Slide 1: Opening New Frontiers – Roadshow presentation 3Q11 results
Opening New Frontiers Roadshow presentation 3Q11 results 3Q11 Roadshow presentation 1
Slide 2: Agenda
AGENDA ¾ The new Solvay ¾ Rhodia’s impact on Group B/S ¾ 3Q11 results 3Q11 Roadshow presentation 2
Slide 3: The new Solvay at a glance
NEW SOLVAY GROUP The new SOLVAY at a glance Solvay acquired Rhodia, a specialty chemicals company, on 7 September 2011 CREATING Generated EUR 12bn of sales in 2010 A MAJOR Committed to sustainable development with a clear focus on innovation and operational excellence GLOBAL A worldwide presence wit
Slide 4: A major global chemical player
NEW SOLVAY GROUP A major global chemical player Operating SALES 2010, EURbn REBITDA 2010, EURbn Cash Flow 2010, EURbn 1,9 12,0 1,2 6,8 (1) 1,0(1) 0,7 (1) Solvay SOLVAY Solvay SOLVAY Solvay SOLVAY & RHODIA & RHODIA & RHODIA 1 From continuing operations 3Q11 Roadshow presentation 4
Slide 5: Diversified portfolio with strong leadership positions
NEW SOLVAY GROUP Diversified portfolio with strong leadership positions Global market Segment Description position High-Performance Engineering Polymers, Fluorinated Specialty Polymers #1 Polymers Polyamide Materials #2 PA 6.6 polymers, Intermediates & engineering plastics Specialty Surfactants, Pho
Slide 6: Diversified end-markets portfolio
NEW SOLVAY GROUP Diversified end-markets portfolio Energy, Water & Proforma 2010 Consumer goods Construction Automotive Electronics Environment SOLVAY 4% 22% 9% 7% 7% RHODIA <40% >5% >20% 10% >5% COMBINED 19% 15% 14% 8% 6% 3Q11 Roadshow presentation 6
Slide 7: Strong footprint in developing regions
NEW SOLVAY GROUP Strong footprint in developing regions 40% OF SALES FROM EMERGING MARKETS WESTERN EUROPE 43% NORTH AMERICA 17% ASIA / PACIFIC REST OF THE 25% WORLD(2) LATIN AMERICA (1) 14% 1 Includes net sales and other revenues Solvay regional sales split Rhodia regional sales split % Sales combin
Slide 8: Strengthened innovation capabilities
NEW SOLVAY GROUP Strengthened innovation capabilities Open Innovation New Academic partnerships combination(1) Start‐ups Venture Capital: 23% of combined net sales realized with new products(2) 254 new patents Start‐up ~1 700 Research employees Venture Capital 20 R&D centers (1) On 2010 basis (2) Ne
Slide 9: Vertical integration in raw materials
NEW SOLVAY GROUP Vertical integration in raw materials PRODUCT HYDROGEN (H2O2) 60 % coverage of our needs FLUORSPAR (FLUORINATED PROD.) 75% coverage of our needs SALT (PVC / NAOH / SODA ASH) 100% coverage of our needs (1) LIMESTONE / TRONA (SODA ASH) 100% coverage of our needs (1) this doesn’t exclu
Slide 10: Rhodia's pricing power
NEW SOLVAY GROUP Rhodia’s pricing power YoY change Selling price / Raw Material & Energy (RM&E) cost changes* 2005 ‐ Q3 2011 In €m Q1 '11 Q2 '11 Q3 '11 +271 +42 +55 +23 +52 . +51 . +58 . +47 +9 Resilient favorable selling price / raw material cost balance *excluding FOREX impacts 3Q11 Roadshow prese
Slide 11: Two initiatives to foster Sustainable Growth
STRATEGIC INITIATIVES Two initiatives to foster Sustainable Growth Solvay & Rhodia both launched in 2010 a strategic reorganization initiative FOSTERING SUSTAINABLE GROWTH Creation of a new organisation bringing the organization closer to the customer reinforce entrepreneurship within Solvay empower
Slide 12: Solvay Horizon: well on track
STRATEGIC INITIATIVES Solvay Horizon : well on track ANNUALIZED TARGETED PROGRESS REPORT REORGANIZATION Run rate by end 2012 9 EFFICIENCY IMPROVEMENT EUR 120m Staff reduction 800 300 (1) Internal cost savings EUR 65m Procurement EUR 55m EUR 12m (1) At the end 2011 3Q11 Roadshow presentation 12
Slide 13: Rhodia Move for growth: well on track
STRATEGIC INITIATIVES Rhodia Move for growth : well on track RHODIA’S AMBITION EUR 1bn+ IMPROVEMENT BY 2013/15 EUR 250m+vs 2010 ORGANIC GROWTH GROWTH THROUGH EXTERNAL INNOVATION GROWTH EUR 100m+ 2 new surfactants & guar sites in China EUR 50m+ EUR 100m+ and debottlenecking in USA Progress Rare Earth
Slide 14: Rhodia integration: targeted synergies
NEW SOLVAY GROUP Rhodia integration : targeted synergies Cost synergies: EUR 250 m Targeted synergies: Based on good practices for business combinations 2/3 external 1/3 internal (mainly G&A) Achieved within 3 years Represents 2.1% of combined sales Represents 4.8% of Rhodia’s sales (versus 4 to 9%
Slide 15: Innovation and technology focus to develop sustainable solutions
NEW SOLVAY GROUP Innovation and technology focus to develop sustainable solutions for the future Developing low-carbon business opportunities Focus on sustainable products Specialty Polymers (e.g., light-weight and bio-based Consumer Chemicals engineering polymers) Advanced Materials (e.g. energy ef
Slide 16: Solar Impulse: around the world in a solar airplane
SOLVAY INNOVATION Solar Impulse: around the world in a solar airplane SOLVAY 1st main partner & technology partner 11 products, 15 applications and 6000 parts with Solvay products and technical solutions for renewable energy, energy storage, insulation, lightweight materials and lubrication Mileston
Slide 17: Sound financial structure
SOLVAY GROUP Sound financial structure (as of September 30, 2011) NET FINANCIAL DEBT : EUR 1.9 bn (net debt / equity: 29%) Gross financial debt: EUR 4.4 bn Cash & Cash equivalents: EUR 2.4 bn BREAKDOWN OF MAIN BORROWINGS In EUR Bn Issuers 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 EMTN bonds
Slide 18: Shareholding structure and Board composition
NEW SOLVAY GROUP Shareholding structure and Board composition Total issued capital 84,701,133 shares Solvac (Founding families’ holding company listed on NYSE Euronext) : 30% Solvay (to cover share option program) : 4% 16 Board Members Nationalities : 8 Belgian, 1 Dutch, 3 French, 1 German, 1 Spanis
Slide 19: Agenda
AGENDA ¾ The new Solvay ¾ Rhodia’s impact on Group B/S ¾ 3Q11 results 3Q11 Roadshow presentation 19
Slide 20: Post-employment benefits
SOLVAY GROUP Post-employment benefits Alignment of accounting policies • No longer use the corridor method • Changes in actuarial gains/losses in other comprehensive income • Harmonization of discount rates and mortality tables Pension gap • Deficit funded plans Solvay…………… EUR 224m • Deficit funded
Slide 21: Rhodia's impact on Group B/S (cont'd)
SOLVAY GROUP Rhodia’s impact on Group B/S (cont’d) Rhodia’s B/S subject to Purchase Accounting (PPA) i.e. recognition of all assets and liabilities at fair value End of 3Q11: PPA done for the following liabilities (in EURm) • Provisions……………………2 124 • Net financial debt……………..632 • Income tax payabl
Slide 22: Rhodia's impact on Group B/S (cont'd 2)
SOLVAY GROUP Rhodia’s impact on Group B/S (cont’d 2) In EURm Price consideration for the equity ………………………………….4 013 Net assets………………………………………………………..........(144) PPA (net of deferred tax assets) for provisions and for debt .……..231 Provisional goodwill …………………..……………………………..3 959 Reduction of equit
Slide 23: Agenda
AGENDA ¾ The new Solvay ¾ Rhodia’s impact on Group B/S ¾ 3Q11 results 3Q11 Roadshow presentation 23
Slide 24: Successful pricing power
SOLVAY GROUP RESULTS (without Rhodia) Successful pricing power SALES (EURm) 3Q11 9m11 10% 7% 5% Price 1% Price Volume +455 Scope Volume +108 Scope +201 & Forex +11 & Forex 5020 1632 1550 - 38 4446 - 82 3Q10 3Q11 9m10 9m11 3Q11 Roadshow presentation 24
Slide 25: Improved profitability, REBITDA +13%
SOLVAY GROUP RESULTS (without Rhodia) Improved profitability, REBITDA +13% REBITDA UP TO REBITDA MARGIN: EUR 264m Up to 16% in EURm 264 233 136 153 15% 16% 117 118 -20 -7 3Q10 3Q11 3Q10 3Q11 Chemicals Plastics CBS/NBD Group margin 3Q11 Roadshow presentation 25
Slide 26: Plastics: REBITDA EUR 153m, up by 13%
3Q11 PLASTICS RESULTS REBITDA: EUR 153m, up by 13% REBITDA (EURm) and margins (%) REBITDA (EURm) and margins (%) Specialty 93 Vinyls Polymers 72 63 60 31% 24% 11% 10% 15% 15% 10% 3Q10 3Q11 3Q10 3Q11 RECORD REBITDA MARGIN SLOWDOWN IN DEMAND Sustained demand : above last year’s record Global slowdown
Slide 27: Chemicals: REBITDA EUR 118m, up by 1%
3Q11 CHEMICALS RESULTS REBITDA: EUR 118m, up by 1% REBITDA (EURm) and margins (%) REBITDA (EURm) and margins (%) Essentials Special 94 103 Chemicals Chemicals 19% 18% 24 15% 15 10% 10% 16% 10% 3Q10 3Q11 3Q10 3Q11 CONTINUED REBIDTA PERFORMANCE LOWER REBITDA PERFORMANCE Sustained overall level of acti
Slide 28: 26% of sales in emerging regions
SOLVAY GROUP RESULTS (without Rhodia) 26% of sales in emerging regions Group’s sales breakdown by region 9m11 S.America EMEA: 59% ASIA North America: 15% South America: 11% EMEA Asia: 15% N.America 3Q11 Roadshow presentation 28
Slide 29: Total net energy expenses
SOLVAY GROUP RESULTS (without Rhodia) Total net energy expenses Net energy expenses in % of sales 12.7% 13.5% 13.2% 11.2% 2010 1Q11 2Q11 3Q11 Initiatives in energy management Exeltium in France OPERATING Refuse Derived Fuel cogeneration plant at Bernburg OPERATING Conversion to membrane electrolysis
Slide 30: Other elements of the income statement
SOLVAY GROUP RESULTS (without Rhodia) Other elements of the income statement In EURm 9 months 11 9 months 10 REBIT 594 427 Non recurring items -30 -234 Financial charges -124 -135 Tax charges -87 22 Result from continuing operations 354 81 Result from discontinued operations -38 1 726 Non-controllin
Slide 31: Plastics: strategic developments
PLASTICS Strategic developments PVC plant in Russia (2013) New Specialty Polymers plants in China (1H12 & 1H14) Specialty Polymers capacity extensions in Europe (2012) Electrolysis conversion → membrane in Belgium (2012) 3Q11 Roadshow presentation 31
Slide 32: RusVinyl
PLASTICS RusVinyl Financing Agreement signed in St Petersburg on June 17, 2011 State-of-the-art Vinyls plant in Russia BUENOS AIRES Commissioning 2013 50/50 JV SolVin – SIBUR Total investment: EUR 1.5 billion Debt financing: EUR 750m Sberbank of Russia (EUR 150m) EBRD (EUR 150m) BNP Paribas, ING Ban
Slide 33: Chemicals: strategic developments
CHEMICALS Strategic developments HPPO plant in Thailand (started up Q311) 30% share in a soda ash plant in China (2011) EPICEROL® plant in Thailand (2012) Electrolysis conversion → membrane in France (2012) 3Q11 Roadshow presentation 33
Slide 34: HPPO Thailand: successful commissioning
CHEMICALS HPPO Thailand : successful commissioning Largest Hydrogen Peroxide plant in the world (330 kt/year) in Map Ta Phut JV with DOW New plant commissioned in October 2011 Mainly captive raw material for the manufacture for Propylene Oxide Up to 80 kt/year of H2O2 also supplied to Solvay Peroxyt
Slide 35: R&D and venture capital
NEW BUSINESS DEVELOPMENT R&D and venture capital R&D commitment budgeted in 2011 EUR 145m R&D in the new business development EUR 35m Focus of New Business Development: Printable Organic Electronics New financing EUR 10m Plextronics polymer-based materials and technologies for printed electronics: s
Slide 36: Performance summary – 9M11
SOLVAY GROUP RESULTS (without Rhodia) Performance summary – 9M11 STRONG SALES SALES EXCELLENT REBITDA DEVELOPMENT EUR 5 020m PROFITABILITY EUR 853m +13% +22% RESULT OPERATING CONT. OP.* CASH FLOW CONT.OP.* EUR 354m EUR 312m *From continuing operations 3Q11 Roadshow presentation 36
Slide 37: Foreword
Foreword All performance indicators presented hereafter reflect and result from the application of Rhodia accounting principles and performance definitions outstanding prior to the acquisition and consolidation of former Rhodia group. Former Rhodia group 3Q11 income statements as at Sep. 30, 2011 pr
Slide 38: Rhodia: Rec EBITDA EUR 273m, up 16%
3Q11 RHODIA RESULTS Rec EBITDA(1) : EUR 273m, up 16% Net sales Sound business VOLUME (2) EUR 1,670m performance 4% +23% PRICING POWER (3) EUR 47m Rec. EBITDA (1) Good Free EUR 273m Cash Flow (4) EUR 61m +16% (1) Recurring EBITDA: before restructuring and other operating income and expenses (2) Organ
Slide 39: Sustained sales growth
3Q11 RHODIA RESULTS Sustained sales growth NET SALES (EURm) 3Q11 260 1,670 19% 65 (64) 49 4% Price Scope Forex Volume 1,360 & mix +23% 3Q10 3Q11 3Q11 Roadshow presentation 39
Slide 40: 47% of sales in emerging regions
3Q11 RHODIA RESULTS 47% of sales in emerging regions Group’s sales breakdown by region 9m11 Latam EUROPE: 32% North America: 21% Europe Asia Latin America: 16% & Asia & RoW: 31% RoW North America 3Q11 Roadshow presentation 40
Slide 41: Powerful growth engines
3Q11 RHODIA RESULTS Powerful growth engines Recurring EBITDA (EURm) and margins Recurring EBITDA (EURm) and margins Consumer Advanced Chemicals 82 Materials 87 72 32% 15% 13% 28 20% 3Q10 3Q11 3Q10 3Q11 Business dynamics remained healthy, organic Overall volume up 26% yoy: volume growth +3% (+16 % in
Slide 42: Polyamide under pressure; AES good resilience
3Q11 RHODIA RESULTS Polyamide under pressure; AES good resilience Recurring EBITDA (EURm) and margins Recurring EBITDA (EURm) and margins Polyamide Acetow & Materials Eco Services 71 52 56 49 16% 27% 11% 22% 3Q10 3Q11 3Q10 3Q11 Market demand slowdown noticeable since Overall, sustained good demand b
Slide 43: Creating value in Energy & CO2 markets
3Q11 RHODIA RESULTS Creating value in Energy & CO2 markets Recurring EBITDA (EURm) Energy Services Higher CER volumes offset by lower selling prices (average price realized 11 EUR/T vs 14 EUR/T last year) 40 37 A large majority of expected annual CER production hedged. Average hedged price close to
Slide 44: Investment for growth coupled with operational discipline
3Q11 RHODIA RESULTS Investment for growth coupled with operational discipline Operating Working Capital(1) Capital Expenditures % OF TOTAL SALES In EURm FORECAST <370 12.4 12.3 270 9.6 10.2 9.2 Q3 Q3 Q2 Q2 Q1 Q1 FY FY FY FY 9m11 2007 2008 2009 2010 Best-in-class operating Growth investments focused
Slide 45: Strategic developments
3Q11 RHODIA RESULTS Strategic developments MOU with Cobalt Technology to develop bio n- butanol refineries in Latam New rare earth-based compounds unit (Liyang) for the Chinese catalysis market Rhovea™ launch: versatile range of customized aromatic vanillin products for perfumery, agro and pharma ma
Slide 46: Diversifying Rare Earths sourcing
3Q11 RHODIA RESULTS Diversifying Rare Earths sourcing Terbium recovery New recycling process process from used for rare earths contained low-energy lamps in magnets Ö 1Q12 Ö 1Q12 Rare Earths re-cycling, a competitive strategic source Joint process development with Umicore for Nickel Metal Hydride re
Slide 47: Delivering on our growth ambition
3Q11 RHODIA RESULTS Delivering on our growth ambition Rec. EBITDA evolution In EURm In EURm >1000 + 25% 905 853 682 9m10 9m11 FY 10 FY11e 3Q11 Roadshow presentation 47
Slide 48: Outlook 2011
SOLVAY GROUP Outlook 2011 The Solvay Group is attentive to the macro-economic deterioration and to the need for tight management of its operations. Despite the current softening in some of its markets, Solvay expects as foreseen to improve its operating result both in Chemicals and in Plastics in 20
Slide 49: Forward-looking statements
“To the extent that any statements made in this presentation contain information that is not historical, these statements are essentially forward-looking. The achievement of forward-looking statements contained in this presentation is subject to risks and uncertainties because of a number of factors