Solvay Sa · EURONEXT:SOLB
Solvay Sa — FY2019 Earnings Presentation
49 slides from Solvay Sa's earnings presentation, Feb 26, 2020
Slide 1: Solvay Corporate presentation
Solvay Corporate presentation 2019 results, strategy and mid-term plan
Slide 2: Forenote
Forenote IFRS 16 has been implemented in the Group’s financial statements since January 1, 2019. Comparative information for the first quarter of 2018 in the business review is presented on an unaudited pro forma basis as if the implementation had taken place on January 1, 2018. This information is
Slide 3: 2019 Review
2019 Review 3 Full Year 2019 Results February 26th, 2020
Slide 4: One year in review
One year in review New CEO G.R.O.W. Our purpose One Planet & measures Strategy Shared sustainable Shared sustainable value for all value for all Efficient solutions TPC platform Battery platform Research centers 6 solutions Creation in May Creation in May Europe, US, China 4 Full Year 2019 Results F
Slide 5: Strategic update
Strategic update GGROWTH Portfolio Structure Customer focus R RESILIENCE • Divestment of Polyamides • Bonus structure aligned to • Collaboration with leading O commodities differentiated business auto OEM customer enabled mandates Solvay to win new battery • Net Proceeds of €1.2 billion container ap
Slide 6: 2019 Financial results
2019 Financial results Focus on cost, cash and customers in a challenging macro environment €10bn €2.3bn €606m FY NET FY UNDERLYING FY FREE CASH FLOW SALES EBITDA to Solvay Shareholders from continuing operations Disciplined focus Down 2% yoy Foreign exchange delivers solid results Price partly offs
Slide 7: Advanced Materials 2019 Performance
Advanced Materials 12% 4% 2019 Performance NET SALES Aeronautics & Automotive 9% Electrical & Electronics NET Resources & Environment +0.3% SALES -9.3% EBITDA 25 % EBITDA 3% Agro, Feed & Food 54% y/y organic y/y organic margin Consumer goods & Healthcare 7% Building & Construction Industrial applica
Slide 8: Advanced Formulations 2019 Performance
1% 1% Advanced Formulations 25% 2019 Performance NET SALES 29% Aeronautics & Automotive Electrical & Electronics NET Resources & Environment -10% SALES -12% EBITDA 17 % EBITDA Agro, Feed & Food y/y organic y/y organic margin 7% Consumer goods & Healthcare Building & Construction Industrial applicati
Slide 9: Performance Chemicals 2019 Performance
5% Performance Chemicals 24% 9% 2019 Performance NET SALES Aeronautics & Automotive Resources & Environment NET 20% +2.2% SALES +10% EBITDA 29 % EBITDA Agro, Feed & Food y/y organic y/y organic margin Consumer goods & Healthcare 14% Building & Construction Industrial applications Performance Highlig
Slide 10: Significant free cash flow generation
Significant free cash flow generation 2019 FCF to Solvay shareholders from continuing 2019 (in € billion) operations at €606 million • Strict working capital 2,322 (826) management Provisions: Employee benefits (217) Financing: • Capex discipline maintained Environment (78) Net interests (118) Other
Slide 11: Strong operational deleveraging
Strong operational deleveraging Underlying Net Financial Debt Provisions Leverage (in € million) Leverage (in € million) 2.1x 2.0x (5,538) 801 (3,820) 399 (43) (112) 8 (5,386) (231) 70 (3,710) (387) (114) (154) (87) C hanges O ther (4 5 7) 114 In/outflow O ther (3 1 4) Use of Remeasu- in scope C han
Slide 12: 2019 social & environmental results
2019 social & environmental results Constantly focused to respect our commitments 2019 2018 2017 Greenhouse Gas emissions (scope 1 & 2) in percentage at constant perimeter vs. Y-1 -5% flat - Sustainable solutions as percentage of Group sales 53% 50% 49% Occupational accidents at Group sites 0.44 0.5
Slide 13: 2020 outlook
2020 outlook Return to growth in second half 0 % to -3% 28 % ~ 8 % UNDERLYING EBITDA FREE CASH FLOW ROCE Organically Conversion stable from €2,322 million in 2019 Assumptions included in guidance: • 737MAX build rate of ~200 in 2020 versus almost ~600 in 2019 (~30m to 40m FY impact) • COVID-19 virus
Slide 14: Solvay Profile and strategy
Solvay Profile and strategy 14 Full Year 2019 Results February 26th, 2020
Slide 15: Solvay By The Numbers
Solvay By The Numbers €10.2B €2.3B >50% 24,100 115 net sales underlying EBITDA revenue in faster People at Sites 53% sustainable solutions 23% margin growing economies Solvay globally Evenly Balanced 2,015 €336M >100 64 revenue across Europe, the R&I employees in in R&I nationalities countries Ameri
Slide 16: We bond people, ideas and elements to reinvent progress
Our purpose AT OUT BEST We bond people We Believe in As Solvay As Leaders ideas and elements Citizens to reinvent progress Purposeful Responsibility We Care and We Lead with Purpose, Heart and Collaborate Mind We Unity, Not We Are Passionately Uniformity Customer Coach People Our vision Obsessed to
Slide 17: Financial performance
Financial performance Underlying net financial 6.6 6.5 debt 5.3 5.1 5.5 5.4 (in € billion) 2,330 2,322 and Leverage 2.8x 2,230 2.6x 2.2x 2,075 2.0x 2.1x 2.0x Underlying 1,938 EBITDA [1] CAGR 2015 2016 2017 2018 2019 2019 (in € billion) c.5% 4.3 4.2 Provisions 3.9 (in € billion) 3.8 3.7 2015 2016 201
Slide 18: Our Businesses are Aligned to Powerful Megatrends
Our Businesses are Aligned to Powerful Megatrends IoT / Eco-friendly Electrification Lightweighting Resource efficiency Healthcare Digitalization based solutions • Resource scarcity • Responsible mobility • Safeguard ecosystem • Aging population • People connecting • Health and wellness • Climate ch
Slide 19: Our G.R.O.W. Strategy
Our G.R.O.W. Strategy A differentiated management approach to drive growth, cash, and returns GGROWTH ACCELERATE GROWTH DELIVER RESILIENT CASH OPTIMIZE RETURNS WIN R MATERIALS CHEMICALS SOLUTIONS Solvay ONE Prioritize investments in high margin Maximize cash flow generation from our Optimize our Sol
Slide 20: Materials
Materials #1 pure play advanced materials business GGROWTH Track Unique high-performance Strategic intent R record polymers & composite Accelerate growth technologies +7% EBITDA growth RESILIENCE Strong growth opportunities (organic 2014-2019) Innovation Customers Investment • Sustainable automotive
Slide 21: Chemicals
Chemicals #1 cash conversion chemical player GGROWTH Track World-leaders in Strategic intent R record essential chemicals Deliver resilient cash to daily life +9% Cash flow growth RESILIENCE (organic 2014-2019) Mono-technology businesses Innovation Customers Investment • Soda ash Focus on Leverage S
Slide 22: Solutions
Solutions Unlock value GGROWTH Track Unique Strategic intent R record formulation & Optimize returns application expertise Returns RESILIENCE Selective Customers < WACC Innovation Investment (average 2014-2019) opportunities to grow Focus on Digitalization, Selective O • Natural food ingredients eco
Slide 23: Committed to Delivering Enhanced Value
Committed to Delivering Enhanced Value Mid-term financial targets GGROWTH 2019 2020 – 2024 Underlying EBITDA growth -2.8% Mid-single digit / year average GROWTH MATERIALS CHEMICALS SOLUTIONS R RESILIENCE More than O FCF 28% Exceed 30% ~€150M FCF [2] conversion [1] by 2024 run rate OPTIMIZE More than
Slide 24: Sustainability goals by 2030
10 SUSTAINABILITY GOALS BY 2030 Baseline 2018 Greenhouse gas emissions: Align its trajectory with “well below 2°C -26% (-2%/y) Reduce the environmental impact of our operations at temperature increase” (2015 Paris Agreement) planetary scale: tackle Coal phase out and no new coal plant: wherever rene
Slide 25: Our Value Proposition
Our Value Proposition Sustainable Solutions Unmatched Depth Aligned to Megatrends of Capabilities • Attractive secular trends drive long term growth • Leadership positions in >75% of our portfolio • Advanced materials and specialty chemicals offer sustainable solutions aligned to • Leverage technolo
Slide 26: Annexes
Annexes 26 Full Year 2019 Results February 26th, 2020
Slide 27: SOLVAY ONE: Disciplined centrally allocated resources
SOLVAY ONE Disciplined centrally allocated resources GGROWTH CAPEX R&I • • Contain Group Capex at 7-8% sales Prioritize at Group vs GBU level • • Contain Group R&I at ~€350M/year Prioritize at Group vs GBU level R RESILIENCE • Redirect resources from ~40% to ~60% to • Redirect resources from ~35% to
Slide 28: SOLVAY ONE: Cost reductions of €300 to €350M
SOLVAY ONE Cost reductions of €300 to €350M GGROWTH SIMPLIFICATION PRODUCTIVITY R €100- €100 & SYNERGIES - MEASURES € 200M 150M 150M run-rate by 2024 run-rate by 2024 Complete Current Continued operational RESILIENCE Simplification Program cost reductions MATERIALS • Announced in 2018, to be complet
Slide 29: SOLVAY ONE: Cash management
SOLVAY ONE Cash management GGROWTH REDUCING REDUCING PENSIONS €75M WORKING € 150M R run-rate cumulative & INTERESTS by 2024 CAPITAL NEEDS by 2024 Lower pension cash service Order-to-cash program RESILIENCE by >€40M run-rate as from 2020 • A leaner enterprise-wide supply chain • Deploy ~€0.5B of proc
Slide 30: 2020 P&L Considerations
2020 P&L Considerations Underlying FCF Conversion Forex EBITDA Sensitivity To be “flat to modestly down” (0% to To be at around 28% Mostly exposed to the U.S. dollar, -3%) organically compared to €2,322 with the main sensitivities per million in 2019 US$/€0.10 change • Growth to be back-ended as mac
Slide 31: Our Businesses are Aligned to Powerful Megatrends
Our Businesses are Aligned to Powerful Megatrends IoT / Eco-friendly Electrification Lightweighting Resource efficiency Healthcare Digitalization based solutions Bio-based High-performance polymer technology portfolio ingredients OUR • Binders & • Improving • Flexible risers • Long-term implants • N
Slide 32: Performance Chemicals growth partly compensates decline in Advanced segments
Performance Chemicals growth partly compensates decline in Advanced segments Advanced Organic growth Advanced Organic growth Materials -9.3% 46% Formulations -12% 20% • Double-digit growth in Composite Materials for aerospace offset lower volumes in • Oil & gas significantly down on lower demand as
Slide 33: Balanced maturities allowing flexibility
Balanced maturities allowing flexibility Deleveraging and reduced of cost of debt Major financial $163 Issued 3.95% in Sep debt [1] in million 145 2019 €300 300 $196 4.25% 175 3.5% Repaid in Sep 2019 €750 $800 712 750 $800 712 700 €700 1.63% 3.4% 4.45% €600 4.2% €500 600 0.5% €500 €500 500 500 5.87%
Slide 34: 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 (*) PERFORMANCE 1 year 3 years 3 years PERIOD following
Slide 35: Solvay's profile by market and region
Solvay’s profile by market and region Latin America 12% 8% 11% 5% Net sales 14% 2019 19% 30% 31% By end-market Asia North Pacific America 25% 17% 28% Consumers goods & Healthcare Automotive & Aerospace Europe Resources & Environment Agro, Feed & Food Building & Construction Electricals & Electronics
Slide 36: Digitalization as key enabler for further value creation
Digitalization as key enabler for further value creation Example Example DIGITALIZATION in Specialty DIGITALIZATION in Technology OF PLANTS Polymers FOR CUSTOMERS Solutions Increase asset performance • +18% tons/yr • Real-time data enables gain in fluids • Real-time ongoing interaction with • Levera
Slide 37: From science to product to outcome to impact
From science to product to outcome to impact OxystrongⓇ CYCOMTM RytonⓇ PPS JaguarⓇ RhovanilⓇ Waste water Composites for lighter and Solution for 5G devices and Natural hair & Vanillin taste in food treatment solution safer structures for planes communication body care solution InteroxⓇ PicoPlus CYAN
Slide 38: Automotive
Automotive ELECTRIFICATION LIGHTWEIGHTING RESOURCE EFFICIENCY We make cars more efficient 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 202
Slide 39: Aerospace
Aerospace LIGHTWEIGHTING RESOURCE EFFICIENCY We make aircraft lighter & more efficient 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% Significant increase of composites •
Slide 40: Thermoplastic composites
Thermoplastic composites LIGHTWEIGHTING RESOURCE EFFICIENCY For aerospace, automotive and oil & gas MARKET DRIVERS HOW WE WIN Investments Why Thermoplastics? • Capacity expansions in aero (Sept 2019) Fast cycle time • New capacity for oil & gas (Oct 2019) ~10% SEnabling increased build rates Two inn
Slide 41: We are a technology leader for mission critical battery materials
We are a technology leader for mission critical RESOURCE ELECTRIFICATION LIGHTWEIGHTING EFFICIENCY battery materials A unique expertise in fluorine chemistry and advanced ENERGAINTM conductive materials NOHMS* TFSI ILS Fluorinated solvents Ionic liquids based on TFSI and formulations for High Voltag
Slide 42: 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 42 Full
Slide 43: Electronics
Electronics IOT / DIGITALIZATION Beyond smartphones 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 trends the fast development of 5G with a portfolio of solutions ~5% • Exponentia
Slide 44: Healthcare
Healthcare EXPANDING ECO-FRIENDLY HEALTHCARE SOLUTIONS We improve comfort for others MARKET DRIVERS HOW WE WIN +5-7% CAGR Patient care: • Health care coverage in developing markets World leader in thermoplastics used for high performance membrane • The growing care needs of elderly populations ~5% (
Slide 45: Home & Personal care
Home & Personal care ECO-FRIENDLY SOLUTIONS Performant & 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&I
Slide 46: Soda ash & Bicarbonate
Soda ash & Bicarbonate EXPANDING RESOURCE HEALTHCARE EFFICIENCY Resilient demand & strong cash conversion 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 • Capacity
Slide 47: Peroxides
Peroxides RESOURCE EFFICIENCY Resilient demand & strong cash conversion 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 48: ADR program for US investors
ADR program for us investors ADR program Benefits Contact CITI for US investors of ADR’s to create ADR symbol SOLVY • Clear and settle according to US Solvay ADRs Platform OTC standards New York Michael O’Leary CUSIP 834437303 • Convenience of stock quotes and michael.olaery@citi.com dividend paymen
Slide 49: Investor Relations
Investor Relations investor.relations@solvay.com Rue de Ransbeek, 310 1120 Brussels, Belgium Shareholders services shareholders@solvay.com Rue des Champs Elysées, 43 1050 Brussels, Belgium