a good business, and thank you for asking the question. On molecular sieves, it has been now... you know, we have two business, a sort of recurring business, which is stable, I would say, and continues to be stable. But, the big contribution you are referring to are more coming from project-related business, which has been rather weak in the past years, and it will continue to be weak for a couple of years. So don't count on that for next year. But, you have been able to see that on performance additive. We have been able to mitigate that by other development, and we are happy about that. So you have a strong performance additive and resilient, and you could see it especially this year, where, in the macro, when you add all the addition of the different product line or contribution of performance additives, we are really contributing nicely and growing a little bit, which is really a good performance. If I may just ask one follow-up on PVDF. You know, where are we on the technology evolution for suspension grade for Arkema? Are you guys going to, you know, compete with one of your close competitors there? Or, you know, you don't need to be there, and you can still grow and sort of upgrade your immersion technology. You know, could you do us some color on that, please? Thanks a lot. So again, we have not created this debate, but we'll answer anyway. So, I'm a bit puzzled when you ask the question, because suspension is good for a part of the binders. It's not necessarily well positioned for separators and for other applications of the cell. E mulsion is good for a part, as you know, LFP related, and which is more or less taking half of the market long term, and is good for separators. So I think for us, it's important to build the two suspension. We are making some good research, which midterm will help us to be positioned, but we are happy with what we have. This mean that not everybody in PVDF is positioned the same way. I think with the cards we play, positioning on the high value, I think we are well, we are well positioned. Now each, each player is a little bit, different. Thank you a lot. We are talking about, but we are talking about battery. Yeah. Then there is all the rest, in which we have a very strong positioning. Thanks a lot to you. So we are very, we are very consistent with what we said, the Capital Markets Day, where, as you know, where we have a showroom, we could really explain where we were in batteries. N ot only in fact PVDF for batteries, but also in a acrylic technology and other technology. So, I mean, the game is starting, and we have plenty of cards to play. Not exactly the same cards as our competitor, but we are happy with that. Thanks a lot. The last question is from Martin Evans with HSBC. Please go ahead. Thank you. Yeah, it's just a very quick question. Thierry, on your longevity at Arkema, I noticed last night the main board of directors had- I started young, Martin. Yeah, they've agreed to extend your contract for another four years, starting next year. So that's 2024, that'll take you up to 2028. And I first met you back in, well, I think it was before 2006, with the spinoff, when again, you were Chief Executive Officer. That's an awfully long time. In fact, it must be a record for anyone to hold a job in the chemical industry for over 20 years. I'm just, it's obviously very reassuring for everyone who knows you, for investors, for analysts, and so on. But what was your motivation? I guess you'll say simply because you want to carry out the latest strategy up until 2028. Did you not think of possibly having a rest? Because it is an awfully long time to be running a company. Okay, thank you for the question, Martin. So first of all, t his is the board, and we're deciding this is not myself, so I was happy to see that the board is supporting that. Now, there will be the general assembly with the shareholders, this is the voice at the end. W ith regard to me, as you know, pretty good shape. T he good thing with the—as you know, with the chemical industry and the world in general, is that it's moving all the time. So we had, I would say the topics are changing, the stakes are changing, which is very good. W ith the Capital Markets Day, I think as you could see, we have quite a very interesting project to lead. I was happy to see that I get the support of the board to lead this project, which is really very exciting, and because the world is really changing, so it keep me in good shape. Hopefully, I answered your question more or less. Yeah. Excellent. Well, good luck and congratulations. Thank you very much, Martin. Do we have other question or? No, Mr. Le Hénaff, so that was the last question. I turn the conference back to you for the closing remarks. Okay. So I would like to thank you all for your question and for listening to us. As usual, Beatrice and Peter will be at your disposal for questions in the short term, and Marie-José and myself, when we have the opportunity to meet you in the coming weeks and months. Thank you very much. Ladies and gentlemen, this concludes this conference call. Arkema thanks you for your participation. You may now disconnect.