Solvay Sa · EURONEXT:SOLB
Solvay Sa — 9M 2020 Earnings Presentation
42 slides from Solvay Sa's earnings presentation, November 2020
Slide 1: Solvay profile & strategy
Solvay profile & strategy November 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. 9M/Q3 2020 Performance 3. Annexes page 3 First nine months 2020 earnings
Slide 4: Solvay Profile & Strategy
Solvay Profile & Strategy page 4 1 First nine months 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 nine months 2020 earnings 2019 figures
Slide 7: 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 8: 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 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: Spotlight on sustainable mobility trends
Spotlight on sustainable mobility trends Solvay’s 3 platforms positioned for growth New PLATFORM EV Batteries Thermoplastic Hydrogen & Composites Clean Energy Materials for binders, Combining our expertise in Membranes & electrodes electrolytes, and separators polymers and composites of PEM electrol
Slide 11: 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 12: 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 13: 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 14: 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 15: Cost savings plan
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 page 15 Presentation name Fir
Slide 16: 2030 Solvay One Planet goals
2030 Solvay One Planet goals 10 ambitious objectives to reduce our global impact CLIMATE Align GHG with Phase Reduce Paris Agreement out coal negative pressure & commit to SBTi on biodiversity Fight against climate crisis Reduce by 30% (-2%/y) Achieve 100% 30% reduction Increase Increase Reduce Redu
Slide 17: Why Invest?
Why Invest? Future growth Customer potential fuelled partnerships by megatrends drive innovation Global scale, diversity of products Key leadership positions Consistently and end-markets, rewarding reliable infrastructure shareholders over time Proven Bold ESG resilience Ambition with through Crises
Slide 18: Responding to society needs during the COVID-19 crisis
Responding to HAND SANITIZER TEST KITS society needs during the COVID-19 crisis MEDICAL DEVICES ANTIMICROBIAL CLEANING SOLUTIONS PROTECTIVE We are essential DIALYSIS & EQUIPMENT HEMODIALYSIS VENTILATORS page 18 First nine months 2020 earnings
Slide 19: First 9M / Q3 2020 Highlights
First 9M / Q3 2020 Highlights page 19 2 First nine months 2020 earnings
Slide 20: Nine months 2020 Performance
Nine months 2020 Performance Record free cash flow and cost delivery € € € 801 m 6.8 bn 1,481 m FREE CASH FLOW¹ NET SALES Underlying EBITDA Margins 22% ● Disciplined working capital ● Market trends similar to Q2 ● High quality earnings due to ● Structural improvements ● Pricing Sustained price & €260
Slide 21: Trends by end market
Trends by end market % Solvay End Market annual Solvay Q3 2020 trends sales 2019 Building & Construction/Industrial 16% Demand improvement in flat glass for construction (Sept) Automotive 14% Growth in EV battery applications & silica for tires (Sept) Food/Agro/Feed 12% Growth in Agro; vanillin remai
Slide 22: Performance by segment 9 months 2020
Performance by segment 9 months 2020 Materials -20.4% -14.3% Solutions yoy yoy ● Civil aircraft build rates impact ● Sequential improvement in Q3 volumes, while defense remains resilient Underlying ● Growth in home & personal care, agro, coatings and ● Automotive demand showed EBITDA electronics imp
Slide 23: Strong free cash flow generation
Strong free cash flow generation Driven by disciplined working capital management & cost saving programs First Nine Months 2020 9m 2020 FCF €801m vs. €345m in 9M 2019 801 Capex Working Provisions Financing Taxes Main drivers capital & Other ● Working capital discipline Underlying FCF to Solvay ● Cost
Slide 24: Cost savings status update 2020
Cost savings status update 2020 Nine months 2020 Permanent structural levers FY 2020 estimate (€130m) ● Restructuring €62m €150m Structural ● Indirect Spend €51m measures 2020 ● Productivity Efficiencies €17m €260m Temporary levers (€130m) Temporary ● Furloughs €150m measures 2020 ● Salary freeze & r
Slide 25: Balanced maturities
Balanced maturities Deleveraging and reduced of cost of debt Major financial debt [1] in million (EUR and USD) page 25 First nine months 2020 earnings
Slide 26: Outlook for full year 2020
Outlook for full year 2020 Costs EBITDA* Cash Cost savings of ~ In a range between Free cash flow €300m gross €1,890 and €1,970m around ~€900m including 50% structural +50% vs 2019 cost reductions Remain focused on cost, cash, and customers *Underlying EBITDA - Barring further deterioration related t
Slide 27: Annexes
Annexes page 27 3 First nine months 2020 earnings
Slide 28: 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 29: 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 30: 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 31: 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 32: 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 33: 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 34: 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 35: 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 36: 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 37: 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 38: 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 39: 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 40: 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 41: Our Purpose
Our Purpose We bond people, ideas and elements to reinvent progress. Together we can create a sustainable and shared future. page 41 First nine months 2020 earnings
Slide 42: 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