Arkema S.A.

Thierry Le Hénaff - Chairman, CEO Thierry Lemonnier - CFO

Martin Roediger - Kepler Cheuvreux Thomas Wrigglesworth - Citi Alex Stewart - Barclays Laurent Favre - Evercore ISI Jean-Luc Romain - CM-CIC Market Solutions Geoff Haire - UBS Paul Walsh - Morgan Stanley Jean-Baptiste Rolland - Bank of America Merrill Lynch Patrick Lambert - Raymond James Chetan Udeshi - JPMorgan

Thank you. Good morning, everyone.

Welcome to this conference call. So with me today are Thierry Lemonnier, our CFO; Sophie Fouillat and Francois Ruas from Investor Relations as usual to support this full year 2017 conference call.

We have posted on our website a set of slides which includes highlights of the full year performance. But also an overview what has been achieved over the past few years.

At 2017, was the final year of Australia plant presented to the financial community in June 2015. Together with Thierry Lemonnier, we propose first to comment the set of results and then to answer your questions.

As you have seen from the figures which we've released this morning Arkema finished the year strongly and achieved an excellent share with new record high EBITDA close to €1.4 billion. This is a very significant progression over 2016 and it is well above our mid-term target of €1.3 billion set three years ago.

This translates into a 42% increase in adjusted net income. In 2017, we also managed to deliver a strong cash generation through combination of EBITDA growth and other structural improvements on working capital and taxes that Thierry Lemonnier will comment later on.

And there also we exceeded our mid-term targets. As you can see on Slide 3, net cash flow was multiplied by four compared to 2014 and EBITDA to free cash flow conversion increased to best-in-class level at 41%.

All these element contributed to significantly decrease our net debt plus Bostik acquisition leaving us at the end of 2017 with a net debt to EBITDA ratio of less than 0.8 times and a strong financial flexibility. Such achievement is very important milestone for us and a real element of pride as you can imagine for other things.

We demonstrate today that we managed to deliver the ambitious financial target we set three years ago while operated in quite different types of business environments, characterized by strong relativity of raw material prices and currencies. All our three business divisions contributed to this very good performance.

This also demonstrate the successful implementation of our strategy which as you know ends up further increasing the share of our speciality businesses, which represent today more than 70% of our total sales and the commitment and hard work of our teams to implement high density of projects. I propose now to come back on few of them.

We have successfully implemented several growth project with start-up of thiochemicals platform in Malaysia and the expansion of our specialty molecular sieve in Honfleur, in France which were two strong contributors to our growth. We continue to reap the benefit from our innovation drive for advanced materials to meet our customers demand for lighter materials, new energies or 3D printing have been ranked for the seventh consecutive year in Top 100 Global Innovator by Clarivate Analytics together with companies like Oppo [ph] or Nike to name a few.

Innovation together with start-up of new unique supported solid 7.5% EBITDA growth year-on-year [ph] in advanced materials over the past few years. And marginally to say 2017 was particularly good for high performance material with an excellent EBITDA progression of plus 11% despite higher raw materials and currencies at your end.

In the coming years, we'll continue to significantly expand this high value added businesses with major investment plan for specialty polyamides in Asia, but also expansions in our Kynar PVDF business in Sartomer. Over the past three years, we successfully also integrated Bostik and implemented no synergy though setting up a solid platform for further value creation.

Since integration within Arkema, Bostik's EBITDA increased by plus 53% and strongly contributed to our excellent performance year-after-year. In line with our strategy in - we've focused our efforts on innovation, geographic expansion in emerging country with the opening of five new units and value accretive bolt-on acquisitions such as Den Braven in 2016 and Xcel Brands last year early 2018.

After three years, additives now represent close to a quarter of our total sales and have confirmed of their potential. We've already considered that in a still fragmented sector with many small and mid-sized independent company, we can further grow this business and improve its profitability in line with our long-term ambition.

Lastly, the Group's strong 2017 was supported by an excellent performance of our intermediate chemical businesses namely acrylic acid, fluorogases and PMMA which benefited from a positive environment but also from all the mainly development and competitiveness actions implemented over the years. Finally, I would like to highlight that we remained very disciplined in our cash allocation.

Looking at the past three years and thanks to significant improvement in our operational performance and a strict control of both CapEx and working capital. We have managed to finance €1.3 billion of CapEx, €2 billion in M&A and €0.4 billion of dividends while maintaining low level of debt.

All the project undertaken are particularly on track and we're confident they would create value for the mid and long-term. Over the coming years and as announced at our recent 2017 Capital Market Day we'll pursue this strategy to our specialty chemicals and will accelerate our development in additive and advanced material while maintaining a strong cash generation and further improving our profitability among the best in the industry.

In view of the many developments ongoing within the company with several significant start-ups expecting in the coming four years in PEKK, thiochemicals, polyamide. We're well on track with our long-term ambition.

Reflecting this confidence in our progress in our long-term prospects and given our dividend policy the Board of Director has proposed to increase the dividend by 12% to €2.30 per share compare to €2.05 per share in 2016. Before my concluding this initial remarks, I would like to remind that as chemist we want to deliver growth, profitability but to deliver it responsibly.

You know that we have committed to ambitious long-term social environment and safety target which are part of our corporate social responsibility from work. And we're well on track to reach them as shown on Slide 11.

I'm also pleased to announce that we're speeding up the rollout of our digital strategy by creating a digital transformation division. This division will be headed Frédéric Gauvard that some of you know as he has been formerly Head of Investor Relations.

He will directly report to me as digital transformation is really a key priority as innovation for our Group. In a nutshell, 2017 has been as you could see really an excellent share, we're very pleased.

From both quantitative and qualitative standpoint we have shown a very significant growth over 2016 and we're well on track for 2020 and 2023 plans to continue transforming the company and also creating value for all our [indiscernible]. I will now hand it over to our CFO, Thierry Lemonnier who will detail the 2017 financial performance.

Thank you Thierry. Good morning, everyone and let's start with the sales which are at €8.3 billion up 10.5% year-on-year.

Organic growth amounted to 8.9% supported by 2.4% volume growth and a 6.5% price effect. Volumes have benefited for the 4.4% growth in high performance materials driven by Asia innovation and start-up of new units.

Price effects reflect selling prices increases impactful higher raw material cost in specialties and positive trends in our intermediate businesses. Scope of business amounted to plus 3.3% and [technical difficulty] currency effect to minus 1.7% reflecting mainly the strengthening of Euro against US Dollar in the second part of the year.

Despite higher raw material prices EBITDA progressed in each of our three business divisions to a level close to €1.4 billion and EBITDA margin goes up by 90-basis point to 16.7%. With G&A stable compared to last year, EBIT stood at €942 million up 28% on last year and EBIT margin is up 160-basis point to 11.3%.

Non-recurring charges amounted to €52 million around half of this amount corresponds to the consequences of Hurricane Harvey in the US and the other half to restructuring charges. On financial results, we're at the same level as last year but in 2019 we'll have a €12 million savings coming from the refinancing of €500 million bond bearing interest at 4% at more favorable conditions.

Taxes stood at €162 million, they include exceptional items with one-off non-cash profit of €36 million on deferred taxes in the US related to the rate decrease on 35% to 21%. Excluding the exceptional items tax rate is at 26% of EBIT lower than last year due to the change in the geographic split of our results especially with better results in France and China.

Regarding the US tax reform given the stronger connect position there. The Group will benefit from tax savings estimated on the basis of our 2017 results at around 6% of our adjusted net income.

It means that our tax rate for 2018 should be at around 23% of EBIT. So this is clearly a positive cash element for the coming years and it comes at a time when we're significantly increasing our industrial investments in the US.

If you add the tax reduction in the US with a gain on our financial charges next year, all things being equal this will have a positive impact of around 8% on our adjusted net income and EPS. Adjusted income for 2017 is up 42% on last year at €592 million that is €7.82 per share.

Let's now go through the performance of our three business divisions. High performance materials delivered a strong performance with sales up 12% on last year, volumes increased by 4.4% up in all business line and driven by a strong demand in Asia for lighter materials, new energies and consumer goods and from the contribution of our new specialty molecular sieve unit in France.

The strong development reflects all the work achieved over the past years on innovation. The 8% scope effect mainly reflects the integration of Den Braven net of the divestment of the activated carbon business.

Globally for the segment prices are up 1.5% reflecting the actions taken to pass through higher cost of raw materials. At €632 million EBITDA is up 11% supported by the solid volume momentum in advanced materials and by Bostik expansion with Den Braven integration and first synergies despite higher raw materials headwinds and the strengthening of the Euro versus the US Dollar.

EBITDA margin held firmly at 16.5%. Let's now move to industrial specialties; sales are up 10% there, on higher selling prices reflecting improvements in certain fluorogases prices mainly in Europe and in Asia and positive market conditions in MMA/PMMA.

Volumes are up 1.7% driven by the good demand in thiochemicals. At €585 million EBITDA is up 24% and margins 10% to 23%.

In a context of solid global growth and tighter environmental policy in China the performance of the division reflects the return as expected for fluorogases to very good levels of results approaching tight supply and demand balance in MMA/PMMA and a solid performance of thiochemicals. In coating solutions, sales are up 9% with prices up 12.1% reflecting improving market conditions in acrylics along with raw material prices pass through all around the year.

Volumes are stable with higher volumes in the downstream businesses offsetting the impact in acrylic monomers of the shutdown of two old reactors at Clear Lake in the US to be replaced by mid-2019. At €240 million EBITDA is up 17%.

The improvement of unit margin in acrylic monomers in all three regions more than offset the impact of higher improved cost in the downstream businesses. As expected acrylic margin in 2017 were on average between low and mid-cycle condition and EBITDA margin for the segments to about 12.7%.

A few comments now in cash flow and net debt at €565 million free cash flow generation continuous to be very strong. This reflects the higher EBITDA and the tight control of both working capital in CapEx.

Recurring CapEx at €431 million that is 5.2% of sales, a bit lower than initially expected and below our target of 5.5%. For 2018, given our exceptional investment in thiochemicals and specialty polyamides, total CapEx should be at around €550 million.

At 13.1% of sales working capital is at historical low reflecting a strict management optimization efforts and some positive currency effect. EBITDA to free cash conversion ratio reached 41%, this performance is certainly amongst the best-in-class in the industry and is a global mid-term objective.

As a consequence net debt decreased sharply to below €1.1 billion compared to €1.5 billion at the end of last year. Obviously this figure does not include the €205 million acquisition of [indiscernible] closed in early January.

Some quick word now on the strong fourth quarter performance. Sales at close to €2 billion, 6% up year-on-year with a solid 4% volume growth in advanced material.

EBITDA at €283 million is up 16.5% despite higher raw materials prices and the stronger Euro versus US Dollar up in last year. EBITDA margin stands at 14.5%, 140 basis points up on last year.

High performance materials achieved a good performance with an EBITDA €131 million benefiting from Dan Braven integration and synergies and from the solid volume momentum in advanced materials. Industrial specialties delivered another very strong quarter with €120 million EBITDA supported by all business lines.

Coating solutions with an EBITDA at €44 million posted slight improvement on last year which was high comparison base. So this concludes my presentation.

Thank you for your attention and I now hand it over to Thierry for the comments on the outlook.

Thank you, Thierry. I will now comment some elements of the outlook which I mentioned in the press release.

First as you could read, we're confident that 2018 would be another strong year supported by good demand in all three regions and despite higher raw materials and the stronger Euro. Beyond this economic context we will as usual focus on what we control, which is strength of our internal momentum and especially our innovation for advanced materials and Bostik growth with integration of Xcel Brands.

We will also continue our operational excellence program as well as our actions to rise our filling prices. Finally, we expect the market conditions in our most intermediate businesses to remain overall robust.

So far 2018 have started well and we expect given our strong internal momentum I have underlined and despite the current significant headwind of your strength to increase our EBITDA in 2018 compared to the excellent 2017 performance. I thank you very much for your attention and we're now together with Thierry ready to answer any of your questions.

I've three questions please. The first question is on fluorogases.

Can you give us your view about the market environment in fluorogases in 2018? And do you think you can keep the current earnings level in fluorogases this year and also next year?

The second question is on volumes, at Group level they have been flat in Q4 despite the high demand this was because you had decreasing volumes in the industrial specialty segment as well as in the coating solutions segment in Q4? Are you sold out in both segments?

And do you think you can grow volumes in both segments in 2018? And the third question eventually related to that, it is on working capital which has been quite successful when I look to the working capital sales ratio in 2017 better than your target for 2017 has been and also better than your mid to low-term target.

Can you explain details beside of course what you mentioned the disciplined and the dollar effect and should we assume working capital sales ratio to stay at the current level in 2018? Thank you.

Okay, Martin. So I'll start with fluorogases.

I think the good thing about fluorogases, first of all is that we delivered what we said, we would delivered. I think everybody will recognize [technical difficulty] three years ago and everybody I think will appreciate that, we delivered this bet.

As everything is that in fact we got an improvement in all three regions and particularly after a good period in the US in the past years. A good improvement in Europe and also in China.

What has happened in Europe, which will answer your question? Is that and this is what we said a few years ago, finally on the current generation of fluorogases.

There would be for the historical complete year, a benefit from the new legislation and which I think it is very healthy is reducing in order to reduce the initial, is reducing the amount of production written-offs from quotas okay which creates some improvement in pricing, then improvement in profitability that you can reinvest in the future generation of gas. So I think it's a very good system.

So what is happening, what has happened in Europe this year? We certainly continue to prevail in 2018 and beyond, so I think we are certainly confident about it.

With regard to China, which is all right by definition but not only for Arkema Chemical [ph] but for chemical in general, more volatile as you know. The good thing that we appreciate this result finally after maybe some years of more challenging condition.

The Chinese Government is far more strict it's environmental policy and it's an advantage for company like us which has always put corporate social responsibility among it's priority. One of the consequence of that is certainly to have a more balance supply to demand capacity on certain fluorogases and overall it's good for our business and we believe it will continue to prevail in 2018.

So I think as you know on four years plan, which we started in 2014 we're one-year in advance, we delivered after three years, but we believe that we have quite good level in 2017, but we believe that we can keep this level in 2018. With regard to the volume and I think what is more important in your question, is are we sold out in industrial specialities and coating solution?

If I take coating solution certainly not, I think we have a good base of comparison the year before which explains that we were flat. But I think we've potential for further increase.

You know that, in the US for [indiscernible] 2019 we start a new reactor in the US which means that we believe that this market not only is growing but will create some more capacities reasonable but more capacities in industrial [ph]. But we're still in Asia some capacities enabled for acrylic acid and with regard to the downstream, which is more batch processed than continuous processed where certainly capacity is.

If we go to industrial specialities, it is clear. You cannot have everything at the center, which clears that we're tight in MMA/PMMA.

But this is why also we have very good pricing. So I think we don't seeing it's a disadvantage but in terms of growth, it's more pricing, momentum and volume growth momentum.

We're still capacity available fluorogases but in fact, in the US and in Europe it is more managed by quota which we meet certainly the potential of growth. But again pricing is quite good.

The picture is more different in thiochemicals, where we have really solid momentum of growth every year which has performed rather well last year and which should continue to perform and grow in 2018. For working capital, not an issue although me.

I'll ask Thierry Lemonnier to comment this quite good performance. I'm very proud of the team because we started 10 years ago at 23%.

Now we're in the range of 13% to 14% and which really reflect the good work which has been achieved by the team.

Good afternoon, Martin. So as you mentioned it, there are two different elements which I can explain.

The much lower working capital ratio of this year at 13.1%, one is related to the exchange rate and the fact that we're comparing sales which are converted on the basis of an average rate at 1.13 and working capital which is converted at the rate at the end of the year, which was at 120 so that give us –give to the ratio a slight advantage that we can estimate at around alpha point, I would say which means that the remaining part of the decrease in the ratio is really the consequence of the internal discipline and the progressive optimization of working capital with the implementation of new IT integrated system that will continue in the coming years, but globally I think that we can keep a level of working capital at somewhere between 13.5% and 14%, 14% being the objective that we gave during our Capital Market Day.

Thank you very much.

Three questions, if I may. Firstly on your guidance for growth in EBITDA in 2018.

Could you just help flash out the bridge elements in that? Are you assuming any decline in the MMA/PMMA environment and obviously the FX you've kind of addressed but are there any positives that you see offsetting that?

Second question obviously on Bostik certain prices have gone up strongly together what I expect some of the epoxy costs as well. Could you just talk a little bit about how you see the margin evolution given the balance of raw material pressure into 2018?

And lastly, on actually coming more specifically onto MMA/PMMA. Is the new supply growth in the market being marketed today?

I'd expect the price pressure to come before that plant comes on stream. So is that material being marketed for the first half, can you give us any color on the market dynamics on that regard?

Thank you.

Okay, Tom. Thank you for your question, so I will answer.

Maybe before that - if I may I can take advantage of your question, really to insist on the fact that our performance on the first quarter, but also our performance for the full year is really a combination of strong performance of many different lines. It would be certainly let's say incorrect to review this performance to one or two lines, by far we have a very strong performance in HPM and even if you take Q4 because we had some question about that.

Industrial specialties it was not just MMA/PMMA it was also fluorogases but also thiochemicals and also H2O2 which finished the year quite strongly. It's important for me, it's my duty to mention that.

Our performance is really made of whole portfolio which is qualitatively has made significant progress with strong positioning and - we benefit from the whole package including in Q4, this year. Now I will answer operationally for your question.

With regard to this guidance it is clear that we have plenty of positive and have the right, we wouldn't be able to set the strong Euro-Dollar headwind, we have really plenty of positive which we've mentioned including in high performance material. In fact the net positive will come mostly from our specialty business in 2018.

With regard to MMA, as we've mentioned already our feeling is that, will MMA/PMMA will continue to be robust as a share, we have no doubt about that, but at the level which will be in average from the year below last year, so no surprise, it has been assumptions since many months so we don't change that. Certainly with start of the year which is quite okay and with some normalization all along the year, but at the same time.

I think we also mentioned that several times. We believe that in fact, if we put together MMA/PMMA and the acrylics, we should have a sort of set because as you know, the acrylics margin are expected to get near at weak cycle this year, so I think it's a good sequence for the company.

And for what we call our more intermediate chemicals MMA/PMMA, fluorogases and acrylic which represent around 30% of Arkema. We still believe that it will be a robust share, but the growth again will come in 2018 really from more speciality businesses.

This is where innovation will certainly benefit from innovation, our new start-up of plants will certainly play a big role. As it has been in the past three years.

With regards with Bostik, I think you're right to mention that raw material cost is certainly a challenge and because we're reading the more downstream businesses. It's not question about our ability to recoup, it's more a question about the speed to recoup because the more you go downstream, the more it takes time to pass for raw material.

It has been a challenge in 2017, so we have quite a solid performance on Bostik, but more stable compared to 2016, that we believe that Bostik performance will go in 2018 and margin evolution should increase, margin should increase in percentage a little bit compared to 2017, which assuming that we will more than offset raw material in 2018, on top of that we'll get the benefit from Xcel Brands as you know which is quite a good acquisition plus the synergy of Den Braven. Now your last question is on MMA/PMMA which I think I mentioned during the first part of the answer.

I think the new supply growth have started clearly, so at least you can see that despite of that we have still good momentum in MMA/PMMA so we're pleased about it, which means that anyways the market is tight, even if there would be some normalization along the year. Clearly, one fact is that since the market has been very tight for three years.

The plant has quite to run at maximum, so now you need to maintain this plant which has run for many years at maximum and certainly it's a factor, which explained why you don't see so much effect on the pricing starting the year. So it's more good news for Arkema.

Excellent. Very helpful.

Thank you very much.

In HPM, I was surprised the volume growth in the fourth quarter wasn't higher, given you've got the start-up of all the benefits of molecular sieve plants in Honfleur and PVDF plans in China, you did migrate percent in the third quarter, but if [technical difficulty] looks like let the other businesses financially negative in the fourth quarter, unless I'm missing something. And then I wondered if you can just comment to Tom's point about net pricing, all the balance between raw materials and pricing in the fourth quarter in high performance materials, is up, turned positive in the fourth quarter.

Was it still low in the year before? And then finally on coating solutions you mentioned that the acrylic monomers business is probably somewhere between low and mid cycle which implies about 12.5% EBITDA margin, so extrapolating that also suggest the downstream coatings businesses similar level of profitability.

Is that where you would like the downstream margin to be - is there some work you could do to move it up it seems to be a little bit below your peers in that area? Thanks so much.

Okay, Alex, thank you for your question. With regard to HPM actually molecular sieve in 2016 the another year was rather good.

And in fact we compared negatively in molecular sieve compared to 2016. Okay so it's one element of the lower growth in HPM.

The second thing, is that it's clear that in environment and this is our duty of raw material. We try really to manage increase, we try really to manage the balance between pushing the volume growth but also to manage raw material increase.

But in advanced material which is really technical polymer Sartomer etc. we have an increase of 4% of organic growth in the quarter and the Q4 which I believe is quite a good performance in this environment and is mostly the benefit from our innovation.

So advanced material, we mentioned it in the press release have had an organic growth in the Q4 of 4%. On HPM the balance of raw material which have increased very significantly for some of them and not all of them, some of them in the second semester is negative in the last quarter.

But overall with the volume growth and all the other action we were able to deliver a very strong increase of EBITDA 13% in high performance materials. Now with regard to coating solution, if I understand your point.

It's clear that in a year and you have then you need to look at the whole business segment. In a year where acrylic acid is increasing and we're quite happy about that, is one of our main assumption for this segment, has increased notably.

It take some time for the downstream to recoup. The raw material knowing that is not only acrylic acid but it is also MMA, so we'll come back to your question about MMA, but MMA has increased also as you know and it's challenge for the downstream in coating solution.

But we're confident step-by-step to recoup the whole increase of on the value chain. It's more difficult on the part of acrylic downstream which is in the coating solution than on the one which is Sartomer, which is an high performance material, so we have a mix view on that, but at the end the coating solution is quite positive for the year and is true that, we have not passed everything, all the positives that we got on the acrylic acid which is the upstream.

One thing maybe last thing on the coating solution, is that, in China last year the end of the year was very, very strong. So when you look at the 7% EBITDA change on the coating solution is the first quarter.

If you take that into account it's still a very solid result.

Perfect. Thank you very much.

I just have one question around M&A and the flexibility that Thierry you mentioned. When we think about your plan, your M&A plan between now and 2020.

I think you're looking to add about €800 million now of sales, so a €1 billion less Xcel Brands. Should we assume that a lot of this is in HPM or are you also thinking about still adding in downstream acrylic, that's I guess question number one?

And question number two is, with all the volatility those are downstream assets we have a lot of volatility in raw materials. I mean would you say that all of this is making availability of assets in issue or would you say that, whoever wants to sell won't change their views based on what's happening in their business on a day-to-day basis or indeed what's happening with US tax reform or anything like that.

Thank you.

When you meet availability of assets, you're still in M&A. you mean?

Yes.

Okay, so with regard to M&A we have not changed our order of priorities. Our first priority is additives.

Okay because you know the story the market is fragmented, this is a good period to continue to develop M&A, but we take our time. This means that we have made Den Braven which was €500 million, Xcel Brands is €200 million.

There will be some small like CNP at the end it will be sum of small and medium size, but yes we want to continue to grow in basis. After that clearly technical polymer, but you know you don't have so many potential targets, so we will collect on organic growth ,but if we have opportunities we will look at them reasonable opportunities and we don't forget acrylic downstream to the extent that they're high value, we have a very strong strength in specialty coating, this is a case for example for Sartomer as you know, so it's still on the list but I would say, but it is still our priority and this is what you see actually in our execution.

With regard the availability of assets, are in the context which as you mentioned wisely is changing all the time, so it can be a raw material, it can be [indiscernible], it can be plenty of things - interest rates which are a little bit increasing. I think it's not so much the availability is that as you know the prices have increased overtime, so you have to be careful you have to speak the right word and I believe we've done that.

You need to have synergies but if you do that, I think you have enough asset available. Does it mean that every year we'll make big acquisition?

Sometime we take our time but there are enough particularly in this field and maybe the acrylic downstream asset to pick the right one you know to create value for shareholders.

And when you talk about creating value, can you say anything around targeted synergies? Or did you have - do you think your criteria for value creation are too strict in other words that you're looking for too high synergies and therefore you cannot justify being 11, 12, 13 times EBITDA when you trade on seven or would you say that there are enough targets?

We still have this benchmark after three, four years to go down to post synergies, to go down to seven times, eight times, seven, eight times EBITDA which we have beaten in the past as you know. We believe that with this kind of target we have enough assets available.

Again the world will change in the coming five, 10 years so how much you pay the synergy is very important for your long-term. So we each acquisition we're making we're really looking at our ability to create value not just instantly because interest rates are low, but also to make sure that strategy again it's a long-term.

So we take off time again but we believe that we have enough with our criteria which are strict clearly, but it's not only for acquisition it's also for big industrial project, we are very strict. This is why we generate so much cash and improve our ratio step-by-step but we believe that we have enough assets available.

Yes.

Thank you very much.

Thank you. I've just the question about the advanced materials.

You mentioned an impact from increasing prices which were partially regrouped by increasing your advantage. How much was that impact on margin, was it significant on it?

But in fact we've been quite - at the end because we work - you have to think when you look at the margin you have the product mix and you have the materials. On the raw material we say this year we recouped partially already at a good level, but not completely.

But again I confirm that what we've not recouped, we plan to recoup that. So it's just a matter of timeline and we're absolutely convinced that we will recoup the full of it.

Now thanks to our product mix, which thanks to our innovation is moving in the right direction. We say that in terms of margin and you can see that on the evolution of margin on the high performance material, we went from 13.8% in the Q4 to 14.4% just on the Q4.

And we are more or less stable between 16 and 17, you can see that the product mix is in fact is doing the remaining part of managing the at least percentage of margin stable in environment which is against starts with raw material, so I think it's a good delivery.

Thank you very much.

Just two quick questions. One is, first of all on the currency.

I was wondering if you could update us on actions you're taking to sort of offset the impact of the stronger dollar and other currencies and remind us of what sensitivity on a translational basis is, would be helpful. And finally just I wonder if you have any guidance for CapEx levels for this year and next year.

Thanks.

Okay, so with regard to currency. Instantly you have just - you have the impact - what you can do and what we've been doing for what is not the translational effect, but the translational effect is to make sure that you balance your manufacturing and your sales, based on currency and this is what we have been doing by investing significantly in the US and in Asia.

One of the last line which was not balanced was the polyamide which is still pretty much based in Europe but with all the investment that we're putting as you know the big plan of €300 million, we will do on polyamide what we've been doing in the other line and step-by-step the transactional effect is diminishing, just to give you another magnitude. So for what is truly transmission, so you have nothing to do about it, you publish in Euro.

We have strong profitability in dollars. Automatically you have a negative effect.

We mentioned it in the press release is for 10% around €50 million. After that you have transaction which is the effect where you're making Euro, you sell in Dollar.

Okay, if you remember in the early days of Arkema we were saying nearly the same dollar of magnitude and now I would say between one-third and 50%. So we're significantly reduced this effect, okay and we continue to reduce it in the coming years by putting a fair balance between what we produced in dollar and what we sell in dollars.

But everything is taken into account in our guidance, which means that beyond the exchange rate we've really a very strong momentum of internal actions benefit from our positioning and this is why we're quite confident about 2018 to deliver our guidance. On CapEx, we plan for this year around €550 million, which and beyond so for 2019 its really increased a little bit with sales, but is more or less in the same order of magnitude and the €550 million in fact for 2018 is split between 5.5% of turnover 2018 turnover to which we add a few exceptional project which really change the scale like acquisition and we have two fields that we've mentioned at the Capital Market Day.

One is big polyamide measure investment €200 million, that we've mentioned to position polyamide fully in Asia. And the second one, is on thiochemicals where we've mentioned this big investment which is in Malaysia.

These are the two areas for the animal nutrition. For the rest is really included in our 5.5%.

Thank you.

A few simple questions. What's your best guesses to the absolute FX headwind you're facing in EBITDA terms at this stage for 2018?

Second question, you talked about normalizing PMMA I just wondered if that was a future comment or whether or not you're actually seeing those spreads down in Q1 versus where we were in Q4. And on the fluorogases business have you seen any negative effect on your fluorogases portfolio from your inability at this stage to compete in the 1234yf product area or not?

Thank you.

Okay, so Paul. Thank you for your question.

I can only confirm what you said, is that we have for 10% is the €50 million, which is more or less Thierry.

Yes, we were on average last year at 113so if we remained at level at around 125 that represent roughly a 10% valuation which response to the €50 million impact on EBITDA that we mentioned.

To be precise Paul, we have worked because it has, as you mentioned changing all the time 120, 125, 122 so we have worked in the past months - I'm sure 120, 125. So and the 125 is exactly what Thierry is mentioning.

Okay, that's very clear. Yes thank you.

Okay, so with regard to the normalization of PMMA, I'm not sure I catch exactly.

Well listen, I think the only question is this, which is you're talking about similar levels of performance this year versus last year. But I'm guessing spreads in PMMA are higher in Q1 than they were in Q1 of 2017 and actually sequentially they might even be higher today than where they were in Q4.

And I'm just wondering your comments around flat year-on-year, is that because you're baking in a normalization that you haven't yet seen or have you already started to see that normalization.

No, I think Paul I say that more or less acrylic acid should set from decline of margin in MMA/PMMA so our assumption is clear and we have been very consistent. MMA/PMMA this year starting from excellent level should continue to be quite robust, but should be below what it has been in 2017.

When we say - normalization it's not flat. Normalization means declined.

Okay.

Okay.

And starting the year, we're more or less at the level of last year maybe a little bit above Q1. But we believe that the first semester will be quite solid.

The good news because we have also looked at it positively. Is that despite the fact that supply of some new competitor have started the market remain quite solid, but we still maintain our assumption which is - that there will be normalization of MMA/PMMA at which level we don't know exactly will stay good, but at which level we don't know but offset acrylic acid coming at mid-cycle.

Okay.

Sure.

And with regard to fluorogases, again what we don't have, we don't have. We don't have contribution actually of threshold 4yf, so but what we can say also, is that even without that we have quite a good performance in fluorogases and fluorogases is not only one product, sometimes we hear but the specialty 4yf, about 22 in the US but we have for each region 10 products and frankly speaking, we have combination of the different product and the momentum in fluorogases has been quite good in 2017 and we think that we can be rather stable in 2018 fully despite the exchange rate, which is a good performance.

Okay.

That's great. So can I just come back on the PMMA comments because you had a great performance in industrial specialities in Q4.

And I'm trying to understand if you're insinuating Q1 already steps down because I'm just not seeing it in the pricing data or the spread data. Admittedly PMMA is more opaque but MMA spreads in particular look higher to me now than they did on average in Q4.

No, no I think maybe I was not completely clear. First of all the performance of PMMA was positive in Q4 compared to the previous year.

But it was only one element in and that was specialities because all the four including H2O2 and thiochemicals contributed to the growth, not mentioning that HPM. If I look at the whole company also was quite positive.

So it's really a team effort and it was not only MMA/PMMA. Once we've said that PMMA was above last year in Q4.

In Q1, it will be bit above normally we've not finished the year. it should be Q1 is in continuity more or less of Q4 and should be a bit above as the last year Q1, but again the performance of Arkema you can talk about Q1, 2018 or Q4, 2017 year-on-year is really the combination of many different lines and certainly by far from being just sort of MMA call which is new among plenty of others.

Okay?

That's very clear guys. Thank you very much.

Two questions on industrial specialities, fluorogases. Could you provide us any update on any advancements regarding the complaint that you filed with European authorities?

Have you had any contact within your competitors regarding potential licenses for rate defers, that's the first question. Second question again on fluorogases, are able, are you taking any measures in Europe or elsewhere that could allow you to increase sales volumes, despite the few two emissions phase down.

i.e. can you make your sales mix of HFCs evolved towards lower [technical difficulty] potential gases [technical difficulty] which have been going up lately.

There has been, I believe you have a contract with a company called Enterprise sourcing propylene from Mont Belvieu. And I was just wondering if there was, if you had any prices increases when buying your raw material [technical difficulty].

You're cut, Jean-Baptiste. [technical difficulty] 4yf, the compliant has been filed is follow is normal course and if we have something to learn, you will get it from the commission.

But I've no more comment to say that I [technical difficulty] what we have.

Sorry, you were cutting all the time. Can you hear me?

Yes, we can hear you.

I think there's still a few questions.

How are you, Patrick?

Congratulations for Q4.

Thank you very much. [technical difficulty]

I think it's still worth mentioning. Could you comment a bit more on the margins of HPM at 16.5 and the dynamics between additives and rest of the division, just to quantify a bit the additives margin basically that's question number one.

And I think question number two is just, again PMMA/MMA nothing to do with normalization, but just asking about how much backward integration do you have in PMMA. I always thought that you had backward integration in Europe, some contracts in the US but you were not backward integrated in Asia, is that the correct assumption and in order to for us to calculate the potential impact of normalization?

Thank you.

Okay, so on the HPM so firstly, the mid-below last year because of the raw materials, we're not - we explained the story but mostly consolidated, but with margins which has decreased a little bit compared to last year because the time just to pass raw material which has been on the certain part of quite heavy, but I think if we look at the good side of the battle and I think they've been able to contemplate a big part of it. So which means that the rest of HPM which is advanced materials as continued despite the raw material increases margin which is quite good.

Again because we don't have so many question about that. I would like to raise in this on the fact that we had quite very good performance on speciality business including the HPM and thiochemicals.

Frankly speaking it was very, very good and very strong contributor on Q4 and the full year and we continue to develop next year. On MMA/PMMA as we've mentioned many times we're more or less balanced between MMA/PMMA.

Asia is an exception because don't [technical difficulty] MMA in Asia but it has not the impact is quite minimal because we have a small position in Asia whereas mostly European and American player.

Is it fair to say that ex-additives I think you gave us the margin last year, an idea of the margin. It's above 20% this year ex-additives.

Sorry, we're around 20% still on the magnitude.

It's Chetan Udeshi from JPMorgan. Just wanted to come back to that question on HFO-1234yf.

I mean the question is, what is holding you back from sign the licensing agreement. Is it just that your competitors are not willing to license the patents or are the terms more onerous than you would want because clearly there is some sort of opportunity cost at the moment for you to be not able to participate in the growth, in that market.

So just wanted to understand what are the key issues that is holding any sort of agreement.

So I will not comment any detail again because this is end of the commission. Clearly what we are asking are just fair condition of licensing.

Clearly if there is a complaint which has been filed at the level of conditions, this means that we don't this condition at the level of commission. Which means that we don't this condition where we can get what we call a FRAND license which is a license in fair condition, but I cannot comment more.

Okay, thank you.

Just one question from me. You successfully refinanced your senior bond in 2017 and achieved a much lower coupon.

In addition to that, you've load your leverage quite substantially over the last couple of years. given that context, I'm just wondering how you're currently thinking about having the hybrid within your capital structure.

Thank you.

Okay, as you know the hybrid is part of our Bostik financing and the position for time being is to refinancing, but you know the hybrid obviously it will be linked to capacity to make additional acquisitions. But today our position is to refinancing to maintain the hybrid.

Thank you.

Maybe you can take just few left question.

But this time it's good afternoon. Just one question on the battery, new energy exposure.

When we include the new PVDF site. In terms of percentage of HPM or percentage of your overall exposure.

How much of the Group on gain [ph] of HPM do you think new energies would represent? Are we talking about 3% of the group or 6% of the group?

Obviously this is a big area for growth. Thank you.

For the time being, it's not the first longer than the second one. But as you mentioned is something which is growing quite fast.

So fully, we'll be able to come back to your target. But it's more the first part.

but it's a good growing business and we're very confident on our ability to grow it - that is more [indiscernible]. Okay.

And the margin is now similar to the rest of PVDF or does it have to lower in margins to incentivize customers?

[Indiscernible] margin which is in the average you have, you have grade, new grade which are coming all the time. You have also positioning on different function is not only binding, it's also the membrane and you have new type of batteries coming on-stream.

So you have a mix up which is important so we're however would say seeing the average.

Excellent. Thank you.

If there is no other question, maybe we can conclude now. So thank you all for your attention and for your good question.

Any way we'll be able to follow-up after the call with different meetings and again we're very pleased and hope you're [indiscernible] about the 2017 results and we start the year in good confidence to achieve another strong year in 2018. Thank you very much.