Solvay Sa · EURONEXT:SOLB
Solvay Sa — Q3 2022 Earnings Presentation
24 slides from Solvay Sa's earnings presentation, Nov 3, 2022
Slide 1: Third Quarter 2022 Results
Dr. Ilham Kadri CEO and President of the Executive Leadership Team of Solvay Third Quarter 2022 Results Karim Hajjar CFO of Solvay November 3, 2022 Third Quarter 2022 Earnings
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: 2022 performance breaking new company records
2022 performance breaking new company records Performance Record result +40% yoy Underlying Q3 2022 organic growth EBITDA Record margin at 25.4% Cost reduction ~€450m (gross savings) total structural 2020-2022 15.4% ROCE vs 11.4% at the end of 2021 Balance sheet €3.4bn improvement 41% reduction sinc
Slide 4: Third quarter 2022 performance
Third quarter 2022 performance +29.5% organic sales growth driven by prices, and another record EBITDA Free Net Sales EBITDA Underlying Cash Flow Continuing operations € € € 3.6bn 917m 452m +29.5% organic yoy +39.8% organic yoy 14th quarter of positive FCF +30% pricing 25.4% EBITDA margin FCF conver
Slide 5: Investments and innovation support our growth and sustainability commitments
Stepping up to enable green mobility Investments to support customers in the electric vehicle, renewable energy and aerospace and innovation industries. support our Solid-state battery pilot unit Rare earths hub for magnets New PVDF JV with Orbia in NA growth and sustainability commitments Innovatin
Slide 6: Materials Q3 2022 performance
Materials Q3 2022 performance Net sales EBITDA EBITDA y/y organic y/y organic margin Highlights • Specialty Polymers reached another record, driven by both + + 37 % 43 % 34.6 % pricing and volume, thanks to sustained demand in most markets, particularly in automotive (incl. EV batteries), electronic
Slide 7: Chemicals Q3 2022 performance
Chemicals Q3 2022 performance Highlights Net sales EBITDA EBITDA y/y organic y/y organic margin • Soda Ash & Derivatives saw sustained demand on tight supply. Price increases offset increased energy and logistics costs. Volume + + growth was constrained by a production issue which is now 34 % 22 % 2
Slide 8: Solutions Q3 2022 performance
Solutions Q3 2022 performance Highlights Net sales EBITDA EBITDA y/y organic y/y organic margin • Growth in Novecare was driven by strong demand in Agro backed by higher prices across all markets while volumes were + + down in certain markets such as coatings and consumers. 20 % 21 % 19.1 % • Specia
Slide 9: Sustained strong pricing in Q3
Sustained strong pricing in Q3 € 836m in price overcame €485m of inflationary costs € million € million * Impact on net sales in € million Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Solvay Pricing €13 €23 €1 -€13 €4 €29 €139 €269 €475 €690 €836 Variable costs €2 -€8 €30 €19 -€1
Slide 10: Double-digit EBITDA growth
Double-digit EBITDA growth Margin +2.1pp Margin 23.3% 25.4% € 917m in Q3 2022 vs. €599m in 2021 € Main drivers million Fixed costs Other Cost savings +10 • Pricing more than offset variable Investments -25 costs inflation Inflation -30 Business activity -50 Net pricing Others -15 • Sustained momentum
Slide 11: Strong free cash flow generation
Strong free cash flow generation € million € 452m in Q3 2022 Capex vs. € 276m in 2021 Working capital Provisions Financing Taxes €-50m Others €-4m Main drivers • Higher profits • Investment in growth • Higher working capital EBITDA FCF Q3 2022 Q3 2022 • No dividend from Rusvinyl JV Comparison to 2021
Slide 12: 2022 Full-year outlook increased
2022 Full-year outlook increased EBITDA Free cash flow Underlying organic* continuing operations around around +28% € 1bn year-on-year CapEx est to reach €1bn previously between 14% and 18% previously around €750m * at constant forex and scope page 12
Slide 13: Q&A
O&A Y¥fno wl % solvay.com
Slide 14: Annexes
Annexes page 14 Third Quarter 2022 Earnings
Slide 15: Key figures
Key figures Underlying, in € million Q3 2022 Q3 2021 % yoy 9M 2022 9M 2021 % yoy Net sales 3,609 2,573 +40.3% 10,141 7,402 +37.0% EBITDA 917 599 +53.2% 2,493 1,784 +39.7% EBITDA margin 25.4% 23.3% +2.1pp 24.6% 24.1% +0.5pp EBIT 709 421 +68.3% 1,909 1,227 +55.6% Net financial charges -57 -64 +10.8% -16
Slide 16: Segment review
Segment review Underlying, in € million Q3 2022 Q3 2021 % yoy % organic 9M 2022 9M 2021 % yoy % organic Net sales 3,609 2,573 +40.3% +29.5% 10,141 7,402 +37.0% +29.5% Materials 1,114 752 +48.1% +36.6% 3,041 2,152 +41.3% +33.1% Specialty Polymers 853 570 +49.5% - 2,333 1,617 +44.3% - Composite Materi
Slide 17: Strengthening our balance sheet
Strengthening our balance sheet Reduction in net debt and provisions continue Net debt in million € vs end of 2021 Provisions in million € vs end of 2021 Underlying net debt slightly down at €3.8 billion Provisions decreased by €506 million to €2.1 billion, driven by: ● Higher free cash flow generati
Slide 18: Balanced maturities
Balanced maturities Deleveraging and reduced of cost of debt, record low leverage Financial debt [1] in million € and $ NET DEBT Leverage ratio 1.2x S&P Negative outlook Period 31 December 2021 30 September 2022 Variation over the period BBB Bond type Face value Avg. maturity Avg. cost Face value Av
Slide 19: €3.4 billion of deleveraging
€3.4 billion of deleveraging Debt & pensions Leverage in € million ratio -€3.4 Bn Improved by 41% 10,000 4.0 8,210 Improved by 41% 7,500 3.0 2,672 4,805 5,000 996 -63% 2.0 2,500 1.0 5,538 3,809 2.1 1.2 -31% 0 0 01 Jan 19* 30 Sep 22 01 Jan 19* 30 Sep 22 Total Debt & Pensions Pensions Debt Debt Third
Slide 20: Structural cost reduction
Structural cost reduction ~90% of 2024 cost savings achieved Total costs savings to date ~€ Realized in FY 2020 Realized in FY 2021 Realized in 9M 2022 450 m ~€ ~€ ~€ 175m 213m 59m Costs savings target by 2024 € Permanent structural levers 500 m ● Restructuring: ~45% of total ● Indirect costs reduct
Slide 21: Solvay's natural gas usage in Europe
Solvay’s natural gas usage Finland Total sites: 1 in Europe Germany Using natgas: 1 Total sites: 6 Using natgas: 4 Netherlands Total sites: 2 Using natgas: 1 Top-10 sites Belgium Total sites: 6 90% of total Using natgas: 4 32 of 45 sites use natgas UK Total sites: 4 Using natgas: 4 Top-20 sites Fran
Slide 22: Contingency plans launched to mitigate the risk and ensure business continuity
Contingency plans launched to mitigate the risk and ensure business continuity Activities in our control Industrial Procurement ● Ensure production continuity, prioritize critical/ high-margin for our ● Ensure security of supply of natgas & critical raw materials customers currently sourced from Eur
Slide 23: Market segment & region annual figures
Market segment & region annual figures Region (% 2021 Net Sales) Group Materials Chemicals Solutions Europe 27% 31% 32% 21% North America 26% 31% 18% 29% TOP 3 Market position Latin America 13% 2% 25% 10% in ~ 90% of Asia and rest of the world 34% 36% 25% 40% portfolio End markets (% 2021 Net Sales)
Slide 24: Why invest?
Why invest? We aim to reshape the global Future growth potential Customer partnerships chemical industry by delivering fuelled by megatrends drive innovation solutions that meet the world’s sustainability challenges and provide critical solutions in fast-growth markets. Global scale, diversity of We