Solvay Sa · EURONEXT:SOLB
Solvay Sa — H1 2020 Earnings Presentation
48 slides from Solvay Sa's earnings presentation, September 2020
Slide 1: Solvay profile & strategy
Solvay profile & strategy September 2020
Slide 2: Forenote
Forenote 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: Summary
Summary 1. Solvay Profile & Strategy 2. H1/Q2 2020 Performance 3. 2019 Review 4. Annexes page 3 First half 2020 earnings
Slide 4: Solvay Profile & Strategy
Solvay Profile & Strategy page 4 1 First half 2020 earnings
Slide 5: Solvay by the numbers
Solvay by the numbers € € 10.2B net sales 2.3B >50% revenue in faster 24,100 115 People at Sites underlying EBITDA 53% sustainable 23% margin growing economies Solvay globally solutions Evenly € Balanced 2,100 336M >100 64 revenue across Europe, the R&I employees in in R&I nationalities countries Am
Slide 6: Solvay by markets and region
Solvay by markets and region 31% 28% Asia, Pacific Europe & RoW Net sales Net sales by market by region 11% 30% Latin America North America page 6 First half 2020 earnings 2019 figures
Slide 7: Our purpose
Our purpose AT OUR BEST We bond people We Believe in As Solvay As Leaders ideas and elements Citizens to reinvent progress Purposeful We Care and We Lead with Purpose, Responsibility Collaborate Heart and Mind Our vision We We Are Passionately Unity, Not Sustainable shared Uniformity Customer Obsess
Slide 8: Financial performance
Financial performance Underlying net financial debt (in € billion) 2.8x 2.6x Underlying Leverage 2.2x 2.1x 2.0x EBITDA in times [1] 2.0x (in € million) CAGR c.5% Provisions (in € billion) Free cash flow to Solvay shareholders from continuing operations (in € million) Dividend (in € per share) CAGR c.5
Slide 9: Our Businesses Aligned to Powerful Megatrends
Our Businesses Aligned to Powerful Megatrends Megatrends Electrification Lightweighting Resource efficiency Healthcare IoT / Digitalization Eco-friendly based solutions Our Solutions High-performance polymer technology portfolio Bio-based ingredients & Value • Binders & membranes • Improving engine •
Slide 10: Our G.R.O.W. Strategy
Our G.R.O.W. Strategy A differentiated management approach to drive growth, cash, and returns ACCELERATE GROWTH DELIVER RESILIENT CASH OPTIMIZE RETURNS WIN MATERIALS Prioritize investments in high margin Materials businesses with high growth potential, which are also our most sustainable solutions C
Slide 11: Materials
Materials #1 pure play advanced materials business Unique high-performance Strategic intent Track polymers & composite technologies Strong growth opportunities Accelerate growth Innovation Customers Investment record +7% G GROWTH EBITDA growth Research, Upgrade key Prioritize (organic 2014-2019) • S
Slide 12: Chemicals
Chemicals #1 cash conversion chemical player World-leaders in Strategic intent Track essential chemicals to daily life Mono-technology businesses Deliver resilient cash Innovation Customers Investment record +9% G GROWTH Cash flow Focus on Leverage Selectively • Soda ash process best-in-class invest
Slide 13: Solutions
Solutions Unlock value Unique Strategic intent Track formulation & application expertise Selective opportunities to grow Optimize returns Innovation Customers Investment record Returns G GROWTH Focus on Digitalization, Selective < WACC • Natural food ingredients eco-friendly focus on key in niche (a
Slide 14: Solvay ONE PLANET
Solvay ONE PLANET Strong ESG credentials MSCI ESG SUSTAINALYTICS FTSE4GOOD WBCSD CLIMATE AAA #2 out of 42 92nd percentile Top 10 (AAA-CCC scale) “Science and research play an important role to tackle the world’s environmental and health challenges and I'm particularly happy that Solvay is leading th
Slide 15: Our 2030 Sustainability Goals
Our 2030 Sustainability Goals SOLVAY ONE PLANET Align greenhouse gas emissions with Paris Agreement Reduce by 26% (-2%/y) CLIMATE Phase out coal Achieve 100% Reduce negative pressure on biodiversity 30% reduction Increase Sustainable Solutions revenues Achieve 65% vs 50% Increase Circularity Achieve
Slide 16: Why Invest?
Why Invest? Future growth Customer potential fuelled partnerships by megatrends drive innovation Global scale, diversity of products Key leadership and end-markets, positions reliable infrastructure Proven Bold ESG resilience Ambition with through Crises Solvay ONE Planet page 16 First half 2020 ear
Slide 17: First Half / Q2 2020 performance
First Half / Q2 2020 performance page 17 2 First half 2020 earnings
Slide 18: First Half 2020 Performance
First Half 2020 Performance Strong free cash flow despite demand headwinds € € € 435 m 4.6 bn 1,008 m FREE CASH FLOW NET SALES UNDERLYING EBITDA to shareholders, continuing ops Margin 21.7% FCF conversion ratio (LTM) 49.1% ● Lower volumes in aero, auto, oil & gas and construction markets ● Reduction
Slide 19: Solvay performance by end markets in H1 2020
Solvay performance by end markets in H1 2020 % Solvay End Market annual Solvay first half 2020 performance sales 2019 Building & Construction/Industrial 16% Short-term impact¹ to Chemical & Solutions segments Penetration of high-performance polymers in under-the-hood and Automotive 14% battery applic
Slide 20: Materials
Materials Q2 2020 performance - - 2019 Net Sales by End-Market 19 % Net sales y/y organic 28 % EBITDA y/y organic 25 % EBITDA margin Materials Specialty Polymers, Composite Materials Automotive & Aerospace 55% 25% Market Drivers Performance Highlights Industrial Applications 11% 19% • Significant vol
Slide 21: Chemicals
Chemicals Q2 2020 performance - - 2019 Net Sales by End-Market 19 % Net sales y/y organic 30 % EBITDA y/y organic 25 % EBITDA margin Chemicals Soda Ash & Derivatives, Peroxides, Coatis, Silica and Rusvinyl Consumer good, Healthcare 26% 17% Market Drivers Performance Highlights Industrial Application
Slide 22: Solutions
Solutions Q2 2020 performance - - 2019 Net Sales by End-Market 14 % Net sales y/y organic 26 % EBITDA y/y organic 16 % EBITDA margin Solutions Novecare, Special Chem, Technology Solutions and Aroma Performance Resources & Environment 24% 14% Market Drivers Performance Highlights Industrial Applicati
Slide 23: Strong free cash flow generation
Strong free cash flow generation Driven by disciplined working capital management First Half 2020 H1 2020 FCF to Solvay shareholders €435m vs. €33m in H1 2019 Capex Working Provisions Financing Taxes Main drivers: capital & Other Underlying FCF to Solvay ● Disciplined working capital EBITDA sharehold
Slide 24: Cost savings status update, 2020
Cost savings status update, 2020 First Half 2020 Structural levers (€80m) FY 2020 estimate Structural ● Restructuring 45% €80m ● Indirect Spend 40% €150m Structural CM ● Productivity Efficiencies 15% measures 2020 Temporary levers (€90m) Temporary Temporary €90m ● Furloughs €150m measures 2020 ● Sala
Slide 25: Outlook and expectations for full year 2020
Outlook and expectations for full year 2020 Demand Costs Cash Challenging Cost savings of ~ Free Cash Flow in environment €300m gross, line with FY 2019 continues into Q3 structural and before improving temporary in Q4 Low visibility continues into Q3; Remain focused on Cost and Cash levers page 25
Slide 26: 'GROW' Cost savings plan
‘GROW’ Cost savings plan Overview of structural targets Structural €350m Main Levers (Nov’19 G.R.O.W. strategy + Feb’20) ● Restructuring Composite Materials ● Indirect Spend +€60m (May’20) ● Productivity Efficiencies Total structural target of €410 million gross savings by 2024 >35% plan to be achiev
Slide 27: 2019 review
2019 review page 27 3 First half 2020 earnings
Slide 28: 12 months in review
12 months in review Long-term actions to unleash longer-term results G.R.O.W. Structure Culture Core competencies Strategy Solvay ONE Purpose & incentives Customer Innovation ESG partnerships TPC platform Solvay ONE Planet Battery platform page 28 R&I Centers First half 2020 earnings
Slide 29: 2019 Results
2019 Results Delivery on our financial and sustainability objectives FCF to NET SALES UNDERLYING EBITDA Solvay shareholders EBITDA margin continuing operations € € € 10 -2% yoy bn 2.3 -2.8% yoy bn 23 stable yoy % 606+€40m yoy m organically GHG SUSTAINABLE OCCUPATIONAL SOCIETAL EMISSIONS SOLUTIONS ACC
Slide 30: Annexes
Annexes page 30 4 First half 2020 earnings
Slide 31: Sustainable value creation integrated in group compensation structure
Sustainable value creation integrated in group compensation structure Fixed Compensation Short and Long and Benefits Term Variable Compensation Annual Pension Short term Performance Share Stock Base Salary & Benefits incentive Units (*) Options (*) 1 year 3 years 3 years PERFORMANCE PERIOD following t
Slide 32: Balanced maturities
Balanced maturities Deleveraging and reduced of cost of debt Major financial debt [1] in million (EUR and USD) page 32 First half 2020 earnings
Slide 33: Bonding with customers to create value
Bonding with customers to create value UDELⓇ RADELTM CYCOMⓇ prepreg Solvay insideⓇ Solvay insideⓇ Polymer for hemodialysis Face Shields to protect Strike protection Testing kit & antiviral drug Cough suppressant membranes against COVID-19 surfacing film COVID-19 drugs HyflonⓇ FomblinⓇ InteroxⓇ Solvay
Slide 34: Automotive
Automotive ELECTRIFICATION LIGHTWEIGHTING RESOURCE We make cars more efficient EFFICIENCY MARKET DRIVERS HOW WE WIN Fuel efficiency / lightweighting Broadest portfolio of advanced materials regulations driving CO2 reductions • Greater use of high-performance polymers to • EU target 95g CO2/km by 2020
Slide 35: Aerospace
Aerospace LIGHTWEIGHTING RESOURCE We make aircraft lighter & more efficient EFFICIENCY MARKET DRIVERS HOW WE WIN 4.3% annual growth in passenger traffic Broad customer base • Positions with major global OEMs 10% ➝ 50% by weight in US, Europe, China & Russia ~10% • Long-term contracts on key programs •
Slide 36: Thermoplastic composites
Thermoplastic composites LIGHTWEIGHTING RESOURCE For aerospace, automotive and oil & gas EFFICIENCY MARKET DRIVERS HOW WE WIN Why Thermoplastics? Investments • Capacity expansions in aero (Sept 2019) ~10% Fast cycle time • New capacity for oil & gas (Oct 2019) net sales • Enabling increased build ra
Slide 37: We are a technology leader for mission critical battery materials
We are a technology leader RESOURCE for mission critical battery ELECTRIFICATION LIGHTWEIGHTING EFFICIENCY materials A unique expertise in fluorine chemistry and advanced conductive materials ENERGAIN® NOHMS* TFSI ILS Fluorinated solvents and Ionic liquids based on TFSI for formulations High Voltage
Slide 38: 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- Carbon Thermoset Resin & HPPA PPS PAEK PSU PTFE PVDF PFA FKM PFPE plastic Autoclave Fiber Prepreg Infusion Surfacing prepreg prepreg films ✓ ✓ ✓ ✓ ✓
Slide 39: Electronics
Electronics IOT/ Beyond smartphones DIGITALIZZATION MARKET DRIVERS HOW WE WIN Double digit growth expected We target advanced technology • The growing demand for hyper-connectivity and markets driven by strong long-term the fast development of 5G trends with a portfolio of solutions ~5% • Exponentia
Slide 40: Healthcare
Healthcare EXPANDING HEALTHCARE ECO-FRIENDLY SOLUTIONS We improve comfort for others MARKET DRIVERS HOW WE WIN +5-7% CAGR Patient care: World leader in thermoplastics • Health care coverage in developing markets used for high performance membrane • The growing care needs of elderly populations (agei
Slide 41: Home & Personal care
Home & Personal care ECO-FRIENDLY SOLUTIONS Performant and convenient MARKET DRIVERS HOW WE WIN Attractive market potential: GDP+ We provide our customers with portfolio • Request for more natural and bio based solutions of innovative polymers and surfactants • Growing customer base • Homecare and I
Slide 42: Soda ash & Bicarbonate
Soda ash & Bicarbonate EXPANDING HEALTHCARE RESOURCE Resilient demand & strong cash conversion EFFICIENCY MARKET DRIVERS HOW WE WIN Resilient growing soda ash demand We offer security of supply • Mix of consumer and industrial-driven demand • Global network of world-class and local assets ~16% • Cap
Slide 43: Peroxides
Peroxides RESOURCE Resilient demand & strong cash conversion EFFICIENCY MARKET DRIVERS HOW WE WIN Resilient & growing H202 & (HP)PO markets We partner with our customers • Diversity of markets decreases cyclicality • Offering a global footprint for security of supply • Applications in Agro / Food, C
Slide 44: Digitalization as key enabler for further value creation
Digitalization as key enabler for further value creation DIGITALIZATION DIGITALIZATION Example Example OF PLANTS in Specialty Polymers FOR CUSTOMERS in Technology Solutions Increase asset performance • +18% tons/yr • Real-time • Real-time data enables gain in fluids data analysis ongoing interaction
Slide 45: Solvay stock information
Solvay stock information Listing on Euronext Brussels & Paris, compartment A How to hold Solvay shares? ISIN code BE0003470755 Solvay ordinary shares can be held as: Member code SOLB • Dematerialized shares: your shares remain with your financial intermediary, who manages them. Currency EUR • Registe
Slide 46: ADR program for US investors
ADR program for US investors ADR program for US investors Benefits of ADR’s Contact CITI ADR symbol SOLVY • Clear and settle according to US standards to create Platform OTC Solvay ADRs • Convenience of stock quotes and dividend New York CUSIP 834437303 payments in US dollars Michael O’Leary michael.
Slide 47: Our Purpose
Our Purpose We bond people, ideas and elements to reinvent progress. Together we can create a sustainable and shared future. page 47 First half 2020 earnings
Slide 48: Thank you.
Thank you. Investor Relations Shareholders services investor.relations@solvay.com shareholders@solvay.com Rue de Ransbeek, 310 Rue des Champs Elysées, 43 1120 Brussels, Belgium 1050 Brussels, Belgium Follow us on solvay.com