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Q2 2015 Results – Solvay

Solvay · Jul 29, 2015 · 85 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Q2 2015 Results – Solvay – slide 1
    Q2 2015 results FORENOTE All historic data are restated for comparison purposes, unless otherwise indicated. Solvay presents Adjusted Income Statement performance July 29, 2015 indicators that exclude non- cash Purchase Price…
  2. Q2 2015 Results – Solvay – slide 2
    Growth supported by forex Volumes drop offset by pricing power Volumes drop offset by pricing power Innovation-driven growth more than offset by persistent substantial contraction of O&G and acetate tow market REBITDA Pricing power…
  3. Q2 2015 Results – Solvay – slide 3
    Q2 2015 financial highlights 2.7 bn +4.2% 500 m +8.1% Net Sales yoy REBITDA yoy Strong forex impact (US in particular) Strong forex Volumes down as innovation-driven growth offset Positive pricing power, underpinned by excellence…
  4. Q2 2015 Results – Solvay – slide 4
    Portfolio reshaping and investments for value Reducing cyclical & Strengthening low-growth businesses Growth Engines European Chlorovinyls Novecare INOVYN created Shift to on-pipe alkoxylation globally Acquisition of facility in…
  5. Q2 2015 Results – Solvay – slide 5
    Forex and excellence more than offset substantial adjust- ments in O&G supply chain and acetate tow market Net Sales REBITDA Pricing power 57 m in m in m 89 (21) 235 (93) 55 (49) (6) 500 (33) 2,675 2 (33) Fixed Volume 463 costs…
  6. Q2 2015 Results – Solvay – slide 6
    Net pricing & forex supportive across operating segments REBITDA Q2 2015 (in m) Advanced Substantial drop in New REBITDA record Advanced Formulations Novecares O&G on strong innovation- Materials markets demand driven growth (12)%…
  7. Q2 2015 Results – Solvay – slide 7
    Advanced Formulations Q2 2015 performance Favorable forex insufficient to offset further volume decline in Novecares O&G Net sales (in m) REBITDA (in m) Novecare 97 (104) 725 (4) 16% (29) 686 70% margin 15% Scope Conversion Volume…
  8. Q2 2015 Results – Solvay – slide 8
    Advanced Materials Q2 2015 performance New REBITDA record on strong innovation-driven growth and favorable forex Net sales (in m) REBITDA (in m) Specialty Polymers 58 (1) 840 27% 79 57% margin 25% 670 33 Price Volume (0.1)%…
  9. Q2 2015 Results – Solvay – slide 9
    Performance Chemicals Q2 2015 performance Solid pricing and favorable forex more than offset volume drop in Acetow Net sales (in m) REBITDA (in m) Soda Ash & 43 (45) 31 754 Derivatives 724 - 23% 25% 51% margin Scope Conversion…
  10. Q2 2015 Results – Solvay – slide 10
    Functional Polymers Q2 2015 performance REBITDA up on strengthened net pricing and supportive volume mix in Polyamide Net sales (in m) REBITDA (in m) Polyamide 11.4% 448 (29) 15 (4) (35) 395 97% margin Volume 8.1% Scope…
  11. Q2 2015 Results – Solvay – slide 11
    Corporate & Business Services Q2 2015 performance Costs up yoy due to phasing and forex impact REBITDA (in m) Q2 2015 Q2 2014 (37) (43) Energy Services 4 1 Other C&BS (47) (38) Reported (43) (37) Q2 2014 Q2 2015…
  12. Q2 2015 Results – Solvay – slide 12
    Solvays share in net income at 143 m Adjusted* P&L Non-recurring costs in line with 2014 in m Q2 2015 Q2 2014 Restructuring expenses of (10) m Impairment charge of (26) m for Special Chem non- Net sales 2,675 2,566 performing assets…
  13. Q2 2015 Results – Solvay – slide 13
    Positive Free Cash Flow Net debt up with dividend payments Free Cash Flow Net debt** evolution in m in m Q2 Q2 Free Cash Flow 167 m (1,608) Delta (27) (19) (200) 2015 2014 (1,417) 311 Changes in (90) Other REBITDA* 311 337…
  14. Q2 2015 Results – Solvay – slide 14
    Capital investment efforts maintained Forex driving nominal amount up Capex sustained Continuing operations (861) high efforts* In 2015 in m (734) Q4 (318) 9 new facilities to start up (307) Q3 50% growth capex (205) Q2 (151) (215)…
  15. Q2 2015 Results – Solvay – slide 15
    Working capital discipline maintained Seasonal patterns Industrial working capital % of gross sales 16.3% 16.5% 15.6% 15.7% 15.2% IWC/sales 15.3% Average 2014 DSO* Overdues 12.8% Q1 Q2 Q3 Q4 Q1 Q2 2014 2015 * Days…
  16. Q2 2015 Results – Solvay – slide 16
    Debt management allows to reduce cost of net debt Capital structure 31/03/2015 Capital structure 30/06/2015 in bn in bn Total equity 7.5 Total equity 7.3 Hybrid bond Hybrid 1.2 bond Gross debt 1.2 Gross debt (2.6) (2.7)…
  17. Q2 2015 Results – Solvay – slide 17
    Outlook 2015 Solvay remains confident to generate solid REBITDA growth Despite expectation of continued uncertainties in various markets Q2 2015 results 18 29/07/2015
  18. Q2 2015 Results – Solvay – slide 18
    Accelerate transformation Continue portfolio upgrade 2015 Grow with our customers Priorities Maintain focus on excellence Sustain profit & value growth Sustain momentum Q2 2015 results 19 29/07/2015
  19. Q2 2015 Results – Solvay – slide 19
    Investor relations contacts Maria Alcn-Hidalgo Geoffroy Raskin Bisser Alexandrov +32 2 264 1984 +32 2 264 1540 +32 2 264 2124 maria.alconhidalgosolvay.com geoffroy.raskinsolvay.com bisser.alexandrovsolvay.com Next events October…
  20. Q2 2015 Results – Solvay – slide 20
    Annexes Additional Q2 & H1 2015 financial data 2015 considerations Group presentation Segment & GBU presentation Q2 2015 results 21 29/07/2015
  21. Q2 2015 Results – Solvay – slide 21
    Forex and excellence more than offset adjustments in O&G and acetate tow markets Pricing power Net Sales REBITDA 90 m in m in m 120 (29) 100 (77) 7 1,002 445 (135) (30) 5,322 Fixed Others (30) costs (including Volume Price 5,054…
  22. Q2 2015 Results – Solvay – slide 22
    Income statement H1 Balance sheet in m H1 2015 H1 2014 in m 30/06/2015 31/12/2014 Net sales 5,322 5,054 Fixed assets 10,423 10,080 REBITDA 1,002 911 Investment & shares 565 545 Other elements (11) (5) Loans & other non current 32…
  23. Q2 2015 Results – Solvay – slide 23
    Lower discontinued operations contribution to FCF Seasonal uplift in net debt Free Cash Flow Net debt** evolution in m in m (311) 25 14 (1,608) H1 H1 Delta Other Changes in 2015 2014 changes Free Cash Flow (177) m (117) net debt…
  24. Q2 2015 Results – Solvay – slide 24
    Cash flow statement in m Q2 2015 Q2 2014 in m H1 2015 H1 2014 Cash flow from operating Cash flow from operating 410 293 326 390 activities activities Cash flow from investing Cash flow from investing (267) (289) (781) (511) activities…
  25. Q2 2015 Results – Solvay – slide 25
    Factors impacting Net income in m Q2 2015 Q2 2014 in m H1 2015 H1 2014 IFRS Net income, Group 125 (313) IFRS Net income, Group 265 (225) Rhodia PPA (after tax) 18 21 Rhodia PPA (after tax) 36 40 Non-recurring items 46 46…
  26. Q2 2015 Results – Solvay – slide 26
    Pension liabilities down as discount rates increased Cash contribution stable at (42) m in Q2 2015 Pensions (30/06/2015) (78) m in H1 2015 in bn Net pension (180) m in 2014 liabilities Pension (2.9) liabilities (5.2) Discount…
  27. Q2 2015 Results – Solvay – slide 27
    Annexes Additional Q2 & H1 2015 financial data 2015 considerations Group presentation Segment & GBU presentation Q2 2015 results 28 29/07/2015
  28. Q2 2015 Results – Solvay – slide 28
    REBIT(DA) considerations for 2015 Forex impact REBITDA adjustments Mainly linked to USD RusVinyl JV Immediate impact on conversion exposure Consolidated through equity associates Adjusted for financial charges Deferred transactional…
  29. Q2 2015 Results – Solvay – slide 29
    Significant forex tailwind expected at prevailing rates Forex exposure Exposure to USD Conversion: Sensitivity of 100 m REBITDA impact No cash effect / no coverage provided per (0.10) USD/ change Transactional: Half conversion, half…
  30. Q2 2015 Results – Solvay – slide 30
    Financials and tax considerations for 2015 Net debt charges Hybrid bond Retail bond redeemed at maturity Nominal value of 1.2 bn (500) m paid in June 2015 Initial average dividend yield of 4.7% Net financial charges expected at (125)…
  31. Q2 2015 Results – Solvay – slide 31
    Other considerations for 2015 Non-recurring elements Cash flow Restructuring costs FCF fluctuations Cash expenses for pensions of (180) m Impairments relative to business not under discontinued operations Sustained high level of…
  32. Q2 2015 Results – Solvay – slide 32
    Annexes Additional Q2 2015 financial data 2015 considerations Group presentation Segment & GBU presentation Q2 2015 results 33 29/07/2015
  33. Q2 2015 Results – Solvay – slide 33
    Solvay, a major global chemical player Based on strengths 10.2 bn 119 Net Sales Industrial sites Well-balanced geographical spread and end-user markets 1.8 bn 15 REBITDA Major R&I centers Leading player in 90% of our…
  34. Q2 2015 Results – Solvay – slide 34
    Well-balanced geographical spread and end-user markets Balanced Exposure to geographical exposure* higher growth end-markets* Automotive & North Aeronautics Consumer goods America Europe & Healthcare 18% 23% 34% 26% Energy &…
  35. Q2 2015 Results – Solvay – slide 35
    Transforming the present Group profile Growth Resilience Returns Transforming the present, sustaining the future 36 June 2015
  36. Q2 2015 Results – Solvay – slide 36
    With distinct strategic intent for our businesses Advanced Performance Materials Chemicals HARVEST; SELECTIVELY INVEST & DIVEST INNOVATE & INVEST BREAK- Advanced THROUGH Formulations PROFITABILITY IMPROVEMENT…
  37. Q2 2015 Results – Solvay – slide 37
    Upgrading portfolio Divestments Strategic Portfolio Monetizing Divestitures refocussing for value Ability to extract value Special Chem Chlorvinyls LifeScience Europe & Eco Services Latam Refrigerants 2014 PCC 2011…
  38. Q2 2015 Results – Solvay – slide 38
    Innovating effectively Our main thrusts RESPONSIBILITY OPEN INNOVATION EFFECTIVENESS SPM methodology to Large Ecosystem Customer assessing & prioritize for faster & wider focus projects progress Sustainable solutions…
  39. Q2 2015 Results – Solvay – slide 39
    Delivering strongly Excellence scope expanded Management Model Performance Sustainable value oriented Entrepreneurial Collaborative Customer innovation Empowerment focus 800 m Accountability vs 670m initially foreseen…
  40. Q2 2015 Results – Solvay – slide 40
    Sustaining the future Deliver more for society Innovate sustainable solutions Renewable materials Clean mobility Eco-efficient processes Clean water and air Food security Sustainable energy Circular chemistry Smart chemistry…
  41. Q2 2015 Results – Solvay – slide 41
    Responding to megatrends Resource constraints & Evolving demography Innovation increased sustainability & consumers acceleration demand behaviors Growing Fight for talents world population Digitalization & mobility Ecosystem at…
  42. Q2 2015 Results – Solvay – slide 42
    Creating sustainable value Mid-term targets 2014 On Divestments, including track European PVC Expanding Excellence 10% yoy REBITDA growth initiatives 11% 2016 REBITDA 2.3 - 2.5 bn* growth Disciplined reinvestments in growth…
  43. Q2 2015 Results – Solvay – slide 43
    With value creation momentum across segments 2012 2014 2016 WACC Premium return* WACC Premium return* WACC Premium return* 30% REBITDA margin 25% 20% 15% 10% Value Value Value 5% creation creation creation zone zone…
  44. Q2 2015 Results – Solvay – slide 44
    Underpinning growth momentum though investments 861 785 708 Capex* Capex discipline in m maintained 2012 2013 2014 2015 2016 Growth capex Strategic fit IRR 15% Capex* 48% ratios 43% Maintenance 38% Capex / capex at…
  45. Q2 2015 Results – Solvay – slide 45
    Allocating capex strategically Growth capex 2015-2018 Portfolio Regional Solvays business matrix of GBUs, based on value generation potential Based on main projects GROWTH ENGINES High investment 60% level in value enhancers…
  46. Q2 2015 Results – Solvay – slide 46
    With current pipeline starting to deliver in 2016 Major Industrial Years to Projected Total growth projects start-up maturity IRR* capex 3 GROWTH ENGINES Novecare Alkoxylation USA & Singapore 2015 20% 3 500 m Aroma…
  47. Q2 2015 Results – Solvay – slide 47
    Supporting growth through strong financial framework Capital structure (31/03/2015) Strong liquidity position maintained in bn in bn Total equity 7.5 (4.2) Lower (3.8) Gross debt Hybrid cost of carry (2.7) bond 1.2 Unused credit…
  48. Q2 2015 Results – Solvay – slide 48
    Converting REBITDA into cash for value REBITDA 10% yoy on average Working capital 15% / sales Intensity Capex reduces after 2015 Pensions, environmental, Other cash flow items restructuring, 300 m net Income tax Low to…
  49. Q2 2015 Results – Solvay – slide 49
    Rewarding shareholders with stable to growing dividend Gross dividend Total shareholder return 4 200% in /share Indexed (with re-invested net dividends) 3 150% Dividend TSR* 2 100% 5.3 % CAGR 17 % CAGR 1 50%…
  50. Q2 2015 Results – Solvay – slide 50
    Remuneration aligned to value creation REBITDA* 35% CFROI* VARIABLE Share-price REBITDA 30% Cash Sustainability FIXED 35% Applicable to Executive Committee (*) Targets and KPIs aligned & Business General Managers…
  51. Q2 2015 Results – Solvay – slide 51
    Annexes Additional Q2 2015 financial data 2015 considerations Group presentation Segment & GBU presentation Q2 2015 results 52 29/07/2015
  52. Q2 2015 Results – Solvay – slide 52
    Organized in Operating segments and Global Business Units Functional Polymers Advanced Formulations Performance Chemicals Advanced Materials Corporate & Business Services Novecare Specialty Soda Ash & Polyamide Solvay…
  53. Q2 2015 Results – Solvay – slide 53
    Advanced Formulations 2014 figures 2,854 m 426 m 15% Net Sales REBITDA Margin Aroma Novecare Coatis Performance As one of Solvays growth engines, the businesses 71% grouped under Advanced Formulations stand out for Novecare…
  54. Q2 2015 Results – Solvay – slide 54
    Novecare Delivering sustainable solutions for surface chemistry North America Europe 12 production sites 7 production sites Focused on 12 R&I & tech centers 4 R&I & tech centers key markets Home & Personal care 20% 53% Net…
  55. Q2 2015 Results – Solvay – slide 55
    Novecare Customer intimacy with tailor-made solutions Delivering Developing Tailor-made Strategic value proposition products formulations solutions Develop innovation model with core customers HPC Leading position in niche…
  56. Q2 2015 Results – Solvay – slide 56
    Novecare Broad portfolio of innovation projects across markets and aligned to megatrends Time to Large size market projects Evolving demography & consumers Mid-size behaviours projects Small size 13% of our portfolio…
  57. Q2 2015 Results – Solvay – slide 57
    Novecare Investing for competitiveness and regional growth coming on stream in 2016 Expansion in Germany to access Eastern Europe New plant, construction 2012-2014 Genthin, Germany Ethylene oxide on pipe in US, Europe and…
  58. Q2 2015 Results – Solvay – slide 58
    Novecare Successful strategy delivery across markets underpinning growth levers Markets Strategic levers Growth trend evolution % of Tailor-made Inno- Competi- net sales solutions vation tiveness 2010-2014 2014-2016 HPC 20% high…
  59. Q2 2015 Results – Solvay – slide 59
    Coatis Sustainable solvents solutions provider and leading Latin American player of phenol Multiple applications for phenol and oxygenated solvents 8% 10% 3% Net Sales 2014 79% Latin America Asia & RoW 1 production site 1…
  60. Q2 2015 Results – Solvay – slide 60
    Aroma Performance Worlds largest Diphenols & Fluoroaliphatics integrated producer serving customers growth and innovation North America Europe 1 production site 3 production sites 1 R&I center Vanillin ingredients for Food,…
  61. Q2 2015 Results – Solvay – slide 61
    Advanced Materials 2014 figures 2,762 m 709 m 26% Net Sales REBITDA Margin Specialty Polymers Silica Special Chem A leader in markets with high entry barriers and strong 54% returns on investment, the Advanced Materials segment…
  62. Q2 2015 Results – Solvay – slide 62
    Solvay Specialty Polymers Inventing the future every day Diversified end markets with superior growth North America Europe potential 8 production sites 7 production sites 2 R&I centers 4 R&I centers Healthcare Consumer 35% Net…
  63. Q2 2015 Results – Solvay – slide 63
    Specialty Polymers Unique solution offering, differentiating Solvay from competition High-barrier X-linkable Aromatics Aromatics Fluoropolymers Fluoropolymers polymers compounds LCP HPPA PPS PEEK PAI PSU PTFE PVDF PFA FKM PFPE…
  64. Q2 2015 Results – Solvay – slide 64
    Specialty Polymers Outgrowing markets Solvay Specialty Polymers 2014 sales by end markets Water Industrial Energy Electrical/Electronics Automotive Addressable 3 Consumer market growth Healthcare 8% p.a.* Construction…
  65. Q2 2015 Results – Solvay – slide 65
    Specialty Polymers Powerful innovation levers across the value chain 2014 data Precursors Monomers Polymers Alloys Downstream 32% of net sales realized with products < 5-y 50+ New product grades 3,300+ Patents in…
  66. Q2 2015 Results – Solvay – slide 66
    Silica Growth through innovation for sustainable mobility HDS (Highly Dispersible Silica) North America Europe for fuel-efficient & 1 production site 3 production sites (1 in construction) performance tires 2 R&I centers 41%…
  67. Q2 2015 Results – Solvay – slide 67
    Silica Highly Dispersible Silica (HDS) delivers value to the tire industry Excellent technical performance growing across a number of applications Rolling Resistance In passenger car and light trucks 125 + 25% 120 Energy-efficient…
  68. Q2 2015 Results – Solvay – slide 68
    Special Chem, Innovative solutions for growth industries Formulations North America Europe 3 production sites 14 production sites 2 R&I center 4 R&I centers Fluor Rare earths & other metals 39% Net sales 26% 2014 31% 3%…
  69. Q2 2015 Results – Solvay – slide 69
    Special Chem Creation of new GBU, enhancing scale, innovation and growth options Special Aroma* Chemicals Performance Special Chem Fluor Fluor chemicals chemicals Fluor Rare earth Sr/Ba Key technologies chemicals chemicals…
  70. Q2 2015 Results – Solvay – slide 70
    Performance Chemicals 2014 figures 2,944 m 724 m 25% Net Sales REBITDA Margin Soda Ash & Emerging Derivatives Peroxides Acetow Biochemicals Operating in mature resilient markets, this Segments 47% Soda Ash success is based on…
  71. Q2 2015 Results – Solvay – slide 71
    Soda Ash & Derivatives Resilient cash generator for Solvay North America Europe 2 production sites 7 production sites Soda ash 3 R&I centers in many applications Flat glass 45% Net sales 24% 2014 19% Container glass 12%…
  72. Q2 2015 Results – Solvay – slide 72
    Soda Ash & Derivatives Solvay products Leading player with very competitive supply approximate main end-market exposures Raw materials Products Applications End-markets Synthetic process 20% Additives in chemical and Industrial…
  73. Q2 2015 Results – Solvay – slide 73
    Soda Ash & Derivatives Market leader with world-class assets Solvay assets World-class assets 66% addressing regional and export markets Solvay has 36% Rheinberg Bernburg Green River (Wyoming, US) of European Green River (US,…
  74. Q2 2015 Results – Solvay – slide 74
    Soda Ash & Derivatives Cost competitiveness, key success factor in the soda ash industry Average FOB Natural process (NP) Synthetic process cash cost Freight & logistics Solvay Solvay costs World-class Local assets assets…
  75. Q2 2015 Results – Solvay – slide 75
    Soda Ash & Derivatives Market maker in Bicarbonate, a diversified growth story Global Bicarbonate demand Total market volumes (2014) Solvay positioning Unparalleled security of supply Others 14% 20% Food 8 facilities in Europe and…
  76. Q2 2015 Results – Solvay – slide 76
    Peroxides Global market & technology leader North Europe Peroxides Pulp America 9 production sites (1 HPPO*) 2 production sites in diversified markets 2 R&I centers 41% HPPO* 13% CAPACITY Homecare 13% 33% Latin Asia &…
  77. Q2 2015 Results – Solvay – slide 77
    Peroxides Solvay market and technology leader Global market leader Technology leader On-purpose on-site technologies High productivity process for H2O2: mega plants to serve PO customers 70 % market share Reviewed H2O2 production…
  78. Q2 2015 Results – Solvay – slide 78
    Peroxides HPPO*, a game changer generating strong growth & guaranteed returns HPPO HPPO: plants the preferred route to PO Solvay HPPO 70% of Long term contracts worldwide with the 2 WW On-purpose route capacity leaders (BASF,…
  79. Q2 2015 Results – Solvay – slide 79
    Acetow Leading the market with quality and innovation Products North America Europe 1 production J/V 2 production sites 1 R&I center 35% 1% Net 12% Sales 2014 Cellulose acetate flakes Cellulose acetate tow 52%…
  80. Q2 2015 Results – Solvay – slide 80
    Emerging Biochemicals Leader in bio- based epichlorohydrine, vinyls and caustic soda in South East Asia Vinyl applications Europe 1 R&I center Films Sheets Net Sales 2014 100% Asia & RoW Pipe & fittings Wires & cables…
  81. Q2 2015 Results – Solvay – slide 81
    Functional Polymers 2014 figures 1,654 m 111 m 6.7% Polyamide Chlorovinyls Net Sales REBITDA Margin Polyamide & Intermediates Fibras Engineering Plastics PVC Compounds The key success factor of this Segment, which primarily 93%…
  82. Q2 2015 Results – Solvay – slide 82
    Polyamide Integrated polyamide player 3 business units Europe 7 production sites 2 R&I centers 48% Net Polyamide & Intermediates 4% Sales 2014 15% 33% Latin America Asia & RoW 4 production sites 3 production sites 3…
  83. Q2 2015 Results – Solvay – slide 83
    Corporate & Business Services 2014 figures (188) m REBITDA Other Corporate Energy Services & Business Services This Segment includes the Solvay Energy Services business which delivers energy optimization programs both within…
  84. Q2 2015 Results – Solvay – slide 84
    Executing a clear value creation strategy Towards a higher growth, less cyclical & greater returns Chemical Group Targeting Sustainable Value Growth Q2 2015 results 85 29/07/2015
  85. Q2 2015 Results – Solvay – slide 85
    THE FIRST ROUND-THE-WORLD www.solvay.com SOLAR FLIGHT MARCH 9 2015 Feedback expected by end March 2015

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