Solvay Sa · EURONEXT:SOLB
Solvay Sa — 9M 2018 Earnings Presentation
38 slides from Solvay Sa's earnings presentation, Nov 8, 2018
Slide 1: First Nine Months 2018 Results Presentation
FIRST NINE MONTHS 2018 November 8, 2018 RESULTS PRESENTATION
Slide 2: Safe Harbor Forenote
SAFE HARBOR FORENOTE This presentation may contain forward-looking information. Following the announcement in September 2017 of plans to divest Forward-looking statements describe expectations, plans, the Polyamide business, these have been reclassified as strategies, goals, future events or intenti
Slide 3: Overview: Executing our plan
OVERVIEW Executing our plan Financial highlights Priorities and outlook Appendix 9 Months 2018 Results 3 November 8, 2018
Slide 4: Organic Sales & EBITDA growth of 6% in 9M 2018
Volume growth sustained Organic Sales & EBITDA growth of 6% 9M 2018 Higher volumes and pricing EBITDA margin at 22% 9 Months 2018 Results 4 November 8, 2018
Slide 5: 2018 first nine months results
2018 first nine months results Volume growth sustained complemented by pricing power EBITDA -1% Free cash flow [1] Organic growth +6% €275 million Volume/Mix Resulting from 4% higher volumes across segments Phasing in working capital Higher inventories and variable remuneration Pricing p
Slide 6: Organic EBITDA growth driven by higher volumes in each segment
Organic EBITDA growth Driven by higher volumes in each segment Advanced Materials Organic growth: +3% Organic growth: +16% Advanced Formulations Volume growth in polymers and Strong volume growth and pricing 942 922 composites for aeronautics, auto- power mainly related to oil & gas 386 403 motive a
Slide 7: Financial highlights
OVERVIEW Executing our plan Financial highlights Priorities and outlook Appendices 9 Months 2018 Results 7 November 8, 2018
Slide 8: Sales impacted by forex & scope, strong organic growth
Sales impacted by forex & scope Strong organic growth Net sales in € million 7,645 (82) (327) 312 134 7,683 Volume growth Advanced Materials: solid growth in sustainable mobility and Scope Price healthcare, but tempered by lower demand in smart devices and -1.1% Forex Volume +1.8% conversion & m
Slide 9: EBITDA margin sustained
EBITDA margin sustained Driven by strong volume growth and pricing power Underlying EBITDA in € million 1,737 (24) (82) 119 24 (46) (4) 1,725 Scope Net Fixed Equity earnings Volume & mix Forex Volume pricing costs & other -1.4% 1.4% Led by Advanced Formulations and Advanced conversion & mix -2.6%
Slide 10: Higher underlying profit from continuing operations
Higher underlying profit from continuing operations EBITDA reduction more than offset by lower financial charges Underlying P&L in € million 9M 2018 9M 2017 % yoy Net sales 7,683 7,645 - Underlying profit from continuing operations up 10% EBITDA 1,725 1,737 -1% Lower net financial charges reflecti
Slide 11: Focus on cash maintained
Focus on cash maintained Amid higher working capital needs 1,725 -488 Provision Cash generation 9 months 2018 in € million payments: Employee benefits -161 -468 Environment -52 Other +141 Financing Capex -72 FCF from payments: -170 discontinued Net interests -56 Dividends to operations Hybrid coupon
Slide 12: Efficient capital structure
Efficient capital structure Leading to reduced cost of debt Underlying financial debt [1] evolution (7.6) in € billion (6.9) (2.2) (6.4) EUR perpetual (2.2) hybrid bonds (2.2) USD bonds Pro forma impact from announced (2.2) (1.7) Polyamide divestment (1.6) EU bonds Underlying net debt €4.4 b
Slide 13: Priorities and outlook
OVERVIEW Executing our plan Financial highlights Priorities and outlook Appendix 9 Months 2018 Results 13 November 8, 2018
Slide 14: Our priorities: Deliver and prepare the future
Our priorities Deliver and prepare the future Organic volume growth Earnings and cash flow growth Optimize organization Leadership transition 9 Months 2018 Results 14 November 8, 2018
Slide 15: Outlook Full year 2018
Outlook Full year 2018 Underlying Organic EBITDA growth around 5% to 6% Free cash flow[2] to exceed 2017 level 9 Months 2018 Results [1] Excluding forex conversion and scope effects 15 November 8, 2018 [2] Free cash flow from continuing operations
Slide 16: Appendices: Additional 2018 financial data
APPENDICES Additional 2018 financial data General information Other financial considerations for 2018 9 Months 2018 Results 16 November 8, 2018
Slide 17: Advanced Materials first nine months 2018
Advanced Materials first nine months 2018 Net sales (in € million) EBITDA (in € million) 47% 28.4% 28.0% 3,323 -32 -121 +130 -8 3,292 margin 942 922 Scope Forex Volume Price -1.0% conversion & mix -0.2% -2.1% -3.6% +3.9% 10% 3,292 +3.8% 24% -0.9% 19% Specialty Polymers Composite Materials Special Ch
Slide 18: Advanced Formulations nine months 2018
Advanced Formulations nine months 2018 Net sales (in € million) EBITDA (in € million) +68 2,293 66% 17.4% 17.6% 2,219 -51 -101 +158 margin Scope Price 386 403 Forex Volume +3.1% -2.3% conversion & mix -4.5% +7.1% 2,293 +4.3% +11% +3.3% 13% 21% Novecare Technology Solutions Aroma Performance 9M 2017
Slide 19: Performance Chemicals nine months 2018
Performance Chemicals nine months 2018 Net sales (in € million) EBITDA (in € million) 56% 27.7% 2,087 - -105 +35 +74 2,091 margin 26.6% Scope 579 - Forex Volume Price 557 conversion & mix +3.5% -5.0% +1.7% 2,091 -3.7% +5.5% 23% 3% +0.2% 18% Soda Ash & Derivatives Peroxides Coatis Functional Polymers
Slide 20: Corporate & Business Services nine months 2018
Corporate & Business Services nine months 2018 Continued cost discipline EBITDA (in € million) 9M 2017 9M 2018 Other Corporate & Business Services Costs were substantially lower versus last year Benefitted from phasing of costs over the year +7.3% Inflation was offset by cost discipline and de
Slide 21: Appendix: General information
APPENDIX Additional first half 2018 financial data General information Other financial considerations for 2018 9 Months 2018 Results 21 November 8, 2018
Slide 22: Solvay: A more resilient, streamlined & profitable group
SOLVAY A more resilient, more streamlined & more profitable group Providing mission critical solutions in fast-growth end-markets Supporting blue chip manufacturers & brands globally Technology focused in Advanced Materials & Advanced Formulations Powered by innovation & market leadership posito
Slide 23: We are a world leader in the chemical industry
We are a world leader In the chemical industry ~26,800 Top 3 Employees[2] Market position [1] 61 €10.1billion countries net sales 135 €2.2billion Industrial sites underlying EBITDA 21 22% Major R&I sites EBITDA margin 2017 9 Months 2018 Results [1] Applicable to ~90% of portfolio 23 November 8, 2018
Slide 24: Upgraded portfolio
Upgraded portfolio Enhancing customized ACQUISITIONS solution LT-CF offerings Cytec Ener- gain plant XL Form. comp resins ounds Polyamide [1] Ryton Chem- Indupa Viny- Rhodia logics Refri- gerants thai Phos- Reducing phorous PCC Dakarto cyclical & Pipe- Eco Benvic life Services Inovyn low-growth busi
Slide 25: Significantly enhanced portfolio
Significantly enhanced portfolio More specialty and more resilient NET MORE MORE MORE MORE SALES SPECIALTY GLOBAL DIVERSIFIED SUSTAINABLE 2010 ~25% >50% ~20% ~20% specialty in in GDP+ sustainable €6.5 billion products Europe markets solutions 2017 ~70% ~33% ~50% ~50% specialty in each in GDP+ sustai
Slide 26: 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 €1.75 bn Reduce by -20% over 3 years -24% Exceed
Slide 27: Our strategic commitment: double revenue share from sustainable solutions
Our strategic commitment Double revenue share from sustainable solutions[1] (From 25% in 2014, baseline) NUMBER OF ACCIDENTS Goal MTAR <0.50 SUSTAINABLE SOLUTIONS IN GROUP’S SALES OF EMPLOYEES INVOLVED IN SOCIETAL By 2025, €1 revenue out of €2 ACTIONS OF in sustainable solutions GREENHOUSE GAS INTEN
Slide 28: Integrating sustainability into decision-making
Integrating sustainability into decision-making Drives superior financial value growth Fully embedded into our decision-making processes 2014 2017 Manufacturing Footprint SUSTAINABLE SOLUTIONS 25% 49% M&A 60% CAPEX 80% R&I 60% 43% NEUTRAL Higher volume growth on average from CHALLENGED 15% 8% sustai
Slide 29: Growth engines deliver 70% of EBITDA
Growth engines deliver 70% of EBITDA Advanced Advanced Materials Formulations 49% 21% Advanced Materials Advanced Formulations Performance Chemicals EBITDA Providing solutions for Customized specialty Leading positions €2,230 sustainable mobility, formulations for surface in chemical intermediates m
Slide 30: Debt profile
Debt profile Balanced maturities allowing flexibility Repaid in Major financial debt [1] $82 @8.95% October 2017 in million Repaid $87 in July 2017 @3.95% $204 $163 @3.50% @3.95% $196 Repaid in €1,000 @3.50% @Euribor December 2017 €118 +82bp @4.63% €700 €750 $800 $800 @4.20% @1.63% @3.40% @4.45% €50
Slide 31: Provisions
Provisions Gradual operational deleveraging Movements (4,269) +408 -216 -100 +232 in provisions +55 (3,890) in € million Discounting Payments Net new Remeasu- Changes costs rements provisions in scope [1] & other Operational deleverage +92 [1] Impact of index, mortality, forex & discount rate change
Slide 32: Rewarding shareholders
Rewarding shareholders Strong track record of continued shareholders’ distribution Gross dividend in €/share 4.00 Adjusted gross dividend (for rights issue) 3.60 3.00 ~5.6% CAGR 2.00 1.00 0.00 1982 1987 1992 1997 2002 2007 2012 2017 Committed to stable / growing dividend 9 Months 2018 Results 32 Nov
Slide 33: Appendices: Other financial considerations for 2018
Appendices Additional first half 2018 financial data General information Other financial considerations for 2018 9 Months 2018 Results 33 November 8, 2018
Slide 34: 2018 P&L Considerations
2018 P&L Considerations Underlying EBITDA Depreciation/Amortization EBITDA to grow 5% to 6% organically, excluding forex Underlying D&A expected at ~€(700)m, in line with 2017 conversion an scope effects Excludes ~€(240)m PPA amortization Forex conversion impact estimated at €(125) million based
Slide 35: 2018 Sensitivities
2018 Sensitivities EBITDA sensitivity Financials sensitivity Forex sensitivity on conversion and transaction: Net debt sensitivity Immediate impact on conversion exposure ~€140m per US$/€ 0.10 change Deferred transactional impact due to hedging (~6-12 month rolling basis) Net financial charges
Slide 36: 2018 Cash Considerations
2018 Cash Considerations Free cash flow Cash financing payments Free cash flow from continuing operations expected to Net cash financing payments at ~€(250)m exceed 2017 level of €782m, including: Reduction by more than €100m Capital expenditure from continuing operations at ~€(700)m Total net c
Slide 37: Solvay's ADR program
Solvay’s ADR program ADRs Details Benefits of ADRs ADR Symbol SOLVY Clear and settle according to US standards Platform OTC CUSIP 834437303 Convenience of stock quotes and dividend payments in US dollars DR ISIN US834437305 Underlying ISIN BE0003470755 Purchase in the same way as other US stoc
Slide 38: Investor relations contacts
Investor relations contacts Geoffroy Raskin Jodi Allen Bisser Alexandrov +32 2 264 1540 +1 609 860 4608 +32 2 264 3687 [email protected] [email protected] [email protected] NEXT EVENTS November 8, 2018 February 27, 2019 May 7, 2019 July 31, 2019 9M 2018 Full-year 2018 Q1 2019