Solvay Sa · EURONEXT:SOLB
Solvay Sa — Investor Day (November 2023)
77 slides from Solvay Sa's investor day presentation, Nov 13, 2023
Slide 1: Capital Markets Day
Capital Markets Day 13 November 2023
Slide 2: Important Legal Information
IMPORTANT LEGAL INFORMATION This presentation relates the contemplated separation of Solvay SA/NV (“Solvay” or the “Company”) into two independent companies, Solvay (EssentialCo) and Syensqo SA/NV (“Syensqo”). This presentation has been prepared by Solvay, and access to it has been granted to you, s
Slide 3: Financial Information Included in This Presentation
FINANCIAL INFORMATION INCLUDED IN THIS PRESENTATION This presentation contains certain financial information relating to Solvay before completion of the Partial Demerger, as well as separate indicative financial information with respect to Solvay in its expected configuration immediately following the
Slide 4: Agenda
Agenda O1 Vision CEO O2 Strategy CEO O3 Operations COO O4 Business Deep Dives Soda Ash & Bicar - Peroxides O5 Financials CFO O6 Closing Remarks O7 Q&A All Speakers 4
Slide 5: O1 Vision
O1 Philippe Kehren Incoming Chief Executive Officer Vision 5
Slide 6: A New Chapter: Our Ambition
A New Chapter Our Ambition We are mastering the elements essential to our world Consolidate #1 market position Be THE benchmark on cost Sustain top quartile profitability and returns Deliver carbon neutrality through process innovation 6
Slide 7: Value unlocked by the separation
Value unlocked by the separation Standardization Simplification End-to-End optimization Lowest cost operations Industry Leadership Process innovation for sustainable operations Attractive shareholder returns Focused Investments for efficiency and decarbonization Investments Maintain IG rating 7
Slide 8: Board of Directors representing all stakeholders
Board of Directors representing all stakeholders 10 6 30% 6 Directors Independent Women Nationalities Experience in operational excellence, sustainability, finance, and talent management 8
Slide 9: Incoming Executive Leadership
Incoming Executive Leadership Alexandre Blum Lanny Duvall Mark van Bijsterveld Lisa Brown Brad Rector Chief Finance & Strategy Chief Operations Officer Chief People Officer General Counsel Chief Information Officer Officer Philippe Kehren Chief Executive Officer Etienne Galan Carlos Silveira An Nuyttens Danie
Slide 10: O2 Strategy
O2 Strategy 10
Slide 11: At a glance
At a glance +9,000 42 7 Employees Industrial sites in Major R&I 20 countries centers €5.6bn 23% 70% Net EBITDA Cash sales margin Conversion 11 Solvay pro-forma unaudited figures for 2022 (excludes Rusvinyl)
Slide 12: Balanced global geographical exposure
Balanced global geographical exposure EUROPE 33% of net sales AMERICAS 22 21 industrial sites industrial sites ASIA PACIFIC & Rest of the World* 39% of net sales 28% of net sales 12 industrial industrial sites sites 9 industrial sites *includes Middle-East and Africa 12 Source: Internal data; Solvay
Slide 13: Essential to multiple end-markets
Essential to multiple end-markets 10% 5% Electronics Resources, Environment & Energy 21% Industrial Applications 12% & Chemical industry % Building & others of Net Sales 18% Consumer goods, 16% Home & Health Care Agro, Feed & Food 18% Automotive 13 Solvay pro-forma unaudited figures for 2022
Slide 14: Resilient through the cycles
Resilient through the cycles Underlying EBITDA & Cash Conversion 2017-2022 % Cash Conversion 70% 71% 71% 69% 70% 70% % uEBITDA Margin % % % % % % 23 21 24 24 23 23 1,257 ~1,150* 1022 961 uEBITDA 919 876 875 CAPEX 273 254 295 272 285 380 2017 2018 2019 2020 2021 2022 2023e 14 Source: Company informat
Slide 15: Our people underpin our ambition & future success
Our people underpin our ambition & future success Invested & Experienced >9,000 1 in 4 ~14 yr. Employees invested as FTEs shareholders Avg. tenure Diverse ~25% 80 Women in leadership positions Nationalities Engaged ~80% Employee Engagement 15 Source: Solvay Internal data
Slide 16: Why Invest
Why Invest Top-quartile margins and cash generation Attractive progressive dividends Seasoned executives and best in class governance 16
Slide 17: Founded on 4 strategic priorities
Founded on 4 strategic priorities Market Cost & Process Energy Capital Leadership Leadership Transition Discipline Leverage Drive Deliver Prioritize #1 position Excellence & Carbon Cash in every competitiveness neutrality generation market & dividends 17
Slide 18: Reinforce #1 position
Reinforce #1 position Market Cost & Process Energy Capital Leadership Leadership Transition Discipline Leverage Drive Deliver Prioritize #1 position Excellence & Carbon Cash in every competitiveness neutrality generation market & dividends 18
Slide 19: Leadership across businesses
Leadership across businesses 1 Soda Ash Net Sales €1.7bn 30% Coatis 1 Bicar 10% Net Sales €0.9bn Net Sales €0.5bn % 1 16% Net Solvents (Latin America) Sales 17% 15% 1 Peroxides(1) 12% (1,2) Net Sales €0.9bn Special Chem Net Sales €0.8bn Silica 1 Rare earths Net Sales €0.6bn for auto catalysts 1 High
Slide 20: Portfolio: 75% aligned with GDP growth
Portfolio: 75% aligned with GDP growth Soda ash H 2 O2 175 GDP 175 ex. Pulp & Paper 150 150 125 125 100 100 75 75 ‘13 ‘18 ‘22 ‘27 ‘13 ‘18 ‘22 ‘27 Phenol Silica 150 200 175 125 150 100 125 75 100 ‘13 ‘18 ‘22 ‘27 75 ‘13 ‘18 ‘22 ‘27 20 Source: Company internal data using public information
Slide 21: Portfolio: 25% materially outpacing GDP
Portfolio : 25% materially outpacing GDP Highly Soda ash H 2O 2 Coatis Dispersible Silica Lithium carbonate used in Battery recycling Circular Silica Green solvents Batteries & urban mining (Rice Husk based) 15-20% 15-20% 15-20% 20-25% Bicar e-H2O2 Rare Earth Process chemicals for Permanent magnets
Slide 22: Intensify productivity and performance
Intensify productivity and performance Covered by COO Market Cost & Process Energy Capital Leadership Leadership Transition Discipline Leverage Drive Deliver Prioritize #1 position Excellence & Carbon Cash in every competitiveness neutrality generation market & dividends 22
Slide 23: Reinforcing our climate commitments
Reinforcing our climate commitments Market Cost & Process Energy Capital Leadership Leadership Transition Discipline Leverage Drive Deliver Prioritize #1 position Excellence & Carbon Cash in every competitiveness neutrality generation market & dividends 23
Slide 24: Our One Planet Roadmap
Our One Planet Roadmap CLIMATE BETTER LIFE -30% Scope 1 & 2 Safety RIIR 3 GHG Emissions 1 Aim for zero by 2030 Gender parity 4 -20% Scope 3 in 10 years GHG Emissions 1 by 2030 Living wage to Coal Phase out 2 100% of workforce CARBON NEUTRAL by 2030 by 2026 Scope 1 & 2 by 2050 1 Reference year 2021.
Slide 25: A clear path towards carbon neutrality
A clear path towards carbon neutrality Synthetic Natural Coal phase out Coal phase out Further & GHG abatement 1.10 decarbonization • Coal phase out by 0.90 2030 1 Further decarbonization 0.70 • Elimination of T of CO2 / process emissions T of Soda Ash 0.50 • Decarbonization of 0.35 energy 0 0 2018
Slide 26: Executing the energy transition
Executing the energy transition 1 site (NL) 2020 2 site (DE) 1 site (US) 2021, 2025 2020 1 site (DE) 1 site (CN) 2022 2024 1 site (US) 2 sites (FR) 2021, 2023 1 site (Fl) 2023 2023 2025 1 site (UK) 2019 2 sites (DE) 1 site (PL) 1 site (SK) 2023 2022 2019 1 site (FR) 1 site (PL) 2025 2023 4 sites (CN
Slide 27: Committed to a progressive dividend
Committed to a progressive dividend Market Cost & Process Energy Capital Leadership Leadership Transition Discipline Leverage Drive Deliver Prioritize #1 position Excellence & Carbon Cash in every competitiveness neutrality generation market & dividends 27
Slide 28: Clear prioritization of Cash usage
Clear prioritization of Cash usage ~€4bn Levered pre-CAPEX cash flow Indicative over 2024-28 Priority 1 ➔ One Planet Essential CAPEX ➔ Sustenance ~1/3 Priority 2 ‘Stable to increasing’ policy Dividends ~1/3 ➔ Selective investment projects Priority 3 ➔ Deleveraging More value creation ~1/3 ➔ Further s
Slide 29: 2028 Targets
2028 Targets Underlying EBITDA Growth (in %) Mid Single-Digit per year average Underlying EBITDA Margin (in %) Mid to High 20s Total Gross Savings €300 mn run-rate Free cash flow Conversion (in %) Exceed mid 30s ROCE (in %) Increasing to low 20s Stable to increasing dividends Investment grade credit
Slide 30: O3 Operations
O3 Lanny Duvall Incoming Chief Operations Officer Operations 30
Slide 31: Intensify productivity and performance
Intensify productivity and performance Operations Market Cost & Process Energy Capital Leadership Leadership Transition Discipline Leverage Drive Deliver Prioritize #1 position Excellence & Carbon Cash in every competitiveness neutrality generation market & dividends 31
Slide 32: A simpler and more effective operating model
A simpler and more effective operating model Repeatable technology platforms Scalable production footprint Standardized service model Common agenda on sustainability Separation will enable further simplification and standardization across businesses 32 32
Slide 33: Separation drives new and faster cost savings
Separation drives new and faster cost savings Fixed costs reduction driven by ✓ operational excellence ✓ continued footprint optimization Manufacturing Variable costs improvement driven by €300 mn ✓ process innovation Cost reduction by 2028 An organization fit for purpose G&A with a simple ERP platfo
Slide 34: Every factory will be a Star
Safety Every factory will be a Star Competitiveness Sustainability Customer Employee Satisfaction Engagement Star Factory is a unique journey for all stakeholders, In 2023 empowering our employees and maximizing our customers’ satisfaction ✓ 50% of sites started the journey Site Manager, La Rochelle
Slide 35: 160 years of mastering process innovation
160 years of mastering process innovation… Solvay builds first soda Solvay invents precipitated Schaerbeek pilot ash industrial plant in silica for green tires Largest H2O2 Mega-plant plant, Belgium Couillet site, Belgium in Thailand 1861 1866 1990 2011 1863 1958 1996 2022 Ernest Solvay invents a new
Slide 36: Mastering the art of process innovation in our operation
Mastering the art of process innovation in our operation e.Solvay a new myH2O2 a Bio-highly Production of rare A portfolio of chemical breakthrough breakthrough concept dispersible silica earths from recycled blowing agents electrochemical of small, safe, and derived from rice material to serve form
Slide 37: From… To
FROM… …TO ● Diversified technologies ● A simpler and more effective operating model ● Strong competitiveness of assets ● €300mn savings to extend cost leadership ● 160-year legacy pioneering ● Breakthrough processes to industrial processes drive sustainability and competitiveness 37
Slide 38: O4 Soda Ash & Bicar
O4 Etienne Galan Incoming President Soda Ash GBU Soda Ash and Bicar & Bicar 38
Slide 39: Global market leader in both Soda Ash and Bicar
Global market leader in both Soda Ash and Bicar Global #1 position in Soda Ash Global #1 position in Bicar Soda Ash global capacity (excl. China) in kt (2022) Bicar global capacity (incl. China) in kt (2022) APAC (7%) Other (36%) NAM (21%) NAM (35%) Natural (43%) Other (52%) 10% 11% 4%% 6% 12% 6 EUR
Slide 40: Market leadership with strong cash generation
Market leadership with strong cash generation SODA ASH BICAR ~20% ~15% ~10% ~30% ~25% Flat glass Container glass Water softener for Other applications Flue gas treatment, (construction, solar (food & beverages) detergents incl. sodium silicates, pharma, feed, food panels, automotive) lithium carbona
Slide 41: Sustainable megatrends create strong tailwinds
Sustainable megatrends create strong tailwinds Sustainable & Renewable Evolving MEGATRENDS Efficient Resources Energy Demographics MARKET TRENDS Energy & Health & Construction Electrification Food & Beverages Environment ● Double and triple glazing for ● Solar panels ● Sustainable packaging ● Tighter c
Slide 42: Stable demand & high operating rates creates high resilience
Stable demand & high operating rates creates high resilience Soda Ash global rate Global Soda Ash Resilient demand evolution capacity & demand excl. China (%) excl China (Mt) Stable operating rates and tight market conditions Forward looking market tightening as demand outgrows expansion Operating r
Slide 43: We are serving the highest growing Bicar segments
We are serving the highest growing Bicar segments Market acceleration driven by flue gas treatment and healthcare Bicar market size by end-market, incl. China (in Mt) Flue Gas Treatment 10 Leading global supplier of one-third of 7.6 the flue gas treatment market 8 CAGR 6.3 6 2023-28 5.3 4% Overall Mar
Slide 44: Cost Competitive Assets
Cost Competitive Assets Global Assets ➔ Globally Competitive ➔ Well positioned for the Seaborne Market ➔ Investments focused on expansion, decarbonization & competitiveness Regional Assets ➔ Highly competitive in Europe ➔ Risk free, short supply chain and logistics ➔ Investments focused on decarboni
Slide 45: Expanding natural Soda Ash capacity in North America
Expanding natural Soda Ash capacity in North America MT of CO2 MT of Soda Ash equivalent emissions Production 2.5 Reduced GHG 3.2 - 750 kt/yr CO2 eq. 3.0 2.0 3.8 Full ownership of Green River 1.5 acquiring 20% of AGC Shares 2.6 2.4 1.0 Increased capacity +600 kt/yr Soda Ash 2.2 2025 0.5 2.0 2022 202
Slide 46: Inventor and re-inventor of the soda ash process
We are the inventor and the re-inventor of the soda ash process New breakthrough electrochemical process powered by renewable energy €40mn invested to develop a proprietary technology first patented in 2014 -50% -20% Energy CO2 Emissions Pilot in Dombasle, France, commissioned in April -20% -30% Lime
Slide 47: O4 Peroxides
O4 Carlos Silveira President, Peroxides Peroxides 47
Slide 48: Market leadership and strong cash-generation
Market leadership and strong cash-generation ~40% ~20% ~10% ~30% Chemical Industry Pulp & Paper Electronics Niches incl. Textile bleaching, Food, Water & Aquaculture disinfectants and others Financials Net Sales 2022 EBITDA Avg. Growth 2014-2022 Cash conversion 2014-2022 ~€0.9bn ~11% >70% 48 Source:
Slide 49: Undisputed market leader
Undisputed market leader North America EMEA #2 Global #1 position #1 In a Mature Market In a Mature market Semicon investments NAM ~10% Semicon investments support growth LATAM ~15% support growth (GDP growth) (GDP growth) Capacity Capacity APAC ~30% South America APAC ex. China ~17% EMEA ~45% #1 Ma
Slide 50: Best-in-class cost position
Best-in-class cost position Nominal Capacity* Solvay Cost - Capacity Curve per asset versus competition, Euro/ton Competitors Drivers North America 0.8 mT 1.9 mT EMEA Vertically integrated proprietary technology More productive and sustainable production process South America 0.4 mT 1.5 mT APAC Uniq
Slide 51: Unmatched mastery of peroxide technologies
Unmatched mastery of peroxide technologies Unique degree of vertical integration Catalyst Merchant markets including Agro, Environment, 5-25 kt/year Building and Insulation Anthraquinone Operated remotely with reduced logistics costs Commercial plants Pipeline business Solvents 30-100+ kt/year Efficie
Slide 52: Track record of strong EBITDA growth
Track record of strong EBITDA growth Peroxides EBITDA delivery (indexed to 2013) Drivers 300 Cost, scale and technology leadership 250 ~3x 200 since 2013 Investment in operational 150 excellence and proprietary technology 100 13 14 15 16 17 18 19 20 21 22 Cash Conversion Ratio ~35% ~80% HPPO Investm
Slide 53: Leadership positions in the two highest growth segments
We have leadership positions in the two highest growth segments Market acceleration driven by ICC and electronics Electronics semicon, PV, display ● One of three global H2O2 market size by end-market (in €bn) suppliers >5 CAGR ● Only globally vertically integrated player ~4.4 2023-28 ~3.6 Overall Ma
Slide 54: O5 Financials & Outlook
O5 Alexandre Blum Incoming Chief Finance & Strategy Officer Financials & Outlook 54
Slide 55: Evolution since 2014
A long track record of resilient growth, margin expansion and cash generation 21.5% 23% EBITDA (€mn) Underlying EBITDA & margin 200 Last 10-year Average Growth: 6% Average EBITDA margin Indexed 2014 = 100 150 100 Evolution since 2014 50 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023e CAPEX & Ca
Slide 56: 2019 - 2022 Average Performance versus Peers
Top Quartile performance Solvay Peers Average Performance EBITDA margin (%) 25 20 2019 - 2022 Average Performance versus Peers 15 10 5 0 Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Cash conversion (%) 80 60 40 20 0 Peer 4 Peer 2 Peer 7 Peer 5 Peer 8 Peer 6 Peer 3 Peer 1 20 15 ROCE (%) 10
Slide 57: 2019 - 2022 Average Performance versus Peers
Top Quartile performance Solvay Peers Average Performance EBITDA margin (%) 25 20 2019 - 2022 Average Performance versus Peers 15 10 5 0 Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Cash conversion (%) 80 60 40 20 0 Peer 4 Peer 2 Peer 7 Peer 5 Peer 8 Peer 6 Peer 3 Peer 1 20 15 ROCE (%) 10
Slide 58: 2019 - 2022 Average Performance versus Peers
Top Quartile performance Solvay Peers Average Performance EBITDA margin (%) 25 20 2019 - 2022 Average Performance versus Peers 15 10 5 0 Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Cash conversion (%) 80 60 40 20 0 Peer 4 Peer 2 Peer 7 Peer 5 Peer 8 Peer 6 Peer 3 Peer 1 20 15 ROCE (%) 10
Slide 59: Solvay is more resilient than most peers
Solvay is more resilient than most peers Peak-to-trough underlying EBITDA 2017-2022 Solvay 3.02 Peers 2.09 1.81 1.81 1.85 1.46 1.47 1.47 1.31 1.38 More resilient ← Resilience through the cycle → Less resilient 59 Source: Market data and Company information - for Solvay, Solvay pro forma unaudited fig
Slide 60: 2028 Targets
2028 Targets Underlying EBITDA Growth (in %) Mid Single-Digit per year average Underlying EBITDA Margin (in %) Mid to High 20s Total Gross Savings €300 mn run-rate Free cash flow Conversion (in %) Exceed mid 30s ROCE (in %) Increasing to low 20s Stable to increasing dividends Investment grade credit
Slide 61: Profitable growth drivers
Profitable growth drivers Underlying EBITDA (€mn) and Margin (%) x EBITDA margin (%) Underlying EBITDA (€mn) 24% Mid to High 20's GDP Growth in key market segments with Mid-Single Digit Growth pockets going beyond Cost Savings from G&A and Operational Excellence 2019 2023e Existing Assets Projects Co
Slide 62: Best-in-class ROCE to improve further
Best-in-class ROCE to improve further Return on Capital Employed (%) Improve Top Line Growth to Low 20s ~20% Cost Reduction ~16% Value Creation investments Asset Efficiency Gains 2019 2023e 2028 62 Source: Solvay Internal data; Solvay audited financials (2019)
Slide 63: Optimized capital structure supports value creation
Optimized capital structure supports value creation In €bn Solvay Expected rating BBB- Expected outlook stable Gross debt 2.2 Net debt ~1.7 Net pension liabilities 0.7 Environmental liabilities 0.4 63 Financial debt indications are based on projections at the end of 2023 whereas other liability indi
Slide 64: Clear prioritization of Cash usage
Clear prioritization of Cash usage ~€4bn Levered pre-CAPEX cash flow indicative over 2024-28 Priority 1 ➔ One Planet Essential CAPEX ➔ Sustenance ~1/3 Priority 2 ‘Stable to increasing’ policy Dividends ~1/3 ➔ Selective investment projects Priority 3 ➔ Deleveraging More value creation ~1/3 ➔ Further s
Slide 65: O6 Closing Remarks
O6 Closing Remarks 65
Slide 66: Thank you
Thank you 66
Slide 67: O7 Q&A
O7 Q&A 67
Slide 68: Annexes
Annexes 68
Slide 69: Pierre Gurdjian
Pierre Gurdjian Incoming Chairman Pierre Gurdjian, 62, will serve as independent Director and Chair of the Board and Chair of the Finance Committee. He is currently a Director of Solvay in its present-day perimeter, appointed in 2022. He also serves on the Board of Directors of UCB and Lhoist. In ad
Slide 70: Philippe Kehren
Philippe Kehren Incoming Chief Executive Officer Philippe Kehren, 52, will serve as Chief Executive Officer and member of the Board. He is currently President of the Soda Ash & Derivatives global business unit and Head of Sustainability at Solvay. Mr Kehren is an industrial authority with a 30-year cros
Slide 71: Lanny Duvall
Lanny Duvall Incoming Chief Operations Officer Lanny Duvall, previously Chief Operations Officer at Heubach, will serve as Chief Operations Officer. He has three decades of chemical industry experience and a track record of creating organizations that deliver superior safety, quality, and productivity res
Slide 72: Etienne Galan
Etienne Galan Incoming President, GBU Soda Ash and Bicar Etienne joined Solvay’s GBU Soda Ash & Derivatives in 2015 as Senior Vice-President, Strategic Marketing. He then held various regional Business roles for the GBU, in Seaborne and Europe, and now oversees the Soda Ash Business globally. Prior
Slide 73: Carlos Silveira
Carlos Silveira President, Peroxides Until mid-2023, Carlos was the CEO of Peroxidos do Brasil Ltda, a JV of Solvay and PQM operating in South America, and where he delivered four fold growth over the last eight years, structuring long term lock- in contracts with key customers and a strong industri
Slide 74: Alexandre Blum
Alexandre Blum Incoming Chief Finance & Strategy Officer Alexandre Blum, currently Finance Director, Soda Ash & Bicar will serve as Chief Financial Officer. He was previously Group Controlling Director at Solvay. He plays a pivotal role in the financial management of the Group and in the profound transfo
Slide 75: Independent Board representing all stakeholders
Independent Board representing all stakeholders Pierre Gurdjian Chairman, Chair of finance committee and Independent Director Philippe Kehren Thomas Aebischer Aude Thibaut de Maisières Wolfgang Colberg Marjan Oudeman Chief Executive Officer Chair of the Audit Committee Chair of ESG committee, Vice Chai
Slide 76: Glossary
Glossary ✓ Capital expenditure (capex): Cash paid for the acquisition of tangible and intangible assets presented in cash flows from investing activities, and cash paid on the lease liabilities (excluding interests paid), presented in cash flows from financing activities, excluding acquisition of asset
Slide 77: Glossary
Glossary ✓ Organic growth: Growth of Net sales or underlying EBITDA excluding scope changes (related to small M&A not leading to restatements) and forex conversion effects. The calculation is made by rebasing the prior period at the business scope and forex conversion rate of the current period. Sco