Solvay Sa · EURONEXT:SOLB
Solvay Sa — Q1 2020 Earnings Presentation
48 slides from Solvay Sa's earnings presentation, May 6, 2020
Slide 1: Solvay Corporate presentation
May 6th, 2020 Solvay Corporate presentation Profile, Strategy, and Q1 2020 results
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: Profile and strategy
Solvay Profile and strategy 3
Slide 4: Solvay By The Numbers
Solvay By The Numbers € € 10.2B 2.3B >50% 24,100 115 net sales underlying EBITDA revenue in faster People at Sites 53% sustainable solutions 23% margin growing economies Solvay globally Evenly € Balanced 2,100 336M >100 64 revenue across Europe, the R&I employees in in R&I nationalities countries Am
Slide 5: Solvay by markets and region
Solvay by markets and region 5 IR presentation May 2020
Slide 6: We bond people, ideas and elements to reinvent progress
Our purpose AT OUT BEST We bond people We Believe in As Solvay As Leaders Citizens ideas and elements to reinvent progress Purposeful Responsibility We Care and We Lead with Purpose, Heart and Collaborate Mind We Unity, Not We Are Passionately Uniformity Customer Coach People Our vision Obsessed to
Slide 7: Financial performance
Financial performance Underlying net financial debt (in € billion) and Leverage 2.8x 2.6x 2.2x 2.0x 2.1x 2.0x Underlying EBITDA [1] (in € billion) CAGR c.5% Provisions (in € billion) Free cash flow to Solvay shareholders [2] from continuing Dividend policy operations (stable to growing) (in € millio
Slide 8: Our Businesses are Aligned to Powerful Megatrends
Our Businesses are Aligned to Powerful Megatrends IoT / Eco-friendly MEGATRENDS Electrification Lightweighting Resource efficiency Healthcare Digitalization based solutions High-performance polymer technology portfolio Bio-based ingredients OUR • Binders & • Improving • Flexible risers • Long-term i
Slide 9: Our G.R.O.W. Strategy
Our G.R.O.W. Strategy A differentiated management approach to drive growth, cash, and returns GGROWTH ACCELERATE GROWTH DELIVER RESILIENT CASH OPTIMIZE RETURNS WIN R MATERIALS CHEMICALS SOLUTIONS Solvay ONE Prioritize investments in high margin Maximize cash flow generation from our Optimize our Sol
Slide 10: Materials
Materials #1 pure play advanced materials business GGROWTH Track Unique high-performance Strategic intent record polymers & composite technologies Strong growth opportunities Accelerate growth +7% EBITDA growth (organic 2014-2019) R RESILIENCE Innovation Customers Investment • Sustainable automotive
Slide 11: Chemicals
Chemicals #1 cash conversion chemical player GGROWTH Track World-leaders in Strategic intent record essential chemicals to daily life Deliver resilient cash +9% Cash flow growth (organic 2014-2019) R RESILIENCE Mono-technology businesses Innovation Customers Investment • Soda ash Focus on Leverage S
Slide 12: Solutions
Solutions Unlock value GGROWTH Track Unique Strategic intent record formulation & application expertise Optimize returns Returns R RESILIENCE Selective Customers < WACC Innovation Investment (average 2014-2019) opportunities to grow Focus on Digitalization, Selective • Natural food ingredients eco-f
Slide 13: Climate, Resources, Better Life
CLIMATE MSCI ESG SUSTAINALYTI FTSE4GOOD WBCSD AAA CSof 42 #2 out 92nd Top 10 (AAA-CCC scale) percentile Science and research play an important role to tackle the world’s environmental and health RESOURCES challenges and I'm particularly happy that Solvay is leading the way. Bertrand Piccard, Chairma
Slide 14: Our 2030 Sustainability Goals
Our 2030 Sustainability Goals Align greenhouse gas emissions with Paris Agreement Reduce by 26% (-2%/y) CLIMATE Phase out coal Achieve 100% Reduce negative pressure on biodiversity 30% reduction Achieve 65% vs 50% Increase Sustainable Solutions revenues Increase Circularity Achieve 15% vs 7% RESOURC
Slide 15: Why invest?
Why invest? Talents with Values Future growth Customer potential fuelled partnerships Passion for Performance by megatrends drive innovation Global scale, diversity of products Key leadership Unity, not and end-markets, positions Uniformity reliable infrastructure Proven Bold ESG Purposeful resilien
Slide 16: Q1 2020 performance
Q1 2020 performance 16
Slide 17: We apply strict safety measures
We apply strict safety measures Business Operations People Continuity 17 IR presentation May 2020
Slide 18: Our response to COVID-19
Our response to COVID-19 Masks 350,000 Personal 114,000 Protection Equipment for HCPs H2O2 700,000lt disinfectants 6,700 Materials for 1,000,000 6,700 face shields Sanitizing gel bottles 18 IR presentation May 2020
Slide 19: Decisive actions drive results
Decisive actions drive results Costs Cash Customers €50 million €202 million FCF New business total savings generation ● Solvay proprietary technology used in ● Indirect spend (⅔) ● ~€300 million above Q1’19 COVID testing & vaccine (healthcare) ● Labor (⅓) ● Working capital focus ● Medical grade pol
Slide 20: Strong Q1 performance
Strong Q1 performance Supported by focus on cost, cash and customers € € € 2.5 bn 569 202 m m UNDERLYING EBITDA; FREE CASH FLOW NET SALES Margins increase to 23% to shareholders, continuing ops ● Lower volumes (oil & gas / aero) ● Resilient markets (healthcare, home and ● Disciplined working capital
Slide 21: Materials Q1 2020 Performance
SOLVAY, 2019 Net Sales by End-Market Materials Automotive & Aerospace Industrial Applications 25% 19% Q1 2020 Performance Consumers goods & Healthcare 17% Resources & Environment 14% Agro, Feed & Food 12% Building & Construction 8% Electricals & Electronics 5% - NET SALES - EBITDA EBITDA 3 % y/y org
Slide 22: Chemicals Q1 2020 Performance
SOLVAY, 2019 Net Sales by End-Market Chemicals Automotive & Aerospace Industrial Applications 25% 19% Q1 2020 Performance Consumers goods & Healthcare 17% Resources & Environment 14% Agro, Feed & Food 12% Building & Construction 8% Electricals & Electronics 5% - NET SALES + EBITDA EBITDA 3 % y/y org
Slide 23: Solutions Q1 2020 Performance
SOLVAY, 2019 Net Sales by End-Market Solutions Automotive & Aerospace Industrial Applications 25% 19% Q1 2020 Performance Consumers goods & Healthcare 17% Resources & Environment 14% Agro, Feed & Food 12% Building & Construction 8% Electricals & Electronics 5% - NET SALES - EBITDA EBITDA 6 % y/y org
Slide 24: Strong free cash flow generation
Strong free cash flow generation Record Q1 2020 performance (in € million) Q1 2020 FCF to Solvay shareholders at €202 million ● Strict working capital management ● Polyamide divestment proceeds use results in one-off tax gain ● Planned capex reduction plan 24 IR presentation May 2020
Slide 25: Financial robustness
Financial robustness Strong cash flow generation, balance sheet, and liquidity Liquidity Debt Deleveraging ● €4 billion (credit+cash) ● Next maturity in June 2021 ● €460 million pension contribution of €500m hybrid ● Lowers annual cash out by ● No covenants ● Low refinancing risk €60 million Confirm
Slide 26: Exceptional times, exceptional measures
Exceptional times, exceptional measures Plans in place to address reduced activity levels Align production rates Reduce staff on Strict Capex to lower demand temporary basis management ● ~10% of our global sites ● >15% of workforce ● Reduce full year by temporarily closed furloughed effective May 4
Slide 27: Solvay Solidarity Fund
Solvay Solidarity Fund Responsible Capitalism in Action Charitable foundation established Alleviate COVID-19 hardship Contribution pledges to date Personnel gestures by directors/leaders/employees Dividends • Reference shareholder, SOLVAC: €10m up to €24m • Private shareholders: ca. €3m • Many more
Slide 28: 2019 Review
2019 Review 28
Slide 29: 12 months in review
12 months in review long-term actions to unleash longer-term results G.R.O.W. Structure Culture Core competencies Strategy Solvay ONE Purpose & incentives Customer Innovation ESG TPC platform Solvay ONE Planet partnerships Battery platform R&I Centers 19 IR presentation May 2020
Slide 30: 2019 results
2019 results delivery on our financial and sustainability objectives FCF to NET SALES UNDERLYING EBITDA Solvay shareholders EBITDA margin from continuing operations € € € 10 bn 2.3 -2.8% yoy bn 23 % 606 m -2% yoy organically stable yoy +€40m yoy GHG Sustainable Occupational Societal emissions soluti
Slide 31: Balanced maturities allow flexibility
Balanced maturities allow flexibility Deleveraging and reduced of cost of debt Major financial debt [1] in million $163 Issued 3.95 in Sep % 2019 €300 4.25 % $196 3.5% Repaid €750 $800 $800 1.63 in Sep 3.4% % 4.45 % €600 2019 €500 €500 €500 €500 0.5% 5.12 5.43 5.87 2.75 % % % % [1] Major debt only,
Slide 32: Annexes
Annexes 32
Slide 33: Sustainable value creation integrated in group compensation structure
Sustainable value creation integrated in group compensation structure Fixed Compensation Short and Long and Benefits Term Variable Compensation Annual Pension Short term Performance Share Stock Base Salary & Benefits incentive Units (*) Options (*) PERFORMANCE 1 year 3 years 3 years PERIOD following
Slide 34: Bonding with customers to create value
BONDING with CUSTOMERS to create value Business Continuity UDELⓇ RADELTM CYCOMⓇ prepreg Solvay insideⓇ Solvay insideⓇ Polymer for hemodialysis Face Shields to protect Strike protection Testing kit & antiviral drug Cough suppressant membranes against COVID-19 surfacing film COVID-19 drugs HyflonⓇ Fom
Slide 35: Automotive
Automotive ELECTRIFICATION LIGHTWEIGHTING RESOURCE EFFICIENCY We make cars more efficient MARKET DRIVERS HOW WE WIN Fuel efficiency / lightweighting Broadest portfolio of advanced materials regulations driving CO2 reductions • Greater use of high-performance polymers to meet more critical applicatio
Slide 36: Aerospace
Aerospace LIGHTWEIGHTING RESOURCE EFFICIENCY We make aircraft lighter & more efficient 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% • Significant increase of composites
Slide 37: Thermoplastic composites
Thermoplastic composites LIGHTWEIGHTING RESOURCE EFFICIENCY For aerospace, automotive and oil & gas MARKET DRIVERS HOW WE WIN Investments Why Thermoplastics? • Capacity expansions in aero (Sept 2019) Fast cycle time • New capacity for oil & gas (Oct 2019) ~10% • SEnabling increased build rates • Two
Slide 38: We are a technology leader for mission critical battery materials
We are a technology ELECTRIFICATION LIGHTWEIGHTING RESOURCE leader for mission critical EFFICIENCY battery materials A unique expertise in fluorine chemistry and advanced ENERGAINTM conductive materials NOHMS* TFSI ILS Fluorinated solvents Ionic liquids based on TFSI and formulations for High Voltag
Slide 39: Broadest portfolio of advanced materials differentiating Solvay from competition
Broadest portfolio of advanced materials differentiating Solvay from competition Aromatics Fluoropolymers High Perf Composites Adhesives & Out-of- Thermoset Resin Thermo-plas HPPA PPS PAEK PSU PTFE PVDF PFA FKM PFPE Carbon Fiber Surfacing Autoclave Prepreg Infusion tic prepreg films prepreg 39 IR pr
Slide 40: Electronics
Electronics IOT / DIGITALIZATION Beyond smartphones 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 trends the fast development of 5G with a portfolio of solutions • Exponential gr
Slide 41: Healthcare
Healthcare EXPANDING ECO-FRIENDLY HEALTHCARE SOLUTIONS We improve comfort for others MARKET DRIVERS HOW WE WIN +5-7% CAGR Patient care: • Health care coverage in developing markets World leader in thermoplastics used for high performance membrane • The growing care needs of elderly populations (agei
Slide 42: Home & Personal care
Home & Personal care ECO-FRIENDLY SOLUTIONS Performant & 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&I
Slide 43: Soda ash & Bicarbonate
Soda ash & Bicarbonate EXPANDING RESOURCE HEALTHCARE EFFICIENCY Resilient demand & strong cash conversion 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 • Capacity
Slide 44: Peroxides
Peroxides RESOURCE EFFICIENCY Resilient demand & strong cash conversion 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 45: Digitalization as key enabler for further value creation
Digitalization as key enabler for further value creation Example Example DIGITALIZATION in Specialty DIGITALIZATION in Technology OF PLANTS Polymers FOR CUSTOMERS Solutions • +18% tons/yr • Real-time data enables Increase asset performance • Real-time ongoing interaction with gain in fluids • Levera
Slide 46: 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 • Regist
Slide 47: ADR program for US investors
ADR program for US investors ADR program Benefits Contact CITI for US investors of ADR’s to create ADR symbol SOLVY • Clear and settle according to US Solvay ADRs Platform OTC standards New York Michael O’Leary CUSIP 834437303 • Convenience of stock quotes and [email protected] dividend paymen
Slide 48: Investor Relations
Investor Relations [email protected] Rue de Ransbeek, 310 1120 Brussels, Belgium Shareholders services [email protected] Rue des Champs Elysées, 43 1050 Brussels, Belgium