Solvay Sa · EURONEXT:SOLB
Solvay Sa — Q2 2017 Earnings Presentation
35 slides from Solvay Sa's earnings presentation, Aug 1, 2017
Slide 1: Second Quarter & First Half 2017 Results
SECOND QUARTER & August 1, 2017 FIRST HALF 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 in late 2016 of plans to divest the Acetow and Vinythai businesses, these have been reclassified as discontinued operations and as assets held for sale. For comparative purposes, the second quarter and first half year of 2016 income statement has been restated. T
Slide 4: Overview: Executing our Plan
OVERVIEW • Executing our Plan • Financial highlights • Outlook and summary • Annexes Q2 & H1 2017 results 4 August 1, 2017
Slide 5: Strong Earnings Growth and Cash Generation
STRONG EARNINGS GROWTH AND CASH GENERATION Significant volume and profit growth Record margin Q2 2017 Sustained cash flow generation Full year outlook raised Q2 & H1 2017 results 5 August 1, 2017
Slide 6: 2017 Second Quarter Results Momentum Continues into Q2
2017 SECOND QUARTER RESULTS MOMENTUM CONTINUES INTO Q2 EBITDA Free cash flow up +18% €85m Volume Growth Lower Capex Positive pricing power Working capital discipline Strong excellence and synergy Lower underlying net debt delivery EBITDA up +11% excluding one-time €38m synergy EBITDA m
Slide 7: Greenhouse Gas Reduction to Reduce Climate Change Impact
GREEN HOUSE GAS REDUCTION TO REDUCE CLIMATE CHANGE IMPACT GHG INTENSITY KEY LEVERS (in kg CO2 eq. / € EBITDA) Portfolio 8.1 SOLWATT® 5.7 Energy efficiency 5.8 Manufacturing Excellence 4.4 Capex 30% Internal carbon price €25 / ton CO2 40% R&I priorities 2014 2017 2018 2025 Performance e
Slide 8: Overview: Financial Highlights
OVERVIEW • Executing our plan • Financial highlights • Outlook and summary • Annexes Q2 & H1 2017 results 8 August 1, 2017
Slide 9: Resilient Multi-Specialty Portfolio
RESILIENT MULTI-SPECIALTY PORTFOLIO VOLUME-DRIVEN GROWTH ACROSS EACH OPERATING SEGMENT in € million ADVANCED Good innovation-related ADVANCED MATERIALS Strong volume growth in FORMULATIONS automotive & smart growth in agro & continued 22% 356 devices; sequential improvement in Oil & Gas 5.2% 293 130
Slide 10: Double-Digit Sales Growth Driven by Volume & Price
DOUBLE-DIGIT SALES GROWTH DRIVEN BY VOLUME & PRICE Net sales in € m 221 76 3,022 2,714 (22) 33 Price Volume 2.8% Volume growth Scope Conversion (0.8)% forex & mix Volume growth in all four segments 1.2% 8.1% Good demand from end markets: smart devices, automotive, aerospace, oil & gas 11% Pr
Slide 11: Record EBITDA Margin Driven by Volume Growth
RECORD EBITDA MARGIN DRIVEN BY VOLUME GROWTH Underlying EBITDA in € m 31 (49) 705 96 27 599 (5) 5 Net pricing Fixed Others Volume & mix costs (including 5.2% Growth across all segments Volume (8.1)% equity Scope Conversion earnings) (0.8)% forex & mix 16% 4.5% 0.9% 18% Pricing power Positive aga
Slide 12: Underlying Net Income Reflecting Higher Operating Profit
UNDERLYING NET INCOME REFLECTING HIGHER OPERATING PROFIT Underlying P&L in € m Q2 2017 Q2 2016 % yoy Net sales 3,022 2,714 11% Underlying profit (Solvay share) up 38% EBITDA 705 599 18% EBITDA margin 23% 22% 1pp Depreciation & amortization (186) (184) (1)% Good EBIT growth versus prior year EBIT 5
Slide 13: 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 € 257 m vs €183m in H1 2016 (6,556) 1,321 (139) (208) 11 964 Perpetual (378) (360) 176 (351) (220) (5,740) hybrid Free cash Taxes Changes in Perpetual bonds flow from Changes in provisions Other di
Slide 14: Lower Capex in Line with Strategy
LOWER CAPEX IN LINE WITH STRATEGY Cash conversion (EBITDA + CapEx) / EBITDA Capex in € m (928) (14)% ~(800) Q4 (287) Q3 (228) Q2 (208) (16)% (174) Q1 (205) (177) 2016 2017 Q2 & H1 2017 results [1] H1 result 14 August 1, 2017
Slide 15: Enhanced Credit Strength: Upgrade by S&P to BBB
ENHANCED CREDIT STRENGTH UPGRADE BY S&P TO BBB (May 8, 2017) Underlying debt [1] (7.6) (7.5) @ 3.55% [2] @ 3.54% [2] evolution in € billion (2.2) (2.2) @ 5.07% @ 5.07% EUR perpetual hybrid bonds (2.2) (2.0) USD bonds @ 4.03% @ 4.01% EU bonds & major debt (2.8) (2.8) @ 1.97% @ 1.96% Other deb
Slide 16: Overview: Outlook and Summary
OVERVIEW • Executing our plan • Financial highlights • Outlook and summary • Annexes Q2 & H1 2017 results 16 August 1, 2017
Slide 17: Raising Outlook Full Year 2017
RAISING OUTLOOK FULL YEAR 2017 High-single digit EBITDA growth Free cash flow from continuing operations more than €800 million Q2 & H1 2017 results 17 August 1, 2017
Slide 18: On Track to Deliver
ON TRACK TO DELIVER Portfolio optimization Volume growth Earnings and cash flow growth Sustainable progress Q2 & H1 2017 results 18 August 1, 2017
Slide 19: Investor Relations Contacts, 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 [email protected] [email protected] [email protected] [email protected] NEXT EVENTS November 8 February 28 May 3
Slide 20: Annexes
ANNEXES • Additional 2017 financial data • General information • Other financial considerations for 2017 Q2 & H1 2017 results 20 August 1, 2017
Slide 21: Advanced Materials Q2 2017
ADVANCED MATERIALS Q2 2017 SOLID EBITDA GROWTH ACROSS DIVERSIFIED MARKETS Net sales (in € million) EBITDA (in € million) 46% margin 31% 1,082 (6) 7 58 3 1,144 27% 356 Scope Conversion Volume Price 293 0.2% (0.6)% forex & mix 0.7% 5.4% 1,144 5.7% 10% 25% 22% 19% Q2 2016 Q2 2017 Specialty Polymers Com
Slide 22: Advanced Formulations Q2 2017
ADVANCED FORMULATIONS Q2 2017 SALES AND EBITDA GROWTH RETURN Net sales (in € million) EBITDA (in € million) 99 5 757 19% margin 65% 17% 650 (3) 6 Price 0.8% Scope Conversion Volume (0.4)% forex & mix 0.8% 15% 124 130 757 16% 5.2% 13% 22% Q2 2016 Q2 2017 Novecare Q2 2016 Q2 2017 Technology Solutions
Slide 23: Performance Chemicals Q2 2017
PERFORMANCE CHEMICALS Q2 2017 SOLID PERFORMANCE CONTINUES Net sales (in € million) EBITDA (in € million) 36 3 666 73% 30% margin 619 (4) 11 29% Price Scope Conversion Volume 0.5% (0.6)% forex & mix 188 190 1.7% 5.8% 666 7.5% 1.0% 18% 27% Q2 2016 Q2 2017 Soda Ash & Derivatives Q2 2016 Q2 2017 Peroxid
Slide 24: Functional Polymers Q2 2017
FUNCTIONAL POLYMERS Q2 2017 STRONG EBITDA GROWTH Net sales (in € million) EBITDA (in € million) 100% margin 18% 66 449 82 21 14% 362 (10) 10 Volume Price 52 Scope Conversion 18% & mix (2.6)% forex 2.7% 5.9% 449 24% 57% Q2 2016 Q2 2017 Polyamide Chlorovinyls Q2 2016 Q2 2017 Polyamide Chlorovinyls Sal
Slide 25: Corporate & Business Services Q2 2017
CORPORATE & BUSINESS SERVICES Q2 2017 STABLE CONDITIONS EBITDA (in € million) Q2 2016 Q2 2017 Key figures Underlying (in € million) Q2 2017 Q2 2016 % yoy Net sales 7 1 n.m. Energy Services - - n.m. 9.0% Other Corporate & Business Services 7 1 n.m. EBITDA (53) (58) - (53) Energy Services 3 (2) n.m. (
Slide 26: Debt Profile: Balanced Maturities Allowing Flexibility
DEBT PROFILE BALANCED MATURITIES ALLOWING FLEXIBILITY Major debt in million 1,200 $72 1,000 8.95% To be repaid $250 3.95 in July 800 € 500 600 5.43% €1,000 Euribor +82 bp $800 $800 400 €700 €750 3.40% 4.45% 1.63% To be repaid 4.20% €500 €500 €500 €500 in December 200 4.63% 5.12% $400 5.87% 2.75% 3.5
Slide 27: Net Pension Liabilities Up on Lower Discount Rates
NET PENSION LIABILITIES [1] UP ON LOWER DISCOUNT RATES Pensions (June 20, 2017) in € billion Net pension liabilities decreased by € 0.1 bn Net Pension liabilities down to €(5.4) bn pension Pension assets widely stable at €2.8 bn liabilities (2.7) (5.4) 2.7 Cash contribution of €(82) m in H1 2017
Slide 28: Annexes: General Information
ANNEXES • Additional 2017 financial data • General information • Other financial considerations Q2 & H1 2017 results 28 August 1, 2017
Slide 29: Upgraded Portfolio
UPGRADED PORTFOLIO ACQUISITIONS Enhancing customized Cytec solution offerings Form. XLC resins Ryton Chem- Indupa logics Refri- Viny- Rhodia gerants thai Eco PCC Pipe- life Services Acetow Reducing Inovyn cyclical & low-growth businesses DIVESTMENTS exposure 2011 2012 2013 2014 2015 2016 2017 MORE g
Slide 30: 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 billion €10.9 billion MARKETS • Automotive & aerospace ~20% >50% • Resources & environment • Electrical & electronics in GDP+ in GDP+ • Agro, fee
Slide 31: Aligned Business Segments Strategically Coherent to Drive Results
ALIGNED BUSINESS SEGMENTS STRATEGICALLY COHERENT TO DRIVE RESULTS GROWTH RESILIENT CASH 43% ENGINES CONTRIBUTOR 19% ADVANCED ADVANCED PERFORMANCE FUNCTIONAL MATERIALS FORMULATIONS CHEMICALS POLYMERS EBITDA High performance Customized specialty Leading positions in Leading regional 2016 materials, pr
Slide 32: Annexes: Other Financial Considerations
ANNEXES • Additional Q2 & H1 2017 financial data • General information • Other financial considerations Q2 & H1 2017 results 32 August 1, 2017
Slide 33: Underlying EBIT(DA) Considerations for 2017
UNDERLYING EBIT(DA) CONSIDERATIONS FOR 2017 Scope effects Forex sensitivity Divestments having led to restatements in 2016 Immediate impact on conversion exposure Latin American PVC activity Indupa sold end 2016 Deferred transactional impact due to hedging Asian PVC activity Vinythai sold
Slide 34: Underlying Financial, Cash & Tax Considerations for 2017
UNDERLYING FINANCIAL, CASH & TAX CONSIDERATIONS FOR 2017 Underlying net financial charges Other elements Underlying net financial charges expected at ~€(425) m, Cash flow excluding foreign exchange fluctuations impact Cash expenses for pensions projected at Underlying net cost of borrowings at
Slide 35: 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