Solvay Sa · EURONEXT:SOLB
Solvay Sa — FY2016 Earnings Presentation
41 slides from Solvay Sa's earnings presentation, Feb 24, 2017
Slide 1: Q4 & Full Year 2016 Results
Q4 & FULL YEAR 2016 February 24, 2017 RESULTS
Slide 2: Safe Harbor
SAFE HARBOR This presentation may contain Consequently, actual results or future forward-looking information. Forward- events may differ materially from those looking statements describe expectations, expressed or implied by such forward- plans, strategies, goals, future events or looking statements
Slide 3: Forenote
FORENOTE Following the announcements at the end of 2016 of the intended divestments of the Acetow and Vinythai businesses, these businesses are reclassified as discontinued operations and as assets held for sale. For comparative purposes, the 2015 income statement has been restated. These figures we
Slide 4: Overview: Executing our Plan
OVERVIEW • Executing our Plan • Financial highlights • Priorities and outlook • Annexes Q4 & FY 2016 results 4 February 24, 2017
Slide 5: Strong Earnings Growth and Cash Generation
STRONG EARNINGS GROWTH AND CASH GENERATION Upgraded portfolio Solid profit growth and record margin Synergies and excellence exceed targets Strong cash generation Q4 & FY 2016 results 5 February 24, 2017
Slide 6: Upgrading Our Portfolio
UPGRADING OUR PORTFOLIO Enhancing customized solution ACQUISITIONS * offerings FR VinyThai v [1] Indupa Ryton [1] Chem- Rhodia logics Acetow Refri- Inovyn gerants Reducing Eco PCC cyclical & Services low-growth Pipe- businesses life DIVESTMENTS exposure 2011 2012 2013 2014 2015 2016 MORE global sust
Slide 7: Our Global Profile
OUR GLOBAL PROFILE GEOGRAPHIES • Europe >50% ~33% • Asia & RoW • Latin America in in each • North America Europe region 2010 net sales 2016 net sales € 6.5 bn € 10.9 bn MARKETS • Automotive & aerospace ~20% >50% • Resources & environment • Electrical & electronics in GDP+ in GDP+ • Agro, feed & food
Slide 8: 2016 Full Year Results: Solid EBITDA Growth & Cash Generation
2016 FULL YEAR RESULTS SOLID EBITDA GROWTH & CASH GENERATION EBITDA Free Cash Flow 7.5% 78% Pricing power Resulting from Sustained for 3 years Strong EBITDA based on excellence Lower CapEx Lower fixed costs Working capital management Benefiting from excellence & synergies Under
Slide 9: Solid Financial Performance in 2016
SOLID FINANCIAL PERFORMANCE IN 2016 ADVANCED Broad-based growth across Oil & Gas markets turning ADVANCED MATERIALS diverse markets combined around by year-end. FORMULATIONS 2.9% with operational excellence Growth in other markets (7.2)% 1,079 1,110 522 484 44% 19% FY 2015 FY 2016 FY 2015 FY 2016 pr
Slide 10: Accelerated Cytec Synergies
ACCELERATED CYTEC SYNERGIES Cost synergies 2016 2018 People synergies Run rate € 150 Leveraging talent of € 100 million million +50% Revenue synergies vs July 2015 announcement Cash accretive already in 2016 A track record of delivery Exceeding expectations Q4 & FY 2016 results 10 February 24, 2017
Slide 11: Solid Sustainability Performance in 2016
SOLID SUSTAINABILITY PERFORMANCE IN 2016 CREATING MORE VALUE 2016 to 2018 FY 2016 FY 2015 % yoy targets GHG intensity 5.89 7.26 19% PLANET reduction 5.80 CO2 eq. emissions / EBITDA Sustainable Solutions 43% 33% 10pp 40% % Group sales Accident rate 0.69 PEOPLE with medical treatment / million hours 0
Slide 12: Overview: Financial Highlights
OVERVIEW • Executing our plan • Financial highlights • Priorities and outlook • Annexes Q4 & FY 2016 results 12 February 24, 2017
Slide 13: Lower Sales: Stable Volumes Offset by Price, FX, Scope
LOWER SALES STABLE VOLUMES OFFSET BY PRICE, FX, SCOPE Net sales in € m 11,415 (106) (175) 15 (266) Volumes stable 10,884 Strength in agro, auto, consumer & Scope (0.9)% Conversion Volume Price healthcare markets forex & mix (2.3)% (1.5)% 0.1% Improvement in oil & gas market late in Q4 but over
Slide 14: Another Record EBITDA Margin
ANOTHER RECORD EBITDA MARGIN DRIVEN BY PRICING, SYNERGIES, AND EXCELLENCE Underlying EBITDA Pricing power in € m € 125 m Pricing power 61 24 2,284 in all segments except 390 2,125 (8) (40) (4) (266) Advanced Formulations, Others supported by Fixed (including Scope costs (0.38)% Conversion Volume 2
Slide 15: Underlying Net Income Reflecting Higher Operating Profit
UNDERLYING NET INCOME REFLECTING HIGHER OPERATING PROFIT Underlying P&L FY 2015 (in € m) FY 2016 % yoy in € m pro forma Net sales 10,884 11,415 (5)% EBITDA 2,284 2,125 7% EBITDA margin 21% 19% 2pp Depreciation & amortization (750) (727) (3)% Underlying profit (Solvay share) up 10% EBIT 1,534 1,398 1
Slide 16: Significant Cash Generation, Net Debt Stable
SIGNIFICANT CASH GENERATION NET DEBT STABLE Underlying net debt [1] evolution in € m Free cash flow € 876 m vs € 492 m in 2015 (6,579) 2,284 (386) (237) (6,556) (335) 140 70 (300) Perpetual (75) (208) Perpetual hybrid (929) Other hybrid bonds Dividends: changes bonds Free cash Acquisitions Net (2,20
Slide 17: Improvement in Cash Conversion
IMPROVEMENT IN CASH CONVERSION DRIVEN BY LOWER CAPEX AND HIGHER EBITDA Cash conversion (EBITDA + capex) / EBITDA 59% >60% 50% New production in 2017 Capex in € m • Adhesives for Aerospace (1,057) (929) • Special Chem high-purity H2O2 in Italy ~(800) • Silica in Korea • Composites/Resins in Germany (
Slide 18: Efficient Capital Structure Leading to Reduced Cost of Debt
EFFICIENT CAPITAL STRUCTURE LEADING TO REDUCED COST OF DEBT Underlying debt [1] evolution (8.7) in € bn at 3.80% [2] (7.6) at 3.55% [2] (2.2) EUR perpetual at 5.07% hybrid bonds (2.2) at 5.07% (2.1) 0.8 USD bonds at 4.03% @ 5.45% (2.2) at 4.03% EU bonds (3.6) repaid in & major debt at 2.88% H1
Slide 19: Rewarding Shareholders
REWARDING SHAREHOLDERS SOLVAY GROSS DIVIDEND 2017 DELIVERY ON COMMITMENTS over 30 years [1] Paid on Gross dividend Interim € 1.32 / January 18, 4 in €/share dividend share 2017 3 Final € 2.13 / To be paid on 2 dividend [1] share May 16, 2017 1 Total [1] € 3.45 / Up 4.5% 0 share Committed to stable /
Slide 20: Overview: Priorities and Outlook
OVERVIEW • Executing our plan • Financial highlights • Priorities and outlook • Annexes Q4 & FY 2016 results 20 February 24, 2017
Slide 21: Our Priorities in 2017
OUR PRIORITIES IN 2017 Continue portfolio optimization Volume growth Earnings and cashflow growth Sustainable progress Q4 & FY 2016 results 21 February 24, 2017
Slide 22: Outlook Full Year 2017
OUTLOOK FULL YEAR 2017 EBITDA to grow by mid-single digits Free cash flow from continuing operations more than € 800 million Q4 & FY 2016 results 22 February 24, 2017
Slide 23: Investor Relations Contacts and Next Events
INVESTOR RELATIONS CONTACTS Kimberly Stewart Jodi Allen Geoffroy Raskin Bisser Alexandrov +32 2 264 3694 +1 (973) 357 3283 +32 2 264 1540 +32 2 264 3687 kimberly.stewart@solvay.com jodi.allen@solvay.com geoffroy.raskin@solvay.com bisser.alexandrov@solvay.com NEXT EVENTS May 3 May 9 May 16 August 1 N
Slide 24: Annexes: Additional 2016 Financial Data
ANNEXES • Additional 2016 financial data o Fourth Quarter 2016 o Full Year 2016 Q4 & FY 2016 results 24 February 24, 2017
Slide 25: Higher Sales: Improving Market Conditions at Year End
HIGHER SALES IMPROVING MARKET CONDITIONS AT YEAR END Net sales in € m 106 (61) 2,767 Volumes higher 2,722 (8) 8 Less pronounced seasonality Price Scope Conversion Volume (2.2)% Strength in agro, auto, consumer/health (0.30)% forex & mix 0.30% 3.9% markets Improved market conditions in oil &
Slide 26: EBITDA Margin Increase Driven by Pricing and Volume
EBITDA MARGIN INCREASE DRIVEN BY PRICING AND VOLUME Underlying EBITDA Pricing power in € m € 44 m Pricing power in all segments except Advanced Formulations, 105 (3) (1) 527 supported by 41 (61) operational excellence 453 (1) (5) Fixed costs Others (including (0.64)% equity Scope Conversion Volume
Slide 27: Multi-Specialty Portfolio: Margins Improved Across All Segments
MULTI-SPECIALTY PORTFOLIO MARGINS IMPROVED ACROSS ALL SEGMENTS ADVANCED Oil & Gas markets turning ADVANCED MATERIALS Broad-based growth & FORMULATIONS operational excellence around by year-end. 6.1% offset weaker smart device Growth in other markets 5.6% 244 259 & composite markets 118 124 43% 21% Q
Slide 28: Focus on Cash Maintained
FOCUS ON CASH MAINTAINED SLIGHT UPTICK IN NET DEBT FROM PORTFOLIO & FX Underlying net debt [1] evolution in € m Free cash flow € 412 m vs € 413 m in 2015 (6,502) 527 (76) (37) (179) (6,556) (287) 197 (28) (47) 50 (175) Perpetual Other Perpetual Changes in Free cash Acquisitions Net Dividends: hybrid
Slide 29: Working Capital Management
WORKING CAPITAL MANAGEMENT LINKED TO HIGHER NEEDS OF SPECIALTY BUSINESSES Net working capital [1] 17.5% 17.4% % of total sales First half inflated by receivable on Inovyn exit price 14.8% 14.9% 15.0% 14.6% 15.3% 13.7% 14.4% 13.7% 13.4% 12.7% 12.5% Working capital 11.9% management efforts offset
Slide 30: Aligned Business Segments Strategically Coherent to Drive Results
ALIGNED BUSINESS SEGMENTS STRATEGICALLY COHERENT TO DRIVE RESULTS GROWTH RESILIENT CASH 44 19 ENGINES CONTRIBUTOR % % ADVANCED ADVANCED PERFORMANCE FUNCTIONAL MATERIALS FORMULATIONS CHEMICALS POLYMERS EBITDA High performance Customized specialty Leading positions in Leading regional 2016 materials,
Slide 31: Advanced Materials Full Year 2016
ADVANCED MATERIALS FULL YEAR 2016 EBITDA GROWTH ACROSS DIVERSIFIED MARKETS Net sales (in € m) EBITDA (in € m) 4,503 (104) (79) 13 (21) 4,313 45% margin 26% 24% Scope Conversion Volume Price (2.3)% forex & mix (0.46)% (1.8)% 0.30% 1,079 1,110 10% 4,313 (4.2)% 25% 2.9% 20% FY 2015 FY 2016 Specialty Po
Slide 32: Advanced Formulations Full Year 2016
ADVANCED FORMULATIONS FULL YEAR 2016 OIL & GAS NOT YET OFFSET BY OTHER MARKET GROWTH Net sales (in € m) EBITDA (in € m) 62% 18% margin 18% 2,885 (20) (47) (49) (101) 2,668 Scope Conversion Volume (0.68)% forex Price (1.6)% & mix (3.5)% 522 484 (1.7)% 2,668 (7.5)% (7.2)% 13% 25% FY 2015 FY 2016 Novec
Slide 33: Performance Chemicals Full Year 2016
PERFORMANCE CHEMICALS FULL YEAR 2016 EBITDA GROWTH ATTRIBUTABLE TO SODA ASH & DERIVATIVES Net sales (in € m) EBITDA (in € m) margin 28% 2,526 8 (28) 64% 3 (49) 2,460 25% Scope Conversion Volume Price 0.32% forex & mix (1.9)% 695 (1.1)% 0.10% 628 2,460 (2.6)% 11% 14% 22% FY 2015 FY 2016 Soda Ash & De
Slide 34: Functional Polymers Full Year 2016
FUNCTIONAL POLYMERS FULL YEAR 2016 EXCELLENCE-DRIVEN PROFIT GROWTH Net sales (in € m) EBITDA (in € m) 98% margin 1,490 10 (20) 52 (95) 15% 1,436 Scope Conversion Volume Price 0.64% forex & mix (1.4)% 3.5% (6.4)% 9.5% 222 1,436 141 (3.6)% 57% FY 2015 FY 2016 Polyamide Chlorovinyls FY 2015 FY 2016 pro
Slide 35: Corporate & Business Services Full Year 2016
CORPORATE & BUSINESS SERVICES FULL YEAR 2016 BENEFITING FROM COST DISCIPLINE EBITDA (in € m) FY 2015 FY 2015 pro forma FY 2016 in € m FY 2016 pro forma Energy Services (3) 3 of which one-offs (7) - CER write-offs excluding one-offs 4 3 Other C&BS (242) (231) 7.3% of which one-offs 30 - U.S. post-ret
Slide 36: Debt Profile: Balanced Maturities Allowing Flexibility
DEBT PROFILE BALANCED MATURITIES ALLOWING FLEXIBILITY Repaid € 300 3.90% € 1,000 € 500 $ 800 in January Euribor 5.43% 4.45% +82bp € 700 $ 800 € 750 4.20% 3.40% 1.63% Repaid € 500 € 500 € 500 € 500 € 500 in June 6.38% 4.63% 5.12% $ 400 5.87% 2.75% 3.50% $ 250 $ 82 3.95% 8.95% 2016 2017 2018 2019 2020
Slide 37: Net Pension Liabilities Up on Lower Discount Rates
NET PENSION LIABILITIES [1] UP ON LOWER DISCOUNT RATES Pensions (31/12/2016) in € bn Net pension liabilities decrease by € 0.4 bn Net pension Pension liabilities down to € (5.7) bn following discount liabilities rates increase (2.9) Pension assets down to € 2.8 bn (5.7) 2.8 Cash contribution of
Slide 38: Annexes: Other Financial Considerations for 2017
ANNEXES • Other financial considerations for 2017 Q4 & FY 2016 results 38 February 24, 2017
Slide 39: Underlying EBIT(DA) Considerations for 2017
UNDERLYING EBIT(DA) CONSIDERATIONS FOR 2017 Scope effects Forex sensitivity Acquisitions 2016: Cytec Immediate impact on conversion exposure Full consolidation as of January 1, 2016 Deferred transactional impact due to hedging Pro forma 2015 restated for acquisition (6-12 month rolling bas
Slide 40: Underlying Financial, Cash & Tax Considerations for 2017
UNDERLYING FINANCIAL, CASH & TAX CONSIDERATIONS FOR 2017 Cost of borrowing Discounting of pensions and HSE Underlying net financial charges expected at ~€ (425) m, P&L: ~€ (80) m (2/3 - pensions, 1/3 - HSE) excluding foreign exchange fluctuations impact Sensitivity to change in discount rates [1
Slide 41: Solvay's ADR Program
Solvay’s ADR program Convenience of investing in American Depositary Receipts (ADRs) through a sponsored Level 1 program ADR Symbol SOLVY Benefits of ADRs: Platform OTC Clear and settle according to US standards CUSIP 834437303 Convenience of stock quotes and dividend payments in US dollars DR I