We see the following risks to our investment view and target price: 1) persistent weak demand may lead to lower than expected sales and negatively impact asset utilization, reducing profitability. 2) continued negative net-pricing, following over earnings in PVDF in 2022, should competitor capacity loosen the supply demand balances. 3) further weakening of acrylic acid margins – if demand remains soft or new capacity is brought online, margins could compress via reduced pricing power. 4) Macro outlook: Arkema has transitioned mainly through M&A, however, a slower pace of disposals or lack of bolt-ons could hurt investor sentiment. 5) Fluorogases: longer term, the market is moving to a more environmentally friendly product, to HFO from HFC; should this market development occur sooner than we expect, it could negatively impact margins and require further investment to convert to the new product. 6) the global nature of Arkema’s operations exposes it to FX risk. 7) Tariffs and/or trade wars could depress demand and may increase costs which would lower earnigns.
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