Solvay Sa · EURONEXT:SOLB
Solvay Sa — Q3 2017 Earnings Presentation
39 slides from Solvay Sa's earnings presentation, Nov 8, 2017
Slide 1: Third Quarter & Nine Months 2017 Results
THIRD QUARTER & November 8, 2017 NINE MONTHS 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 Besides IFRS accounts, Solvay also December 2016 of the divestment of the presents underlying Income Statement Acetow and Vinythai businesses and in performance indicators to provide a September 2017 of plans to divest the more consistent and comparable Polyam
Slide 4: Overview: Executing our Plan
OVERVIEW • Executing our Plan • Financial highlights • Outlook • Annexes Q3 & 9M 2017 Results 4 November 8, 2017
Slide 5: Becoming a Global Multi-Specialty with a Sustainable Solution Portfolio
BECOMING A GLOBAL MULTI-SPECIALTY WITH A SUSTAINABLE SOLUTION PORTFOLIO NET MORE MORE MORE MORE SALES GLOBAL DIVERSIFIED SPECIALTY SUSTAINABLE 2010 >50% ~20% ~25% <20% in in GDP+ specialty sustainable €6.5 billon Europe markets products solutions 2016 RS [1] ~33% >50% >70% >40% in each in GDP+ speci
Slide 6: Strong Earnings Growth and Cash Generation
STRONG EARNINGS GROWTH AND CASH GENERATION Portfolio upgraded 9M 2017 Strong volume growth Disciplined cash management Q3 & 9M 2017 Results 6 November 8, 2017
Slide 7: 2017 Third Quarter Results
2017 THIRD QUARTER RESULTS ON TRACK TO ACHIEVE FULL YEAR OUTLOOK EBITDA Free cash flow[1] up +1% €195m Strong volume growth Lower Capex Foreign exchange effect of (3%) Working capital discipline impacted organic growth Lower underlying net debt EBITDA margin at 22% Q3 & 9M 2017 Results 7 N
Slide 8: Overview: Financial Highlights
OVERVIEW • Executing our plan • Financial highlights • Outlook • Annexes Q3 & 9M 2017 Results 8 November 8, 2017
Slide 9: Higher Sales Volume & Mix Offset Forex
HIGHER SALES VOLUME & MIX OFFSET FOREX Net sales in € m Volume growth across operating segments 202 5 2,464 2,370 (24) (89) • Automotive Price Scope +0.2% • Batteries for electric vehicles -1.0% Conversion Volume forex -3.8% & mix • Smart devices +8.5% • Oil & Gas +4.0% Foreign exchange impact •
Slide 10: Organic EBITDA Growth, Strong EBITDA Margin Maintained
ORGANIC EBITDA GROWTH STRONG EBITDA MARGIN MAINTAINED Underlying EBITDA in € m 93 (22) (41) 546 (7) (14) (3) 553 Net 5% organic growth pricing Fixed Others Scope Conversion (4.0)% costs (including Strong volume growth -1.2% forex Volume -7.4% equity -2.6% & mix earnings) Higher fixed costs fro
Slide 11: Resilient Multi-Specialty Portfolio, Volume Growth Across Segments
RESILIENT MULTI-SPECIALTY PORTFOLIO VOLUME GROWTH ACROSS SEGMENTS ADVANCED Continued strong demand in Maintained solid ADVANCED MATERIALS automotive; Composites for recovery in North FORMULATIONS aero stable, while industrial American oil & gas 292 294 markets down 114 129 +0.8% +13% 49% Q3 2016 Q3
Slide 12: Underlying Net Income Reflecting Lower Contribution Discontinued Operations
UNDERLYING NET INCOME REFLECTING LOWER CONTRIBUTION DISCONTINUED OPERATIONS Underlying P&L in € m Q3 2017 Q3 2016 % yoy Underlying profit Solvay share at Net sales 2,464 2,370 +4% €229m EBITDA 553 546 +1% Net financial charges lower following EBITDA margin 22% 23% -1pp optimization of financial
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 €227m vs €280m in Q3 2016 (5,740) 553 (122) 32 (36) - - 20 (40) (44) (5,538) (153) Perpetual Changes in Free cash Acquisitions Financing Dividends: Other Changes in Taxes hybrid Underlying Capex pr
Slide 14: Capex Discipline Maintained While Investing in Future Growth
CAPEX DISCIPLINE MAINTAINED WHILE INVESTING IN FUTURE GROWTH Capex in € m (839) Capex discipline maintained (252) YTD cash conversion at 73% Q4 -19% (202) Investing in future growth Q3 Ramp-up of the PEEK capacity in US (153) Start-up of PVDF plant in China (193) Announced polysulfone an
Slide 15: Efficient Capital Structure Leading to Reduced Cost of Debt
EFFICIENT CAPITAL STRUCTURE LEADING TO REDUCED COST OF DEBT Underlying debt [1] evolution (7.6) in € bn (7.4) EUR perpetual (2.2) (2.2) hybrid bonds Pro forma impact from USD bonds (2.2) (2.0) Polyamide divestment EU bonds → Underlying net debt €4.4 bn & major debt (2.8) (2.8) Other debt (0.
Slide 16: Debt Profile, Balanced Maturities Allowing Flexibility
DEBT PROFILE BALANCED MATURITIES ALLOWING FLEXIBILITY Major debt in million $82 Repaid Repaid @8.95% in October 2017 in July 2017 $87 @3.95% $204 $163 @3.50% @3.95% $196 To be repaid €1,000 @3.50% in December 2017 @Euribor +82bp €118 @4.63% €700 €750 $800 @1.63% $800 @4.20% @3.40% @4.45% €500 €500 €
Slide 17: Overview: Outlook
OVERVIEW • Executing our plan • Financial highlights • Outlook • Annexes Q3 & 9M 2017 Results 17 November 8, 2017
Slide 18: Outlook Full Year 2017
OUTLOOK FULL YEAR 2017 Underlying EBITDA on track to grow 6% to 8% for full year Free cash flow projected to exceed €800 million At constant forex & scope Q3 & 9M 2017 Results 18 November 8, 2017
Slide 19: Solvay, a Sustainable Investment
SOLVAY A SUSTAINABLE INVESTMENT Providing mission critical solutions in fast growth end markets Supporting blue chip manufacturers and brands globally Technology focused in Advanced Materials and Formulations Powered by innovation and market leadership positions (ranking # 1 or #2) Highest EBITD
Slide 20: Investor Relations Contacts, Next Events
INVESTOR RELATIONS CONTACTS Kimberly Stewart Jodi Allen Geoffroy Raskin Bisser Alexandrov +32 2 264 3694 +1 609 860 4608 +32 2 264 1540 +32 2 264 3687 [email protected] [email protected] [email protected] [email protected] NEXT EVENTS January 18 February 24 May 3 Ma
Slide 21: Annexes: Additional Financial Data
ANNEXES • Additional financial data • General information • Other financial considerations for 2017 Q3 & 9M 2017 Results 21 November 8, 2017
Slide 22: Advanced Materials Q3 2017
ADVANCED MATERIALS Q3 2017 Net sales (in € m) EBITDA (in € m) 27% margin 28% 1,072 -18 -43 +50 -9 1,052 48% 292 294 Scope Price Conversion Volume -1.6% -0.8% forex & mix -4.0% +4.6% 1,052 -1.9% 10% 22% +0.8% 20% Q3 2016 Q3 2017 Specialty Polymers Composite Materials Q3 2016 Q3 2017 Special Chem Sili
Slide 23: Advanced Formulations Q3 2017
ADVANCED FORMULATIONS Q3 2017 Net sales (in € m) EBITDA (in € m) +99 +4 721 66% 18% margin 18% 648 -5 -26 Price Scope +0.7% 129 -0.8% Conversion Volume 114 forex & mix -4.0% +15% 721 +11% +13% 12% 22% Q3 2016 Q3 2017 Novecare Q3 2016 Q3 2017 Technology Solutions Aroma Performance Novecare Technology
Slide 24: Performance Chemicals Q3 2017
PERFORMANCE CHEMICALS Q3 2017 Net sales (in € m) EBITDA (in € m) 29% margin 26% 649 -1 -20 +46 +9 684 59% Price 185 178 Scope Conversion Volume -0.1% +1.5% forex & mix -3.0% +7.1% 684 +5.4% -4.0% 4% 15% 22% Q3 2016 Q3 2017 Q3 2016 Q3 2017 Soda Ash & Derivatives Peroxides Coatis Functional Polymers S
Slide 25: Corporate & Business Services Q3 2017
CORPORATE & BUSINESS SERVICES Q3 2017 STABLE CONDITIONS EBITDA (in € m) Q3 2016 Q3 2017 Key figures Underlying (in € million) Q3 2017 Q3 2016 % yoy Net sales 7 1 n.m. Energy Services - - n.m. -5.2% Other Corporate & Business Services 7 1 n.m. EBITDA (47) (45) - Energy Services 14 5 n.m. (45) (47) Ot
Slide 26: Net Pension Liabilities Up on Lower Discount Rates
NET PENSION LIABILITIES [1] UP ON LOWER DISCOUNT RATES Pensions (30/09/2017) in € bn Net pension liabilities improved by € 0.1 bn Pension liabilities improved to € (5.3) bn following Net discount rates decrease and Polyamide sale pension liabilities Pension assets stable at € 2.7 bn (2.5) (5.3)
Slide 27: Higher Sales Driven by Volume & Mix
HIGHER SALES DRIVEN BY VOLUME & MIX Net sales in € m 566 (10) 7,645 7,138 (49) - Price -0.1% Scope Conversion Volume -0.7% forex & mix Volume growth - +7.9% Volume growth across all segments Good demand from end markets including automotive, batteries and smart devices +7.1% Foreign exchange
Slide 28: Record EBITDA Margin Sustained Driven by Volume
RECORD EBITDA MARGIN SUSTAINED DRIVEN BY VOLUME Underlying EBITDA in € m 247 (20) (118) 45 1,737 1,595 (14) 1 Net Volume & mix pricing (1.3)% Fixed Others Growth across all business segments costs (including Scope Conversion Volume -7.4% equity -0.9% forex & mix earnings) +0.1% +15% +2.8% Pricin
Slide 29: Resilient Multi-Specialty Portfolio, Volume-Driven Growth
RESILIENT MULTI-SPECIALTY PORTFOLIO VOLUME-DRIVEN GROWTH ACROSS BUSINESS SEGMENT ADVANCED Strong demand in Recovery in North ADVANCED MATERIALS FORMULATIONS automotive, batteries, American Oil & Gas and better demand for 386 942 360 852 smart devices +11% +7.2% 50% 20% Q3 2016 Q3 2017 Q3 2016 Q3 201
Slide 30: Underlying Net Income Reflecting Higher Operating Profit
UNDERLYING NET INCOME REFLECTING HIGHER OPERATING PROFIT Underlying P&L in € m 9M 2017 9M 2016 % yoy Net sales 7 645 7 138 +7% EBITDA 1 737 1 595 +9% Underlying profit up 20% EBITDA margin 23% 22% - Volumes growth supporting profit Depreciation & amortization -517 -488 -6% Higher depreciation am
Slide 31: 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 € 484 m vs €464m in 9M 2016 (6,556) +1,737 -180 +38 -194 +781 -362 Perpetual -443 +342 -228 (5,538) hybrid -473 Free cash bonds Changes in Taxes flow from Perpetual (2,200) provisions Dividends: Ot
Slide 32: Annexes: General Information
ANNEXES • Additional financial data • General information • Other financial considerations for 2017 Q3 & 9M 2017 Results 32 November 8, 2017
Slide 33: We Are a World Leader in the Chemical Industry
WE ARE A WORLD LEADER IN THE CHEMICAL INDUSTRY 1 ~24,500 Top 3 3 2 employees Market position [1] 58 €9.6bn countries net sales 135 €2.1bn Industrial sites underlying EBITDA 21 22% Major R&I sites EBITDA margin 2016 rs [2] Q3 & 9M 2017 Results [1] Applicable to ~90% of portfolio 33 November 8, 2017 [
Slide 34: Upgraded Portfolio
UPGRADED PORTFOLIO ACQUISITIONS Enhancing customized Cytec solution offerings Form. XLC resins Polyamide [1] Ryton Chem- Indupa logics Refri- Viny- Rhodia gerants thai Eco PCC Pipe- life Services Inovyn Reducing Acetow cyclical & low-growth businesses DIVESTMENTS exposure 2011 2012 2013 2014 2015 20
Slide 35: Strong Delivery in 2016
STRONG DELIVERY IN 2016 [1] GROWTH RESILIENT CASH ENGINES CONTRIBUTOR 45% 28% ADVANCED ADVANCED PERFORMANCE MATERIALS FORMULATIONS CHEMICALS EBITDA Providing solutions for Customized specialty Leading positions 2016 sustainable mobility, formulations for surface in chemical inter- lightweighting, ch
Slide 36: Annexes: Other Financial Considerations
ANNEXES • Additional financial data • General information • Other financial considerations 2017 Q3 & 9M 2017 Results 36 November 8, 2017
Slide 37: Underlying EBIT(DA) Considerations for 2017
UNDERLYING EBIT(DA) CONSIDERATIONS FOR 2017 Scope effects Forex sensitivity Divestments having led to restatements in 2016 and Immediate impact on conversion exposure 2017 Deferred transactional impact due to hedging Latin American PVC activity Indupa sold end 2016 (6-12 month rolling basis)
Slide 38: 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 39: 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