Arkema S.A.

Hello. Thank you very much.

Good morning, everybody. So welcome to Arkema's Q1 2025 Results Conference Call.

Joining me today are Marie-José Donsion, our CFO; and the Investor Relations team. As always, to support this conference call, we have posted a set of slides, which are available on our website.

I will comment now the highlights of the quarter before letting Marie-José goes through the financials. And at the end of the presentation, we'll be available to answer your questions as usual.

After a challenging macro in 2024 during which Arkema delivered a good performance, the market environment in Q1 2025 remains difficult with volatility and also lack of visibility, reinforced as you well know, by the ongoing uncertainty around trade tariffs that has driven certain customers, particularly in the U.S. to adopt a wait-and-see attitude.

As a result, the demand was globally slow across most of our markets in Europe and the U.S. in the first quarter, while Asia remained solid with significant growth.

Note that there were some exceptions in the market with well-oriented markets like electronics, which again supported PIAM's significant development. In this context, Arkema results held up well with EBITDA slightly down at EUR 329 million for the quarter.

Our Specialty Materials, which represent 93% of our total sales and which are the core of Arkema strategy showed a good resilience with EBITDA close to last year level with a 3% decline, supported by the strong growth of high-performance polymers following on from the positive momentum of last year. On the opposite side, Intermediates, which is 7% of our sales, decreased significantly due to refrigerant gases that are expected to stay weak in the second quarter before they start to improve.

Looking briefly at the performance of our 3 Specialty Materials segments. In the Adhesives segment, our ongoing work on efficiency, our strict control of operation as well as our continuous dynamic price management enabled us to mitigate the weak demand environment in Industrial Adhesives in Europe and North America, while the Construction business was rather stable.

Besides, Bostik benefited from the integration of Dow's laminating Adhesives, which is starting well, I'm pleased to say. In Advanced Materials, our EBITDA was strongly up by 7%, thanks to the good momentum in high-performance polymers, especially in Asia.

The dynamic of new business developments, notably in batteries, electronic and sports drove the significant volume growth and was supported by the plant expansions. Moreover, I wanted to highlight PIAM whose EBITDA increased by more than 70% in Q1, supported notably by the rising demand for ultra-thin PI films for smartphone, one of their latest innovations.

Lastly, in Coating Solutions, market conditions remained at a low level in upstream acrylic impacting the performance of the segments. I believe these Q1 results position us well among the industry and confirm the resilience of our portfolio of high value-added technologies in specialty materials that we have built over the past years.

In parallel, the group continued to implement with a high level of execution, its major project, which will support the growth of the company in the future. As mentioned already, we have made good progress in integrating the teams of Dow and already put in place a whole set of initiatives to restore their market position and improve the performance of this activity with procurement and cost optimization.

This is really an exciting project where Arkema can make a difference since our adhesive businesses are very complementary. We can now propose a full set of technology for flexible packaging to our customers, and this should position us as a key player in the market.

We are happy to confirm our expectation of significant development and synergies over the next 5 years. At the organic project front, we are progressing well with the ramp-up of the 1233zd unit in the U.S.

This new generation of fluorospecialties with low emissive impact used for energy efficiency of buildings is already contributing nicely to our results. In addition, our DMDS capacity in the U.S.

should ramp up from midyear as well as the expansion of our organic peroxide in China. Besides, I'm very happy to confirm our greenfield polyamide 11 plant in Singapore, which is now running pretty well from a technical standpoint and should start to exceed breakeven around the summer.

Finally, as already announced in Feb, we will shortly start to work on our new capacity in the U.S. for PVDF, scheduled to be completed in mid-2026.

This represents a high-return project with a limited investment of USD 20 million, which will enable us to follow market development and answer the increasing demand for locally manufactured PVDF, notably in semiconductor, cable markets and energy storage systems. I also wanted to come back quickly on the long-term agreement we recently signed with ENGIE for the supply of biomethane for Bostik in France.

This means that approximately 85% of the gas consumption needed to run our Bostik operation in France will come from a renewable source. This follows the agreement we already signed last year, also with ENGIE for advanced materials and those will contribute to reduce our CO2 Scope 1 emission in line with our climate plan objective.

I will now hand it over to Marie-José for a more in-depth look at the financials before we discuss the outlook at the end of the presentation, and we exchange around your questions.

Thank you, Thierry, and good morning, everyone. So let's start with Arkema's revenues.

At EUR 2.4 billion, the Q1 sales were up 1.7% year-on-year, supported by a 1.9% positive scope effect corresponding mainly to the EUR 51 million sales contribution of Dow's laminating adhesives. Volumes came out broadly stable year-on-year, supported by Asia and driven by the continued progression of high-performance polymers in Advanced Materials.

This performance was achieved in the context of an overall weak demand environment in many markets in Europe and North America. The price effect was limited to minus 0.5%, reflecting the globally stable raw materials environment.

Q1 EBITDA came in at EUR 329 million, 6% below last year. Main items are the Intermediates EBITDA, which was down nearly 40% year-on-year at EUR 24 million, essentially impacted by the significant decrease in refrigerant gases due to the implementation of new quotas in Europe as well as lower prices in the U.S.

Acrylics in China allowed to offset partially this effect, thanks to good momentum on volumes at the start of the year. On the other hand, Specialty Materials was very resilient with an EBITDA at EUR 331 million, 3% below Q1 last year.

When looking at the different segments, Adhesive Solutions achieved an EBITDA of close to EUR 100 million. It was impacted by the lower volumes mainly in Industrial Additives, while Construction remained at a low level, but was supported by our dynamic pricing management and strict control of operations.

The EBITDA margin reached 13.8%, which takes into account nearly 50 basis points of dilutive effect related to the consolidation of Dow's Laminating Adhesives. Advanced Materials EBITDA increased significantly at EUR 174 million, thanks to a solid growth in high performance polymers, benefiting from the growing contribution of PI Advanced Materials, the positive momentum in fluorospecialties and the progressive contribution of new projects.

Performance Additives held up well in a weak environment. And all in all, Advanced Materials EBITDA margin improved 100 basis points to 19.5%.

EBITDA in Coating Solutions came in at EUR 58 million, reflecting low cycle conditions in the upstream as well as lower volumes in the downstream activities. Depreciation and amortization stood at EUR 169 million and included the amortization of the new production units, which started up during 2024, leading to a recurring EBIT of EUR 160 million and an REBIT margin of 6.7%.

Nonrecurring items amounted to EUR 58 million. They included EUR 36 million of PPA amortization and EUR 22 million of one-off charges, notably the reorganization costs at our Jarrie site in France and some restructuring and integration costs at Bostik.

Financial expenses stood at minus EUR 24 million, reflecting the lower interest on invested cash. Tax expenses at 22.5% of REBIT are consistent with the last year's level.

And consequently, the Q1 adjusted net income stood at EUR 99 million, which corresponds to EUR 1.31 per share. Moving on to cash flow.

Q1 recurring cash flow amounted to minus EUR 138 million, which included the first quarter working capital seasonality. The working capital ratio on annualized sales stands at 17.4%, slightly up year-on-year, including a negative change in fixed assets payables.

This is clearly mechanically linked to the reduction in CapEx in the first quarter this year compared to the end of last year, which was at a peak level in a CapEx commitment. Local capital expenditure amounted to EUR 89 million in the quarter, in line with our guidance of annual CapEx spend around EUR 650 million for the full year 2025.

Net debt on hybrid bonds at the end of March '25, therefore, amounted to just over EUR 3.4 billion. The net debt to last 12 months EBITDA ratio stands at around 2.3x.

This concludes my comments. Thank you for your attention.

I will now hand it over to Thierry for the outlook.

Thank you, Marie-José, for your comments. So going into Q2, as you will know, the weakness and the uncertainty in the macroeconomic environment that we observed in Q1 was reinforced at the beginning of the second quarter by the announcement of significant tariffs by the U.S.

administration and by the wait-and-see attitude we could observe from customers. With regard to this topic of tariff, we have developed over the years a particularly strong industrial footprint, as you know, in the 3 major regions of the world in order to serve customers from their own geography.

This proves to be a key element to protect the group from direct impact of higher tariffs, which we assume should be therefore limited. Nevertheless, we are remaining obviously very attentive about the indirect impact of these tariffs and the response from other countries on the global demand and on the macroeconomics.

This is obviously not easy to quantify at this stage. On the other hand, we will certainly continue to focus on our sales, controlling strictly our cost and operation as well as pursuing our main growth project execution and ramp-ups.

In this context, assuming no major slowdown in global growth occurring from the current tariff implementation, the group will aim to achieve in 2025 an EBITDA at least equal to last year at constant exchange rates and a recurring cash flow of close to EUR 600 million, which would mean a significant step-up compared to last year. Thank you very much for your attention.

And together with Marie-José, we are now ready to answer your questions.

Two questions, if I may. The first one is on PIAM.

I mean, clearly, you bought this as a business that would grow. But I don't think I fully understood the point you're making today.

Are we now in a phase where PIAM is delivering its next phase of growth? You talked about 70% year-on-year growth in 1Q, but clearly, there's a strong step-up expected in the PIAM consensus through the rest of this year.

So are we now at a point where we're going to start to see consistent growth from PIAM going forward? Second question, if I may, again, just around your 2Q guidance.

So 1Q was down approximately 7% year-over-year. But is it fair to assume that the exit rate from 1Q is worse, i.e., is down more than 7% and therefore, the starting rate for 2Q is going to be below that, on top of which we then have to think about the FX impacts.

I'm just trying to grapple with whether you're seeing a further deterioration in the data in April versus what we saw in March with regards to this wait-and-see from U.S. customers?

Thank you for your question. So yes, with regard to PIAM, our feeling is that -- that it was already the case, if you remember last year, particularly in the second part of last year, we are growing, which is nice to see in the current world because the pocket of growths are quite limited in the current macroeconomics.

And we believe that PIAM will continue to grow especially in electronics, but hopefully, with also some other developments in other industrial market will continue to grow in the coming quarters. So as you know, the equity story for PIAM was not just sort of short-term growth, but also long-term project where we could -- we believe we could change significantly the rate of profitability of PIAM over 5 years.

And it's nice to see that last year, we started to see that. Start of the year, we confirm that.

And hopefully, it will continue. Also, I will not promise that the kind of growth that you show in the first quarter will be the same for the following quarter, but we should continue to grow in the coming quarters and years.

With regard to the Q2 guidance, I would say it's not purely a guidance. It was more to give you some color on Q2 in a world which is rather -- sometimes to say the least.

What can I say? So we say that we talk about relative continuity, so which means that broadly similar trends to the ones in Q1.

This means still contrasted trend by region. This means low demand in LA and Europe and Asia still continuing to do well.

Most of end markets showing good demand, but with exception like electronics that we mentioned with PIAM, but also batteries, sport, 3D, certainly significantly better resilience of Specialty Materials versus Intermediates. So these element that we saw in Q1, we believe we will see them in Q2.

The 2 difference, we'll put a bit more pressure on Q2 than on Q1 that we spotted. One is mechanical, the FX evolution, whatever we do, we got in April, it was not favorable.

We'll see what it is in May and June, but it's quite volatile. So the truth of 1 month can change the month after.

But let's say that if it continues like it was in April, it's a negative factor compared to Q1. And then -- and again, it's uncertain.

We have no crystal ball and we need to see what is the landing point. We had, early April, the confirmation of the U.S.

tariff, as you know, and also the magnitude, which in April reinforced the wait-and-see attitude of customers. So this is also the second difference between Q1 and Q2.

But for the rest, this is what we say. We see a good continuity.

First question, did you see any prebuying from your customers in Q1 in advance of the tariffs? The reason I'm asking is that the volumes in Intermediates were up by 16% in Q1, and that was driven primarily by acrylics China, which must have been skyrocketing in demand.

And the second question, a bit coming back to Thomas' question before regarding your guidance for 2025. EBITDA was down by 6% in Q1.

You say the trend continues into Q2, which means EBITDA will be down in Q2 as well year-over-year. But your full year guidance is flattish EBITDA.

That means you need to catch up in the second half to reach your guidance. But the second half is usually seasonally weaker than the first half.

So what makes you confident that this seasonality in the second half this year will be more favorable than in the past?

Okay. So on the prebuying because in a market which is chemical, which is serving so many customers, so many countries, so many end markets is always difficult to have a complete feeling of -- maybe there has been a little bit of pre-buy in Asia is possible.

But on the -- if you look at Asia, this is a good trend. We already had it in last year's second semester.

So it was not the question of tariff at that time and the trend was good. So we see -- and I think we share it with you, we see a good momentum in Asia since now, a certain number of quarters, maybe because of our positioning in this region.

So we see, but on the other side, you talk about pre-buy, but we saw also destock, and we'll come back to that on the second point in Europe and U.S. So it's always a mystery how customers will continue to be stuck.

But it's true that we believe that the stock in the chain are rather low. So now when you look at the full year guidance, yes, clearly, it shows some rebound in H2 of the macro after in H1, which is really atypical from what we have seen this kind of demand, cautiousness, wait-and-see is quite atypical.

So then all of you have different assumptions, and we have our own assumptions that we wanted to share with you, and we share also internally to get all our teams focus on what we want to deliver. This is obviously what we shared with you.

What we think is that -- so when you say seasonality is, in fact, we compare year-on-year. So this means we compare H1 with H1 and H2 with H2.

And we think that we have low stock in the chain clearly, as I mentioned. If the demand in the Q1 and Q2 is weak, we don't see a collapse.

And in fact, if you look at our volumes, they are negative, but not so negative. So this means we have not collapsed in the end market, which means that we believe and then we can have a debate on that, the clarification and stabilization of geopolitical topics should support an improvement with some level of rebound.

And then last but not least, on top of that, we have the contribution of the project with our policy ramp-up. So even if we assume the lower end of the rush to be consistent with our full year EBITDA guidance, you still deliver EUR 80 million EBITDA on the year and the majority of it will be in the second part of the year.

So these are some elements that we can share with you.

I have just one on high-performance polymers. Last week, one competitor of yours reported mid-single-digit price decline.

I wanted to understand what's driving your positive pricing in high-performance polymers, if you can be specific in terms of which polymers and application, that would be useful.

So we don't specifically disclose HPP, we disclose Advanced Materials. So you have a combination.

What is clear is that high-performance polymer were mostly driven by good volume by new business development introduction. Pricing, I would say, was rather neutral.

And it's true that we work a lot on the mix with some introduction of new business in fluorospecialties. As you know, I mentioned, I think in my speech, 1233zd, which is doing well.

Clearly, it takes the mix up. So good mix development in specialty polyamide supported by our Singapore plant, but not only it is going in the right direction.

Also, we really focus on new business with high value. PIAM has a good pricing by nature.

You know that PIAM, you saw the business case on PIAM. They have a strong profitability, also it certainly helps.

So it's a combination, I would say, that it's more -- it's not really the pricing. It's really the impact of the mix and which was favorable and top of that, a good volume development.

But we were, I would say, more, let's say, neutral plus in terms of pricing, okay? But the team are really doing a good job.

A couple of quick questions. Did I hear you say that you're still expecting EUR 80 million or so of contribution from the big projects starting up this year and that you expect that to be more heavily weighted to the second half.

I just wanted to clarify that point. In Adhesive Technologies, you had quite a material slowdown in Q1, as you've highlighted.

Could you tell us when in the quarter that started? Was it really towards the end of March?

Was it sort of February, March? Just some idea of when that started to change would be very helpful.

And then finally, in fluorogases, you talked about weaker pricing, which weighed on margins. Was that as you expected, or was it worse than you expected?

And if it was worse than you expected, what are the main reasons why it was worse given that you had pretty good visibility into quotas and this isn't a business that moves around a huge amount quarter-to-quarter on volumes. So any insight on those 3 points would be great.

Okay. Yes, you understood right on the EUR 80 million contribution at least from project, but my message was we would be more on the low end of the range.

We gave you, I think, a range of EUR 80 million to EUR 130 million. So we say it should be closer to EUR 80 million, but not surprised consistent with the overall environment.

And I would say we started to share with you, we started the first quarter. So all the projects are ramping up.

And some projects have not even started. Some like, now, it's just at the start, et cetera.

So you can expect that the quarter-by-quarter development will be higher and higher. And we started at 15% -- around 15% in Q1.

So if you put some improvement in Q2, let's say, 20% to say something, then this means that the second semester will be significantly higher than the first one. With regard to adhesives, thank you for asking the question because quite experienced in the adhesive field.

And it's very rare that we see the adhesive, which is normally certainly our most resilient business, which was not the case in the Q1, which should not be the case in the Q2 either, more volatile than the advanced materials. So this was atypical.

And it's really about -- we have seen at certain customers without losing any share at all because we check customer by customer every month in detail without losing any share. We have some customers in the U.S., in Europe, but surprisingly enough in the U.S.

for which the level of demand was 20%, 30%, 40% lower than it was last year. So this means that they are destocking quite significantly and in an atypical way.

And for this reason, we believe that H2 for Adhesives will be significantly better. And in connection to the question of -- which was asked at the beginning.

With regard to fluorogases, yes, we must say we are a bit surprised that at the end on the Q1, we delivered our guidance, which means that -- for the total company, which means that more or less, we had not too many surprises. But fluorogases pricing was a bit lower than expected.

It comes from this general environment where the demand is low and then you have -- as for Intermediate -- traditional intermediate businesses, you have a correlation between the volume and the pricing. And this is the reason why we think and we have some evidence of that midyear start to improve both volume and pricing because the stock at our customers are quite low.

Seasonality gives more volume in fluorogases. Q2 and Q3 are a bit bigger and Q3 is always bigger.

It should help prices. And also maybe this is an example where tariff should help.

So for this reason, we think that H2 should be quite better with regard to fluorogases. One last point on the adhesives also you asked between Feb and March difference.

I mean it's always very difficult. It's my experience to comment 1 month because 1 month is always, see the supply chain are long.

This is not because 1 month is lower or higher than another that it means anything. So it's better to look at the whole quarter.

The first question was simple. Can you remind us what is your current sensitivity on FX, bearing in mind that euro has strengthened not just against U.S.

dollar, but also a few other currencies like perhaps Chinese yuan or some of the LatAm currencies. So any -- I had a number of EUR 50 million in mind, but maybe just wanted to check if that has changed given the portfolio shifts and some acquisitions.

The second question, just following on the -- following back to the discussion on fluorogases. Are you saying you expect the year-on-year to improve in the second half of the year just because the comps become easier?

Or you actually think the absolute contribution from fluorogases actually gets better? And just related to that, I saw one of your competitors, Honeywell announced -- I think it was surcharge of 45%, et cetera, on certain refrigerant gases, HFO type.

Can you remind us -- if I'm not mistaken, you produce all of your fluorogases in the U.S. that you sell in the U.S.

So for you, it should be a positive. But I'm not sure if this will be in Intermediates or will that be in your Advanced Materials because I suppose some of your newer generation refrigerants are actually included in Advanced Materials.

Okay. So on the sensitivity -- so first of all, on the FX, we have all to deal with it because it changed really -- it's quite volatile and it change every month, if not weeks.

But I would say that what we have communicated so far, which is still true, is that for the U.S. dollar and euro parity, is EUR 50 million, as you mentioned, impact in EBITDA, for plus or minus 10% change, okay?

On the other FX, we have not communicated. But the main event if there can be Korean won, there can be RMB, there can be Japanese, et cetera.

In this world, it can come from many countries. I would say the main driver is the U.S., and this is the one we communicate to you regularly.

With regard to fluorogases, I mentioned. When I say situation is improving, we are never sequential.

We are always year-on-year, whatever our comments, it can be for [indiscernible], whatever -- when -- I know that sometimes listening to all chemical companies, there can be some confusion. But with regard to Arkema, when we say it improves, it's nearly always year-on-year.

So any fluorogases, there are typical seasonality. Every quarter has it own seasonality.

This is why sequential means not a lot. With regard to refrigerant gases, I think like everybody, but it's not linked to refrigerant gases, we will when we will -- we will adapt on the tariff.

So we'll do what is necessary. I would say that the split between Intermediates and HPP is quite simple.

Intermediates is really refrigerant -- for refrigeration. While in HPP and in fact, there is a coincidence in the 2, the HFO by coincidence in Arkema development, but since many, many years has always been outside of refrigerant.

So this means that the refrigerant or at least for most of it, so this means that in HPP, you will find the HFO, the new generation and the applications are more supported like for -- by megatrends. For example, one good example is 1233zd that we use in building efficiency, which is there.

Two questions that may appear a bit technical, but the first one is around working capital. I think you've had one of the largest outflows in Q1 that's something I can remember.

And it looks like it's mostly driven by inventories. I was wondering if that's related to, I guess, inventories of finished products or whether that's reflecting a higher level of purchase of raw materials as maybe you are preparing -- I understand you didn't see pre-buying from your customers.

But I was wondering if you did some prebuying yourselves on raw materials. That's the first question.

And the second one is on PIAM. I understand there's a lot of growth.

But when we look at the net income from minorities, it's about EUR 1 million in Q1 '25, similar to Q1 '23 or before when you didn't have PIAM. So I'm wondering why are we not seeing the, I guess, the minorities flow back to the 46% of PIAM that you don't own?

Maybe I will let Marie-José answer the two questions.

So regarding working capital, Laurent, basically, we have 2 main effects, I would say. We have clearly a significant outflow on payables of CapEx since the level of CapEx committed last year was at, let's say, at a peak.

So compared obviously to the decline of CapEx in the first quarter, there is a significant payout in the quarter. I would say it accounts for half the variance if we compare to the outflow of working capital with Q1 2024.

The second is, let's say, customers and inventories. You are correct in inventories, the stocks are slightly increasing.

I would say, overall, no particular phenomenon. We are, in fact, ramping up our stocks classically in this period of the year coming out of a low Q4 levels.

When I look at the seasonality of the sales in terms of proportion, stock levels are not inconsistent, let's say, compared to last year. We also have increased in receivables with no sinistrality particular or no overdues particularly increasing, but more linked, let's say, to the increase in -- a slight increase in sales.

So at this point, I have no particular, let's say, one-off item to give you that would indicate, let's say, a change in strategy where we continue in the organization discipline in terms of controlling our stocks and our creditors. Regarding PIAM, in fact, when you look at the publication of PIAM and our own contribution, there is definitely in the conversion in euro, a significant adverse variance, I would say, on the Korean won over the period.

So probably going back to the question on the fluctuation of currencies where a number of currencies are actually following a similar trend compared to dollar. So no particular, let's say, issue.

The only effect is, in fact, the depreciation of the newly invested assets that we had in PI that we inherited and that, let's say, increased over the year last year. So no particular effect.

We should see some reduction in the financial expenses. So in terms of net income, I think we should see, let's say, translation of their improved EBITDA into net income as we progress in the year.

I still have 3 questions. First, I understand the integration of Dow Adhesives has started well.

Does that mean that the 13.8% of EBITDA margin in Adhesives in Q1 should be the low point and you should recover as from Q2? Second, do you see much more imports from China to Europe because of the trade war between U.S.

and China? Is that a risk you are considering?

And last question, how much of your revenue in the U.S. is produced locally?

And what are the main business units exporting from Europe or Asia to the U.S.?

Thank you, Emmanuel. So with regard to Dow, so yes, we confirm that the integration -- we are just at the first steps of the integration.

So far, from integration point, it is going quite well, and we are already implementing our plan. The effect on the margin of Dow Adhesives, I think Marie-José was what [indiscernible] on the legacy Bostik is 14.3%.

So have that in mind. Now when you mentioned Q2, as we explained in Q2, we have a similar kind of environment plus the FX, and plus the announcement of the magnitude of the tariff early April.

So you should more expect the improvement of the margin in adhesives on the second semester, as we mentioned for other business lines. Do we see much more import from China?

China -- to the Europe. Europe Is a big importer.

So now when we say that, it's a general comment for the chemical industry. And there are very notable nuances depending on which business line you are talking about, and that for Adhesives we don't see imports from China.

You will see that more in actually -- this is why the margin are more challenging these days. I would not say that we see a disruption or that we expect a risk of disruption in this matter in the coming quarter.

I think the landscape is very well known. And let's say that the European Commission is aware not only for the chemical industry, but also for other industries that it is a topic and that they need to address one way or the other in the current world.

Now for a company for Arkema, we are a global player, as you know, we take Europe as it is, we take China and Asia as they are and we take the U.S. as they are.

There are some strengths, some elements of weaknesses and it's important to have really a global positioning that we have. Now with regard to the U.S., as I say, what is not produced locally is rather incremental.

So it's not -- I will not give the numbers, but it's not -- not for Arkema. We are supplying the region.

We are very close to the customer. We supply the region from the region, if not the country to the country for the largest country of Arkema.

From what we see today, the direct impact, and I think I mentioned it precisely to Arkema, tariff will be limited. The question for us, and this is the one we mentioned when we guided for the year and for Q2 is more -- is indirect -- what we call the indirect impact, which is the one which is the same for everybody on the global macro and on the global demand.

But with regard to local production for local sales, we are -- our footprint is [indiscernible].

I just had one left. Looking at the Intermediates business for Q2, you obviously delivered somewhere in the region of EUR 84 million last year.

Will that number be closer to where you were in Q1? Or will it be closer to where you were in Q2 last year because it's quite a big difference.

With regard to Intermediates, so I will not guide for every business or every quarter. What we say is that we had in Q1 quite a significant slowdown in our profitability year-on-year and that the profile in the Q2 should be continuity.

So you will have a big -- again, a big slowdown in Q2 versus Q2 last year, as we mentioned. I think it was clear in the press release.

I've got 2 left. On PVDF, two-part question.

First, have you changed the growth strategy slightly? So now also targeting pushing harder into applications like cables and semiconductors in addition to EV?

And then secondly, could you talk about the sales split for PVDF because I'm not really quite aware what that is? And then secondly, on Coating Solutions, and I know you touched on this a little bit a few minutes ago on the acrylic side, but the EBITDA margin now has been under 10% for a few quarters.

We've just not seen that level back since 2015 or so when the acrylic chain was structurally oversupplied. And then we saw capacity taken out.

What are you expecting to happen to the acrylic industry in North America and Europe?

So with regard to PVDF, no, we have not changed our growth strategy. What we have said, I think, in the past is that our so-called legacy business, this means that before battery has been growing in the past by 7% in average.

And this growth, so this includes semiconductor, cables, industrial [indiscernible] et cetera, the traditional PVDF end market. This will continue to grow not every year, it depends on the year.

But in average, I would say, globally at this kind of pace, let's say, 7% a year. On top of that, we got the battery market, which have developed quite nicely in Asia and particularly in China.

And if you remember well, we have put in the past, let's say, 10 years, a significant capacity in China in order to follow not only this market, but in particular, this market. So what we are doing with this incremental investment, this is a small investment in the U.S.

We are investing, let's say, for -- it should start in '26 for the years '27, '28, okay, in order to be able to follow the growth of the PVDF market in the U.S. including the traditional business, which will continue to grow as they were in the past, but it gives also some space to take the first development in battery, knowing that nobody knows exactly at which pace the gigafactory will be implemented and developed in the U.S.

So this means that with this kind of investment, which is strong profitability but modest in size, we are able to be flexible. This means that we can do a bit more of batteries or we can do if battery is not there to push a bit more in cable, semiconductor or other business because they will continue to grow.

So I think this is -- but we have not changed the strategy fundamentally. The only question that we have had during the Capital Market Day was which size and at which speed we want to increase our capacity in the U.S.

for PVDF. And we had different kind of scenario, something very big, something average, something smaller.

And we decided, given the evolution of the electric mobility in the U.S., we decided to go for the smaller ones. Sales of PVDF, you did not mention if it was by region or end market.

But anyway, the answer will be the same. We don't give it.

So I think the level of split we don't want to give to our competitors, so we don't give it. Actually, you are right to say that we are below 10%, but close to 10%.

So let's say we are around 10%, which is really a mid-cycle -- sorry, a low cycle environment, which at the same time, reflect on intermediate products, the kind of environment we are living in for the time being. But I think the stocks are very low.

And again, it doesn't mean that we still have that the whole year. We think that the second semester should be better for Acrylics upstream.

I have one left. What do you expect the raw material progression to be in the revised guidance?

And in particular, how will the oil price affect margins in the kind of Upstream Acrylics business and Coating Solutions and other acrylic businesses?

Raw material, we don't have crystal ball. For the time being, they have been rather stable since the beginning of the year.

The oil price has decreased. We'll see is that long lasting or not, we don't know.

Clearly, if the demand is not rebounding, we'll get certainly upside on the raw material, but we'll get downside on the demand, okay? So my feeling is that we should have some decrease of raw material, but not so huge around the second semester.

This is what we planned. And anyway, you have a sort of 3 to 6 month lag between the raw material decrease and when it comes to your P&L.

But let's say that what we have assumed in our guidance, maybe here and there a little bit of improvement in raw material, but nothing significant, except maybe given the oil price on some raw material like propylene that will feed acrylic, which is back to your question. But then as you know, in acrylics, this is not a matter of -- let's say, that if you take our most downstream business, if you have lower raw material, it would have some benefit in your P&L.

If you take acrylics, it's more driven by the supply/demand. So the propylene price is reflected in the pricing, in the acrylic.

This is the nature of Intermediates. So it's not a big factor for acrylic, and we have not put -- what we say is basically the second semester is better for acrylic.

It will come from better demand and some restocking because, as I mentioned, the pipeline of stock is rather weak, but not a matter of raw material.

Just a quick one. Just can we touch on the additives part of the Materials division?

You're mentioning that was an area of softness in the portfolio. I think sales down 6%.

Can you just expand on sort of where the weakness is and any view on whether or not that's going to improve as the year progresses?

So the additives were, I would say, in Advanced Materials, we had 2 profile, HPP, which went very well and Adhesives, which were a bit lower than that last year. I would say, a combination of the general weakness I would say, for example, if you take petrochemical, which is more present on some traditional market like refineries -- refinery on the first quarter, where we are for example.

So you had some weakness in biochemical, H2O2, as you know, we are impacted by Jarrie operation in France, which has been quite struggling in the context of the difficulty of our supplier [indiscernible] surfactant overall are in low volume. So you don't have -- I would say it's not -- it's a bit below last year, which is not so bad in the current context, but I would say general weakness with some specific elements like I mentioned in -- linked to refinery, linked to [indiscernible], linked to this specific [indiscernible].

So some of this, not necessarily in the Q2, but in H2, it should improve.

A question on the oil and gas side of the business for PVDF and polyamide 11. We've seen one of the -- one of your historical customers, I guess, move to a solution with a competing technology with the contract announced this morning in Brazil.

I was wondering if you could remind us of how big oil and gas is for your PVDF and polyamide 11 business and whether that is, I think, a new serious competition that you are seeing or whether you think it's more of a one-off?

So with regard to -- and then I take something broader than Q1, let's say, last year also, et cetera. No, I would say that it's a business -- I will not give you the numbers on the side for obvious competitive reasons.

I don't want to share that. But it's one business among others in polyamide 11 and PVDF, which is a nice business, but not by far, not the majority at all of what we have in PVDF in polyamide 11, but it's a good among the 10 others.

And so far, it has been a solid business. And there are depending on the application, some new technologies, but also you have the reverse way.

We have benefited from change of technology, which were favorable to us. So I would say all in all, it's a business which is never steady.

You have some better years than others. But I would say with regard to Arkema and our development, it goes in the right direction.

Okay. So, if there are no more questions, I'd like to thank all for your questions, which are always very interesting.

And don't hesitate if in the day or the day after you have some complementary question, Beatrice Zilm and the whole team will be certainly willing to exchange with you. And thank you again for your time, and talk to you soon.