Solvay Sa · EURONEXT:SOLB
Solvay Sa — Q3 2013 Earnings Presentation
64 slides from Solvay Sa's earnings presentation, 2013
Slide 1: Roadshow Presentation Q3 2013
Roadshow Presentation Q3 2013
Slide 2: Forenote
Forenote Unless stated otherwise, all references to 2012 P&L data are to be deemed restated for the Group’s new business organization effective as from January 1st 2013, the reporting of Solvay Indupa as discontinued operations and for the application of IAS 19 revised. Furthermore, as from Septembe
Slide 3: Agenda
Agenda • Q3 2013 earnings highlights • Solvay at a glance • A far-reaching transformation • Appendices 3
Slide 4: Q3 2013 Earnings Highlights
S f : ~— Q3 2013 Earnings Highlights
Slide 5: Further concrete steps in Solvay's strategic portfolio management
Further concrete steps in Solvay’s strategic portfolio management Acquisition of U.S.-based Chemlogics Progress made with setting up the Chlorovinyls joint-venture Moving towards a higher growth, less-capital intensive and greater return Group 5
Slide 6: Q3'13 Earnings Highlights
Q3’13 Earnings Highlights Q3’13 • Net sales down (8)% YoY Volumes stable, Prices (4)% and Forex effects (5)% Net Sales: € 2,458 m • Adjusted REBITDA down (13)% vs 2012 (up 2% excluding exceptional guar and CER effects) • Consumer Chemicals at € 77 m, down (52)%, affected by guar developments REBITDA
Slide 7: Net sales down due to forex headwinds and selling price effects
Net sales down due to forex headwinds and selling price effects In € million Q3 Net Sales 26 (135) 2,672 1% (7) Scope (99) (5)% - 2,458 Conversion Volume & mix (4)% Price (8)% Q3 2012 Q3 2013 7
Slide 8: REBITDA adversely impacted by guar developments
REBITDA adversely impacted by guar developments (high comparison and current volatility) In € million REBITDA Segment split Net pricing 502 (14) effect of €(29)m In € million (8) (99) (3)% 70 (16) 4% (2)% (53) 57 439 Conversion Volume 16% & scope & mix (3)% Fixed Q3 costs (20)% 14% (11)% 11% 43% 201
Slide 9: Consumer Chemicals
Consumer Chemicals Guar price volatility impacting margins In € million 580 Net sales (15)% Novecare % YoY evolution Aroma Performance (1)% 16% • On-going guar effect of €(75)m • Agro and Coatings benefited from good demand 21% Coatis (9)% Novecare 63% Coatis (19)% • Resilience thanks to USD-indexed
Slide 10: Advanced Materials
Advanced Materials Approaching last year highs supported by operational excellence In € million 651 Net sales (5)% Specialty Polymers % YoY evolution Silica +12% • Specialty Polymers matching last year’s quarterly record level 16% • Lower volume offset by operational excellence Rare-Earth Specialty
Slide 11: Performance Chemicals
Performance Chemicals Record REBITDA underpinned by operational excellence In € million 788 Net sales (4)% Essential Chemicals % YoY evolution Acetow • REBITDA underpinned by operational excellence delivery +5% 21% 10% Eco Services Acetow Essential 56% (3)% Chemicals • Performance remains at record
Slide 12: Functional Polymers
Functional Polymers Weak demand moderating profit improvement In € million 428 Net sales (7)% Chlorovinyls % YoY evolution 3% 11% Polyamide • Positive pricing power • Margin pressure in weak demand for Polyamide Intermediates Polyamide 89% (8)% and Fibras • Engineering Plastics recorded improved per
Slide 13: Operational management and capex mitigate profit headwinds
Q3’12 SOLVAY cash Operational RESULTS management & capex mitigates profit headwinds Industrial Working Capital CAPEX* In % of total sales In € million Forecasted 14.5% 14.2% < 900 13.9% 13.7% 785 13.1% Q4: 285 before discop Q3: 176 178 after discop 11.7% Q2: 180 169 Q1: 144 150 Q3 2012 Q4 2012 Q1 20
Slide 14: Strong free cash flow reduces net debt
Q3’12 SOLVAY StrongRESULTS free cash flow reduces net debt Net debt evolution In € million Free cash flow of €224m (1,572) 262 (156) 70 (112) 5 (1,475) 48 Net debt (17) (4) 1 related to Change in assets held industrial Free cashflow Net Dividends Conversion Others * for sale REBITDA Capex working of
Slide 15: Financial structure
Financial structure Ratio’s In € billion Gross financial debt Gearing Leverage 3.6 (Net debt/Equity) (Net debt/REBITDA) Net Bilateral 0.5 22% 0.87x financial Rhodia 63% 2.44x Debt Bonds including pension provisions including pension provisions 1.5 0.8 Debt maturity In € million 1.0 Rhodia bonds (1st
Slide 16: Solvay expects 2013 REBITDA of around €1.65 bn
• Europe slowly coming out of recession, expected to lead to gradual recovery of demand • Relatively more benign seasonal effect expected in Q4 • Restated outlook following discontinuation of Chlorovinyls activity: Solvay expects 2013 REBITDA of around € 1.65 bn 16
Slide 17: Upcoming Capital Market Day November 2013
Upcoming Capital Market Day 27 November 2013 Venue in London, UK 17
Slide 18: At a glance
S f : ~— At a glance
Slide 19: A major global player in Chemicals with compelling strengths
€12.4bn NET SALES A major global Our strengths player in €2.1bn Adjusted REBITDA • 90% of sales in businesses Chemicals with among the top 3 global leaders • Balanced geographical footprint compelling 111 • Diversified end-markets MAJOR strengths • A culture of Sustainability, INDUSTRIAL SITES Innov
Slide 20: Diversified geographical footprint and end-markets
Diversified geographical footprint and end-markets Continued focus on fast-growing regions A well-balanced portfolio Consumer goods 28% 20% 42% Construction Automotive 14% 15% Electricals & Electronics Energy 28% 7% 6% Stable Environment Agriculture 5% 4% 10% Paper Other industries 2% 19% % of 2012
Slide 21: A far-reaching transformation
A far-reaching transformation
Slide 22: A Group in far-reaching transformation
A Group in far-reaching transformation Well-defined strategic vision Clearly defined priorities Solvay’s ability to extract value Consumer Advanced Chemicals Materials ACTIVITIES in % of Group Energy REBITDA 5% Services Functional Polymers Performance Chemicals Value creation potential of industries
Slide 23: Customer-focused organization
Customer-focused organization • More decentralized • Agile • Closer to customer • Entrepreneurial 23
Slide 24: Accelerating in-depth transformation to enhance business profile
Accelerating in-depth transformation to enhance business profile Strategic portfolio management Deploying breakthrough action plans Capturing integration synergies Investing selectively Growing through innovation 24
Slide 25: Deploying breakthrough actions
Deploying breakthrough actions Reducing Exposure to JV 50/50 wih INEOS PVC cyclical Chlorovinyls Solvay Indupa planned sale Restoring profitability 100 M€ REBITDA Polyamide & Strategic flexibility improvement by 2014 Strengthening leadership 100 M€ REBITDA Soda Ash & Improving competitivenes
Slide 26: Reducing Solvay's exposure to cyclical Chlorovinyls
Reducing Solvay’s exposure to cyclical Chlorovinyls B REAKTHROUGH ACTIONS PVC Polyamide Soda Ash SOLVAY & INEOS TO CREATE A WORLD-CLASS PVC PLAYER • Strong industrial logic: creation of a world-class PVC producer with low cost base and significant synergy potential • JV to improve Solvay’s financial
Slide 27: Restoring profitability at Polyamide
Restoring profitability at Polyamide B REAKTHROUGH ACTIONS PVC Polyamide Soda Ash Cost Optimization Operational Excellence • Manufacturing / OEE • Variable costs • Supply Chain • Fixed costs • Commercial Excellence / Differentiation € 100m REBITDA improvement by end 2014 REBITDA refers to Operating
Slide 28: Improving Soda Ash industrial footprint
Improving Soda Ash industrial footprint and ensuring cost leadership B REAKTHROUGH ACTIONS PVC Polyamide Soda Ash BALANCING GLOBAL INDUSTRIAL FOOTPRINT • Regional market dynamics • Cost-effectiveness • Global demand growing • Unlock Trona-based capacity in the US in line with gdp • + 250Kt/y, with l
Slide 29: Delivering on savings
Delivering on savings INTEGRATION-RELATED & HORIZON Synergies & Cost Efficiency programs 2012 400 Purchasing & Logistics € 110m MORE & FASTER In € million 280 2012 purchases • € 1.3bn Energy 170 • € 4.7bn 60 Raw Materials Technical goods & 110 services 20 2011 2012 2013 2014 IN LINE Administration P
Slide 30: Investing selectively for future value-creating growth
Investing selectively for future value-creating growth CAPITAL PVDF Tavaux +50% EXPENDITURES Specialty Polymers Compounding In € million Specialty fluorinated Rare Earth Forecasted derivatives +50% Recycling < 900 Guar Formultation Guar Formulation 846 HPC 785 Derivatized Guar Oil & Gas +40% Special
Slide 31: Growing through innovation
Growing through innovation Major worldwide R&D R&D Venturing New Collaborative R&D centers employees spending & start-ups patents innovation projects 13 1,900 ~€ 300 m € 85 m 300 >100 2012 developments within GBUs Advanced Renewable Organic Sustainable Eco- Consumer Materials & Chemistry Electronics
Slide 32: Enhancing Business Profile
Enhancing Business Profile 2012 Proforma JV Chloro-vinyls By Operating Segment* Energy Services Energy Services Functional Functional Consumer Polymers Consumer Polymers Chemicals 4 Chemicals 11 % of Group 51 % of REBITDA Group 54 REBITDA Performance Advanced Performance Advanced Chemicals Materials
Slide 33: Solar Impulse flight Across America
Solar Impulse flight “Across America” Solvay provides solar aircraft with lightweight, high-strength and energy-efficient products with a total of 6,000 different parts. 33
Slide 34: Solvay Operating Business Segments
Solvay Operating Business Segments
Slide 35: Strong global leadership positions
Strong global leadership positions World leader with 90% of its sales in businesses in which it is in the top 3 High Barrier Polymers, High-Performance High-Performance SPECIALTY Engineering Polymers Silicas, SILICA & RARE POLYMERS & Compounds, Rare Earth EARTH SYSTEMS Fluorinated Systems Polymers #
Slide 36: Consumer chemicals
Consumer chemicals Consumer Chemicals serves the consumer products markets. Its growing product offering is directed at the megatrends of society (demographic growth, new modes of consumption, demand for safer, more sustainable products and renewable materials-based solutions). NOVECARE COATIS AROMA
Slide 37: Consumer chemicals
Consumer chemicals NOVECARE – Net Sales € 1,7 bn COATIS – Net Sales € 0,5 bn • World leader in specialty • Largest Latin American producer surfactants, major player in the of phenol derivatives, leader in polymers, guar and phosphorus oxygenated solvents (Augeo™), derivatives markets, • Main markets
Slide 38: Novecare Leading technologies in diversified markets
Novecare Leading technologies in diversified markets SELECTED MARKETS Home & Agro-chemical Oil & Gas Coatings Industrial Personal Care Specialties TECHNOLOGY Surfactant 70% and Polymers Phosphorous 20% Derivatives Specialty 10% Amines % of Novecare sales in 2011 «Inspired Products from Chemical Ingr
Slide 39: Innovation focused on its leading technologies
Innovation focused on its leading technologies Leading technologies addressing fast growing market segments’ needs Leader in specialty surfactant segments developing blends formulations Surfactants & Polymers using synergies between surfactants and polymers for multiple applications and functions (d
Slide 40: Guar innovation addressing fast growing market segments
Q3’12 RESULTS: RHODIA Guar innovation addressing fast growing market segments Leading bio-sourced technology for many applications & functions Agro Best Process Water Retention • Process leadership in guar derivative delivers • New project to start delivery in 2013 the best quality and enhances comp
Slide 41: Advanced Materials
Advanced Materials Advanced Materials offers ultra-high-performance applications for aerospace, high-speed trains, health, low-energy tires, automotive emission control, smartphones and hybrid-vehicle batteries. SPECIALTY SILICA € 2,743 m POLYMERS Net Sales RARE EARTH SPECIAL SYSTEMS CHEMICALS € 627
Slide 42: Advanced Materials
Advanced Materials SPECIALTY POLYMERS RARE EARTH SYSTEMS Net Sales € 1,3 bn Net Sales € 0,4 bn • World leader in specialty polymers • Global provider of rare earth- and high-performance polymers such based formulations for use in as polyvinylidene fluoride SOLEF®, automotive catalysis, luminophores
Slide 43: Performance: our positioning and strengths
OUR POSITIONING AND STRENGTHS Leading at the top of the pyramid with the widest product portfolio Performance attributes Temperature Resistance ULTRA Chemical Inertness POLYMERS Weathering Resistance Corrosion Protection PFSA Water Repellency PAEK PEEK Stain Repellency HIGH-PERFORMANCE EAP Electrica
Slide 44: Serving well-diversified and highly dynamic markets
Serving well-diversified and highly dynamic markets Emerging markets will be 60% of top line growth by 2016 2011 Sales 2% Advanced Transportation 11% Healthcare 2% Water 18% Automotive 7% Energy 14% 6% Consumer Smart Devices Global CAGR = 8.5% 12% 10% Construction Electrical / Electronics 18% Indust
Slide 45: Specialty Polymers: broadest portfolio of high performance polymers
Specialty Polymers: broadest portfolio of high and ultra high performance polymers PSU FEP PESU SRP/ MFA® FKM/ ECTFE/ PVDC HPPA PARA PPS LCP PPSU PEEK PAI PI HPS PEI PTFE PVDF PFA FFKM PFPE ETFE XLCP Solvay Arkema BASF Celanese Daikin DSM DuPont Dyneon EMS Evonik Kuraray MEP SABIC Victrex 45
Slide 46: Advanced Materials
Advanced Materials SILICA SPECIAL CHEMICALS Net Sales € 0,4 bn Net Sales € 0,6 bn • Inventor and leading global • Among the world leaders provider of highly dispersible silica in fluorine chemistry • Main market/products: fuel-saving • Provider of solutions for high-end tires (Zeosil), industrial ap
Slide 47: Performance Chemicals
Performance Chemicals Performance Chemicals operates in mature and resilient markets, where success is based on economies of scale, competitiveness and quality of service. 128443229 ACETOW ECO SERVICES changer € 3,162m Net Sales ESSENTIAL EMERGING 112366202 € 750 m CHEMICALS BIOCHEMICALS Adjusted RE
Slide 48: Performance Chemicals
Performance Chemicals ESSENTIAL CHEMICALS ACETOW Net Sales € 1,8 bn Net Sales € 0,6 bn • World's largest producer of soda • World's number 3 producer of ash, sodium bicarbonate and hydrogen cellulose acetate, peroxide, • Number 1 in the CIS and Latin America, • Main markets: glass and detergents num
Slide 49: Functional Polymers
Functional Polymers Functional Polymers brings together the chloro-vinyls chain and the polyamide activities to serve primarily the construction, infrastructure, automotive, electrical and electronics markets. ENGINEERING PLASTICS € 1,888 m Net Sales POLYAMIDE & INTERMEDIATES FIBRAS € 100 m Adjusted
Slide 50: Functional Polymers - Polyamide
Functional Polymers - Polyamide POLYAMIDE & INTERMEDIATES ENGINEERING PLASTICS • Among the world's leading • Global specialist in polyamide- producers of polyamide 6.6 (Nylon) based engineering plastics and its upstream • Produces high performance • Main markets: automotive, industrial materials und
Slide 51: Corporate & Business Services
Corporate & Business Services Corporate and Business Services includes the Energy Services GBU and corporate functions such as Business Services and the Research & Innovation Center. ENERGY SERVICES BUSINESS SERVICES € 157 m Net Sales € (99) m Adjusted REBITDA 2012 restated figures 51
Slide 52: Corporate & Business Services
Corporate & Business Services ENERGY SERVICES SOLVAY BUSINESS SERVICES • Designs innovative solutions to fight • Internal structure developing climate change, shared value-adding services for the Group in Human Resources, • 2 missions: optimize energy accounting and IT, purchases, reduce energy cons
Slide 53: Appendices
S f : ~— Appendices
Slide 54: Net sales
Net sales 9 months Net Sales In € million 56 (224) 7,974 1% (153) Scope (3)% (133) Conversion (2)% 7,521 Volume & mix (2)% Price (6)% Sept YTD 2012 Sept YTD 2013 54
Slide 55: REBITDA
REBITDA 9 months REBITDA In € million Segment split 1,489 (23) (82) Net pricing In € million effect of €5m (2)% Conversion (133) 138 (53) 6% & scope (6)% (53) 20% Volume & mix (4)% (4) 1,279 % Fixed 39% REBITDA costs (4)% (0)% Group (9)% 9% Net Others* Price Cost of contribution 35% goods from assoc
Slide 56: Free cash flow
Free cash flow 9 months Net debt evolution (142) 5 (1,475) (312) (7) Net debt related to Free cashflow of €278m Others assets held Conversion for sale (1,125) 685 & scope (189) 222 (173) (441) Dividends Change in industrial Free cashflow Net working of discontinued financial capital operations charg
Slide 57: Exceptional non sustainable REBITDA impacts
Exceptional non sustainable REBITDA impacts 2013 vs 2012 in million Euros In € million H1 H2e FYe CER (15) (75) (90) Exceptional profit on guar peak prices (Hi-Chem) (50) (50) (100) Total (65) (125) (190) 57
Slide 58: Well-managed pension situation stable cash-out
Well-managed pension situation stable cash-out In € billion United Kingdom France & Germany € 1,747m € 389m (unfunded pension shemes) Total pension Other countries provision € 76m € (2,616)m Belgium Net liability € 208m increased by € 24 m linked to North America IAS 19 Revised € 196m Stable 2013 YT
Slide 59: Additional financial indications
Additional financial indications P&L considerations 2013 • Depreciation & amortization • Excl. PPA impact ~ € 600m yearly (excluding chlorovinyls) • Excl. PPA impact ~ € 670m yearly (including chlorovinyls) • PPA impact: ~ € 140m yearly • Average cost of gross financial debt 4.9% • Other financial e
Slide 60: Additional financial indications Post-employment considerations 2013
Additional financial indications Post –employment considerations 2013 Limited impact from implementation of revised IAS 19 as from 2013 onwards: • B/S impacts (Liability/(Equity)): one time increase in provision of € (24) m reported in Q1’13 • P&L impacts (increase of financial costs): € (10) m in H
Slide 61: Key figures (restated for discontinued Chlorovinyls)
Key figures (restated for discontinued Chlorovinyls) Restated key figures Q3 Sept YTD Full year in € m 2013 2012 % 2013 2012 % 2012 Net Sales 2,458 2,672 (8)% 7,521 7,974 (6)% 10,515 Consumer Chemicals 580 680 (15)% 1,788 1,919 (7)% 2,565 Advanced Materials 651 685 (5)% 1,948 2,117 (8)% 2,743 Perfor
Slide 62: Functional Polymers – Chlorvinyls
Functional Polymers – Chlorvinyls (discontinued) SOLVIN CHLOR CHEMICALS • Europe’s leading vinyls company • Chlorinated products not linked SolVin, a BASF-Solvay joint venture to PVC such as allyls (75% Solvay), and chloromethanes, • Chlorine production chain, • Main markets: industry. with SolVin®
Slide 63: Safe harbour
safe harbour “To the extent that any statements made in this presentation contain information that is not historical, these statements are essentially forward-looking. The achievement of forward-looking statements contained in this presentation is subject to risks and uncertainties because of a numb
Slide 64: www.solvay.com
S$ SOLVAY asking more from chemistry®