Solvay Sa · EURONEXT:SOLB
Solvay Sa — FY2015 Earnings Presentation
45 slides from Solvay Sa's earnings presentation, Feb 25, 2016
Slide 1: FY 2015 Results
A FY 2015 RESULTS February 25, 2016 SOLVAY asking more from chemistry’ Forenote Cytec has not contributed to the 2015 Group Income or cash flow statements, as its results and cash flows for the period between 09/12/2015 (acquisition date) and 31/12/2015 are not material. However, in order to provide
Slide 2: Forward-looking statements disclaimer
HARBOR This presentation may contain forward-looking information. Forward- looking statements describe expectations, plans, strategies, goals, future events or intentions. The achievement of forward- looking statements contained in this presentation is subject to risks and uncertainties relating to
Slide 3: Overview
Overview ¢ Transformation acceleration & delivery ¢ Financial highlights SOLVAY ¢ Priorities and Outlook 3 FY 2015 results 25/02/2016
Slide 4: Transformation Acceleration & Delivery
TRANSFORMATION ACCELERATION & DELIVERY Step-change in portfolio upgrade Strong excellence delivery Solid earnings growth Enhanced sustainability commitments Dividend up FY 2015 results 4 | as/o2/2016 S$ SOLVAY asking more from chemistry®
Slide 5: A Step-Change in Our Transformation
2015 A STEP-CHANGE IN OUR TRANSFORMATION Much stronger portfolio FY 2015 results = | 25/02/2016 S$ SOLVAY asking more from chemistry®
Slide 6: An Enhanced Business Profile
AN ENHANCED BUSINESS PROFILE MORE DIVERSIFIED & MORE RESILIENT Solvay pro forma 2015 (including Cytec) Balanced Diversified & higher growth regional profile end-markets Automotive & Consumer goods Aeronautics & Healthcare —— 26% North America 21% 4 Energy & Environment Industrial j . 8% applications
Slide 7: Strategically Coherent Business Segments
STRATEGICALLY COHERENT BUSINESS SEGMENTS DRIVING RESULTS Solvay pro forma 2015 (including Cytec) Net Sales GROWTH RESILIENT CASH ENGINES CONTRIBUTOR €12.4 bn ADVANCED ADVANCED PERFORMANCE F TION, MATERIALS FORMULATIONS CHEMICALS POLYMERS REBITDA € 2,336 m High performance Customized specialty Leadin
Slide 8: Unique Lightweighting Offering
UNIQUE LIGHTWEIGHTING OFFERING DRIVING SUSTAINABLE MOBILITY Solvay’s unique portfolio € Polhie Fiber reinforce Composites compou thermoset & irt & Jafig fiber) thermoplastics Sandwich structures Dowjtetraaciates v NEW PROVIDING SOLUTIONS FOR Lightweight materials for transportation Production cycle
Slide 9: Leader in global markets & niche specialty technologies
= Leader in global markets & niche specialty technologies: = Supplying OEMs, Tier 1 B2B and global B2C brand-owners = Highly competitive global on-pipe alkoxylation footprint g FY 2015 results 25/02/2016 y asking more from chemistry®
Slide 10: Excellence Scope Expanded
EXCELLENCE SCOPE EXPANDED STRONG DELIVERY 3- year excellence targets ... a | ... by YE 2015 ~80% achieved ~70 % achieved ~80% achieved on > € 600m delivered in 2 years on track to deliver € 800 m by 2016 Expected impact on 2016 REBITDA (vs 2013 base), excluding Cytec FAST DELIVERY, MORE POTENTIAL 40
Slide 11: Society, Sustainable, Responsibly
Society Sustainable Responsibly
Slide 12: Overview
Overview ¢ Transformation acceleration & delivery - Financial highlights SOLVAY ¢ Priorities and Outlook 12 FY 2015 results 25/02/2016
Slide 13: Sustainability and key figures
10.6 €billion Net sales 2015 Solvay stand-alone figure 3 FY 2015 results 25/02/2016 ales from products developed or GHG Emissions / REBITDA SPM Sustainable Portfolio Management Employee engagement index Employees involved in societal actions 18% 2D 26,350 new sales ratio” headcount Employees 0.77 |
Slide 14: Forex Impact on Sales More Than Offset
FOREX IMPACT ON SALES MORE THAN OFFSET MAJOR ADJUSTMENTS IN OIL & GAS AND ACETATE TOW MARKETS Net Sales FY 2015 Solvay stand-alone inem 655 (260) ” Supportive forex: USD mainly 59) 10,578 " 2014:1.33 $/€ Price = 2015: 1.11S/€ (0% Conversion forex 6% N Volumes down as contraction in acetate tow and o
Slide 15: Innovation, Excellence & Forex Support REBITDA Growth
INNOVATION, EXCELLENCE & FOREX SUPPORT REBITDA GROWTH DESPITE SOME MAJOR MARKET HEADWINDS REBITDA FY 2015 PRICING POWER ; Solvay stand-alone €187M a Supportive forex in€m USD mainly 246 (48. (147) “ 18 1,955 a Fixed Others A Pricing power (59) costs (including 1,783 @)% equity, across segments earni
Slide 16: Net Income Reflecting Portfolio Upgrade Exceptionals
NET INCOME REFLECTING PORTFOLIO UPGRADE EXCEPTIONALS UNDERLYING NET INCOME UP 9% P&L Solvay stand-alone Adjusted Net sales 10,578 10,213 REBITDA 1,955 1,783 Depreciation & Amortization (733) (641) Other elements (35) (72) Non-recurring items (245) (308) EBIT 941 761 Net financial charges (226) (309)
Slide 17: Combined Entity Pro Forma 2015
COMBINED ENTITY PRO FORMA 2015 PROVIDING ROBUST BASE FOR GROWTH P&L 2015 pro forma (Solvay + Cytec) Pro forma combination (in € m) IFRS Adjust- Uinta ments [1] lying Net sales 10,578 1,800 - 12,378 - 12,378 REBITDA 1,955 381 - 2,336 - 2,336 Depreciation & Amortization (842) (311) - (1,153) 367 (786)
Slide 18: Cytec Delivering on Earnings Growth Targets
CYTEC DELIVERING ON EARNINGS GROWTH TARGETS DRIVEN BY ADVANCED TECHNOLOGY & IMPROVED PRODUCTIVITY Represented according to US GAAP in USD excluding one-off items and Corporate & unallocated costs Cytec Net sales Operating earnings Operating margins (in USS) FY 2015 FY2014 0 %Vvov) FY2015 DFY2014 %vo
Slide 19: Peak Growth Investments in 2015
PEAK GROWTH INVESTMENTS IN 2015 ... 969 Capex 861 Solvay stand-alone 734 Continuing operations in€m m= Growth capex m Maintenance capex Growth projects i) 2013 2014 2015 Growth project Advanced in growth regions Formulations Fluoropolymers plant in China: phase 1 / phase — 2015 ° 8 new facilities co
Slide 20: With Intensified Focus on Cash Generation
WITH INTENSIFIED FOCUS ON CASH GENERATION Selective investments for future value creation REBITDA-capex 54% - oa 969 a ~950 Continuing operations 861 Cytec CED inێm 734 2 Growth capex Maintenance capex J 2013 2014 2015 2015PF 2016e Profit growth SUSTAINABLE IMPROVEMENT Improved cash conversion IN F
Slide 21: Sound Cash Generation
SOUND CASH GENERATION (5,631) 1,477 . (6,567) Underlying net debt" evolution Rights issue} in€m (5,099) (2,188) \cquisition Hybrid cost bonds SOLVAY stand-alone FREE CASH FLOW € 387 M (213) aor 9 gy | 1,972 1,955 Interest rd 546 (49) (3) charges Yd Cytec impact (1,194) (546) Ea sividendst anne ivide
Slide 22: Investment Grade Credit Ratings
INVESTMENT GRADE CREDIT RATINGS CONFIRMED cytec financing Gross debt (8.7) Underlying net debt" evolution in€bn ~ Hybrid bonds (2.2) EUR bonds! EUR bonds! (1.3) Other debt (1.4) Other debt (1.5) Cash (1.2 Cash (2.1) 30/09/2015 31/12/2015 Leverage 3] Gearing net debt/REBITDA net debt/equity -Underiyi
Slide 23: Overview
Overview ¢ Transformation acceleration & delivery ¢ Financial highlights SOLVAY ¢ Priorities and Outlook 23 FY 2015 results 25/02/2016
Slide 24: Focus on Delivery
FOCUS ON DELIVERY Cytec integration, synergies acceleration | Volume growth Excellence initiatives Priorities Intensified focus on cash generation Continuing portfolio upgrade FY 2015 results 24 | 5/02/2016 ( SOLVAY asking more from chemistry®
Slide 25: Total Synergies Expected Well Above Original
TOTAL SYNERGIES EXPECTED WELL ABOVE ORIGINAL € 100 M Corporate overhead and G&A: - Supply chain & procurement Excellence practices Acceleration of lightweighting opportunities across Specialty Polymers & Composite Materials Cross-selling opportunities with Advanced Formulations More being identified
Slide 26: Delivering Growth in 2016
DELIVERING GROWTH IN 2016 ADVANCED Growth in diversified markets to overcome MATERIALS Q1 inventory destocking in smart devices Continued growth from ramp-up of aircraft with higher composites content New Capacity available Innovation Debottlenecking REBITDA growth Lower capex ! ! / . PERFORMANCE Ne
Slide 27: Outlook 2016
OUTLOOK 2016 REBITDA to grow high single digits Growth to be back-ended Free cash flow to exceed € 650 m FY 2015 results 27 | ps/o2/2016 S$ SOLVAY — asking more from chemistry®
Slide 28: Rewarding Shareholders
REWARDING SHAREHOLDERS SOLVAY GROSS DIVIDEND 2015 DELIVERY ON COMMITMENTS Interim Paid on Gross dividend 2! dividend €1.36/ share January 21, 2016 in €/share Final To be paid on dividend) €1-94/share yay a7 2016 Total"! Up 3.3% /21 0 1982 1985 1988 1991 1994 1997 2999 2003 2006 2009 2012 2015 &) Com
Slide 29: Our Commitment
OUR COMMITMENT Exceed expectations on Cytec synergies Excellence & Portfolio optimization continuing Intensified focus on cash generation Attractive returns to shareholders 2g | FY 2015 results S$ SOLVAY 25/02/2016 asking more from chemistry®
Slide 30: Investor Relations
INVESTOR RELATIONS F wih. 4 sas / ; i) ." Maria Alcén-Hidalgo Jodi Allen Geoffroy Raskin Bisser Alexandrov +32 2264 1984 +1(973) 357 3283 +32 2264 1540 +32 2 264 3687 maria.alconhidalgo@solvay.com jodi.allen@solvay.com geoffroy.raskin@solvay.com bisser.alexandrov@solvay.com () NEXT EVENTS May 3 May
Slide 31: Appendix
Appendix / * 2015 FY Solvay stand-alone segment S$ information SOLVAY ¢ Additional 2015 FY financial data asking more from chemistry’ ¢ Solvay pro forma information ¢ Forex sensitivity & other financial considerations 31 FY 2015 results 25/02/2016
Slide 32: Strong REBITDA Growth in 2015
STRONG REBITDA GROWTH IN 2015 IN 3 OUT OF 4 SEGMENTS FORMULATIONS Innovation mitigating MATERIALS major O&G market adjustments 2015 ‘/s REBITDA €1,955m Solvay stand-alone FUNCTIONAL PERFORMANCE POLYMERS CHEMICALS ° ma 22% 789 Excellence-driven margin expansion 25% 26% FY 2015 results 32 | as /o2/201
Slide 33: Advanced Formulations FY 2015 Performance
ADVANCED FORMULATIONS FY 2015 PERFORMANCE OIL & GAS HEADWINDS OFFSET IMPROVEMENT OTHER MARKETS Net sales (nem) REBITDA (inem) 15% EBITDA : 14% 2,854 (a) Oc) 26852 ae een I Scope Conversion — \olyme (09% forme case ecg 47 378 A% 5% FY 2014 FY 2015 mNovecare mCoatis m Aroma Performance FY 2014 FY 2015
Slide 34: Advanced Materials FY 2015 Performance
ADVANCED MATERIALS FY 2015 PERFORMANCE INNOVATION-DRIVEN REBITDA RECORD Net sales (nem REBITDA (nem) 26% REBITDA eo, _ we 256 178 26 3,334 57% D1 lute nega = —_—_— = Volume ls Scope = 3, 69% 15% 709 836 Cy orex 6% FY 2014 FY 2015 mSpecialty Polymers mSilica = Special Chem FY 2014 FY 2015 Specialty P
Slide 35: Performance Chemicals FY 2015 Performance
PERFORMANCE CHEMICALS FY 2015 PERFORMANCE PRICING OFFSET DESTOCKING HEADWINDS IN ACETOW Net sales (nem) REBITDA (in em) 96 3,090 REBITDA 9) 2,944 6 115 (71) 25% —" 26% el Scope Conversion Yo Pre - forex %o 9 4% 724 789 m Soda Ash & Derivatives mPeroxides FY 2014 FY 2015 m Emerging Biochemicals = Ace
Slide 36: Functional Polymers FY 2015 Performance
FUNCTIONAL POLYMERS FY 2015 PERFORMANCE EXCELLENCE-DRIVEN PROFIT RESTORATION Net sales (nem) REBITDA (nem) REBITDA 9.5% 1654 aan 24 (2) (111) 1,490 97% margin —= _ 6.7% a Conversion Mould writes 5)% fore )% 141 111 a 3% FY 2014 FY 2015 m Polyamide mChlorovinyls FY 2014 FY 2015 Operating performance
Slide 37: Corporate & Business Services FY 2015 Performance
CORPORATE & BUSINESS SERVICES FY 2015 PERFORMANCE COSTS UP DUE TO CER IMPAIRMENT AND FOREX IMPACT REBITDA (nem) FY 2014 FY 2015 7 . Corporate & Business Services in€m | Fy2015 | yFy2074 9] Energy Services (3) 25 Of which one-offs (7) CER impairment Excluding one-offs 4 25 Other C&BS (186) (213) B (0
Slide 38: Working Capital Discipline
WORKING CAPITAL DISCIPLINE MAINTAINED Industrial working capital" Solvay stand-alone % of total sales 9 15.2% poe 16.3% 16.5% 15.7% P 15.3% 15.5% ™, 14.0% 12.8% Q1 Q2 93 Q4 91 g2 93 94 2014 2015 > Superior specialty businesses growth increased industrial working capital needs Committed to further op
Slide 39: Debt Profile
DEBT PROFILE BALANCED MATURITIES ALLOWING FLEXIBILITY 1,200 1,000 800 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Face Average Average value duration!" cost Existing EUR hybrid bonds (at call date) 31 5.0% including € 500 m 6.38% 2016 treated as debt Existing debt m@ Existing EUR bon
Slide 40: Pension Liabilities
PENSION LIABILITIES Pensions (31/12/2015 in€bn ey/20%8) Cash contribution of € (168) m in 2015 * vs € (180) min 2014 (5.9) Net pension ,--------- liabilities (3.0) 2.9 Pension assets of € 2.9 bn ° Up €0.8 bn vs 30/09/14 mainly due to Cytec acquisition * ~50% Equities / Diversified alternative funds
Slide 41: Solvay Realigned Business Segments Including Cytec
SOLVAY REALIGNED BUSINESS SEGMENTS INCLUDING CYTEC STRATEGICALLY COHERENT TO DRIVE RESULTS 2015 PF € 2,336 m REBITDA 8% 30% Market positions: ®) Global market position in main markets addressed 45>, Regional market {#X1 (2) position in main markets addressed 2015 proforma GROUP Net sales € 12,378 m
Slide 42: Forex Impacts
FOREX IMPACTS Forex sensitivity in 2016 Forex development in 2015 >» \mmediate impact on conversion exposure > Deferred transactional impact due to hedging (6-12 month rolling basis) >» Mainly linked to USD = Sensitivity in 2016: ~ € 130 m REBITDA per (0.10) $/€ = Half conversion, half transactional
Slide 43: EBIT(DA) Considerations for 2016
EBIT(DA) CONSIDERATIONS FOR 2016 Excellence Scope effects >» Excellence programs on course to reach target > Acquisitions in 2015 = €800 m cumulative benefits by end 2016 vs 2013 cost = Cytec full consolidation as of January 12016 base = Small acquisition in 2015: EPIC = >€600 m delivered in 2014-20
Slide 44: Underlying Financial & Tax P&L Considerations for 2016
UNDERLYING FINANCIAL & TAX P&L CONSIDERATIONS FOR 2016 Cost of borrowings Discounting of pensions and HSE Total underlying financial charges expected at > P&L: ~€ (100) m (34 - pensions, V4 - HSE) ~€ (350) m (incl. perpetual hybrid bonds) a . > Sensitivity to change in discount rates!"l, » Financial
Slide 45: Other Considerations for 2016
OTHER CONSIDERATIONS FOR 2016 Discontinued operations Cash flow elements >» I\ndupa chlorovinyls business in Latin America >» Cash expenses for pensions = Strategic intent unchanged range of € (180) m - € (200) m * Disposal process undergoing > Capital expenditure of ~€ 950m = ~€ (50) min CTA to be