Syensqo Sa/nv · EURONEXT:SYENS
Syensqo Sa/nv — Solvay — Investor Presentation (June 2023)
53 slides from Syensqo Sa/nv's investor presentation, Jun 16, 2023
Slide 1: Creating two strong companies
Creating two strong companies Dr. Ilham Kadri CEO and President of the Executive Leadership Team of Solvay Karim Hajjar CFO of Solvay June 16, 2023
Slide 2: Disclaimer (1 of 2)
Disclaimer (1 of 2) The contemplated separation is subject to general market conditions and customary closing conditions, including final approval by Solvay’s Board of Directors, consent of certain financing providers and shareholder approval at an extraordinary general meeting, and is expected to b
Slide 3: Disclaimer (2 of 2)
Disclaimer (2 of 2) This presentation contains certain financial information relating to Solvay SA (“Solvay”), as well as separate indicative financial information with respect to SpecialtyCo and EssentialCo. The financial information relating to Solvay has been derived from Solvay’s audited consolidat
Slide 4: Today's updates
Today’s updates Separation • On track to separate into two independent companies in project Dec 2023 Credit • Confirmed commitment to two investment grade rated ratings companies Capital Structures • Optimized capital structures provide financial flexibility Branding • Revealed new company names 4
Slide 5: Solvay is delivering strongly on all financial metrics
Solvay is delivering strongly on all financial metrics Underlying EBITDA (€ MM) & Margin (%) Free Cash Flow (€ MM) and Conversion (%) 24.0% 51.1% 22.7% 23.3% 21.7% 37.6% 3,229 Margin 34.4% Conv. +1.3pp % 27.8 +6.6pp 2,322 2,355 1,094 1,945 963 Org. growth 843 CAGR 606 FCF +81% +12% 2019 2020 2021 202
Slide 6: Extensive progress on ESG
Extensive progress on ESG Progress 2030 targets Climate Reduce our GHG emissions (scope 1 & 2) -19% (-15% structural) -30% Delivered 2x Paris 15% Agreement Phase out coal solid fuels 100% 28% Reduce pressure on biodiversity -30% Resources 55% Sustainable solutions, % of Group sales 65% 9.3% Double o
Slide 7: Positioned for greater value creation
Positioned for greater value creation Composites Creates two strong, SpecialtyCo Novecare independent companies 2022 Net Sales: €7.9 Bn Specialty 2022 uEBITDA: €1.9 Bn Polymers Aroma Focused strategies and operating models to Net Sales Tech Solutions better serve customers 2022 €13.4 Bn Oil & Gas Po
Slide 8: On track for December 2023
On track for December 2023 Shareholders’ meeting May 9 Full-year 2022 results Q1 2023 results Q2 2023 results Q3 2023 results February 23 May 4 August 3 November 3 2022 Q1 Q2 Q3 Q4 2023 Webinars Webinars Capital H1 key figures Debt Capital markets Extraordinary Automotive/Batteries Soda Ash, Feb 26 s
Slide 9: SpecialtyCo is a market leader in Materials & Consumers
SpecialtyCo is a market leader in Materials & Consumers MARKET POSITION High-performance polymers; leading position MATERIALS Specialty #1 in thermoplastic composites Polymers Battery Materials, Thermoplastic composites, Green Hydrogen, Renewable materials & Biotechnology #2 Composites for civil aer
Slide 10: SpecialtyCo demonstrated strong historical growth underpinned by profitability and return on capital
SpecialtyCo demonstrated strong historical growth underpinned by profitability and return on capital Underlying EBITDA (€ MM) & Margin (%) Return on Capital Employed (%) 23.6% 13.7% 21.7% 19.5% 1,863 8.2% 1,282 1,027 4.1% 2019 2020 2021 2022 2019 2020 2021 2022 10 2019 estimate, 2020-2022 unaudited fi
Slide 11: SpecialtyCo is a leader with superior growth potential
SpecialtyCo is a leader with superior growth potential Attractive Above Innovation Partner of Strong end markets market leadership choice sustainability supported by growth evidenced for leading OEMs roadmap, tailwinds from at superior returns by unique and and FMCG with path to sustainability and p
Slide 12: Materials is a highly attractive business
Materials is a highly attractive business MATERIALS ~30 ~20 ~20 ~20 % of net sales % % % % Automotive Aerospace & Defense Electronics & Industrial Healthcare & Consumer Net sales Historic sales growth EBITDA margin Materials (‘19-’22) FY 2022 ~€4.1bn ~8% >30% 12 Note: Percentages shown refer to perc
Slide 13: Broadest Materials technology portfolio
Broadest Materials technology portfolio High Performance Polymers High Performance Composites Thermo- 3D Carbon Thermoset Resin Adhesives Space PPS PEEK PSU PTFE PVDF HPPA FKM PFPE plastic Additive Fiber comp. Infusion & films Ablatives comp. Mfg SpecialtyCo Market Position SpecialtyCo ✓ ✓ ✓ ✓ ✓ ✓ ✓
Slide 14: Undisputed track record of outgrowing our end-markets in Materials
Undisputed track record of outgrowing our end-markets in Materials Automotive1 ~30% Electronics 1 ~20% Aerospace 2 ~20% 13-15% 8-10% 3-4% -2 to -3% -11 to -13% -9% SpecialtyCo Semicon SpecialtyCo Global light Smart Devices Vehicles SpecialtyCo Aerospace 14 1) Specialty Polymers sales - CAGR (‘18-’22
Slide 15: The improved Consumer segment is backed by sustainable megatrends
The improved Consumer segment is backed by sustainable megatrends CONSUMER(1) ~20% ~20% ~15% ~10% ~35% Agro Home & Personal Care Coatings Food, Flavors & Fragrances Other (HPC) Net sales Historic sales growth uEBITDA margin Consumer & Resources (‘19-’22) FY 2022 ~€3.8bn ~10% ~20% 15 (1) Percentages
Slide 16: We outperformed the consumer focused markets
We outperformed the consumer focused markets Food, Flavor Agro (~20%) HPC (~20%) Coatings (~15%) & Fragrances (~10%) ∽10% ∽9% ∽6% ∽5% 3-4% ~3% ~2% 1-2% Market SpecialtyCo Market SpecialtyCo Market SpecialtyCo Market SpecialtyCo Agrochemicals market Home & personal care market Paints & varnishes mark
Slide 17: SpecialtyCo has outperformed the industry
SpecialtyCo has outperformed the industry uEBITDA Margin Net Sales CAGR, 2020-22 (%) uEBITDA CAGR 2020-22 (%) ROCE Average 2020-22 (%) Average, 2020-22 (%) 22.5% 34.7% 21.6% 8.7% 21.0% 22.1% 21.2% 5.6% SCo SCo SCo SCo SCo SCo SCo SCo Peers(1) Peers(1) Peers(1) Peers(1) Superior return based Strong t
Slide 18: EssentialCo is a resilient market leader
EssentialCo is a resilient market leader MARKET POSITION Soda Ash Soda Ash (global) #1 & Derivatives Bicarbonate (global) Peroxides #1 Hydrogen Peroxide (global) €5.6Bn Silica #1 Silica for tires (global) 2022 Net sales Coatis #1 Coatis (Latin America) Special Chem #1 Rare earths for automotive cata
Slide 19: EssentialCo has demonstrated consistent delivery of stable growth and solid cash generation
EssentialCo has demonstrated consistent delivery of stable growth and solid cash generation Underlying EBITDA Evolution (€ MM) & Margin (%) Cash Conversion (€ MM) & ratio (%) 23% 23% 23% 71% 70% 71% 1,260 880 958 673 876 588 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 % uEBITDA Margi
Slide 20: EssentialCo is one the most resilient companies in global essential chemicals space
EssentialCo is one the most resilient companies in global essential chemicals space Peak-to-trough underlying EBITDA 2017-22(1)(2) 3.02 2.09 1.81 1.81 1.85 1.46 1.47 1.47 1.31 1.38 Peer 1 Peer 2 Eco Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 More resilient ← Resilience through the cycle → Less
Slide 21: EssentialCo masters cost and cash leadership
EssentialCo masters cost and cash leadership Resilient and Global Process Supplier of Accelerating attractive leadership technology choice sustainability markets positions in key leadership with world-class roadmap backed by driving efficiency global assets with path to segments megatrends in concent
Slide 22: EssentialCo technologies are integral across various end markets
EssentialCo technologies are integral across various end markets EssentialCo ~30% ~20% ~20% ~16% ~10% % of net sales Health & environment Industrial Auto Food & beverages Building & construction Air pollution and emission control Global access to healthcare ~20 Cleaner production route % Longer last
Slide 23: Leadership position founded on scale, technology, cost
Leadership position founded on scale, technology, cost SCALE LEADERSHIP COST LEADERSHIP Down- and upstream TECHNOLOGY with balanced with combination of VALUE CHAIN LEADERSHIP with portfolio and world-class assets INTEGRATION product and process PERSONAL & CONFIDENTIAL ability to supply and highly in
Slide 24: EssentialCo is a global market leader in both Soda Ash and Bicar
EssentialCo is a global market leader in both Soda Ash and Bicar Global #1 position in Soda Ash Global #1 position in Bicar APAC (7%) Other (36%) NAM (21%) NAM (35%) Natural (43%) Other (52%) 10% 11% 4% 6% 12% 6% EUROPE (72%) EUROPE (57%) Synthetic (57%) % 13 15% 18% 17% Market EssentialCo Productio
Slide 25: EssentialCo is the H2O2 global market leader
EssentialCo is the H2O2 global market leader North America EMEA #2 position Global #1 position #1 position in in a relatively stable a slightly growing market market Semicon investments Semicon investments NAM ~10% support growth support growth LATAM ~15% Capacity Capacity APAC ~30% Latin America AP
Slide 26: EssentialCo has one of the strongest profitability and cash generation profiles amongst its peers
EssentialCo has one of the strongest profitability and cash generation profiles amongst its peers Cash Conversion uEBITDA Margin Capital Intensity Average 2020-22 (%) Average 2020-22 (%) Average 2020-22 (%) Cash Conversion 7.6% 70.7% Average 2020-22 (%) 23.0% 7.1% 54.6% 16.9% ECo ECo ECo ECo ECo ECo P
Slide 27: Deep financial foundation leads to two solid credit profiles
Deep financial foundation leads to two solid credit profiles SpecialtyCo EssentialCo €1.9Bn underlying EBITDA €1.3Bn underlying EBITDA Margin of 23.6% Margin of 22.7%, Cash conversion of 71% Key strengths Key strengths Leading market positions offering higher than Leading market positions in key segme
Slide 28: Differentiated Capital Structures will support value creation
Differentiated Capital Structures will support value creation 28
Slide 29: Our approach to optimize capital structures supporting differentiated models
Our approach to optimize capital structures supporting differentiated models SpecialtyCo EssentialCo Align with new Align with new Multiple economic scenarios, Business operating models; operating models; including deep recession fundamentals Market views / Market views / business forecasts business
Slide 30: Differentiated and optimized capital structures to support value creation of both future entities
Differentiated and optimized capital structures to support value creation of both future entities Solvay SpecialtyCo EssentialCo In € bn Expected rating Baa2 / BBB Baa1 / BBB+ Baa3 /BBB- Expected outlook stable / neg stable /stable stable / stable Enhanced credit profile Gross debt 5.3 2.8 2.5 Balanc
Slide 31: SpecialtyCo's capital structure supports its accelerated growth plans
SpecialtyCo’s capital structure supports its accelerated growth plans TARGET DEBT AND LIABILITIES1 Commitment to 4.0 3.4 €Bn strong investment 0.3 Environmental Liabilities grade rating 3.0 0.3 Net pension Liabilities PERSONAL & CONFIDENTIAL 0.3 Leases/other 0.5 Hybrids Hybrid bonds assumed not 2.0
Slide 32: EssentialCo's solid balance sheet supports capital expenditures and decarbonization plans
EssentialCo’s Solid balance sheet supports capital expenditures and decarbonization plans TARGET DEBT AND LIABILITIES1 Commitment to 4.0 3.6 €Bn investment 0.4 Environmental Liabilities grade rating 3.0 0.7 Net pension Liabilities 0.6 Leases/Other Hybrid bonds 2.0 assumed not to be part of permanent
Slide 33: Liability Management Timeline
Liability Management Timeline 9M key figures ECo & SCo Capital Q2 2023 results H1 key figures November structures August 3 ECo & SCo June/July August 28 Q3 2023 results November 3 June/July August September Q2 OctoberQ3 November Q4 December 2023 Extraordinary EUR Bondholders’ End of consent process Ca
Slide 34: Unlocking greater value for all stakeholders
Unlocking greater value for all stakeholders Leverages strong foundation following strategic transformation Establishes two strong industry leaders poised to win Attractive investment thesis for differentiated investors profiles [growth and yield] Creating two Tailored capital structures for differen
Slide 35: Will you keep the Solvay name?
“Will you keep the Solvay name?”
Slide 36: Branding EssentialCo
Branding EssentialCo
Slide 37: EssentialCo Foundation: Mastery
Essential Co Foundation MASTERY Ernest and Alfred Solvay, mastering the soda ash technological breakthrough, which has enabled many other disruptive processes. 37
Slide 38: Manifesto
Manifesto Life is made of elements coming together. We are mastering the elements. Over the past 160 years, our obsession to reach excellence has been driving us to achieve mastery of our processes. Invisible and yet so vital, our products are at the heart of everyone's life. The essential solutions
Slide 39: FROM ...
FROM ...
Slide 40: SOLVAY
SOLVAY
Slide 41: SpecialtyCo new brand
SpecialtyCo new brand
Slide 42: SpecialtyCo Foundation: Explorers
SpecialtyCo Foundation EXPLORERS The Conferences gathering the most brilliant and visionary minds to collaborate on the future of science.
Slide 43: Manifesto
Manifesto The future is rich with unexplored possibilities. We are explorers. People from many horizons who dream the impossible, solve the unsolvable, partnering to pioneer the future of science. Because a sustainable future starts with our commitment, our solutions and innovations are the catalyst
Slide 44: Time to unveil the new brand...
Time to unveil the new brand...
Slide 45: Gathering of great minds at the first Solvay Conference of 1911
It symbolizes the gathering of the 24 great minds who participated in the first Solvay Conference of 1911.
Slide 46: SYENSQO
SYENSQO SY : A reference to Solvay letters EN : A reference to Ernest Solvay SYENS : A reference to our heritage in Science since 1911 Q : In reference to the title of the first Solvay Congress : Radiation and the Quanta, who laid the foundations of quantum physics QO: is for company
Slide 47: We are explorers creating breakthroughs that advance humanity
We are explorers creating We are mastering the elements breakthroughs that advance humanity. essential to our world.
Slide 48: Appendix
Appendix
Slide 49: Indicative overview of debt allocation
Indicative overview of debt allocation In €m Solvay SpecialtyCo EssentialCo Debt instruments Dec 2022 At Spin-Off date At Spin-Off date Actual Indicative Indicative EUR Senior Notes 500m Dec 27 2.75% 500 500 600m Sep 29 0.50% 600 600 New debt ECo (incl. €1.5 billion of new bonds) 1,850 USD Senior No
Slide 50: Solvay's shares are liquid
Solvay’s shares are liquid ..Good reasons to expect SpecialtyCo and EssentialCo to also be liquid ✓ Average total daily liquidity ~ €95m/day last 12 months; ~ 3-mth daily average €120m/day last 3 months, of which OTC ~€64 million OTC accounted for approx 50% 12-mth daily average ~€50 million ✓ Speci
Slide 51: Solvay's shares are liquid relative to benchmarks
Solvay’s shares are liquid relative to benchmarks 3-month average daily breakdown In basis points of free float [1] Median OTC Median Euronext & Other markets Solvay’s stock has traded better than (1) similar sized companies and (2) medians in major indices Source: Based on data from Bloomberg and E
Slide 52: Useful links to previous webinars
Useful links to previous webinars February 28, 2023 Aerospace and Defense webinar February 27, 2023 Soda ash webinar October 4, 2022 Peroxides webinar June 15, 2022 Consumer webinar February 2, 2022 Auto & batteries webinar 52
Slide 53: Glossary
Glossary ✓ Underlying figures adjust IFRS figures for the non-cash Purchase Price Allocation (PPA) accounting impacts related to acquisitions, for the coupons of perpetual hybrid bonds classified as equity under IFRS but treated as debt in the underlying statements, and for other elements to generate a