ARKAF - Arkema: US-Based Plants Provide Tariff Shield

2025-04-18 08:30:00 ET

Summary

• Arkema's 2024 performance was solid with a net profit of 354M EUR and a robust free cash flow of 680M EUR, despite slight revenue growth.
• The company's balance sheet is strong with a net debt of 2.16B EUR, representing just 1.5 times the lease-adjusted EBITDA.
• Despite potential market volatility in 2025, Arkema's diversified production facilities in North America mitigate risks from Trump's tariffs.
• At a market cap of 4.7B EUR and EV/EBITDA of 4.8, Arkema is attractively priced, even with a potential 15% EBITDA reduction.

Introduction

In the past few months, I started to warm up to the European chemical sector as valuations were getting too good to ignore. Arkema ( ARKAF ) ( ARKAY ), the French chemical company focusing on its Specialty Materials division that I have been following for a while, was getting pretty cheap as well thanks to its robust cash flow profile. It goes without saying the recent turmoil in the financial markets has also impacted Arkema’s share price, and I am looking forward to seeing the management commentary on its Q1 update to see if they are already able to quantify the potential fallout. ...

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