Solvay Sa · EURONEXT:SOLB
Solvay Sa — H1 2018 Earnings Presentation
38 slides from Solvay Sa's earnings presentation, Jul 31, 2018
Slide 1: First Half 2018 Results Presentation
FIRST HALF 2018 July 31, 2018 RESULTS PRESENTATION
Slide 2: Safe Harbor Forenote
SAFE HARBOR FORENOTE This presentation may contain forward-looking information. Following the announcement in September 2017 of plans to divest Forward-looking statements describe expectations, plans, the Polyamide business, these have been reclassified as strategies, goals, future events or intenti
Slide 3: Overview
OVERVIEW Executing our plan Financial highlights Priorities and outlook Appendices First half 2018 Results 3 July 31, 2018
Slide 4: Sustained EBITDA margin
Strong volume growth counters forex headwinds Sustained EBITDA margin Organic EBITDA growth of 6% Foreign exchange headwinds EBITDA margin sustained at 23% First half 2018 Results 4 July 31, 2018
Slide 5: 2018 first half results: strong volume growth counters adverse forex
2018 first half results Strong volume growth counters adverse forex EBITDA -3% Free cash flow[1] Organic growth +6% €123 million Volume/Mix Resulting from Strong volumes across Advanced Materials and Lower EBITDA Advanced Formulations Phasing in working capital Pricing power Capex disc
Slide 6: Organic EBITDA growth driven by volumes in Advanced businesses
Organic EBITDA growth Driven by volumes in Advanced businesses Advanced Materials Organic growth: +5% Organic growth: +17% Advanced Formulations Strong demand for high-performance Strong volume growth and pricing 648 630 polymers in automotive and aerospace power in the North American 257 262 Oil &
Slide 7: Financial highlights
OVERVIEW Executing our plan Financial highlights Priorities and outlook Appendices First half 2018 Results 7 July 31, 2018
Slide 8: Sales impacted by forex & scope
Sales impacted by forex & scope Strong organic growth Net sales in € million 5,181 (70) (303) 246 37 5,092 Scope Price Volume growth -1.3% Forex Volume conversion & mix +0.7% Advanced Materials: sustainable mobility remained a -5.8% +4.8% solid growth driver (automotive & aeronautics) Advanced
Slide 9: EBITDA margin sustained
EBITDA margin sustained Driven by strong volume growth Underlying EBITDA in € million 1,183 (21) (78) 95 1 (22) (7) 1,150 Net Volume & mix Scope Fixed Equity earnings -1.7% Forex Volume pricing costs Led by Advanced Materials and Advanced & other conversion & mix 0.1% -1.9% -0.6% Formulations -6.6
Slide 10: Underlying profit from continuing operations up
Underlying profit from continuing operations up EBITDA reduction more than offset by lower financial charges Underlying P&L in € million H1 2018 H1 2017 % yoy Net sales 5,092 5,181 -2% EBITDA 1,150 1,183 -3% Underlying profit from continuing operations up 7% EBITDA margin 23% 23% - Lower net finan
Slide 11: Focus on cash maintained
Focus on cash maintained Cash generation in € million 1,150 -322 -370 Provision payments: Employee Capex benefits -106 Financing Environment -36 payments: -109 Other -48 Net interests -54 Hybrid coupons -84 Dividends to -190 Other FCF non-controlling Working +95 218 -139 interests capital Taxes -37
Slide 12: Efficient capital structure
Efficient capital structure Leading to reduced cost of debt Underlying financial debt [1] evolution in € billion EUR perpetual hybrid bonds USD bonds Pro forma impact from announced Polyamide divestment EU bonds Underlying net debt €4.6 bn & major debt Underlying leverage 1.9x Other debt
Slide 13: Priorities and outlook
OVERVIEW Executing our plan Financial highlights Priorities and outlook Appendices First half 2018 Results 13 July 31, 2018
Slide 14: Our priorities: Deliver and prepare the future
Our priorities Deliver and prepare the future Organic volume growth Earnings and cash flow growth Optimize organization Sustainable value First half 2018 Results 14 July 31, 2018
Slide 15: Outlook Full year 2018
Outlook Full year 2018 Underlying Organic EBITDA growth 5% to 7% Free cash flow[2] to exceed 2017 level of €782 million First half 2018 Results [1] Excluding forex conversion and scope effects 15 July 31, 2018 [2] Free cash flow from continuing operations
Slide 16: Appendices: Additional first half 2018 financial data
APPENDICES Additional first half 2018 financial data General information Other financial considerations for 2018 First half 2018 Results 16 July 31, 2018
Slide 17: Advanced Materials first half 2018
Advanced Materials first half 2018 Net sales (in € million) EBITDA (in € million) 29% 29% 46% 2,270 -32 -124 +116 -21 2,210 648 margin 630 Scope Price -1.4% Forex Volume -0.9% conversion & mix -2.8% -5.5% +5.1% 10% 2 210 +4,5% 24% -2.7% 20% Specialty Polymers Composite Materials Special Chem Silica
Slide 18: Advanced Formulations first half 2018
Advanced Formulations first half 2018 Net sales (in € million) EBITDA (in € million) 1,498 -38 -95 +111 +29 1,505 67% 17% 17% margin Scope Price -2.6% Forex Volume +2.0% 257 262 conversion & mix -6.4% +7.4% 1 505 +1.9% +10% +0.5% 13% 20% Novecare Technology Solutions Aroma Performance H1 2017 H1 201
Slide 19: Performance Chemicals first half 2018
Performance Chemicals first half 2018 Net sales (in € million) EBITDA (in € million) 1,403 - -82 +28 1,372 56% 29% +23 margin 27% Scope - Forex Volume Price 401 conversion & mix +2.0% 365 -5.9% +1.6% 701 -9.0% +3,9% 3% -2.2% 17% 24% Soda Ash & Derivatives Peroxides Coatis Functional Polymers H1 2017
Slide 20: Corporate & Business Services first half 2018
Corporate & Business Services first half 2018 Stable conditions EBITDA (in € million) Other Corporate & Business Services H1 2017 H1 2018 Costs were substantially lower versus last year Benefitted from synergies and phasing of costs Inflation was offset by cost discipline +13% Energy Services
Slide 21: Annexes: General information
ANNEXES Additional first half 2018 financial data General information Other financial considerations for 2018 First half 2018 Results 21 July 31, 2018
Slide 22: Solvay: A sustainable investment
SOLVAY A sustainable investment Providing mission critical solutions in fast-growth end-markets Supporting blue chip manufacturers & brands globally Technology focused in Advanced Materials & Advanced Formulations Powered by innovation & market leadership positons Highest EBITDA margin within di
Slide 23: We are a world leader in the chemical industry
We are a world leader In the chemical industry ~26,800 Top 3 1 2 Employees[2] Market position [1] 3 61 €10.1billion countries net sales 135 €2.2billon Industrial sites underlying EBITDA 21 22% Major R&I sites EBITDA margin 2017 First half 2018 Results [1] Applicable to ~90% of portfolio 23 July 31,
Slide 24: Upgraded portfolio: acquisitions and divestments
Upgraded portfolio Enhancing customized ACQUISITIONS solution LT-CF offerings Cytec Ener- gain plant XL Form. comp resins ounds Polyamide [1] Ryton Chem- Indupa Viny- Rhodia logics Refri- gerants thai Phos- Reducing phorous PCC Dakarto cyclical & Pipe- Eco Benvic life Services Inovyn low-growth busi
Slide 25: Significantly enhanced portfolio: more global, more specialty
Significantly enhanced portfolio More global, more specialty Net MORE MORE MORE MORE Sales GLOBAL DIVERSIFIED SPECIALTY SUSTAINABLE 2010 >50% ~20% ~25% <20% in in GDP+ specialty sustainable €6.5 billon Europe markets products solutions 2017 ~33% >50% >70% ~50% in each in GDP+ specialty sustainable €
Slide 26: Exceeding mid-term targets
Exceeding mid-term targets Creating more value 2 years 2 years 2016 - 2017 2016 - 2017 PROFIT Sustainable Solutions 49% EBITDA[1] growth +8.6% Increase to 40% of net sales by 2018 Mid-to-high single-digit over 2 years CASH GHG intensity Free cash flow €1.75 bn Reduce by -20% over 3 years -24% Exceed
Slide 27: Our strategic commitment: double revenue share from sustainable solutions
Our strategic commitment Double revenue share from sustainable solutions[1] (From 25% in 2014, baseline) NUMBER OF ACCIDENTS Goal MTAR <0.50 SUSTAINABLE SOLUTIONS IN GROUP’S SALES OF EMPLOYEES INVOLVED IN SOCIETAL By 2025, €1 revenue out of €2 ACTIONS OF in sustainable solutions GREENHOUSE GAS INTEN
Slide 28: More sustainable solutions
More sustainable solutions To drive superior returns over time Sustainable Portfolio Management Strategic objectives 2017 2018 2025 49% 40% 50% Manufacturing impact Sustainable on ecosystems solutions 43% 8% Neutral impact Challenged applications Fit with market sustainability criteria Key levers Ke
Slide 29: Growth engines deliver 70% of EBITDA
Growth engines deliver 70% of EBITDA 49% Advanced Materials Advanced Formulations Performance Chemicals Providing solutions for Customized specialty Leading positions Underlying 21% sustainable mobility, formulations for surface in chemical intermediates chemistry & liquid behavior, through scale &
Slide 30: Debt profile
Debt profile Balanced maturities allowing flexibility Repaid in Major financial debt [1] $82 @8.95% October 2017 in million Repaid $87 in July 2017 @3.95% $204 $163 @3.50% @3.95% $196 Repaid in €1,000 @3.50% December 2017 @Euribor €118 +82bp @4.63% €700 €750 $800 $800 @4.20% @1.63% @3.40% @4.45% €50
Slide 31: Provisions
Provisions Gradual operational deleveraging Movements (4,269) +408 -216 -100 +232 in provisions +55 (3,890) in € million Discounting Payments Net new Remeasu- Changes costs rements provisions in scope [1] & other Operational deleverage +92 [1] Impact of index, mortality, forex & discount rate change
Slide 32: Rewarding shareholders
Rewarding shareholders Delivery on commitments over 35 years Gross dividend in €/share 4,00 Adjusted gross dividend (for rights issue) 3,60 3,00 ~5.6% CAGR 2,00 1,00 0,00 1982 1987 1992 1997 2002 2007 2012 2017 Committed to stable / growing dividend First half 2018 Results 32 July 31, 2018
Slide 33: Appendices: Other financial considerations for 2018
Appendices Additional first half 2018 financial data General information Other financial considerations for 2018 First half 2018 Results 33 July 31, 2018
Slide 34: 2018 P&L Considerations
2018 P&L Considerations Underlying EBITDA Depreciation/Amortization EBITDA to grow 5% to 7% organically, excluding forex Underlying D&A expected at ~€(700)m, in line with 2017 conversion an scope effects Excludes ~€(240)m PPA amortization Forex conversion impact estimated at €(125) million based
Slide 35: 2018 Sensitivities
2018 Sensitivities EBITDA sensitivity Financials sensitivity Forex sensitivity on conversion and transaction: Net debt sensitivity Immediate impact on conversion exposure ~€140m per US$/€ 0.10 change Deferred transactional impact due to hedging (~6-12 month rolling basis) Net financial charges
Slide 36: 2018 Cash Considerations
2018 Cash Considerations Free cash flow Cash financing payments Free cash flow from continuing operations expected to Net cash financing payments at ~€(250)m exceed 2017 level of €782m, including: Reduction by more than €100m Capital expenditure from continuing operations at ~€(700)m Total net c
Slide 37: Solvay's ADR program
Solvay’s ADR program ADRs Details Benefits of ADRs ADR Symbol SOLVY Clear and settle according to US standards Platform OTC CUSIP 834437303 Convenience of stock quotes and dividend payments in US dollars DR ISIN US834437305 Underlying ISIN BE0003470755 Purchase in the same way as other US stoc
Slide 38: Investor relations contacts
Investor relations contacts Geoffroy Raskin Jodi Allen Bisser Alexandrov +32 2 264 1540 +1 609 860 4608 +32 2 264 3687 geoffroy.raskin@solvay.com jodi.allen@solvay.com bisser.alexandrov@solvay.com NEXT EVENTS July 31, 2018 September 24, 2018 November 8, 2018 February 27, 2019 May 7, 2019 H1 2018 Inv