Solvay Sa · EURONEXT:SOLB
Solvay Sa — Q1 2015 Earnings Presentation
63 slides from Solvay Sa's earnings presentation, May 6, 2015
Slide 1: Q1 2015 results
Q1 2015 results FORENOTE All historic data are restated for comparison purposes, unless otherwise indicated. In particular, 2014 Q1 data are restated for the discontinuation of Eco Services and the re- May 6, 2015 allocation of Corporate shared services costs Furthermore, Solvay presents Adjusted In
Slide 2: Growth supported by forex and sustained innovation
Growth supported by forex and sustained innovation Innovation-driven growth and excellence-driven pricing power offset by Adjusting O&G markets following sharp oil price decline REBITDA Destocking in acetate tow industry € 502 m +12% yoy Supportive forex Supporting results in all businesses
Slide 3: Q1 2015 Financial highlights
Q1 2015 Financial highlights € 2.6 bn +6.4% € 502 m +12% Net Sales yoy REBITDA yoy Strong forex impact, in particular US$ Supportive forex more than offset volume drop Innovation-driven growth more than offset by Positive pricing power underpinned by excellence adjustments in in acetate tow
Slide 4: Creation of GBU Special Chem
Creation of GBU Special Chem Enhancing scale and innovation capabilities 2014 2015 Special Aroma* Chemicals Performance Special Chem Fluor Fluor Fluor Fluor chemicals chemicals chemicals Key technologies Alkaline earth Sr/Ba Rare Earth Sr/Ba Rare earth & rare earth chemicals chemicals chemicals Syst
Slide 5: Forex and excellence more than offset adjustments in O&G and acetate tow markets
Forex and excellence more than offset adjustments in O&G and acetate tow markets Pricing power Net Sales REBITDA € 34 m in € m 211 (43) in € m 3 2,646 13 502 45 (28) 31 (8) Volume Price (2)% - 3 Fixed Others 2,488 (12) 448 (2) costs (including Volume Price Variable (2)% equity costs earnings) Scope
Slide 6: Dynamics by Operating business segments
Dynamics by Operating business segments Forex positive across the board REBITDA Q1 2015 (in € m) Advanced Strong recovery in Aroma New REBITDA record Advanced Formulations only partially offset profit underpinned by solid Materials drop in Novecare O&G innovation-driven volume (2.5)% 19% business an
Slide 7: Advanced Formulations Q1 2015 performance
Advanced Formulations Q1 2015 performance Favorable forex and strong recovery in Aroma Performance only partially offset profit drop in Novecare O&G business and one-off inventory devaluations Net sales (in € m) REBITDA (in € m) Novecare 86 (45) 15% 663 3 (3) 704 13% 72% margin Volume Price Scope Co
Slide 8: Advanced Materials Q1 2015 performance
Advanced Materials Q1 2015 performance REBITDA record underpinned by sound innovation-driven growth Net sales (in € m) REBITDA (in € m) Specialty Polymers 45 4 801 26% 25% 63 56% margin 658 31 Price Volume 1% Conversion 7% Scope 5% forex 801 203 10% 170 19% 16% 9% Silica Special 22% Chemicals 19% Ra
Slide 9: Performance Chemicals Q1 2015 performance
Performance Chemicals Q1 2015 performance Record level thanks to pricing, forex and breakthrough excellence Net sales (in € m) REBITDA (in € m) Soda Ash & Derivatives 42 (31) 24 754 718 - 51% 26% 24% margin Scope Conversion Volume Price forex (4)% 3% 6% 754 195 14% 171 18% 17% 5.0% Emerging 14% Bioc
Slide 10: Functional Polymers Q1 2015 performance
Functional Polymers Q1 2015 performance Polyamide impacted by inventory devaluation and production issues Net sales (in € m) REBITDA (in € m) Polyamide 448 (46) 8.7% 20 (13) (23) 97% 387 margin 7.6% Scope Conversion Volume Price (10)% forex 4% (3)% (5)% 387 39 30 3% (14)% (24)% Chlorovinyls Q1 2014
Slide 11: Corporate & Business Services Q1 2015 performance
Corporate & Business Services Q1 2015 performance Net costs narrowed thanks to one-off REBITDA (in € m) Q1 2015 Q1 2014 FY 2014 Energy Services 3 13 25 (29) Other C&BS (23) (42) (213) (21) Medicare 30 Other (53) (42) (213) Reported (21) (29) (188) Q1 2014 Q1 2015 Less trading opportunities Other Cor
Slide 12: Solvay's share in net income well up yoy
Solvay’s share in net income well up yoy at € 158 m Adjusted* P&L in € m Q1 2015 Q1 2014 Non-recurring costs • Restructuring expenses of € (6) m, at same level as in Q1 Net sales 2,646 2,488 2014 REBITDA 502 448 • Other costs linked to environmental, litigations and portfolio management provisions o
Slide 13: Seasonal negative Free Cash Flow and net debt increased
Seasonal negative Free Cash Flow and net debt increased Free Cash Flow Net debt** evolution (111) 51 in € m in € m 33 (26) (1,417) (242) Q1 2015 Q1 2014 Delta Other Free Cash Flow € (344) m Dividends changes Changes in Net net debt financial in net debt (75) attributable REBITDA* 268 250 18 charges
Slide 14: Front-loaded capital expenses
Front-loaded capital expenses Capex 861 in line Continuing operations 734 In 2015 in € m 318 • 9 new facilities to start up Q4 307 205 • > 50% growth capex Q3 151 Q2 • ~70% of growth capex 177 147 in Growth Engines Q1 161 234 129 Main growth 2013 2014 2015e capex projects 2013 2014 2015 Investing se
Slide 15: Seasonal patterns with working capital needs
Seasonal patterns with working capital needs Industrial working capital % of gross sales DSO* 16.3% 16.5% 15.4% 15.8% 15.6% Overdues 15.2% 15.2% Average 2014 Inventory Average 2013 15% 15% management room for improvement 13.0% 12.8% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2013 2014 2015 * Days Sales Outsta
Slide 16: Optimizing efficiency, preserving capital structure strength
Optimizing efficiency Preserving capital structure strength Capital structure (31/03/2015) Managing debt for value in € bn Total equity 7.5 Repayments in 2014 → € 1.3 bn Gross debt Hybrid bond ⇒ Lowered underlying cost of borrowing by ~ € 40 m (2.7) 1.2 (on annual basis) ⇒ Other Net debt (0.9) Avera
Slide 17: Outlook 2015
Outlook 2015 Based on current conditions Solvay confident of capacity to generate solid REBITDA growth Q1 2015 results 17 06/05/2015
Slide 18: 2015 Priorities
Accelerate transformation • Continue portfolio upgrade 2015 • Grow with our customers Priorities • Maintain focus on excellence • Sustain profit & value growth Sustain momentum Q1 2015 results 18 06/05/2015
Slide 19: Key dates
Key dates May 12 … Annual General Meeting Brussels, Belgium May 19 … Dividend pay-out Ex-dividend trading date on May 15, 2015 June 10-11 … Capital Markets Day Italy July 29 … Q2 & H1 2015 Results publication October 29 … Q3 2015 Results publication … Q1 2015 results 19 06/05/2015
Slide 20: Safe harbour
Safe harbour This presentation may contain forward- Consequently, actual results or future looking information. Forward-looking events may differ materially from those statements describe expectations, plans, expressed or implied by such forward- strategies, goals, future events or intentions. looki
Slide 21: Annexes
Annexes • Additional Q1 2015 financial data • 2015 considerations • Group presentation Q1 2015 results 21 06/05/2015
Slide 22: Cash flow statement and balance sheet
Cash flow statement Balance sheet in € m Q1 2015 Q1 2014 in € m 31/03/2015 31/12/2014 Cash flow from operating Fixed assets 10,548 10,080 (85) 97 activities Investment & shares 614 545 Cash flow from investing (530) (222) Loans & other non current activities financial receivables / (20) (10) Cash fl
Slide 23: Factors impacting Net income
Factors impacting Net income in € m Q1 2015 Q1 2014 IFRS Net income, Group 140 88 Rhodia PPA (after tax) 18 19 Adj. net income, Group 158 106 Exceptional elements Non-recurring items 19 30 M&A-related elements 15 13 Net financial charges 4 31 Adjustments RusVinyl 20 - Discontinued operations 4 4 Exc
Slide 24: Lower discount rates' impact on pension liabilities offset by pension assets
Lower discount rates’ impact on pension liabilities offset by pension assets performance Pensions (31/03/2015) Cash contribution stable at € (40) m in Q1 2015 in € bn Net pension (€ (180) m in 2014) liabilities Pension (3.0) liabilities Discount rates* decreased further in Q1 2015 (5.3) Pension Aver
Slide 25: Rewarding shareholders
Rewarding shareholders Delivery on commitments Gross dividend CAGR 5.3% Solvay dividend 2014 in €/share Interim Paid on dividend € 1.3͞3* / share January 22, 2015 Dividend To be paid on 2014 balance € 2.0͞6* / share May 19, 2015 € 3.40 Total** € 3.40 / share Up 6.3% DPS** 1982 1986 1990 1994 1998 20
Slide 26: Annexes
Annexes • Additional Q1 2015 financial data • 2015 considerations • Group presentation Q1 2015 results 26 06/05/2015
Slide 27: REBIT(DA) considerations for 2015
REBIT(DA) considerations for 2015 Forex impact REBITDA adjustments At prevailing rates, Forex tailwinds expected RusVinyl JV Immediate impact on conversion exposure Consolidated through Equity associates Adjusted for financial charges Deferred transactional impact due to hedging Volati
Slide 28: Significant forex tailwind expected at prevailing rates
Significant forex tailwind expected at prevailing rates Forex exposure • Conversion: No cash effect / no Exposure to USD coverage provided • Sensitivity of ~ € 100 m REBITDA impact • Transactional: Typical coverage on per 10 cents USD / € change a 6-12 month rolling-forward basis • Half conversion,
Slide 29: Financials and tax considerations for 2015
Financials and tax considerations for 2015 Net debt charges Hybrid bond Gross debt repayments to come Nominal value of € 1.2 bn € (500) m in June 2015 Initial average dividend yield of 4.7% Net financial charges expected at ~€ (100) m € 0.7 bn at 4.199% Average cost of borrowing* at 3.
Slide 30: Other considerations for 2015
Other considerations for 2015 Non-recurring elements Cash flow Restructuring costs FCF fluctuations Cash expenses for pensions of ~€ (200) m Impairments (not under discontinued operations) Sustained capex efforts (€ (861) m in 2014) HSE provisions on non-operational sites Portfolio man
Slide 31: Annexes
Annexes • Additional Q1 2015 financial data • 2015 considerations • Group presentation Q1 2015 results 31 06/05/2015
Slide 32: Solvay, a major global chemical player
Solvay, a major global chemical player Based on strengths € 10.2 bn 119 Net Sales Industrial sites Well-balanced geographical spread and end-user markets € 1.8 bn 15 REBITDA Major R&I centers Leading player in 90% of our businesses 17.5% 26,033 REBITDA margin Employees (FTEs) Strong R&I portfolio €
Slide 33: Well-balanced geographical spread and end-user markets
Well-balanced geographical spread and end-user markets Balanced Exposure to geographical exposure* higher growth end-markets* Automotive & North Aeronautics Consumer goods America Europe & Healthcare 18% 23% 34% 26% Energy & Environment Industrial 10% applications Agro, 16% Feed & Food Latin Asia/Pa
Slide 34: Strong innovation portfolio aligned with global megatrends
Strong innovation portfolio aligned with global megatrends Focused innovation fields 2014 15 Major R&I sites worldwide 1,950 Climate Resource R&I staff Advanced change scarcity Renewable materials chemistry € 287 m Health & Next billion R&I efforts well-being consumers 21% New sales ratio Advanced S
Slide 35: Redeployment for value
Redeployment for value Discontinued Operations Novecare Benvic Inovyn™ Chemlogics Erca Indupa Quimica Reducing Dhaymers Enhancing cyclical & customized low-growth Specialty Polymers solution businesses offering exposure Aonix** Ryton® PPS Special Flux Eco Brazing Chemicals Services Refrige- rants* L
Slide 36: Enhancing growth potential, reducing cyclicality
Enhancing growth potential, reducing cyclicality REBITDA in Growth Engines 52% +2% 54% +4% 58% 24% 29% 34% 39% 20% 18% 2012 2013 2014 11% 5% 6% 36% 41% 37% As published (restated for IFRS 11) Advanced Advanced Performance Functional Formulations Materials Chemicals Polymers Q1 2015 results 36 06/05/
Slide 37: Focused on being a model of sustainability with commitments
Focused on being a model of sustainability with commitments Reach excellence in safety & health Deploy unmatched sustainable portfolio Planet management Reduce our environmental impact by 2020 Customers Energy consumption Water emissions** Investors Greenhouse gas emissions Groundwater consump
Slide 38: Effective organization set-up
Effective organization set-up Executive Committee Strengthened Corporate Advanced Advanced Performance Functional & Business Formulations Materials Chemicals Polymers Services Strategic Growth Resilient cash Restoring Efficient priorities engines flow generation profitability Support REBITDA growth
Slide 39: Organized in Operating segments and Global Business Units
Organized in Operating segments and Global Business Units Functional Polymers Advanced Formulations Performance Chemicals Advanced Materials Corporate & Business Services Novecare Specialty Soda Ash & Polyamide Solvay Energy Polymers Derivatives Services Aroma Silica Peroxide P&I Corporate Performan
Slide 40: Advanced Formulations
Advanced Formulations 2014 figures € 2,854 m € 426 m 15% Net Sales REBITDA Margin Aroma Novecare Coatis Performance As one of Solvay’s growth engines, the businesses 72% grouped under Advanced Formulations stand out for Novecare their innovation capacity and relatively low capital Net sales Coatis i
Slide 41: Novecare
Novecare Continuous growth in fast growing regions and segments North America Europe Broad portfolio 12 production sites 7 production sites in selected (1 in construction) 4 R&I centers 12 R&I centers end markets Home & Personal care 53% Net 16% Sales 2014 25% 6% Latin America Asia & RoW 3 productio
Slide 42: Novecare
Novecare Cutting-edge technologies in diversified focused markets SELECTED MARKETS Home & Agro Oil & Gas Coatings Industrial TECHNOLOGY Personal Care 51% SURFACTANTS 24% POLYMERS PHOSPHOROUS 11% DERIVATIVES SPECIALTY 14% AMINES % of Novecare sales in 2014 Q1 2015 results 42 06/05/2015
Slide 43: Coatis
Coatis Sustainable solvents solutions provider and leading Latin American player of phenol Multiple applications for phenol and oxygenated solvents 8% 10% 3% Net Sales 2014 79% Latin America Asia & RoW 1 production site 1 R&I center 1 R&I center € 0.5 bn ~ 600 1 production site Net sales 2014 employ
Slide 44: Aroma Performance
Aroma Performance World’s largest Diphenols & Fluoroaliphatics integrated producer serving customers growth and innovation North America Europe 1 production site 3 production sites 1 R&I center Vanillin ingredients for Food, Flavors & Fragrances 38% 16% Net Sales 4% 2014 42% Asia & RoW 1 production
Slide 45: Advanced Materials
Advanced Materials 2014 figures € 2,762 m € 709 m 26% Net Sales REBITDA Margin Specialty Rare Earth Special Polymers Silica Systems Chemicals A leader in markets with high entry barriers and strong 56% Specialty Polymers returns on investment, the Advanced Materials segment is a major contributor to
Slide 46: Specialty Polymers
Specialty Polymers Innovation leader with broadest product portfolio Diversified end markets Electricals with superior & Electronics North America Europe growth potential 8 production sites 7 production sites 3 R&I sites 4 R&I centers Consumer Healthcare Goods 35% Net Sales Aircraft Industrial 25% 2
Slide 47: Specialty Polymers
Specialty Polymers Focused on the most advanced products Temperature resistance Chemical inertness Price Performance Weathering resistance Corrosion protection Water repellence Stain repellence Electrical inertness Non-flammability Fatigue resistance Biocompatibility Extractables Self-cleaning Trans
Slide 48: Specialty Polymers
Specialty Polymers Unique solution offering to customers differentiates Solvay from competitors High-barrier X-linkable Aromatics Aromatics Fluoropolymers Fluoropolymers polymers compounds LCP HPPA PPS PEEK PAI PSU PTFE PVDF PFA FKM PFPE PVDC XLCP Q1 2015 results 48 06/05/2015
Slide 49: Silica
Silica Growth through innovation for sustainable mobility HDS (Highly Dispersible Silica) North America Europe for fuel-efficient & 1 production site 3 production sites (1 in construction) performance tires 2 R&I centers 41% Net Sales 28% 2014 31% Latin America Asia & RoW 2 production sites 3 produc
Slide 50: Silica
Silica Highly Dispersible Silica (HDS) delivers value to the tire industry Excellent technical performance … … growing across a number of applications Rolling Resistance In passenger car and light trucks 125 + 25% 120 • Energy-efficient tires 110 • Winter tires 100 with HDS • Sport tires 90 Carbon-B
Slide 51: Special Chem
Special Chem Leader in fluor and rare earth chemistry Compounds North America Europe 3 production sites 15 production sites 2 R&I center 4 R&I centers Rare Fluor Earths & other 39% metals Net Sales 26% 2014 31% 3% Latin America Asia & RoW Automotive Electronics Energy 2 production sites 8 production
Slide 52: Performance Chemicals
Performance Chemicals 2014 figures € 2,944 m € 724 m 25% Net Sales REBITDA Margin Soda Ash & Emerging Derivatives Peroxides Acetow Biochemicals Operating in mature resilient markets, this Segment’s Soda Ash & Derivatives 51% success is based on economies of scale, Peroxides competitiveness and quali
Slide 53: Soda Ash & Derivatives
Soda Ash & Derivatives Resilient cash generator for the Solvay Group North America Europe Soda ash 2 production sites 7 production sites in many applications 3 R&I centers Flat glass 45% Net Sales 24% 2014 19% Container glass 12% Asia & RoW 1 production site (in construction) Detergents € 1.4 bn ~ 3
Slide 54: Soda Ash & Derivatives
Soda Ash & Derivatives Cost is a key success factor in the soda ash industry Average FOB cash cost Natural Synthetic process process Freight & logistics costs Production costs EU 1st CIS North East Asia Turkey China Africa US “Green River” tier EU 2nd tier India Baltics (“Solvay” and “Hou” processes
Slide 55: Soda Ash & Derivatives
Soda Ash & Derivatives European soda ash supply/demand improved 2014-2016 2017-2019 Restructuring started with Kazan project closure announcements Potentially adding 2.5 mt/yr production Solvay Povoa (0.2 mt/yr) capacity Tata Winnington (0.5 mt/yr) Based on natural production process Product
Slide 56: Peroxides
Peroxides Market & technology leader in global peroxides market Balance between North America Europe 2 production sites 9 production sites commodity markets (1 HPPO*) and selected 2 R&I centers end-markets Propylene Oxide (through HPPO* process) 41% 13% Capacity 2014 13% 33% Latin America Asia & RoW
Slide 57: Acetow
Acetow Leading the market with quality and innovation Products North America Europe 1 production J/V 2 production sites 1 R&I center 35% 1% Net 12% Sales 2014 Cellulose acetate flakes Cellulose acetate tow 52% Applications Latin America Asia & RoW 1 production site 1 production site New applications
Slide 58: Emerging Biochemicals
Emerging Biochemicals Leader in bio- based epichlorohydrine, vinyls and caustic soda in South East Asia Vinyl applications Europe 1 R&I center Films Sheets Net Sales 2014 100% Asia & RoW Pipe & fittings Wires & cables Profiles 1 production site Epicerol® applications € 0.4 bn ~ 500 1 production site
Slide 59: Functional Polymers
Functional Polymers 2013 figures € 1,654 m € 111 m 6.7% Net Sales REBITDA Margin Polyamides & Engineering PVC Intermediates Fibras Plastics Compounds The key success factor of this Segment, which primarily 97% groups the Polyamide activities, is continuous manufacturing optimization. Solvay is one o
Slide 60: Polyamide
Polyamide Integrated polyamide player 3 business units Europe 7 production sites 2 R&I centers 48% Net Polyamide & Intermediates 4% Sales 2014 15% 33% Latin America Asia & RoW 4 production sites 3 production sites 3 R&I centers 4 R&I centers Fibras € 1.5 bn ~ 3,600 14 production sites Engineering Pl
Slide 61: Corporate & Business Services
Corporate & Business Services 2014 figures € (188) m REBITDA Other Corporate Energy Services & Business Services This Segment includes the Solvay Energy Services business which delivers energy optimization programs both within the Group as well as for third parties. It also includes the corporate fu
Slide 62: Targeting Sustainable Value Growth
Executing a clear value creation strategy Towards a higher growth, less cyclical & greater returns Chemical Group Targeting Sustainable Value Growth Q1 2015 results 62 06/05/2015
Slide 63: Feedback expected by end March 2015
THE FIRST ROUND-THE-WORLD www.solvay.com SOLAR FLIGHT TAKE-OFF MARCH 9 2015 Feedback expected by end March 2015