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Operator: Welcome to Arkema's Full Year 2025 results and outlook conference call. For your information, this call is being recorded. [Operator Instructions] I will now hand you over to Thierry Le Henaff, Chairman and Chief Executive Officer. Sir, please go ahead.
Thierry Le Hénaff: Thank you very much. Good morning, everybody. Welcome to Arkema's Full Year 2025 Results Conference Call. With me today are Marie-Jose, our CFO; and the Investor Relations team. As always, the slides used during this webcast are available on our website. And together with Marie-Jose, we will be available to answer your questions at the end of the presentation. In 2025, the macroeconomic environment was, as you know, particularly challenging, probably one of the most difficult our industry has faced in the last 20 years. The second part of the year, in particular, was marked by subdued demand across many end markets. The slowdown in the U.S., while Europe remained at low levels. This reflected ongoing cautiousness of economic factors as well as tight year-end inventory management at many of our customers. On the other hand, Asia continued to be the most dynamic region for the group, in particular, China, where we could see an acceleration in certain sectors like electric mobility, advanced electronics and sustainable consumer goods as well. As you could expect in this context, the group focused on its fundamentals of customer proximity and innovation while strengthening its cost and cash initiatives. The teams have been fully mobilized on a daily basis to best address the environment and strictly control the operations. As a result, we generated a high level of cash at EUR 464 million, well above our revised guidance of EUR 300 million. This performance was also better than last year's level despite the significant EBITDA decrease. EBITDA stood indeed at EUR 1.25 billion with a margin of 13.8%, so close to 14%, not living up to our expectation at the beginning of our year, but not different from what most of our peers have experienced. We were able to offset fixed cost inflation and delivered around EUR 90 million of fixed and variable cost savings in 2025, nearly doubling our initial annual target set at CMD. This work will be pursued in 2026 as we strive to offset against the inflation, and we should, therefore, be able to deliver the 2028 cumulative cost savings target of EUR 250 million, 2 years in advance. As you can see in Slide 7, the group has launched a number of new initiatives to make the organization even more efficient, leading to more than 2% headcount reduction in 2025, and we anticipate a further reduction of around 3% per year over the next 3 years. Our performance continued to be supported by several of our key attractive markets, namely batteries, sports, 3D printing, healthcare and new generation fluorospecialties with low global warming potential, which benefited from strong dynamics with sales up 16% year-on-year. This market will continue to grow in the future and contribute to the ramp-up of our major projects listed on Slide 5. These projects delivered around EUR 60 million additional EBITDA in 2025, and we expect this trend to continue in 2026. The group will benefit from the ramp-up of the recent investment in the U.S. and Asia, successfully started in 2025 and early 2026, namely our new 1233zd and the DMDS unit in the U.S. as well as the Rilsan Clear transparent polymer capacity downstream of the polyamide 11 plant in Singapore. In addition, our investment in PVDF in the U.S. is planned to start up in the first half of 2026, increasing our capacity by 15% in the region. PIAM should continue to benefit from the launch of new smartphones, notably foldable and ultra slim models in which polyamide is becoming essential to answer their higher requirements in terms of reliability and thermal management. PIAM should also start benefiting from successful diversification into new high-end application in industry markets. After this important wave of organic projects, offering significant room for growth midterm, Arkema will further reduce its CapEx envelope to EUR 600 million in 2026. This level will enable the group to continue investing in targeted projects with high returns and fast payback. We did not only focus on the very short term but continue to build Arkema for the future by developing strategic partnership with leaders in their domain in order to strengthen our positioning in key markets such as batteries or sports. Maintaining our efforts in R&D is key in order to stay differentiated and accelerate our growth in high-end applications. We stay focused on sustainable innovation. We leverage our competencies by collaborating with doctors, OOYOO in carbon capture is a good example. Coming back to our 2025 EBITDA performance, outside of the negative currency impact, the low cycle in upstream acrylics and the decline of old generation refrigerant explained most of the decrease. The rest of Arkema's business was far more resilient, but this performance to a certain extent, was overshadowed by these other activities. That's why in order to improve the reading of the group's results, we have decided to implement a new segmentation starting in 2026 to better highlight the distinct dynamics and business models of the resilient and fast-growing platforms within Specialty Materials compared to the most cyclical and last industrial activities, which will be rebooked in a new segment called Primary Materials. The global Arkema polyamide business will be included in this new segment. This business has been much more volatile in recent years than it used to be, as you can see Slide 21. However, looking back since the acquisition of our American assets in 2010, this activity has been tremendously cash generative, largely contributing to further growth portfolio transformation over the past year. So we continue to leverage our strong industrial and commercial position in acrylics to generate solid cash generation and capital returns over the cycle. The new segmentation will also bring more visibility to our next-generation low GWP solution for air conditioning, which were actively managed to enhance our prospects. They will now be integrated into the fluorospecialties portfolio and will benefit from accelerated growth in applications like heat pumps and data centers. On the other hand, old generation refrigerants that have been a highly profitable and cash-generative business since 2020, probably exceeding potential proceeds from a disposal will join the Primary Material segment. While this business will quickly fade over the coming years, Arkema will benefit on the other end and within the Specialty Materials from the ongoing growth of the low GWP solution, generating substantial value. I believe this new segmentation will provide the financial community with greater transparency on Arkema's portfolio business drivers and Specialty Materials performance. Finally, I think it's important, I also want to quickly highlight some of our CSR results where we made again strong progress and achieved quite good performance in 2025. This is the case for our climate plan, where the group's numerous initiatives to reduce its carbon footprint are paying off. We reduced our Scope 1 and 2 emissions by 48.7% at the end of 2025 compared to 2029, fully in line with our target. And we have also decided to strengthen our ambition in water withdrawals and introduced a new target on waste treatment, another key priority for Arkema. Lastly, given the strength of the group's balance sheet, the Board has decided to propose a stable dividend of EUR 3.60 per share to the Annual General Meeting despite the challenging macro, which is a sign of confidence, both in the quality of the portfolio and in the relevance of the strategy. Thank you for your attention. I will now hand over to Marie-Jose, who will review in more detail the financial results before I come back to discuss the outlook with you.
Marie-José Donsion: Thank you, Thierry, and good morning, everyone. So as commented by Thierry, 2025 was a challenging year. Starting with revenues of EUR 9.1 billion. Sales were down 5% year-on-year that were impacted by a negative 2.9% currency effect reflecting mainly the weakening of the U.S. dollar against the euro, but also from other currencies, including the Chinese Yuan and Korean Won. The scope effect at plus 1.6% reflecting the integration of Dow's laminating adhesives. Volumes were down 1.6%, reflecting the overall weak demand environment in Europe and North America as well as a tight inventory management by customers in the fourth quarter. On the other hand, we continue to benefit from a positive dynamic in Asia and more particularly in China, mainly driven by high-performance polymers. The price effect was a negative 2.1% impacted essentially by the acrylics cycle and by the refrigerant gases that are transitioning from old to new generation. Our other activities showed a more limited price decrease of 0.9% in the context of declining cost of raw materials. The group EBITDA came in at EUR 1.25 billion, including EUR 40 million negative currency effect. Let's mention first, Q4, which is a seasonally low quarter. The decline in EBITDA in the fourth quarter reflected the overall weak demand environment in Europe and in the U.S. as well as the strong destocking due to tight year-end inventory management at our customers and ourselves, actually, which impacted particularly our Adhesives and Advanced Materials segment. Looking now at the full year performance by segment. Adhesives margin came in at around 14% if we exclude the dilutive effect of Dow's laminating adhesives business still in its integration phase. Full year EBITDA reflected the weak demand in industrial additives and the slowdown in the U.S. in the second half, notably in flexible packaging, transportation and construction. Positive performance continues to be supported by our ongoing work on efficiency and our price discipline. Advanced Materials resisted well with a broadly stable volumes and prices, delivering an EBITDA margin of 17.9%. High Performance Polymers in particular, showed a 2% organic growth on the year, supported by new business developments in batteries, sports and 3D printing and the ongoing positive dynamic in Asia. The segment's EBITDA was nonetheless impacted by the negative currency effect by an unfavorable mix in performance additives as well as by lower volumes in Europe and in U.S. In Coatings, EBITDA was impacted by the low cycle conditions in the upstream acrylics as well as by the weak demand environment in coating market. Construction and decorative paints market in Europe and U.S. were subdued. The performance of the segment was therefore significantly lower than last year despite the resilience of downstream activities. Lastly, Intermediates EBITDA was mostly impacted by the decline in refrigerants in the first half of the year, while acrylics in Asia improved slightly. The group's recurring EBIT amounted to EUR 564 million, which corresponds to a recurring EBIT margin of 6.2%. It takes into account EUR 687 million of recurring fixed asset depreciation, higher than last year due to the integration of Dow's laminating adhesives and to the starting amortization of new production units, which came online during 2025. Nonrecurring items amounted to EUR 276 million. They include EUR 144 million of PPA depreciation and EUR 132 million of one-off charges, notably the restructuring costs linked to the hydrogen peroxide site in France. Financial expenses stood at minus EUR 125 million. The increase versus last year reflects the increased interest costs of our bonds on one hand and the lower interest on invested cash on the other hand. All in all, adjusted net income amounted to EUR 328 million, which corresponds to EUR 4.34 per share. Moving on to cash and debt. Arkema delivered a strong cash flow generation with recurring cash flow standing at EUR 464 million. This reflects our continuous initiatives to tightly manage our working capital. Working capital ratio on annualized sales reached 12.5% from EBITDA. And the EBITDA to operating cash conversion rate stood at 88%. Our spend in capital expenditure amounted to EUR 636 million, below the level of our recurring depreciation in . Free cash flow amounted to EUR 390 million, including a nonrecurring outflow of EUR 74 million, linked essentially to restructuring costs. Taking into account these elements, Arkema's net debt and hybrid bonds were slightly down at EUR 3.2 billion, which includes a EUR 1.1 billion hybrid bonds. The group continues to enjoy a strong balance sheet with a net debt to last 12-month EBITDA ratio of 2.5x. Note that our 2026 maturities were all prefinanced till 2025. The EUR 300 million outstanding hybrid bond issued in January 2020 was redeemed in January 2026. So our portfolio of hybrid bonds at the end of this month -- end of Jan is back at EUR 800 million. I hand it over back to Thierry now.
Thierry Le Hénaff: Thank you, Marie-Jose, for this explanation. So if we exchange all the outlook for this year. So at the beginning of the year, the environment remains and there is no surprise to find the continuity of the second half of last year, with limited visibility and weak demand. The currency effect, you saw it continues to be a headwind following the further weakening of the USD and Asian currencies against the euro. In this context, as we said already, our first priority will continue to focus. And I think we did a good job last year, and we'll continue to do a good job this year on the elements under our control. This means, in particular, optimization of fixed costs, optimization of variable costs, CapEx and working capital. Besides, we continue to rely on the progressive ramp-up of our major project and it's slower than expected because of the macro, but is still material for the company, and it will support the Arkema growth in the long run. So for '26 versus '25, we expect this project to contribute around EUR 50 million of additional EBITDA. It will continue to help us this year and in the following year to reinforce our geographical footprint, since we anticipate more long-term development potential in Asia and in the U.S. In light of these elements for 2026, the group aims for its EBITDA to grow slightly at constant FX, and we prefer, obviously, to reason at constant FX, given the unusual volatility of exchange rates against the euro, not only the USD, as I mentioned, but also most of the Asian currencies. The year-on-year comparison will be more challenging in H1, and more particularly in Q1 since last year profile was more weighted on the first semester with significant destocking in the second half. Besides the currency effect on Q1 should be negative estimated at EUR 25 million. If we put the currency effect aside, we expect in 2026, the macro more or less similar to '25. The comparison with last year should ease progressively until the end of the year, including specifically to Arkema, the ramp-up of our major project. As a result, we anticipate the performance of the 2 halves more balanced in '26 than in '25. So thank you very much for your attention. And together with Marie-Jose, we are ready to answer the questions you may have.
Operator: [Operator Instructions] The first question comes from Tom Wrigglesworth with Morgan Stanley.
Thomas Wrigglesworth: Two, if I may. First, could you talk a little bit about the construction end markets by region? And how -- and kind of help us understand how much step down you saw in the U.S. in the second half and how much weight that weighs on 2026? And conversely, there are expectations that construction refurbishment improves in Europe in '26. Do you see anything in your order books or in your discussions with customers that kind of talk to that? And then secondly, if I may, just around obviously very strong free cash flow in the fourth quarter. How much of that was your decision to really cut the working capital versus the pricing element rolling through working capital, i.e., as we look at working capital for '26, if we do start to see some volume improvement at some point, do you need to see a rapid increase in working capital to meet that demand?
Thierry Le Hénaff: Okay. I will let Marie-Jose answer on the working capital. On the construction market, it's an interesting question because, as you know, we have -- compared to other peers, we have more -- we are more weighted in construction, especially Europe and U.S. and in Asia is less than that. I would say, and it joins your question, in fact, to a certain extent, the answer is in your question. Europe, we have reached certainly a bottom. I'm quite cautious on the signals because we have been caught several times by surprise. My feeling is that let's say, there is a little bit of incremental improvement, but to be confirmed, okay? So Europe is like the bottom, it does not decrease anymore. And if there was a trend, it would be incrementally slightly better. In the U.S., clearly in second semester, it was one of the bad surprise. We are down in terms of business development. I would be -- I know the elasticity and the agility of the U.S. economy. So I would not extrapolate necessarily what we saw in the second semester in the U.S. with what it could be this year. What is clear is that -- and this is a difference with Europe, U.S. decreased second semester of last year in construction, while Europe gave the impression, it was more at the bottom and with a little bit more positive. So U.S. we will see. I know that the administration -- Trump administration is trying to put in place some measures in order to support construction-related activities. We'll see if it brings -- it brings some support, but there are so many variables that are difficult to know today. So I would be cautious as I am on the macro -- overall macro economy, let's take month by month and see how things are developing.
Marie-José Donsion: On the cash?
Thierry Le Hénaff: Yes, the cash.
Marie-José Donsion: A few comments. So basically, you saw the working capital landed at 12.5% of our annual sales, frankly, reflecting the similar work that our customers have been doing on their end. For 2026 at constant macro, I would expect, frankly, a flat working cap. In case of a rebound, then for sure, working cap should increase in a commensurate way versus those 12.5% or 13% of our sales.
Thomas Wrigglesworth: Okay. Just as a quick follow-up. I mean, do you think that the industry or the supply chain has overcut inventories and working capital? It just feels like everybody has cut aggressively at the end of last year and then aggressively cut again in the end of 2025 -- sorry, '24 and '25. I guess investors are surprised as to how much destocking has taken place. So any commentary or color there as to the level of inventories in the system would be very helpful.
Thierry Le Hénaff: Certainly, this question is worth a lot of money. The difficulty, as you know, and you know as much as I know, Tom, is in the supply chain in chemicals, they are complex and they are longer. So it's -- and fragmented, so it's very difficult to have a clear view what is sure is that. And it has been, to a certain extent, a little bit of a mystery for all of us because normally, when you have a cycle in chemicals doesn't last so long. It's clear that we see destock. Now we are already talking about end of destocking, 18 months ago, we thought it was already long. So -- but it's clear that the stock for most of the chain seems to be rather low, but they are low if there is a rebound, if there is no rebound, certainly, the chain can live with that. So my theory is still the same. It does not change. And is that at a certain point, you will get a rebound. We don't know when it will happen. We don't know when and when the rebound will come, the chain will be under big pressure. This is obvious, but we don't know when. And there will be nuances depending on which region, which end market, which product line, et cetera. But basically, this is a typical cycle of chemicals, where you have volume and pricing on the both directions depending on the -- if it goes down or it goes up, always amplifying the industry. Then we have to be a bit patient, but it will come at a certain time. We don't know we'll see. So your question is valid. Certainly stock are less at the end of this year than they were at the end of '24, '24 was less than end of '23. But now this is a demand which will be the main driver of the stock.
Operator: The next question comes from Matthew Yates of Bank of America.
Matthew Yates: I'd like to ask about the new structure, the divisional restatement. Not the first time the company has done that since its creation. And I heard your introductory remarks about the benefits of transparency. But I would put it to you that there is an argument that it highlights a lack of industrial logic to the portfolio that you can move things around so frequently. It hurts investors' ability to track performance over time because we lose that transparency. So can you just elaborate a little bit more as to why you think this is a good decision. And by association, have you changed reporting lines or management structure? I had a quick glance at your exec committee on the website, which hasn't changed. But is there going to be a change in roles and responsibilities that may help us bring some better operational performance and some genuine benefit of this move?
Thierry Le Hénaff: First of all, Matthew, we don't change so often. And here, we are talking about an incremental change. I think the difficulty we had and hopefully, it was well explained in our -- and we are completely open to discuss more with you and who wants. The difficulty we had were 2 things. The first one, we got the impression that on the Specialty Material business, which is whatever definition, by far, the large majority of Arkema portfolio. We are really doing a great job and this year, we were frustrated by the fact that we could not read it and you could not read it simply. And the reason was that we have -- things have changed over the past 3 years, the world has changed. I think maybe we change, but I think it's good to be agile and to try to be as transparent and as clear as possible in a world which is changing a lot, where yourself, ourselves, all our stakeholders are trying to understand what is happening and on what you can really rely and build for the future. And what we saw is that in fact on the refrigerant gas, while we saw that we were mostly old generation gases and little development in new generation, and this is why we wanted to sell it because we saw that there was no future and it was far from our sustainable strategy. What we saw is 2 things: that the old generation that we know already, were going to -- were phasing out or fading out and with an acceleration in the past 2 years. But on the other side, we're far stronger, far better, far quicker in the development of new generation, not for the traditional application in refrigerant, but for new application, heat pump, data center, energy efficiency in the buildings, which were really completely core in terms of the strategy of Arkema with some of niches, same end market, same kind of growth pattern, et cetera. So we wanted absolutely to recognize that. And this is why a part of this we split between old and new generation, and it makes completely sense from a portfolio standpoint that this new generation joins them. We have already started to do it, join the HPP. The second thing with regard to acrylics, for a long time, and we had -- I know discussion together on that. We are absolutely convinced that we would be able, for Europe and U.S., to stabilize their volatility by developing the downstream. It was true for Asia, but Asia, we knew that it would be quite limited. But Europe and U.S., we thought we could go at further on this path to balance the upstream and the downstream. But in fact, we have seen that the targets were not so many. In fact, we bought already most of this target with Sartomer and Coatex. And the second thing was that not only we were -- we decided when we bought Bostik to put most of our allocation of cash for acquisition for adhesives. And the second trend that we see, which is linked to the fact that the world is becoming far more volatile than it was in the old time. You can see on every parameter, the FX, the -- also the macro figures in this or that market, et cetera, or the brand evolution. In fact, it reinforces the volatility of the acrylic acids, the acrylics monomers. And we wanted to also to -- so we decided to put back China, Europe and U.S. together, and to recognize that in the portfolio, we have a minority, a small minority, which around 15% of the portfolio which is really in nature, more volatile. Even if on the -- over the cycle, we still generate a lot of a lot of cash. And for acrylics, it's normal because the upstream goes with this downstream. The upstream is a basic material. We know that basic material. So we think that with this evolution of the world that we want to recognize, the more volatility of what is now in primary materials, we are able really to be -- to show you that all the jobs that we have been doing on the Specialty Materials is really bearing its fruit with quite a resilience and the growth over time. And it was in this context of '25, which was completely atypical and unexpected. They were able to deliver minus 5% EBITDA evolution, which, frankly speaking, given the level of the context or the challenges of the context was quite a good performance. So for us, it was far easier to explain it like this. So you have to take it as a better reading now. This is why we did it. So hopefully, it will -- and we are ready to discuss with any of you. For us, it reinforced the quality of the reading on the performance and also of the benefit of the strategy we have been leading over the past 10 years.
Matthew Yates: Okay. Can I ask a follow-up? Because from your answer, it sounds like the concept of integration across the value chain hasn't worked and is no longer valid. So this goes above and beyond simply the way you're reporting it. It questions the actual strategy of the company. Are you open to the idea of exiting the 3 upstream acrylics plants if there were to be a possible buyer out there? Or are they still core to the broader group?
Thierry Le Hénaff: No. I would say that we have to take it for what it is, which is a better reading and reporting of where we are. Acrylics remains a backbone, which is important of the downstream. So, so far, I would say, is really part of the portfolio. And anyway, the results are quite low. So it's not at all even beyond what you say, the topic of disposal. Now as you say and you have seen the history of Arkema, there is never any taboo. So I think that for the time being, it's quite a reporting topic, and we have to take it as such.
Operator: The next question comes from Laurent Favre of BNP.
Laurent Favre: My first question, I guess, is on HPP where we had a stable Q2, stable each Q3 and Q4, I think a bit of a collapse down -- sales down 15%. We saw something similar with your peer this morning. And I was wondering if you could talk about what you're seeing on beyond, I guess, destocking, what you're seeing on competitive pressures and in particular, maybe some kind of commoditization risk? That's question number one. And the second one just to echo the comments from Matthew. I think best practice for us, especially if you're talking about adding transparency would be to have sort of restatements for the divisions going back to at least 2023. That would be really, I think, helpful for investors and for us. But a question related to the restatement is around acrylics. EU, U.S. I think it looks like you had EUR 13 million of EBITDA in 2025. And I was wondering how you're thinking about this going forward? It seems that we still have capacity additions in the industry in 2026 and maybe 2027. So are you expecting acrylics EU, U.S. to still be around that sort of breakeven EBITDA for '26 before we eventually see a recovery? What did you bake in the guidance?
Thierry Le Hénaff: Okay. So with regard to the first question, I really think that the end of the year and you mentioned also our peers on the -- on the HPP is really driven by the destock of customer. When I saw -- we saw in detail, you can imagine the dynamics to really understand the results beyond the fact that the impact of the FX was more important in Q4. Don't forget that. What we saw is that the impact of destock was quite high. And destock, it happened less in Asia, where by culture, they don't stock a lot, but in Europe and U.S. So in fact, not only we have destock globally, but the fact that the destock was more pronounced in Europe and U.S., where culturally, our customers have more stock changed the geographical mix, okay? And it weighs on the profitability evolution. So the geographical mix was especially this low sales in the U.S. was a little bit of a surprise and that was linked to the destocking. We have spent a lot of time, as you can imagine, in this kind of contact with our customers. We knew, we understood that they would be very cautious in terms of stock at the end of the year. So this destocking topic is not just a matter of the chemical industry. Our customers, they destock, our suppliers, they destock, everybody try to finish the year with stock, which was, I would not say minimal, but more reasonable than they were given the level of the demand. So for me, it's not a matter of more competition or anything special sort of change in evolution, we would have seen in Q4. It's really a matter of customer by customer destock, as you can imagine, we check our market shares very precisely also, no. So -- and you know Q4 is the last quarter of the year. So sometimes you can have certain years, you can have a little bit of amplification of the low demand. But I would not consider this sort of new trend at all. It's not my feeling. And as you know, in HPP, we put a lot of efforts on the new business development, innovation and I think this is a paradox. I think we have been good on that. And so the growth is there. We are able to differentiate versus competition. And the market is not easy, but we are not particularly concerned for the next few years. On restatement, so I pass the message to the Investor Relations team will do what we can, but the idea is certainly not to lose you on the contrary, is to help you. So don't worry on that. We'll do our best. Yes. And with acrylics, yes, EBITDA, you could make the math, at least maybe we're not -- it's complicated for you. But as you could see, you could try to find some new information that you had not before. So it helps you also. I can see you started to work on the acrylics. Clearly, we are surprised by the, let's say, the depth of the cycle of acrylics is something. In fact, we have to go back to 2010 and the acquisition of the acrylics from Dow where the cycle were more or less that one. And I don't know if it makes you more comfortable. A year after, it was our one of best product line. So I think everybody has to be modest on anticipating. So I think that acrylics was under -- in Europe and U.S., was more under pressure than expected clearly in '25. We expect for the time being, something in, hopefully, a little bit of improvement, but something not far from what we saw in '25.
Operator: The next question comes from Emmanuel Matot of ODDO BHF.
Emmanuel Matot: Three questions for me. First, does that make sense to believe that H2 could be in line with H1 in terms of EBITDA? Is that the seasonality you are factoring into your guidance for 2026 because it's quite unusual historically? Second, given the ramp-up of your major projects , why do you expect those projects to have a lower additional contribution to the group's EBITDA in 2026? Because you are mentioning only EUR 50 million contribution compared to EUR 60 million last year. It seems to be cautious. And last question. Do you feel that the authorities in Europe are more willing than in the past to help you and the sector regain competitiveness significantly and protect you more from unfair competition, in particular, from China?
Thierry Le Hénaff: Thank you, Emmanuel, for the question. On the first one, we didn't say it would be equal, we say it will be more balanced. So because on the contrary, in '25 was atypical, in terms of seasonality, but I'd say it would be at par H1 and H2. It's just the imbalance we had in '25 would be more back to normal, I would say. On the project, it's just -- in fact, there is no -- maybe it's counterintuitive, but it's not because you do a EUR 60 million in one year and EUR 50 million the following year. We are talking about incremental, as you know, additional EBITDA, okay? It depends on the momentum of the project. If in '24, you had a project which was started with the first step in '25, with the first step, which was very high in terms of contribution, the year after the same project can deliver far less on top of it. So you can deliver on a project. I don't know I will give you an example. You deliver on 5 years EUR 100 million. You can have the first year of EUR 40 million, the second year EUR 20 million and then EUR 10 million, et cetera. So it's not linked. So what is important is cumulative, and it depends on the phasing of the projects. Some have started 3 years ago. Some will after -- have just started at the end of last year. So don't -- there is no relation, I would say. What is important is accumulation. If we are cautious so much the better, it will depend on the macro. But I think that we should count on the EUR 50 million, I think it's reasonable. But the projects are -- what is more important beyond the figures is that we confirm that the positioning of the project is still completely valid from a strategic standpoint, from a geographical standpoint. And I think this is good news. This means that since the world is changing, your question could have been also, do you think that some of the projects are not relevant anymore because there were a change. It's not the case. We really confirm the quality of the projects. They are all meaningful even if it takes more time to develop than we would have thought at the beginning. On the last question, yes, we think that -- so first of all, we are a global company. So this is not Arkema protected. This is the assets of Arkema in Europe, but we have assets everywhere. And we will be pragmatic at the end, even if we like our region our country, we put our money where we believe we can be competitive and we can develop. And now with regard to Europe, yes, authorities have understood the danger for the industrial assets of chemical company, but also beyond chemicals in Europe. This seems to be more aware of the danger, more protective, think more about competitiveness. So in terms of let's say, awareness and intent, I would say, is positive in terms of act for the time being, we see nothing.
Operator: The next question comes from Chetan Udeshi of JPMorgan.
Chetan Udeshi: I had maybe 2, maybe 3, I don't know, but I'll try. The first one was just I'm looking at your Advanced Materials Q4 numbers. And I mean you're saying you had destocking, but then your revenue in Q4 is actually above Q3 and your EBITDA has been -- I mean it seems revenue is up EUR 10 million versus Q3. EBITDA is down EUR 40 million versus Q3. So I'm just curious what happened there? And maybe just to challenge your comment that Arkema is doing very well in Specialties. It doesn't seem like when I look at your numbers in Adhesives or Advanced Materials that's really coming through in terms of numbers. The EBITDA in both these divisions are down quite dramatically year-on-year. So just curious why you think we should think Arkema is doing well, and this is not a competitive pressure that is coming through in the business? And the last question I had was just in Q1 -- sorry, Q1 guidance. Historically, if I go like many years back, your typically, Q1 will be up 20% to 30% versus Q4. But in the last 2 years, we've had a more modest improvement of 1% to 5%. What should we think in terms of the magnitude of that seasonal rebound that we should have in mind for Q1?
Thierry Le Hénaff: Okay, Chetan. I try to understand your -- the rationale of your questions. When you compare Q4 with Q2 with -- on Advanced Materials or no, I think on Advanced Materials, this is the answer to Laurent. This is a destock. So the destock -- as I said, which was not the case in Q3 happened mostly in Europe and the U.S. We have strong destocking in the U.S., and this is where in terms of added value, we are higher than in Asia. So the geographical mix is working against us. That's all. You have all the figures. So at the end, but it's more -- it's really the destock and the geographical mix. We have some high-value applications in Europe and U.S., which really completely destock. And sometimes just in December, you have no order because your customers are just optimizing their stock. So this is what happened. But from what I see with other peers that I know that you have some peers you especially follow. You can see that we -- destock was all across the board by many peers. So I would say no, no, I confirm what we say. Then your second question that is...
Marie-José Donsion: It's the seasonality between Q1.
Thierry Le Hénaff: No, there was another one.
Marie-José Donsion: We said we are doing well in Specialty, but Chetan seems to flag that Adhesives and Materials were not so great.
Thierry Le Hénaff: No, I think what we -- I don't really understand what your question. But what we say is that I'm sure you are referring to my point to Matthew on the transparency, why we changed segmentation. I think what we see very clearly is that the EBITDA of the Specialty Material over the year has declined by 5%, which we consider in macroeconomic, which is one of the worst we have seen in 30 years is performance, which show the quality of this portfolio. That's all. For the rest, you have your own opinion as the rest. But we consider that we have minus 5% EBITDA in really more than trough conditions. On 85% of the portfolio is a performance which need to be appreciated and to be highlighted. This is what we do. This is -- we think it was worth doing it. With regard to the Q1 guidance, we will not enter into precise figures. The only thing that we can say is that Q1 will be above Q4. There is a seasonality. The macro is comparable, certainly destocking should be less and the seasonality, typical, is better in Q1. We agree that in the recent years, it has been a bit less higher compared to Q4 than it was before. So you have some reference points that you can take. But I think this is a qualitative element that it will certainly not be the kind of seasonality you could find a few years ago. It's more typical of the more recent years, but Q1 will be above Q4, no surprises there. The macro should be quite comparable, but the destocking will be less also. Okay. And don't forget the FX impact of EUR 25 million that we have mentioned.
Operator: The next question comes from James Hooper of Bernstein.
James Hooper: Can we go into a little bit more detail around the outlook, please? Specifically, kind of division through division, if that's possible? And another thing I'd like to try and understand is, obviously, you're guiding for the EUR 50 million cumulative effect from the projects. But is there a cannibalization impact on some of the existing revenues? Because I'm just trying to bridge to the kind of the -- how this -- and also the kind of impact of the specialty groups versus refrigerants?
Thierry Le Hénaff: With the outlook, I think we -- you got our press release and -- and what we can say at this stage on the outlook. So we are not given -- I think we have never given any guidance by division. We give a guidance for the whole company. Now I would say the macro and this is -- this was our feeling in '25, especially if you look at the new segmentation, I would say the macro is similar for each of the business, and there is there geographical footprint is quite comparable. The end markets are a little bit different, but they are all diversified in terms of end market. So I would not make a big difference by division. And there was a question of Laurent on the primary products materials with the weight of acrylics, et cetera, where we think it will stay at least for the first part of the year at a low level. But for the rest, I think the macro should be similar. Now on HPP, you will benefit more of Advanced Materials. You will benefit more from the projects than the rest -- than the other division. You could see that in -- if you take the list of the project is more in Advanced Materials and in Adhesives, but certainly Advanced Materials than the other division. Construction in Europe, we mentioned that I think, should more help the Adhesives and the Coating. So I'm sure you factored also old generation refrigerant and the primary material. So you have some nuances depending on which division you are talking about. So overall, a similar picture, but with some nuances that you know pretty well if you take our slide because you have where the projects are located. You have this discussion on construction, the discussion on old generation refrigerant and the acrylics. On the project, the EUR 50 million, I don't know what you mean by cannibalization, but there is no cannibalization. So this means this is a really -- at least it does not cannibalize other product line, if it is your question, a new product line would replace another one. No, it's not the case, except with refrigerant, where refrigerant is -- that is one project. And in fact, it's not for us in the case of the new refrigerant business, the end market is not the same. So it's not a cannibalization, but we know that old generation disappear, new generation are coming. But for the rest, no, I didn't see any cannibalization coming from the projects.
James Hooper: And can I just ask a quick follow-up as well in terms of the cash outlook as well? Because I don't think you've given formal guidance for cash.
Marie-José Donsion: So on the cash outlook, as we said at, let's say, comparable macro, cash performance should be quite comparable, let's say, provided that you take into account that the working capital would remain flat. So you see, in fact, for 2025, the contribution of the working capital variance. If we assume macro remains comparable, then there is no change in working capital expected in '26.
Operator: Mr. Le Henaff, there are no more questions registered right now, so back to you for any closing remarks you may have.
Thierry Le Hénaff: Yes. So first of all, thank you very much for your attention. I think this new year will be quite interesting as was the previous one. I think the team is really focused on the 2 time horizon, as you know, and as you could appreciate the efforts, cash, fixed costs, which are very important, so we'll continue then with a lot of engagement, and we still are confident on our major projects. It's a very important part. It takes more time than expected to develop them in the current macro, but it will really be a very material contributor in the coming years. And for the rest, we confirm that we have really strong positioning on most of our business lines. And even if the macro for the time being, remain rather weak, we think that our leadership position is really a support in this kind of environment. So looking forward to meeting you at different occasions. And have a good day. Thank you.
Operator: Ladies and gentlemen, this concludes this conference call. Arkema thanks you for your participation. You may now disconnect.