French specialty chemicals group Arkema revealed a near 4% fall in third quarter sales volumes on Wednesday, showing how tough times could lie ahead for the industrial sector in Europe.

Arkema, which kept its earnings goals for this year and through to 2015, said some clients had become increasingly cautious in managing their stock levels at the end of the third quarter and added this would likely amplify the usual slowdown in its business in the last three months of the year.

"We believe the most revealing number in the press release has been the near 4% y-o-y organic volume drop, the most pronounced in our European space this season. This bodes poorly for the quarters ahead. Even though FY11 is in the bag, FY12 is still a long way off," ING analyst Jan Hein de Vroe said in a research note.

Third-quarter sales volumes dropped 3.7%, which Arkema blamed on a tougher construction market in Europe, echoing comments by rivals such as Bayer and industry leader BASF.

Arkema, like its peers, is sensitive to the economic cycle as it makes a range of ingredients for products like paints, detergents and shampoos used in a host of industries including construction, packaging, cars and electronics.

Construction accounts for about 20% of Arkema's sales and the group's activities centre on PVC or plastics in Europe, including pipes for gas or water or window profiles.

Arkema shares were down 6.7% by 1138 GMT, underperforming 2.6% drops on the chemical index and France's main CAC 40 index .

Chief Executive Thierry LeHenaff said it was too early to predict what 2012 might entail for the group, but reiterated Arkema's 2011 goal to achieve core earnings of more than €1 billion.

He also kept the company's targets for 2015, including sales of some €7.5 billion.

"Clearly we have enormous confidence for our 2015 levels ... we confirm them without any problem," Le Henaff told a conference call. Some analysts have said the objectives were rather conservative.

Arkema's core earnings, or earnings before interest, tax, depreciation and amortization (EBITDA), are expected to drop to €913 million in 2012 from 1.031 billion in 2011, according to average estimates from Thomson Reuters I/B/E/S.

Le Henaff said he expected Arkema to be able to continue to pass on higher raw material prices to customers.

In addition, he said Arkema would carry on making small to medium-sized acquisitions of companies with sales ranging from €50 million to as much as 250 million.

Sales growth of 19% to 1.849 billion in the third quarter was mainly due to the takeover of the resin business of oil major and former parent company Total.

Arkema raised prices to clients across its businesses by 12.3% in the quarter, helping to offset a hike in raw material costs. The price rise marked a slowdown against the previous two quarters at 15.8% and 21%.

Closely watched EBITDA rose 7% to €263 million ($363 million) in the quarter, thanks to strong growth in Asia, which accounted for one-fifth of revenue.

Net income fell to €109 million from €130 million a year earlier, however, due to non-recurring items linked to the acquisition of the resin business.

Analysts said the earnings exceeded their expectations. Patrick Lambert, an analyst at Societe Generale, said Arkema's focus on high value-added products, such as technical polymers that can resist ultra-high temperatures, meant it could better resist the economic uncertainties.

"That is where they have invested most in the past quarters, particularly in plants in Asia," he said, referring to Arkema's fluorinated polymer production plant in Changshu, China.

Arkema last year made almost half of its revenue in Europe, 29% in North America and 18% in Asia. It expects to make a quarter of its sales in Asia by 2015.