Solvay SA · EURONEXT:SOLB
Solvay SA — Non-Deal Roadshow (July 2013)
61 slides from Solvay SA's roadshow presentation, July 2013
Slide 1: Roadshow Presentation Q2 2013
Roadshow Presentation Q2 2013
Slide 2: Agenda
Agenda • Q2 2013 earnings highlights • Solvay at a glance • A far-reaching transformation 2
Slide 3: Q2 2013 Earnings Highlights
Q2 2013 Earnings Highlights Forenote applicable to the entire section unless otherwise stated: . REBITDA refers to Operating result before depreciation and amortization, non-recurring items, financial charges and income taxes
Slide 4: Q2'13 Earnings Highlights
Q2’13 Earnings Highlights Solvay boosts its transformation amid challenging conditions • Net sales down (4) % at € 3,062 m Volumes (1) %, prices (2)% and forex (1)% Net Sales: € 3,062 m • REBITDA at € 487 m, down (14)% YoY vs. last year ‘s demanding comparable • Consumer Chemicals at € 92 m, (40)% Y
Slide 5: Global demand slowdown, destocking and deflationary environment
Global demand slowdown, destocking and deflationary environment In € million Q2 Net Sales (1)% Volume (2)% Price (1)% Structure Conversion Forex (4)% Q2’12 Q2’13 5
Slide 6: Profitability declined due to activity levels and strong temporary destocking
Profitability declined due to activity levels and strong temporary destocking In € million Q2 REBITDA Net pricing Breakdown by effect Operational Segment * €4m 6% (2)% (1)% 15% 17% Volume Conversion Forex (4)% % & Fixed REBITDA Structure costs Group (12)% (8)% 33% 13% Price Cost of Others, 29% goods
Slide 7: Consumer Chemicals
Consumer Chemicals In € million 599 (6)% Net sales Coatis % YoY evolution 3% Novecare 21% • Derivatized guar solutions suffered from strong destocking as price fell, but solid in-the-field usage. Furthermore, as anticipated, no more benefits from last year’s exceptional guar 16% Aroma Performance pr
Slide 8: Advanced Materials
Advanced Materials In € million 658 (10)% Net sales Specialty Polymers Silica % YoY evolution +12% • Good dynamics in most markets but Energy 16% • Stable profit and strong margin Specialty Silica 51% 12% Rare-Earth Polymers (40)% (6)% • Record performance driven by volume and satisfactory pricing,
Slide 9: Performance Chemicals
Performance Chemicals In € million 788 flat Net sales Essential Chemicals % YoY evolution Acetow +6% • Contrasted performance: 21% • low soda ash demand in Europe • resilience in Bicarbonate and Hydrogen Peroxide 9% Eco Services (7)% Acetow Essential 56% 14% • New record performance Chemicals Emergi
Slide 10: Functional Polymers
Functional Polymers In € million 978 (2)% Net sales % YoY evolution Polyamide Chlorovinyls (2)% 56% • Challenging overall competitive environment weighed on volumes & 44% Polyamide (2)% margins • Polyamide’s Butachimie pluriannual maintenance turnaround cost impact of € (6) m Chloro Vinyls REBITDA •
Slide 11: Operational cash management and capex
Operational cash management and capex Industrial Working Capital CAPEX In % of total sales In € million Budget 14.2 900-950 13.8 13.9 785 Q4: 285 13.1 Q3: 176 Q2: 180 169 11.7 Q1: 144 150 Q2’13 2012 2013 Maintenance turnarounds at 3 manufacturing sites impacting working capital needs Selective on ti
Slide 12: Free Cash Flow positive; Net Debt increasing with dividend payment
Free Cash Flow positive; Net Debt increasing with dividend payment In € million € +71m FCF* in Q2’13 Conversion Others Dividends Discontinued Net operations financial Capex charges REBITDA/ Change in Provisions/ Industrial Other operating Working Cash Flows Capital March 31, ’13 June 30, ’13 * Free
Slide 13: Sound financial structure (IFRS)
Sound financial structure (IFRS) In € billion Net debt/Equity ratio(2) Leverage ratio(3) Net Debt Bilateral (0.5) 24% 0.82x (1.6) Rhodia Bonds (0.8) Long-dated maturity debt 1,000 Cash and Cash In € million 800 equivalents Solvay (1) Bonds 500 500 2.0 (2.3) 300 Q2 2013 2013 2014 2015 2016 2018 2020
Slide 14: Outlook
Outlook While we see some weak signs of improvement, this has yet to be confirmed in our order book. In a more challenging economic context, Solvay is confident in its ability to generate a REBITDA in 2013 comparable to last year’s, excluding the impacts of the exceptional pricing of guar and the sa
Slide 15: Forthcoming 2013 key dates for investors
Forthcoming 2013 key dates for investors • October 25: Third-quarter results • November 11: Capital Markets Day* (*) Date change 15
Slide 16: At a glance
S f : ~— At a glance
Slide 17: A major global player in Chemicals with compelling strengths
€12.4bn NET SALES A major global Our strengths player in €2.1bn Adjusted REBITDA • 90% of sales in businesses Chemicals with among the top 3 global leaders • Balanced geographical footprint compelling 111 • Diversified end-markets MAJOR strengths • A culture of Sustainability, INDUSTRIAL SITES Innov
Slide 18: Diversified geographical footprint and end-markets
Diversified geographical footprint and end-markets Continued focus on fast-growing regions A well-balanced portfolio Consumer goods 28% 20% 42% Construction Automotive 14% 15% Electricals & Electronics Energy 28% 7% 6% Environment Agriculture 5% 4% 10% Paper Other industries Stable 2% 19% % of 2012
Slide 19: Accelerating a far-reaching transformation
Accelerating a far- reaching transformation
Slide 20: A Group in far-reaching transformation
A Group in far-reaching transformation Well-defined strategic vision Clearly defined priorities Solvay’s ability to extract value Consumer Advanced Chemicals Materials ACTIVITIES in % of Group Energy REBITDA 5% Services Functional Polymers Performance Chemicals Value creation potential of industries
Slide 21: Customer-focused organization
Customer-focused organization • More decentralized • Agile • Closer to customer • Entrepreneurial 2012 REBITDA € 518 m € 627 m € 750 m € 251 m € (79) m Margin on 20.2% 22.9% 23.7% 6.6% n.m net sales 2012 data restated for the new business organization effective as of January 1st 2013, REBITDA refers
Slide 22: Accelerating in-depth transformation to enhance business profile
Accelerating in-depth transformation to enhance business profile Deploying breakthrough action plans Capturing integration synergies Investing selectively Growing through innovation 22
Slide 23: Deploying breakthrough actions
Deploying breakthrough actions Reducing exposure to JV 50/50 with INEOS PVC cyclical Chlorovinyls Solvay Indupa planned sale Restoring profitability & 100 M€ REBITDA Polyamide improvement by 2014 strategic flexibility Strengthening leadership & 100 M€ REBITDA Soda Ash Improving competitivene
Slide 24: Reducing Solvay's exposure to cyclical Chlorovinyls
Reducing Solvay’s exposure to cyclical Chlorovinyls B REAKTHROUGH ACTIONS PVC Polyamide Soda Ash SOLVAY & INEOS TO CREATE WORLD-CLASS PVC PLAYER • Strong industrial logic: creation of a world-class PVC producer with low cost base and significant synergy potential • JV to improve Solvay’s financial m
Slide 25: Restoring Polyamide profitability
Restoring Polyamide profitability B REAKTHROUGH ACTIONS PVC Polyamide Soda Ash Cost Optimization Operational Excellence • Manufacturing / OEE • Variable costs • Supply Chain • Fixed costs • Commercial Excellence / Differentiation € 100m REBITDA improvement by end 2014 REBITDA refers to Operating res
Slide 26: Improving Soda Ash industrial footprint and ensuring cost leadership
Improving Soda Ash industrial footprint and ensuring cost leadership B REAKTHROUGH ACTIONS PVC Polyamide Soda Ash BALANCING GLOBAL INDUSTRIAL FOOTPRINT • Regional market dynamics • Cost-effectiveness GLOBAL DEMAND GROWING UNLOCK TRONA-BASED CAPACITY IN THE US IN LINE WITH GDP • + 250Kt/y, with l
Slide 27: Delivering on savings
Delivering on savings INTEGRATION-RELATED & HORIZON Synergies & Cost Efficiency programs 2012 400 Purchasing & Logistics € 110m MORE & FASTER In € million 280 2012 purchases • € 1.3bn Energy 170 • € 4.7bn 60 Raw Materials Technical goods & 110 services 20 2011 2012 2013 2014 IN LINE Administration P
Slide 28: Investing selectively for future value-creating growth
Investing selectively for future value-creating growth CAPITAL PVDF Tavaux +50% EXPENDITURES Specialty Polymers Compounding In € million Specialty fluorinated Rare Earth derivatives +50% Recycling [900-950] Guar Formultation Guar Formulation 846 HPC 785 Derivatized Guar Oil & Gas +40% Specialty surf
Slide 29: Growing through innovation
Growing through innovation Major worldwide R&D R&D Venturing New Collaborative R&D centers employees spending & start-ups patents innovation projects 13 1,900 ~€ 300 m € 85 m 300 >100 2012 developments within GBUs Advanced Renewable Organic Sustainable Eco- Consumer Materials & Chemistry Electronics
Slide 30: Enhancing Business Profile
Enhancing Business Profile 2012 Proforma JV Chloro-vinyls By Operating Segment* Energy Services Energy Services Functional Functional Consumer Polymers Consumer Polymers Chemicals 4 Chemicals 11 % of Group 51 % of REBITDA Group 54 REBITDA Performance Advanced Performance Advanced Chemicals Materials
Slide 31: Solar Impulse flight "Across America"
Solar Impulse flight “Across America” Solvay provides solar aircraft with lightweight, high-strength and energy-efficient products with a total of 6,000 different parts. 31
Slide 32: Solvay Operating Business Segments
Solvay Operating Business Segments
Slide 33: Strong global leadership positions
Strong global leadership positions World leader with 90% of its sales in businesses in which it is in the top 3 High Barrier Polymers, High-Performance High-Performance SPECIALTY Silica, SILICA & RARE Engineering Polymers POLYMERS Rare Earth EARTH SYSTEMS & Compounds, Systems Fluorinated Polymers #1
Slide 34: Consumer chemicals
Consumer chemicals Consumer Chemicals serves the consumer products markets. Its growing product offering targets the societal megatrends (demographic growth, new modes of consumption, demand for safer, more sustainable products and renewable materials-based solutions). NOVECARE COATIS AROMA PERFORMA
Slide 35: Consumer chemicals
Consumer chemicals NOVECARE - Net Sales € 1,7 bn COATIS - Net Sales € 0,5 bn • World leader in specialty • Latin America’s number 1 surfactants, major player in the producer of phenol derivatives, polymers, guar and phosphorus leader in oxygenated solvents derivatives markets (Augeo™) • Main markets
Slide 36: Novecare leading technologies in diversified markets
Novecare leading technologies in diversified markets SELECTED MARKETS Home & Agro-chemical Oil & Gas Coatings Industrial Personal Care Specialties TECHNOLOGY Surfactant 70% and Polymers Phosphorous 20% Derivatives Specialty 10% Amines % of Novecare sales in 2011 «Inspired Products from Chemical Ingr
Slide 37: Innovation focused on its leading technologies
Innovation focused on its leading technologies Leading technologies addressing fast-growing market segments’ needs Leader in specialty surfactant segments developing blends formulations Surfactants & Polymers using synergies between surfactants and polymers for multiple applications and functions (d
Slide 38: Guar innovation addressing fast growing market segments
Guar innovation addressing fast growing market segments Leading bio-sourced technology for many applications & functions Agro Best Process Water Retention • Process leadership in derivatized delivers • New project to start delivery in 2013 the best quality and enhances competitiveness • Germination
Slide 39: Advanced Materials
Advanced Materials Advanced Materials offers ultra-high-performance applications for aerospace, high-speed trains, health, low-energy tires, automotive emission control, smartphones and hybrid-vehicle batteries. SPECIALTY SILICA € 2,743 m POLYMERS Net Sales RARE EARTH SPECIAL SYSTEMS CHEMICALS € 627
Slide 40: Advanced Materials
Advanced Materials SPECIALTY POLYMERS – RARE EARTH SYSTEMS Net Sales € 1,3 bn Net Sales € 0,4 bn • World leader in specialty polymers • Global provider of rare earth- and high-performance polymers such based formulations for use in as polyvinylidene fluoride SOLEF®, automotive catalysis, luminophore
Slide 41: Leading at the top of the pyramid with the widest product portfolio
Leading at the top of the pyramid with the widest product portfolio Performance attributes Temperature Resistance ULTRA Chemical Inertness POLYMERS Weathering Resistance Corrosion Protection PFSA Water Repellency PAEK PEEK Stain Repellency HIGH-PERFORMANCE EAP Electrical Inertness Performance POLYME
Slide 42: Serving well-diversified and highly dynamic markets
Serving well-diversified and highly dynamic markets Emerging markets will be 60% of top line growth by 2016 2011 Sales 2% Advanced Transportation 11% Healthcare 2% Water 18% Automotive 7% Energy 14% 6% Consumer Smart Devices Global CAGR = 8.5% 12% 10% Construction Electrical / Electronics 18% Indust
Slide 43: Specialty Polymers: broadest portfolio of high and ultra high performance polymers
Specialty Polymers: broadest portfolio of high and ultra high performance polymers PSU FEP PESU SRP/ MFA® FKM/ ECTFE/ PVDC HPPA PARA PPS LCP PPSU PEEK PAI PI HPS PEI PTFE PVDF PFA FFKM PFPE ETFE XLCP Solvay Arkema BASF Celanese Daikin DSM DuPont Dyneon EMS Evonik Kuraray MEP SABIC Victrex 43
Slide 44: Advanced Materials
Advanced Materials SILICA - Net Sales € 0.4 bn SPECIAL CHEMICALS Net Sales € 0.6 bn • Inventor and leading global provider of highly dispersible silica • Among the world leaders • Main market/products: fuel-saving in fluorine chemistry tires (Zeosil), industrial applications, • Provider of solutions
Slide 45: Performance Chemicals
Performance Chemicals Performance Chemicals operates in mature and resilient markets, where success is based on economies of scale, competitiveness and service quality. 128443229 ACETOW ECO SERVICES changer € 3,162m Net Sales ESSENTIAL EMERGING 112366202 € 750 m CHEMICALS BIOCHEMICALS Adjusted REBIT
Slide 46: Performance Chemicals
Performance Chemicals ESSENTIAL CHEMICALS ACETOW - Net Sales € 0.6 bn Net Sales €1.8bn • World's number 3 producer of • World's largest producer of soda cellulose acetate ash, sodium bicarbonate and hydrogen • Number 1 in the CIS and Latin peroxide America, number 2 in Western Europe • Main markets:
Slide 47: Functional Polymers
Functional Polymers Functional Polymers brings together the chloro-vinyls chain and the polyamide activities to serve primarily the construction, infrastructure, automotive, electrical and electronics markets. POLYAMIDE & SOLVIN INTERMEDIATES € 3,808 m ENGINEERING Net Sales PLASTICS FIBRAS ? CHLOR €
Slide 48: Functional Polymers - Chlorvinyls
Functional Polymers - Chlorvinyls SOLVIN CHLOR CHEMICALS • Europe’s leading vinyls company • Chlorinated products not linked SolVin, a BASF-Solvay joint venture to PVC such as allyls (75% Solvay), and chloromethanes, • Chlorine production chain, • Main markets: industry. with SolVin® PVC polymers an
Slide 49: Functional Polymers - Polyamide
Functional Polymers - Polyamide POLYAMIDE & INTERMEDIATES ENGINEERING PLASTICS • Among the world's leading • Global specialist in polyamide- producers of polyamide 6.6 (Nylon) based engineering plastics and its upstream • Produces high performance • Main markets: automotive, industrial materials und
Slide 50: Corporate & Business Services
Corporate & Business Services Corporate and Business Services includes the Energy Services GBU and corporate functions such as Business Services and the Research & Innovation Center. ENERGY SERVICES BUSINESS SERVICES rouge € 157 m Net Sales € (79) m Adjusted REBITDA FY 2012 figures 50
Slide 51: Corporate & Business Services
Corporate & Business Services ENERGY SERVICES SOLVAY BUSINESS SERVICES • Designs innovative solutions to fight • Internal structure developing climate change shared value-adding services for the Group in Human Resources, • 2 missions: optimize energy accounting and IT purchases, reduce energy consum
Slide 52: Solvay - asking more from chemistry
SOLVAY asking more from chemistry
Slide 53: Appendices
f . — Appendices
Slide 54: H1'13 Earnings Highlights
H1’13 Earnings Highlights H1’13 • Net sales down (4) % at € 6,072 m Volumes (1.5) %, prices (1) % and forex impacts (1.5)% Net Sales: € 6,072 m • REBITDA at € 941m, down (13)% YoY against demanding comparable REBITDA: € 941 m • Important non-recurring items of € (137) m mainly restructuring plans fo
Slide 55: Global demand slowdown, destocking and deflation
Global demand slowdown, destocking and deflation H1 Net Sales In € million (1.5)% (1)% Volume Price (1.5)% 0% Forex Structure (4)% H1’12 H1’13 55
Slide 56: Profitability impacted by low activity levels and phasing-out of CERs
Profitability impacted by low activity levels and phasing-out of CERs, while pricing power satisfactory H1 REBITDA In € million Net pricing Breakdown by effect Operational Segment * € 20 m 2% (5)% 14% 22% (1)% Volume (4)% of which Structure & % (2)% (6)% Fixed Conversion 8% costs REBITDA from CER Co
Slide 57: Well-managed pension situation and stable cash-out
Well-managed pension(1) situation and stable cash-out As of June 30, 2013 France & Germany € (1,818) m Pension schemes not funded United Kingdom € (379)m Total pension Other countries provision2 € (72)m € (2,715)m Belgium € (219)m Stable cash North America € (227)m contribution € (206) FY’12 Discoun
Slide 58: Additional financial indications
Additional financial indications P&L considerations 2013 • Depreciation & amortization • Excl. PPA impact ~ € 670m yearly • PPA impact: ~ € 140m yearly • Average cost of gross financial debt 4.9% • Other financial expenses • Employee benefits (IAS-19) liabilities discounting costs ~ €(100)m in 2013
Slide 59: Additional financial indications: Post-employment considerations 2013
Additional financial indications Post –employment considerations 2013 Limited impact from implementation of revised IAS 19 as from 2013 onwards: • B/S impacts (Liability/(Equity)): one time increase in provision of € (24) m reported in Q1’13 • P&L impacts (increase of financial costs): € (10) m in H
Slide 60: Safe harbour
safe harbour “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 numb
Slide 61: Solvay - asking more from chemistry
SOLVAY asking more from chemistry