Solvay Sa · EURONEXT:SOLB
Solvay Sa — FY2018 Earnings Presentation
46 slides from Solvay Sa's earnings presentation, Feb 27, 2019
Slide 1: Full Year 2018 Results
asking more from chemistry® | 2». Ults Full Year 2018 Rest
Slide 2: Forenote
FORENOTE Following the announcement in September 2017 of plans to divest the Polyamide business, these have been reclassified as discontinued operations and as assets held for sale. For comparative purposes, the first quarter of the 2017 income statement has been restated. Besides IFRS accounts, Sol
Slide 3: 2018 Results
2018 RESULTS 2018 Results 3February 27, 2019
Slide 4: Strong volume growth and sustained margins
STRONG VOLUME GROWTH AND SUSTAINED MARGINS + 5.3% 3% higher volumes across segments organic growth Net pricing maintained despite higher raw materials and 22% EBITDA energy prices EBITDA margin Higher fixed costs reflect investments to support growth € 2.2 bn + 6% € 725 m continuing operations
Slide 5: Organic EBITDA growth driven by higher volumes
ORGANIC EBITDA GROWTH DRIVEN BY HIGHER VOLUMES Organic growth: +8.1% 21% Organic growth: +3.1% Advanced Formulations 49% Strong volume growth in oil & gas in first Advanced Materials €2,230m half followed by significant decline in 2018 underlying fourth quarter Volume growth across main end-mark
Slide 6: Financial Highlights
FINANCIAL HIGHLIGHTS 2018 Results 6 February 27, 2019
Slide 7: Strong organic growth impacted by forex & scope
STRONG ORGANIC GROWTH IMPACTED BY FOREX & SCOPE 10,125 (99) (322) 335 219 10,257 Volume growth Advanced Materials strong growth from polymers Scope Price and composites for aeronautics, automotive and -1.0% Forex Volume +2.2% conversion & mix healthcare tempered by lower demand in smart -3.2%
Slide 8: Strong volume growth and stable pricing supported EBITDA margin
STRONG VOLUME GROWTH AND STABLE PRICING SUPPORTED EBITDA MARGIN Margin 22% Margin 22% 2,230 (33) 135 1 (52) 27 2,230 (78) Volume & mix Net Strong growth in core markets including auto, aero, oil Scope Fixed Equity earnings Forex Volume pricing costs & other & gas and mining; certain market headwin
Slide 9: Strong underlying profit from continuing operations supported by lower financial charges
STRONG UNDERLYING PROFIT FROM CONTINUING OPERATIONS SUPPORTED BY LOWER FINANCIAL CHARGES in € million 2018 2017 % yoy Underlying profit from continuing operations up 10% Net sales 10,257 10,125 +1% Lower net financial charges reflect ongoing deleveraging and EBITDA 2,230 2,230 - optimization of th
Slide 10: Focus on cash maintained amid higher working capital needs
FOCUS ON CASH MAINTAINED AMID HIGHER WORKING CAPITAL NEEDS 2,230 -711 FCF from continuing operations at € 830 m Provision Working capital phasing payments: Employee Higher cash variable remuneration for strong 2017 benefits -213 -103 Environment -76 -211 FCF from Financing Capex discipline mai
Slide 11: Provisions: gradual operational deleveraging in 2018
PROVISIONS: GRADUAL OPERATIONAL DELEVERAGING IN 2018 Movements in provisions in € million (3,890) +395 -315 -78 +30 +22 (3,836) Discounting Remeasu- Changes Payments: Net new costs rements in scope cont. +390 provisions [1] & other discont. +5 Operational deleveraging +6 31/12/2017 Payments Net new
Slide 12: Net debt: strong operational deleveraging in 2018
NET DEBT: STRONG OPERATIONAL DELEVERAGING IN 2018 Movements in net debt in € million (5,346) +725 -372 -90 -28 +6 (5,105) Hybrid In/outflow Changes Hybrid bonds Remeasu- FCF to Dividends rements from M&A in scope bonds (2,200) Solvay to Solvay (forex) & other (2,500) share- share- holders holders IF
Slide 13: Efficient capital structure leading to reduced cost of debt
EFFICIENT CAPITAL STRUCTURE LEADING TO REDUCED COST OF DEBT Underlying financial debt [1] evolution in € billion (8,720) (7,626) (2,200) Pro forma impact from announced (6,426) (6,310) (2,200) Polyamide divestment (828) (464) (2,200) (2,500) EUR perpetual hybrid bonds (2,142) • Underlying net debt ~
Slide 14: Debt profile: balanced maturities allowing flexibility
DEBT PROFILE: BALANCED MATURITIES ALLOWING FLEXIBILITY Major financial debt [1] in million $163m 3.95% €300m 300 $196m 4.25% 3.50% €700m 700 700 €750m $800m 700 $800m 4.20% 1.63% 4.45% 3.40% €500m 500 500 500 €500m €500m €500m 5.12% 5.43% 5.87% 2.75% 2019 2020 2021 2022 2023 2024 2025 2026 2027 Dece
Slide 15: Delivered solid organic growth in 2018
DELIVERED SOLID ORGANIC GROWTH IN 2018 vs 2017 Underlying figures + 5.7% + 5.3% + 12% Organic growth Organic growth Continuing operations Net Sales EBITDA Earnings per share + 6% + 4.2% Continuing operations Free Cash Dividend Flow 2018 Results 15 February 27, 2019
Slide 16: Not at the expense of the planet
NOT AT THE EXPENSE OF THE PLANET vs 2015 -24% 50% -30% intensity GHG Sustainable Occupational emissions solutions accidents What is beneficial for 76% 33% Employees involved in business must also be beneficial for our planet Employee Societal engagement actions 2018 Results 16 February 27, 2019
Slide 17: Constantly focused to respect our commitments
CONSTANTLY FOCUSED TO RESPECT OUR COMMITMENTS 2016 - 2018 Delivery 2016 - 2018 -20% GHG Intensity -24% kg CO2 eq. Emissions / € EBITDA +7.5% Mid-to-high single digit EBITDA growth Underlying % yoy 40% Sustainable solutions 50% % Group Sales -10 % Accident rate -30% Acc. with medical treatment / m wo
Slide 18: While creating value for Solvay's shareholders
WHILE CREATING VALUE FOR SOLVAY’S SHAREHOLDERS Underlying EPS Free cash flow to Solvay Dividend (in €) shareholders (in €) 3.75 10.57 725 3.60 (in € m) 3.45 3.30 9.08 8.19 527 7.40 466 148 2015 PF 2016 2017 2018 2015 PF 2016 2017 2018 2015 PF 2016 2017 2018 [1] +13% CAGR +70% CAGR +4.4% CAGR 2018 Re
Slide 19: 2019 Outlook
2019 OUTLOOK EBITDA Free Cash growth Flow Underlying at constant scope and forex Modest EBITDA growth in FY 2019 [1] Solid FCF, expected to continue to Q1 broadly flat versus Q1 2018 [2] deleverage the balance sheet 2018 Results [1] Organic growth, excluding scope & forex conversion effects, v
Slide 20: Strong track record of continued shareholders' distribution
STRONG TRACK RECORD OF CONTINUED SHAREHOLDERS’ DISTRIBUTION Gross dividend €3.75 2018 gross dividend per share in €/share[1] 4.00 Interim €1.44 Payment Jan. 17 2019 Final[1] €2.31 Payment May 23 2019 ~5.5% CAGR Total[1] €3.75 + 4.2 % 3.00 2.00 Committed to stable / 1.00 growing dividend - 1982 1983
Slide 21: Disclaimer
DISCLAIMER 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 t
Slide 22: Additional Information
ADDITIONAL INFORMATION 2018 Results 22February 27, 2019
Slide 23: Advanced Materials Full-Year 2018
ADVANCED MATERIALS FULL-YEAR 2018 46% 4,370 -33 -109 +151 +7 4,385 Price Specialty Polymers Scope Forex Volume +0.2% -0.7% conversion & mix Superior growth from sustainable mobility and -2.5% +3.4% 10% healthcare 25% Lower demand for smart devices as anticipated 19% Composite Materials +3.7% Spe
Slide 24: Advanced Formulations Full-Year 2018
ADVANCED FORMULATIONS FULL-YEAR 2018 65% 2,966 -64 +155 +98 3,057 -99 Novecare Scope Price -2.2% Forex Volume +3.3% Volume and price growth driven by oil and gas in the conversion & mix first half were reduced significantly in the fourth -3.3% +5.2% quarter Coatings, agro and home & personal car
Slide 25: Performance Chemicals Full-Year 2018
PERFORMANCE CHEMICALS FULL-YEAR 2018 56% 2,766 -2 -114 +113 2,808 +45 Soda Ash & Derivatives Scope Price Sustained strong demand for soda ash and bicarbonate Forex Volume -0.1% +4.1% conversion & mix Soda ash prices were slightly lower as expected, but -4.1% +1.6% 23% 3% improved in the second h
Slide 26: Corporate & Business Services Full-Year 2018
CORPORATE & BUSINESS SERVICES FULL-YEAR 2018 Other Corporate & Business Services • Costs were substantially lower versus last year • Productivity programs and low insurance claims FY 2017 FY 2018 helped to lower fixed costs, offsetting inflation Energy Services +10.7% • Stable contribution versus la
Slide 27: 2019 P&L Considerations
2019 P&L CONSIDERATIONS Underlying EBITDA Free cash flow to Solvay shareholders Forex sensitivity Deleveraging of the balance sheet with Mostly exposed to the U.S. dollar, with the EBITDA to grow modestly on an organic basis continued solid operational free cash flow main sensitivities per US$/€0.10
Slide 28: IFRS 16 to affect EBITDA, P&L & debt
IFRS 16 TO AFFECT EBITDA, P&L & DEBT 2018 key figures (in € m) As published IFRS 16 ilmpact Pro forma EBITDA 2,230 +100 2,330 • IFRS 16 implementation Advanced Materials 1,197 +28 1,225 Capitalizes leases, previously considered as Advanced Formulations 521 +12 533 operating leases Performance Chem
Slide 29: Solvay Profile
SOLVAY PROFILE 2018 Results 29February 27, 2019
Slide 30: Solvay ID
SOLVAY ID >70% >50% ~33% specialty in GDP+ in each products markets region Created by Ernest Solvay in 1863, Solvay is today all Advanced Materials Automotive & aerospace Europe Advanced Formulations Electrical & electronics North America about advanced materials and Performance Chemicals Resources
Slide 31: Solvay, platform for strong organic growth
SOLVAY, PLATFORM FOR STRONG ORGANIC GROWTH Established leader in New culture materials and being developed formulation platforms Innovation aligned with key secular trends Strong volume growth Leading to compelling & cash generation shareholder returns 2018 Results 31 February 27, 2019
Slide 32: A unique portfolio to address megatrends
A UNIQUE PORTFOLIO TO ADDRESS MEGATRENDS 50% ADVANCED MATERIALS ADVANCED FORMULATIONS PERFORMANCE CHEMICALS segment Polymer & Surface & Soda ash & Composite Liquid Peroxides technologies chemistry Electronics Healthcare Aerospace Automotive Oil & Gas Mining Agro Food Consumer goods Industrial Constr
Slide 33: Growth engines deliver 70% of EBITDA
GROWTH ENGINES DELIVER 70% OF EBITDA Advanced Materials Advanced Formulations Performance Chemicals 49% Customized specialty Lead in chemical intermediates 21% Providing solutions for sustainable through scale & technology, mobility, light weighting, CO2 and formulations for surface chemistry & liqu
Slide 34: Integrating sustainability into decision-making
INTEGRATING SUSTAINABILITY INTO DECISION-MAKING DRIVES SUPERIOR FINANCIAL VALUE GROWTH M&A > higher social and > Higher volume growth environmental contribution on average from Manufacturing Footprint SUSTAINABLE to customer performance sustainable solutions SOLUTIONS > lower environmental impact in
Slide 35: Innovation at our core
INNOVATION AT OUR CORE STRONG CONNECTIONS TO ADVANCE SCIENCE 2012 2018 Progress Research Intensity R&I Spend / Sales 2.4% 3.4% +100bp Strengthening our R&I capabilities to support strong pipeline of growth opportunities A worldwide Establishing world class network R&I centers of researchers Brussels
Slide 36: Broadest portfolio of advanced materials differentiating Solvay from competition
BROADEST PORTFOLIO OF ADVANCED MATERIALS DIFFERENTIATING SOLVAY FROM COMPETITION Aromatics Fluoropolymers High Perf Composites Adhesives & Thermo- Out-of- Thermoset Resin HPPA PPS PAEK PSU PTFE PVDF PFA FKM PFPE Carbon Fiber Surfacing plastic Autoclave Prepreg Infusion films prepreg prepreg ( ) 2018
Slide 37: Aircraft fundamentals support higher growth in composites
AIRCRAFT FUNDAMENTALS AERO SUPPORT HIGHER GROWTH IN COMPOSITES 4.5% >8,000 50% 2X Annual growth Record high Weight of composites Number of aircrafts expected in passenger traffic order backlog on new aircrafts vs <15% on legacy to double in 20 years SURFACE BONDING & COATINGS MULTIFUNCTIONALITY PRIM
Slide 38: We make cars lighter & more efficient
WE MAKE CARS LIGHTER & MORE EFFICIENT AUTO INCREASED MATERIALS USAGE DRIVES GROWTH 2.4% ~30% CAGR light vehicles CAGR hybrid & plug-in production in 5 years electric vehicles in ten years STRUCTURAL & SEMI-STRUCTURAL PARTS INTERIORS THERMAL & AIR INSULATION MANAGEMENT SYSTEMS ENGINE ENERGY-EFFICIENT
Slide 39: Technology leader for mission critical battery materials
WE ARE A TECHNOLOGY LEADER AUTO FOR MISSION CRITICAL BATTERY MATERIALS Li-ion battery Solvay technologies enable key F1EC, F2EC, SA functionalities of the Fluorinated Li-ion battery additives for electrolytes Safer Better energy density Solef® PVDF Binder Better power Lower cost Solef® PVDF
Slide 40: Solvay positioned in all auto platforms
SOLVAY POSITIONED IN ALL AUTO PLATFORMS AUTO OUTPACING THE INDUSTRY GROWTH BY 3X [1] ICE+ (P)HEV EV Increasing loading per car [2] ~ 6kg ~ 12kg 8kg ~ Internal combustion engine Transmission Performance drives value proposal Electrical engine Battery Opportunity for composites Chassis / functional pa
Slide 41: Resource constraints require more efficient solutions
RESOURCE CONSTRAINTS REQUIRE MORE EFFICIENT SOLUTIONS Doing more with less MINING OIL & GAS AGRO Higher throughput Maximize cost Targeted use MORE and yield of metals performance and of ingredients for & minerals fracturing efficiency seeds & crops Reduce impact Reduce Less clean LESS to employees a
Slide 42: Solvay Share
SOLVAY SHARE 2018 Results 42 February 27, 2019
Slide 43: Solvay Share
SOLVAY SHARE Share data Solvay (BRU) Market capitalization € 9.2 bn Listing Euronext Brussels & Paris Additional Ticker SOLB.BE Share information Currency EUR ISIN code BE0003470755 ADR program for US investors Contact CITI ADR symbol SOLVY Benefits of ADR’s to create Platform OTC Solvay ADRs • Clea
Slide 44: Investor Relations
INVESTOR RELATIONS Upcoming Geoffroy Raskin events +32 2 264 1540 geoffroy.raskin@solvay.com Jodi Allen +1 609 860 4608 jodi.allen@solvay.com Latest Bisser Alexandrov news +32 2 264 3687 bisser.alexandrov@solvay.com 2018 Results 44 February 27, 2019
Slide 45: Disclaimer
DISCLAIMER 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 t
Slide 46: www.solvay.com
SOLVAY www.solvay.com asking more from chemistry®