Solvay Sa · EURONEXT:SOLB
Solvay Sa — Q4 2017 Earnings Presentation
43 slides from Solvay Sa's earnings presentation, Feb 28, 2018
Slide 1: Fourth Quarter & Full Year 2017 Results
FOURTH QUARTER & February 28, 2018 FULL YEAR 2017 RESULTS
Slide 2: Safe Harbor and Forenote
SAFE HARBOR This presentation may contain forward-looking information. Forward- Consequently, actual results or future events may differ materially looking statements describe expectations, plans, strategies, goals, from those expressed or implied by such forward-looking statements. future events or
Slide 3: Overview
OVERVIEW • Delivering our plan • Financial highlights • Priorities and outlook • Annexes Q4 & FY 2017 Results 3 February 28, 2018
Slide 4: Strong Earnings Growth and Cash Generation
STRONG EARNINGS GROWTH AND CASH GENERATION Portfolio upgrade completed Acetow, Vinythai and Polyamide Strong volumes Leading to 7.5% EBITDA growth Sustained cash generation €871 million Including 19% increase on continuing operations Delivering on our plan Q4 & FY 2017 Results 4 Februa
Slide 5: More Upgraded Portfolio
UPGRADED PORTFOLIO Enhancing customized ACQUISITIONS solution LT-CF Cytec Ener- gain plant offerings XL Form. comp resins ounds Polyamide [1] Ryton Chem- Indupa logics Refri- Viny- Rhodia gerants thai Phos- phorous Reducing PCC Dakarto Pipe- Eco Benvic cyclical & life Services Inovyn low-growth Benv
Slide 6: Significantly Enhanced Portfolio: More Global, More Specialty
SIGNIFICANTLY ENHANCED PORTFOLIO MORE GLOBAL, MORE SPECIALTY NET MORE MORE MORE MORE SALES GLOBAL DIVERSIFIED SPECIALTY SUSTAINABLE 2010 >50% ~20% ~25% <20% in in GDP+ specialty sustainable €6.5 billon Europe markets products solutions 2017 ~33% >50% >70% ~49% in each in GDP+ specialty sustainable €
Slide 7: Solid Full Year Performance
SOLID FULL YEAR PERFORMANCE EBITDA +7.5% Free cash flow (9.7% organic[1]) €871m (+19%) Volume/mix impact of 16% Resulting from EBITDA growth and capex discipline Fixed costs effect -6.5% linked to business growth Underlying net debt reduced to EBITDA margin sustained €5.3 billion at 22%
Slide 8: Returns Exceeding Mid-Term Targets
EXCEEDING MID-TERM TARGETS CREATING MORE VALUE 2 years 2 years 2016 - 2017 2016 - 2017 PROFIT Sustainable Solutions 49% EBITDA[1] growth +8.6% Increase to 40% of net sales by 2018 Mid-to-high single-digit over 2 years CASH GHG intensity Free cash flow Reduce by -20% over 3 years -24% Exceed €2.4 bil
Slide 9: Overview: Financial Highlights
OVERVIEW • Executing our plan • Financial highlights • Priorities and outlook • Annexes Q4 & FY 2017 Results 9 February 28, 2018
Slide 10: Resilient Multi-Specialty Portfolio
RESILIENT MULTI-SPECIALTY PORTFOLIO VOLUME-DRIVEN GROWTH ACROSS ALL SEGMENTS ADVANCED Volume growth offset adverse Volumes driven by recovery in ADVANCED MATERIALS forex; strong demand in the North American shale oil & FORMULATIONS automotive and smart devices; gas fully offset adverse forex 1,202 M
Slide 11: Higher Sales Driven by Volume & Mix
HIGHER SALES DRIVEN BY VOLUME & MIX Net sales in € million 754 (11) 10,125 Volume growth 9,569 (71) (116) Volume growth in all four segments Price -0.1% Good demand from end markets including Scope -0.7% Conversion Volume automotive, industrial & agro forex & mix -1.2% +7.9% Foreign exchange
Slide 12: Record EBITDA Margin Sustained Driven by Volume Growth
RECORD EBITDA MARGIN SUSTAINED DRIVEN BY VOLUME GROWTH Underlying EBITDA in € million 327 (45) (135) 50 2,230 Volume & mix 2,075 (19) (22) Net Growth across all business pricing Fixed Others segments (2.2)% costs (including Scope Conversion Volume -0.9% forex & mix -6.5% equity earnings) -1.1% +16
Slide 13: Underlying Net Income Reflects Significant Increase in Operating Profit
UNDERLYING NET INCOME REFLECTS SIGNIFICANT INCREASE IN OPERATING PROFIT Underlying P&L in € m FY 2017 FY 2016 % yoy Net sales 10,125 9,569 +6% EBITDA 2,230 2,075 +7% Underlying profit (Solvay share) up 11% EBITDA margin 22% 22% - Depreciation & amortization (704) (672) -5% EBIT 1,527 1,403 +9% Hig
Slide 14: Improvement in Cash Conversion Driven by Lower Capex and Higher EBITDA
IMPROVEMENT IN CASH CONVERSION DRIVEN BY LOWER CAPEX AND HIGHER EBITDA Capex in € million (839) -15% Q4 (716) (252) New production in 2017 Q3 (243) PVDF for batteries in China (Specialty Polymers) (202) High-purity H2O2 in Italy (Special Chem) Q2 (153) Silica plant in South Korea Composites/
Slide 15: €1.2 Billion Reduction in Net Debt
FOCUS ON CASH MAINTAINED €1.2 BILLION REDUCTION IN NET DEBT Underlying net debt [1] evolution in € million Free cash flow €871m vs €876m in FY 2016 (6,556) +2,230 -373 +89 +875 -396 -199 +227 Perpetual -160 -367 (5,346) hybrid -716 bonds Free cash (2,200) Changes in flow from Other Taxes Dividends:
Slide 16: Efficient Capital Structure, Deleveraging Continues
EFFICIENT CAPITAL STRUCTURE DELEVERAGING CONTINUES Underlying debt [1] evolution in € billion Redeemed or EUR perpetual Repurchased hybrid bonds USD bonds -26% Pro forma impact from Polyamide divestment EU bonds & major debt -41% Underlying net debt €4.2 bn Other debt Underlying leverage
Slide 17: Overview: Priorities and Outlook
OVERVIEW • Executing our plan • Financial highlights • Priorities and outlook • Annexes Q4 & FY 2017 Results 17 February 28, 2018
Slide 18: Our Priorities
OUR PRIORITIES DELIVER MID-TERM OBJECTIVES & PREPARE THE FUTURE Organic volume growth Earnings and cashflow growth Optimize our organization Sustainable value Q4 & FY 2017 Results 18 February 28, 2018
Slide 19: Outlook Full Year 2018
OUTLOOK FULL YEAR 2018 Underlying EBITDA to grow 5% to 7% organically [1] Free cash flow[2] to exceed 2017 level of €782 million Q4 & FY 2017 Results 19 February 28, 2018 [1] At constant scope and relative to average 2017 forex levels [2] Free cash flow from continuing operations
Slide 20: Investor Relations Contacts and Next Events
INVESTOR RELATIONS CONTACTS Kimberly Stewart Jodi Allen Geoffroy Raskin Bisser Alexandrov +32 2 264 3694 +1 609 860 4608 +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 8, May 23, July 31,
Slide 21: Annexes: Additional FY 2017 Financial Data
ANNEXES • Additional FY 2017 financial data • Q4 2017 financial data • General information • Other financial considerations for 2018 Q4 & FY 2017 Results 21 February 28, 2018
Slide 22: Advanced Materials FY 2017
ADVANCED MATERIALS FY 2017 Net sales (in € million) EBITDA (in € millon) margin 27% 46% 26% 4,313 -41 -74 +199 -27 4,370 1,202 1,110 Scope Conversion Volume Price -1.0% forex & mix -0.6% -1.7% +4.6% €4,370m +1.3% +8.2% 20% 24% FY 2016 FY 2017 Specialty Polymers Composite Materials FY 2016 FY 2017 Sp
Slide 23: Advanced Formulations FY 2017
ADVANCED FORMULATIONS FY 2017 Net sales (in € million) EBITDA (in € million) 18% margin 18% +342 +14 2,966 65% 2,668 -14 -44 524 484 Price €2,966m Scope Conversion Volume +0.5% -0.5% forex & mix -1.7% +13% +11% +8.1% 22% FY 2016 FY 2017 Advanced Formulations FY 2016 FY 2017 Novecare Technology Solut
Slide 24: Performance Chemicals FY 2017
PERFORMANCE CHEMICALS FY 2017 Net sales (in € million) EBITDA (in € million) 28% margin 27% 59% +196 +3 2,766 2,581 -16 +2 Price 718 749 Scope Conversion Volume +0.1% -0.6% forex & mix +0.1% +7.6% €2,766m +7.2% +4.3% 4% 22% 15% FY 2016 FY 2017 FY 2016 FY 2017 Soda Ash & Derivatives Peroxides Coatis
Slide 25: Corporate & Business Services FY 2017
CORPORATE & BUSINESS SERVICES FY 2017 EBITDA (in € million) FY 2016 FY 2017 Key figures Underlying (in € million) FY 2017 FY 2016 % yoy Net sales 23 7 n.m. Energy Services - 4 n.m. -2.8% Other Corporate & Business Services 23 3 n.m. EBITDA (244) (237) - Energy Services 21 4 n.m. (237) (244) Other Co
Slide 26: Debt Profile: Balanced Maturities Allowing Flexibility
DEBT PROFILE BALANCED MATURITIES ALLOWING FLEXIBILITY Major debt Repaid in in million October 2017 $82 Repaid @8.95% in July 2017 $87 @3.95% $204 $163 @3.50% @3.95% $196 €1,000 @3.50% Repaid in @Euribor €118 December 2017 +82bp @4.63% €700 €750 $800 @1.63% $800 @4.20% @3.40% @4.45% €500 €500 €500 €5
Slide 27: Net Pension Liabilities Down on Cash Contribution and Scope Effect
NET PENSION LIABILITIES [1] DOWN ON CASH CONTRIBUTION AND SCOPE EFFECT Pensions (31/12/2017) in € billion Net pension liabilities decreased by € 0.3 bn over the year Pension liabilities improved € 0.4 bn to € (5.3) bn following Net mainly currency translation gain and polyamide divestment pension
Slide 28: Annexes: Q4 2017 Financial Data
ANNEXES • Additional FY 2017 financial data • Q4 2017 financial data • General information • Other financial considerations for 2018 Q4 & FY 2017 Results 28 February 28, 2018
Slide 29: Higher Sales Driven by Volume & Mix
HIGHER SALES DRIVEN BY VOLUME & MIX Net sales in € million 2,431 (22) (116) 188 (1) 2,480 Volume growth Price Volume growth in all business segments Scope -0.9% Conversion Volume - Good demand from end markets including forex & mix automotive, smart devices, oil & gas -4.8% +7.7% Foreign exc
Slide 30: Record EBITDA Margin Sustained Driven by Volume
RECORD EBITDA MARGIN SUSTAINED DRIVEN BY VOLUME Underlying EBITDA in € m 80 (25) (18) 6 494 480 (6) (23) Net Volume & mix pricing Fixed Others Scope (5.3)% costs (including Growth across all business segments -1.2% Conversion Volume -3.7% equity forex & mix earnings) -4.9% +17% +1.2% Pricing pow
Slide 31: Resilient Multi-Specialty Portfolio
RESILIENT MULTI-SPECIALTY PORTFOLIO VOLUME-DRIVEN GROWTH ACROSS EACH OPERATING SEGMENT ADVANCED Continued strong demand in Maintained solid recovery in ADVANCED MATERIALS automotive and smart North American oil & gas FORMULATIONS devices; Composites for 259 260 aero stable 124 138 +0.4% 46% 24% +11%
Slide 32: Advanced Materials Q4 2017
ADVANCED MATERIALS Q4 2017 Net sales (in € million) EBITDA (in € million) 1,076 -18 margin -54 +57 -13 1,047 24% 25% 45% Scope Price -1.6% Conversion Volume -1.2% 259 260 forex & mix -5.1% +5.3% €1,047m -2.7% +0.4% 21% 24% Q4 2016 Q4 2017 Specialty Polymers Composite Materials Q4 2016 Q4 2017 Specia
Slide 33: Advanced Formulations Q4 2017
ADVANCED FORMULATIONS Q4 2017 Net sales (in € million) EBITDA (in € millon) +72 +9 747 margin 18% -4 -38 18% 708 Scope Price 64% 138 -0.5% Conversion Volume +1.2% 124 forex & mix -5.3% +10% €747m +5.5% +11% 23% Q4 2016 Q4 2017 Advanced Formulations Q4 2016 Q4 2017 Novecare Technology Solutions Novec
Slide 34: Performance Chemicals Q4 2017
PERFORMANCE CHEMICALS Q4 2017 Net sales (in € millon) EBITDA (in € million) 26% margin +54 +4 679 58% 25% 645 - -24 Scope Price 170 170 Conversion Volume +0.6% -0.1% forex & mix €679m -3.7% +8.4% 4% +5.2% +0.4% 16% 22% Q4 2016 Q4 2017 Q4 2016 Q4 2017 Soda Ash & Derivatives Peroxides Coatis Functiona
Slide 35: Corporate & Business Services Q4 2017
CORPORATE & BUSINESS SERVICES Q4 2017 STABLE CONDITIONS EBITDA (in € million) Q4 2016 Q4 2017 Key figures Underlying (in € million) Q4 2017 Q4 2016 % yoy Net sales 7 1 n.m. Energy Services - - n.m. -2.3% Other Corporate & Business Services 7 1 n.m. EBITDA (74) (72) - Energy Services (1) 4 n.m. (72)
Slide 36: Underlying Net Income Reflecting Higher Operating Profit
UNDERLYING NET INCOME REFLECTING HIGHER OPERATING PROFIT Underlying P&L in € m Q4 2017 Q4 2016 % yoy Net sales 2,480 2,431 +2% EBITDA 494 480 +3% Underlying profit (Solvay share) down 21% EBITDA margin 20% 20% - Depreciation & amortization (187) (184) -2% EBIT 307 296 +4% Higher EBIT growth versus
Slide 37: Focus on Cash Maintained: Reduction in Net Debt
FOCUS ON CASH MAINTAINED REDUCTION IN NET DEBT Underlying net debt [1] evolution in € m Free cash flow € 388 m vs €412m in Q4 2016 (5,538) +494 -35 +31 -243 +169 -58 +52 -53 -139 (5,346) -26 Perpetual Dividends: Other hybrid Changes in Taxes Changes in Free cash Acquisitions Financing Underlying Cap
Slide 38: Annexes: General Information
ANNEXES • Additional Q4 & FY 2017 financial data • Q4 2017 financial data • General information • Other financial considerations for 2017 Q4 & FY 2017 Results 38 February 28, 2018
Slide 39: We Are a World Leader in the Chemical Industry
WE ARE A WORLD LEADER IN THE CHEMICAL INDUSTRY 1 ~24,500 Top 3 3 2 employees Market position [1] 61 €10.1bn countries net sales 124 €2.2bn Industrial sites underlying EBITDA 21 22% Major R&I sites EBITDA margin 2017 Q4 & FY 2017 Results [1] Applicable to ~90% of portfolio 39 February 28, 2018
Slide 40: Strong Delivery in 2017
STRONG DELIVERY IN 2017 GROWTH ENGINES RESILIENT CASH CONTRIBUTOR ADVANCED ADVANCED PERFORMANCE MATERIALS FORMULATIONS CHEMICALS 49% 21% Providing solutions for Customized specialty Leading positions sustainable mobility, formulations for surface in chemical intermediates Underlying chemistry & liqu
Slide 41: Annexes: Other Financial Considerations for 2018
ANNEXES • Additional Q4 & FY 2017 financial data • Q4 2017 financial data • General information • Other financial considerations for 2018 Q4 & FY 2017 Results 41 February 28, 2018
Slide 42: Financial Considerations for 2018
FINANCIAL CONSIDERATIONS FOR 2018 Depreciation/Amortization & Capex Forex sensitivity D&A expected at ~€(700)m, in line with 2017 Immediate impact on conversion exposure • Excludes PPA amortization Deferred transactional impact due to hedging PPA amortization of ~€(240)m (6-12 month rolling
Slide 43: Solvay's ADR Program
SOLVAY’S ADR PROGRAM CONVENIENCE OF INVESTING IN AMERICAN DEPOSITARY RECEIPTS (ADRS) THROUGH A SPONSORED LEVEL 1 PROGRAM ADRs Details Benefits of ADRs ADR Symbol SOLVY Clear and settle according to US Platform OTC standards CUSIP 834437303 Convenience of stock quotes and DR ISIN US834437305 divi