Press Conference - Paris, March 5th 2008...Press Conference - Paris, March 5th 2008. ... Transforming the company Low starting point but strong potential A new face Foward looking,

2007 full year results and mid-term prospects

Press Conference - Paris, March 5th 2008

2 Press Conference / March 5th 2008

Transformingthe companyLow starting point but strong potential

A new faceFoward looking, competitive,with sigificant further growth potential

20102010

20072007First milestones cleared with successAhead of targets and high densityof projects launched

An ambitious industrial projectpoised for the long term

2007: already a very different company

20052005

2007Key points


EBITDA: €518m EBITDA margin: 9.1%

Net income: €122m

Free cash flow: €128m

4th quarter very significantly up in a rather more mixedenvironment

Results far exceeding the objectives

x2.7

+26%

+62%

EBITDA Q4 2007 +41% compared to Q4 2006


Four master projects

JV with Daikin in Asia for new generation of fluorogases

First acquisition: Coatex (specialty acrylic polymers)

Restructuring of European fluorochemical business

New headquarters and streamlined support functions

2005 - 2007A rapid and radical transformation


Implementing a winning long term strategy

3 strategic vectors:

Large cost reduction

Market-driven innovation

Accelerating businessdevelopment in Asia

Portfolio management to speed up transformation


- 21%

Large cost reduction

12/31/2004 12/31/2007

19,167

15,194*

France

Asia and RoW

North AmericaEurope

* incl. 600 related to change in business scope

Cumulative savings of €230m over two yearsEmployee headcount (2004 to 2007):

Decrease of G&A expensesEnergy savings in processes


2007: R&D projects are already bearing results

R&D expenses around 3% of sales

60% of budget allocated to development:

PMMA CapstocksTransparent technical polymersHigh temperature polyamidesSpecialty molecular sieves (medical & petrochemical)Sulfur derivatives (refinery and animal nutrition)New generation of fluorogases

19% of 2007 Performance Products salesgenerated by products < 5 years

Product and process improvement

New products

Long termbreakthrough

15%

12%

33%

New processes

40%

12%


20%

World-class sites

Over €50m capex per year

Building on Changshu platform(China)

Accelerating business development in Asia

% sales in Asia

2007 2012 (e)

80 kt H2O2(Shanghai)

F125 and fluorinated blends with Daikin (Changshu)

Kynar®

(Changshu)

Debottlenecktin stabilizers (Beijing)

Acrylic acid in India (MOU)Technical polymers

ThiochemicalsHydrogen peroxide

Polyamides(Changshu)

Other projects:

13%

€747

m

20092008 20102007


From divestments to acquisitions

~ €180m sales

~ €380m sales

Achieved

€500m to €800msales by end 2009

€300m to €400msales by mid-2008

Objectives

Coatex (Specialty acrylic polymers)

PMMA Repsol

Cerexagri (Agrochemicals)

Urea formaldehyde resinsSpecialty amines (Thiochemicals)

Product lines

Acquisitions

Divestments

Recentered portfolioStill very strong financial balance sheet

2007 Detailed ResultsExceeding the statedobjectives


Results significantly above guidance

* Calculated as total cash flow excluding M&A and NR pre-spin off items

79128

2006 2007

Free cash flow* (€m)

+62%45

122

2006 2007

Net incomegroup share (€m)

x 2,7115

186

+4%excl. exchange rate and scope effect

+0.2%2006 2007

Sales (€m)

411518

2006 2007

EBITDA (€m) & EBITDA margin

7.3%

9.1%

+26%

Rec. net income

Net income


EBITDAEBITDA margin

3556.2%

4117.3%

5189.1%

+ 26%

2005** 2006

Major improvement in profitability

2007 Variation2006 / 2007

Sales 5,710 5,664 5,675 + 0.2%

Operating income (recurring) 128 200 293 + 47%

Other income and expenses (514) (92) (72)

EPS (7.05) 0.75 2.02 x 2.7

Net debt (12/31/07) 567 324 459

Capital employed (12/31/07) 3,068 3,024 3,263

ROCE* 4.2% 6.6% 9.3%

Headcount (12/31/07) 18,377 17,044 15,194

In €m

* Calculated as recurring operating income divided by average capital employed ** Proforma financial statements including Cerexagri


+ 4% organic growth

€5,664m

(2.6)%

2006 sales 2007 sales

Prices Conversion effect

Scope

Volume

+1.7%

€5,675m

+4% organic growth

+2.3% (1.2)%

* Excluding negative impact on volumes from the closure of the urea-resin site in Villers-Saint-Paul (France) in 2006

Evolution by segment

Vinyl Products

Industrial Chemicals

Performance Products*

+2.9%

+5.7%

+4.2%

PricesOrganic growth

Volumes


Major contribution from internal projects

€411m

EBITDA2006

EBITDA2007

Internalprojects

OtherEnvironment

€518m+ €17m+ €83m

+ €7m + €83m coming from internal projects

+26%

Increasing raw material and energy costs offset by rises in sales prices

Savings

+ 110

- 11

- 42

+ 26

+ 83

Volume loss from

restructuring

Inflation on fixed

costs

Newbusinesses

Internal projetcs

In €m


Vinyl Products: good demand & cost savings

Fos/Lavera

HeadquartersSoveplast

Dorlyl

Novellara

2005 2006 2007 Var.*

Sales 1,387 1,379 1,418 +2.8%

EBITDA 20 38 90 x 2.4

EBITDA margin 1.4% 2.8% 6.3% -

Rec. op. income 8 21 65 x 3.1

2007 performance

EBITDA growth: 40% internal projects,60% external factors

2007 initiatives

Main projects

Good demand for PVC in EuropePrice increases compensate for higherraw material costs

Benefits from restructuring initiativesLarge maintenance turnaround in Fos (F)Strong performance of QVC**

Implementation of chlorochemicalconsolidation plan

€44m capex+ €30m cumulative EBITDA impact

Further reorganization in downstream PVC- 104 positionsfull impact in 2009

Transfer of teams based in Paris nearproduction sitesFocus on higher added value products

In €m

* 2007 vs 2006 ** Included in "equity income of affiliates"


Industrial Chemicals: strong resistance of results

2005 2006 2007 Var.*

Sales 2,406 2,494 2,529 +1.4%

EBITDA 316 267 289 +8%

EBITDA margin 13.1% 10.7% 11.4% -

Rec. op. income 204 160 178 +11%

Key partnerships in AsiaJV with DAIKIN in fluorinated gases

3 new restructuring plans- 302 positions (Carling, Pierre-Bénite, Lacq)

Downstream acquisitionsAcrylic polymersPMMAContrasted environment

Good demand in MMA, H2O2

Low acrylic margins & pressure on HFC -134a prices

Impact of € / $ exchange rate

Savings from European plansPMMA, Thiochemicals, Fluorochemicals

Benefits from growth projectsSuccessful start-ups (Calvert City, Carling,Becancour)

Robust set of results

Successful transformation of fluorochemicals

Restructuring of Pierre-Bénite

New generation of products(HFC-32) - Calvert City

2007 performance 2007 initiatives

In €m


Performance Products: double-digit EBITDA margin

2005* 2006 2007 Var.**

Sales 1,907 1,784 1,723 (3.4)%

EBITDA 109 156 184 +18%

EBITDA margin 5.7% 8.7% 10.7% -

Rec. op. income 19 71 97 +37%

Significant contribution from restructuring

19% of sales from new products < 5 years

Negative impact of € / $ parity

Price increases in functional additives to offsetincreases in tin price

Impact from divestments on revenue

Bonn (Germany) closure: - 83p.

2Q’07

Changshu (China)Rilsan ® polyamide capacity x2

Marseille St Menet (France)- 48p. / +10% monomer capacity

3Q’07 4Q’07

Mont (France) +40% Orgasol® capacity

1Q’07

Strengthening of polyamide business

Serquigny (France) ***- 49p. / €13m capex

Strong recovery

5 new restructuring plans launched infunctional additives and polyamides

- 263 positions

R&D emphasis on renewable materialsSale of non-core businesses

€300m of revenue

2007 performance 2007 initiatives

In €m

* Proforma financial statements including Cerexagri ** 2007 vs 2006 *** Subject to information/consultation of the work council


Strong and structural improvement of cash flow

122

45

In €m 2006 2007

EBITDA 411 518

Capex* (305) (281)

Tax & cost of debt (31) (93)

Δ WCR 16 47

Other (4) 10

Recurring cash flow 95 201NR items (16) (73)

Cash flow 79 128

NR pre-spin off items (359) (87)

Impact from M&A - (135)

Net cash flow (280) (94)

Low gearing€459m = 24% of shareholders equity

Very limited weight of liabilities• Retirement pension• Environment

Credit line of €1.1bn until 2012

€369m

Very strong financial structure


Proposed payment of first dividend

Proposed € 0.75 per shareat next General Shareholders Meeting on May 20th 2008

Shareholders to share in the improvementof the Company’s financial performance

2008 OutlookTarget confirmed


Conservative view of the external factors

Moderate revenue growth expected (1 to 2%) (impact of € / $ conversion)

Traget built with a strong level of internal projects

Keeping a strong focus on internal improvement

€5,675m

Confirmation of 10% objective for EBITDA margin

€518m

EBITDA Projects with an impact in 2008

Productivity + €42mChlorochemicals, Loison, Chantonnay, Dorlyl, Vlissingen, Feuchy, Pierre-Bénite, Lacq, Carling, Marseille, Serquigny

Growth + €23m Molecular Sieves (Inowroclaw), HFC-32 (Calvert City), H2O2 (Shanghai)

Portfolio + €15m Divestments: UF resins, water treatment, aminesAcquisitions: Coatex, Repsol’s PMMA business


600

500

400

300

€m

200

100

600

500

400

300

200

100

10% EBITDA margin target confirmed for 2008

* Proforma financial statements including Cerexagri

2005*2004* 2006 2008(e)2007

6.2%5.7%

7.3%

9.1%

10%

+26%+18%

+18%

EBITDA (€M) & EBITDA margin

Initial objective

of10 to 15%

Initial objective

of10 to 15%

EBITDA margin multiplied by 2 in 4 years

295

355

411

518


Dynamic start to the new year

Serquigny: last stage in polyamides planShared Services Centers: centralization of HR and Accounts functions EDF-Exeltium agreement finalized and put forward for approval inBrusselsAcquisition of Repsol’s PMMA business finalizedAnnouncement of doubling of capacity at Leuna H2O2 facility (+ 40kt)


BécancourCanada

73 kt 93 kt

JarrieFrance

105 kt 115 kt

MemphisUnited States68 kt 73 kt

ShanghaiChina

40 kt 80 kt

LeunaGermany

40 kt 80 kt

H2O2: growth and productivity working together

Average plant capacity

80

60

40

20

kt/year

Industry average (excl. Arkema) Arkema

Total H2O2 : ~ 330kt in 2004/05 ~ 440kt by 2010

2006

2010(e)

Towards 2010Growth platforms implemented


On track to reach 2010 targets

12% EBITDA margin

Gearing < 40%

Working capital at 18% of sales

Organic growth in Industrial Chemicals and Performance Products of 4 to 5% per year

WCR as % of sales

2006 2010 Objectifve

23.6%20.6%

19.6%18%

2005 2007

2007 2010

9.1%

Productivity

GrowthPortfolio

Variable costs

12%*

* EBITDA margin in mid-cycle conditions under a normalized environment


2006 2010(e)2007

120

500

230

2008(e)

330

Continuing to implement effective strategy

Confirming our €500m cost savings target

€200m net EBITDA impact

Accelerating organic growth strategyReaping the benefits of projects from 2005-2007

New projects in Asia

Committed to R&D innovation in sustainable development

Other selective acquisitions in specialty polymers

€400 to 500m of revenues in next three years

Cumulative cost savings since 2005


New in-house culture

StreamliningOrganization remodeled in depth for greater responsiveness

Sharing inSalaries more closely linked to the Company’s performance

Share capital increase reserved for employees: Arkema worldwide

New profit sharing agreement: Arkema France

Individualized and attractive compensation package for management

ModernizingEnhanced forward-looking management of employment and skills

Labor relations based on dialogueEuropean Works Council

Pro-active contractual labor policy

The men and women of Arkemaat the heart of the Group’s transformation


Carry through Reach successfullyContinue reducing our greenhouse gas emissionsContinue improving our safety records

Continue integrating our activities within their local contextCommon Ground® program: community relations and dialoguePartnership with French Red CrossOpinion survey targeting people living near our industrial sites

Our responsibility as a chemicals manufacturer

Frequency rate

2006 20072005 obj 2008

GHG emissions Mt eq CO2

2007 20101990 2010

Divided by 2.523

9.3

<5

5.3

3.6

2.4 2.0

< 2

Sustainable DevelopmentAn opportunity for innovationand growth


A chemicals business ready to take up the energy challenges of the 21st century

Innovative materialsEnergy savings and new forms of energyNanostructured materialsGrowing use of renewable raw materials

Process intensificationProduce more with less energy

Our contribution to sustainable development


Energy savings and new forms of energy

SAVE

Glass adapted to climate conditions

PRODUCE

Photovoltaics: Clean and renewable electricity

STORE

Batteries,supercapacitors,fuel cells


Today, Arkema’s materials:Protect silicon and electrical circuits

Arkema and future generation photovoltaics: Light concentration technologiesToward thin layers of amorphous siliconOrganic photovoltaics over the longer term

Arkema, a player in the photovoltaic sector

Concentrator(Altuglas®)

Connectedsilicon strips

Back-sheet(Kynar®)

Structure of standard module in crystalline silicon

Cover material(glass)

Cells(silicon)

Encapsulation(Evatane®, Luperox®)

Encapsulation(Evatane®, Luperox®)

Back-sheet (Kynar®)


Nanostructured materials

10 μm

A B+

Polymers Alloys Nanostructures

< 1970 > 20001970 - 2000

500 nm

2 μm2 µm 240 nm


Nanostructured PMMA (Altuglas®) in car manufacture

Promising innovations in nanomaterials

Weight saving=

Energy saving

300 nm 30 nm


Promising innovations in nanomaterials

New "self-healing" elastomers of vegetable origin

Bitumen enhanced with "supramolecular" polymers of vegetable origin, tougher and recyclable


Arkema’s expertise in plant chemistry

Flexible

blocks

Flexible

blocks

Castorplant

Castorplant

Castorseeds

Castorseeds

C7C7

C11C11

EstersEsters

Amino

11

Castoroil

Castoroil

C3C3

MonomersMonomersRenewable raw materials

Renewable raw materials


New polymers of vegetable origin

First range of technicalthermoplastic elastomersfrom renewable resources

First adhesive fromfully renewable source


Microreactors to manufactureorganic peroxides

Glycerol in acrolein and acrylic acid production Double dehydration of glycerol leads to acrolein, and subsequent oxidation to acrylic acid

Two examples of process intensification

OHHOOH

OH

H

2 H2O Acrolein and acrylic acid plant

Glycerol

Thermaloxidizer

Acrolein oracrylic acid

Storage

Storage

Separationplant


Building a major chemical player

An excellent 2007, with payment of very first dividend

Confidence reaffirmed for 2008

Growth relays in place thanks to projects launched over last three years

Very strong financial structure

2010 objectives confirmed

Sustainable development at the heart of innovation

Arkema tomorrow: A deeply transformed, modern and competitive chemical player.A project creating value over the long term.


Disclaimer

The information disclosed in this document may contain forward-looking statements with respect to the financial condition, results of operations, business and strategy of Arkema. Such statements are based on management’s current views and assumptions that could ultimately prove inaccurate and are subject to risk factors such as, among others, changes in raw materials prices, currency fluctuations, implementation pace of cost-reduction projects and changes in general economic and business conditions.

Arkema does not assume any liability to update such forward-looking statements whether as a result of any new information or any unexpected event or otherwise. Further information on factors which could affect Arkema’s financial results is provided in the documents filed with the French Autorité des MarchésFinanciers.

Financial information related to 2005 are extracted from pro forma financial statements presented in the 2006 prospectus for the listing of Arkema shares. Financial information for 2006 and 2007 are extracted from the consolidated financial statements of Arkema. Quarterly financial information are not audited.

The business segment information is presented in accordance with Arkema’s internal reporting system used by the management.

A global chemical player, Arkema consists of 3 coherent and related business segments: Vinyl Products, Industrial Chemicals, and Performance Products. Present in over 40 countries with 15,200 employees,Arkema achieves sales of 5.7 billion euros. With its 6 research centers in France, the United States and Japan, and internationally recognized brands, Arkema holds leadership positions in its principal markets

2007 full year results and mid-term prospects

Press Conference - Paris, March 5th 2008

Documents

Press Conference - Paris, March 5th 2008...Press Conference - Paris, March 5th 2008. ... Transforming the company Low starting point but strong potential A new face Foward looking,