The chemical industry is a highly sought after sector by investors in the stock markets that wish to invest in shares that are both liquid and volatile. In the European sector, in particular the French stock market, one particular company distinguishes itself; Arkema, we shall examine this company in detail in this article to assist you in completing comprehensive analyses of its share price.
The activities of the Arkema Group remain very cyclical which represents a significant risk over the long term. The group’s activities are also sensitive to the exchange rate with the American dollar and the prices of commodities such as crude oil, electricity and also agricultural commodities.
We would of course monitor carefully the objectives fixed by the Arkema Group and its ambition to become the uncontested leader in the speciality chemicals and advanced materials sectors. The data you need to take into account primarily relate to sales, particularly in the emerging countries, as well as the operating margins and debt level. The growth of this company on the Asian market is also crucial for the group’s future and therefore we would monitor any financial benefits from new factories in its markets and the growth of sales in the markets of the countries that provide a strong return.
Of course, you will need to keep a watchful eye on all buyout operations as well as divestments or sales and their economical consequences as related to the objectives of the Arkema Company.
The Arkema Group continues unceasingly to announce its growth perspectives relating to operational profits and these objectives need to be verified against the actual results.
You then need to take into account the innovative capabilities of this company, notably in future areas of interest relating to green and renewable energy.
The Arkema Group is currently one of the international leaders in the production, development and sales of chemical products. However the chemical products concerned are from different sectors representing a varied clientele with mainly industrial chemical products but also high performance chemical products.
Arkema possesses over 90 production sites around the world and sells its products in France as well as other European countries, North America and also Asia.
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The Arkema Group is a specialist in the industrial chemical sector. It must therefore resist strong competition from other leading international companies in this activity sector. As a trader you need to know the major competitors to this company in order to integrate certain important data into your fundamental analyses. To best anticipate the future movements of this company’s share price on the stock markets you will need to take into account the respective results from each of Arkema’s major competitors as well as their market share and determine their influence on the perspectives and results of this group and its share price.
To assist you here is a list of the major competitors in the industrial chemicals sector that represent a threat to the Arkema Company:
In 2007 the Paris stock market lauded a worldwide partnership agreement between Arkema and Spraying Systems for the technical development and marketing of coating solutions destined for returnable glass bottles.
In 2015, Brewer Science and Arkema signed a partnership to develop high performance materials for the semi-conductor market.
In 2016 this company announced a renewal of its partnership with Arkema for 4 years and 42 million Euros. Through this agreement Suez became responsible for the management and valorisation of around 240,000 tons of waste at 28 Arkema sites in France.
In 2017 the consultancy and brokerage company ColisConsult responsible for transport implemented an alliance with the French chemistry company, Arkema. ColisConsult thereby became responsible for the shipment optimisation of around 100,000 packages per year on national and international levels completed from nearly 60 European sites of the Arkema Company divided among 16 countries.
Firstly, the Arkema Group offers an undeniable advantage concerning the organisation of its activities. In fact, this previous subsidiary of the Total Group is organised around three sectors of activities among which sales are fairly evenly divided. These are the high performance materials sector and those of specialty chemicals and paints.
Arkema is also well positioned on a worldwide level with the majority of its activities where it is currently the leader.
Recently the Arkema Group also decided to concentrate on its speciality chemicals activities as well as certain niche sectors such as renewable energy, water purification, lighter materials and plant chemistry which would enable the company to significantly reduce its cyclical bias.
For the investors, the relatively low level of debt compared to that of its competitors in this sector is also a considerable advantage.
We also note that one of the advantages of this company is the excellent division of its activities around the world. Although the European market is still in the lead with 40% of the company sales, the North American market and that of Asia still produce 34% and 20% respectively of the sales. The group essentially concentrates on the American and Chinese markets which are currently highly popular.
The Arkema Group also attracts by its capability to achieve targeted and high quality acquisitions that notably enable this company to diversify its activities and target new markets.
Finally, the long term objectives for the dividends remain bullish with an increase that is highly attractive for the shareholders.
Firstly, the lack of visibility of this group relating to its worldwide economic growth could negatively influence the resumption of the Arkema Group’s activities which notably depend on industrial requirements.
Although this group has been trying to diversify through various niche activities as explained earlier, it unfortunately remains highly exposed to cyclical markets where it achieves over 50% of its sales. The acrylic paints market which generates over 15% of this company’s sales is notably suffering from a significant crisis with a significant drop in prices.
In the same way, the strong implications for the Arkema Company relating to the highly advantageous Chinese market could quickly and easily lead to a risk of overcapacity.
Of course, the Arkema group and its shares on the stock market are also sensitive to policy decisions notably those related to pollution which the company is wary of especially on the subject of a minimum carbon price.
Finally, the objectives of the group relating to its growth and announcements for 2020 are not unanimously accepted by the analysts that see them as too ambitious and unrealistic.
Arkema operates through a number of subsidiaries, including Ashland in adhesives, Bostik in bonding solutions, Coatex in rheology additives, PLPC International in carbon sulphide chemistry, Santomer in specialty acrylates for UV curing systems, Den Braven in high-performance sealants for insulation and Casda in sebacic acid from castor oil.
Arkema's capital is partly free-floating and the other part is held by private shareholders including ISALT or Investissements Stratégiques en Actions Long Terme with 7.75%, Amundi Asset Management with 6.70%, Bpifrance Investissement with 6.12%, Norges Bank Investment Management with 5.65%, Nassef Sawiris with 5.40%, William Blair Investment Management with 2.73%, The Vanguard Group with 2.29%, Henderson Global Investors with 1.54% and BlackRock Investment Management with 1.49%.
To buy or sell Arkema shares online, you can go through a securities account and place a stock market order on an online broker's platform. This will allow you to hold these shares. But you can also speculate on the share price with a derivative product such as CFDs or contracts for difference offered by online brokers.
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