Plastics Sector : extending our product portfolio & leveraging our strengths. Jacques van Rijckevorsel General Manager of Solvay Plastics

Transcription

1 Plastics Sector : extending our product portfolio & leveraging our strengths Jacques van Rijckevorsel General Manager of Solvay Plastics SOLVAY INVESTORS DAY September 26, 2007

2 Positioning Strategy drivers Execution : Multi-regional leader in Vinyls, Global leader in Specialty Polymers

3 P L A S T I C S Our positioning in % of 2006 sales = EUR 3,800 M Inergy 17% Vinyls cluster 55% Vinyls 45% 32% 58% 9% Specialty polymers 28% Pipelife 10% Specialties cluster 45% Growth opportunities in emergent markets 27% Automotive 3 25% Construction and Building 10% Chemicals 9% Electricity & Electronics 9% Water & environment

4 Work on selective leadership P L A S T I C S Main Products Europe World Fluorinated polymers - 3 Other Specialty polymers among the leaders Inergy (fuel systems) 1 1 PVC 2 3 Pipelife (pipes and fittings) 4 - Mio tons/year VINYLS Shin-Etsu 4 Formosa Plastics Solvay Oxyvinyls Georgia Gulf Ineos LG Group Arkema TPC Tayio-Vinyls

5 P L A S T I C S Delivering on a strong model Major portfolio upgrades and selective leadership Focus on competitiveness and growth Global presence / supply chain / sourcing Operational excellence Integrated sites Technological leadership and R&D Customer orientation Innovation Disciplined use of cash Growing performances REBIT/employee (EUR) % Disciplined use of Cash Cash flow from operations Capex 5

6 Positioning Strategy drivers Execution : Multi-regional leader in Vinyls, Global leader in Specialty Polymers

7 Strategy Extending our product portfolio & leveraging our strengths P L A S T I C S Specialty Polymers & Inergy Automotive Systems : product leadership and geographic globalization Vinyls & Pipelife : regional leadership and geographic diversification Margin upgrade Acquisitions in Specialty Polymers (Ausimont, BP specialty polymers ) Vinyls : global competitive multi-regional leadership (Europe; Mercosur, Thailand, Russia) Global leading position of Inergy Turnaround of Pipelife Exit of PP, Decoration, Air Intake Systems, HDPE, Industrial foils 7 (M EUR) Sales AVERAGE REBIT/sales AVERAGE % 12% 10% 8% 6% 4% 2% 0%

8 P L A S T I C S Strategy Drivers Specialty Polymers * Growth of/at the top of the "polymers pyramid" * Product differentiation (R&D, IP) and cost/quality * Globalization, capacity expansions, acquisitions Inergy Automotive Systems * Technological leadership and R&D * Extended scope of the product (e.g. denoxification) * Geographical growth (Asia, ) and customer base * Operational excellence (cost and quality) SPECIALTIES Fluorofluids Continuous-use Temperature Performances Prices Vinyls * Regional leaderships * Competitiveness (industrial efficiency, raw material integration, technological innovation, ) * Focused growth Pipelife * European leadership * Product Innovation * Geographic presence/extension in EU new neighbours VINYLS SBU Vinyls REBIT evolution by region across the cycles Europe Mercosur Asie 8

9 P L A S T I C S Work on competitiveness world-scale plants capacity expansions in Vinyls, Specialty Polymers raw materials integration fluorine chain, chlorine chain, ethylene (LT contract with leading suppliers, cracker ownership in France, ) The complete value chain optimization of global presence scale expansions and reorganization of operations operational excellence exchange of best practices, 9

10 P L A S T I C S Means for growth Discipline in cash use reinvested in future growth M EUR Cash flow Capex GROWTH MAINTENANCE

11 P L A S T I C S CAPEX allocation Medium term capital expenditures (incl. acquisitions) Maintenance Vinyls : projects in Russia, South America and Asia, expansions Specialty polymers: capacity expansions, new grades, Pipelife : selective acquisitions; development of new products and geographic expansion (Russia, Eastern Europe) Inergy Automotive Systems: deployment in BRIC countries; new green products (e.g. green diesel) MEUR sales by 2010

12 P L A S T I C S Sustainable and profitable growth 15% Margin upgrade higher REBIT/sales by 2010 in the current business climate 12% 11% 11% 10% 10% 7% 5% AVG REBIT/sales : 10% (annual growth : sales +3%, REBIT +6%) 0%

13 Solvay Plastics answers to sustainability challenges P L A S T I C S An increasing number of products / processes with both socioeconomical and environmental benefits : a few examples Quality standards for plastics with high stability, lifetime and resource savings Car fuel systems with recognized safety, excellent environmental behavior, and established recyclability Voluntary Vinyl 2010 program: upgrade the environmental performance of the whole PVC industry (with Solvay at the forefront) global EU PVC industry Recycling capacity : tons by 2015 with Solvay Vinyloop process as a breakthrough 13

14 Positioning Strategy drivers Execution : Multi-regional leader in Vinyls, Global leader in Specialty Polymers

15 Projects for growth P L A S T I C S SPECIALTY POLYMERS VINYLS Historic growth rate: ~8%/y Intensive R&D (6% of sales on average) Sustained REBITDA/Sales: 25%+ despite oil derivative price fluctuations RusVinyl in Russia Expansions in Mercosur Expansions and APEX in South East Asia 15

16 GOING FURTHER, STAYING CLOSER with the Specialty Polymers (London presentation of June 2007 published on

17 SPECIALTY POLYMERS Growth projects in Specialty Polymers Upgrade the existing product portfolio to meet growing demand and penetrate new markets : expansion Fluorinated polymers (Algoflon and Hyflon ) PES/PPSU Radel Polyvinyledene fluoride (PVDF) Perfluoropolyether (PFPE) polymers PVDC Broaden the current polymer / technology portfolio through R&D and acquisitions : Mississippi Polymer Technologies (USA) : PrimoSpire TM SolviCore (50/50 joint venture Solvay/Umicore) : R&D, production and sales of Membrane Electrode Assemblies for application in Fuel Cells Accelerate investments in fast growing markets : Development center in China / strengthening of local marketing organization Polymers Division of Gharda (India) : access to ultra high performance polymers, PEEK : construction of a commercial-scale unit in India Construction (by 2007) of a world-class plant for micronized polytetrafluoroethylene (PTFE) powder in China 17

18 SPECIALTY POLYMERS 4 markets with great potential for the next 5 years Medical Flexible electronics Membranes G R O W T H Overall our development pool is more robust than ever : more projects and higher revenue potential Specialty coatings 18

19 «VINYLS, A MULTI-REGIONAL LEADER IN A GROWING MARKET» Mr. JP Pleska, General Manager of SBU Vinyls

20 P L A S T I C S Main market trends Worldwide PVC demand has shown sustained growth: : 6%/y projections: > 4.5%/y CIS & Eastern countries, India, China and South America have the strongest growth rates PVC WORLD - MARKET kt % / year WORLD CONSUMPTION OF PVC Total demand: 33,2 Million Tons 2006 Reduced impact of China ASIA/PAC (excl China) 18,6% CHINA 26,20% N.AMERICA 22,20% ECU margin remains sound AFR/M.E. 4,50% E.EUROPE (incl.turkey) 6,7% W.EUROPE 17,50% S.AMERICA 4,30% Sources : CMAI & Solvay 3 20

21 P L A S T I C S PVC consumption versus GDP PVC consumption versus GDP. kg PVC per capita North America Western Europe Thailand Asia Russia Extended Mercosur EE + CE + Turkey South East Asia US$ per capita 21

22 Strategy: a multi-regional leader in Vinyls P L A S T I C S Worldwide competitiveness, regional leadership, and expansion in selected fast growing markets Solvay is N 2 in EUROPE (with better average plant size) and N 3 WORLDWIDE (with complete integration in Chloralkali) Europe : SolVin : 4 world-class plants (Belgium, Germany, France & Spain) CIS: RusVinyl in Russia (2010) South East Asia: Vinythai in Thailand Mercosur : Solvay Indupa in Argentina, Brazil Focus on world-scale, highly integrated plants to maximize COMPETITIVENESS Europe : cost and size optimization of remaining sites Thailand : capacity doubled in Map Ta Phut; acquisition of APEX under negociation Mercosur : expansion and upgrade in Santo Andre For plants not connected to ethylene grid, supply is secured at competitive price through: Cracker integration (Feyzin in France) Long term supply contract in Northern Europe Leading partner agreements (Rusvinyl, Mercosur, Thailand) Alternative technologies (ethanol based ethylene in Brasil, to be decided) 22

23 A Multi-regional leader in Vinyls fully integrated P L A S T I C S PVC WORLD - Top ten global producers 2007 ASIA NAFTA WE SOUTH AM ERICA Capacities in kt / year Shin-Etsu Solvay Formosa Plastics Oxyvinyls Ineos Georgia Gulf LG Group ARKEMA Vinnolit Tianjin Dagu Che... 23

24 Competitive position & Growth in Europe P L A S T I C S Demand growth : Western Europe (15) : +0.5 to 1% Central/Eastern Europe : > 10% Ongoing capacity increases in existing sites to maintain market share and reach world class size Ongoing measures to keep Solvin s cost leadership Open to innovative partnerships (example: production JV) Average SolVin Plant 50 Average European Plant excluding SolVin Solvin fixed cost evolution in current Euro (2006 = 100%) 130% 125% 120% 115% 110% 105% 100% 95% 90%

25 Competitive position & Growth in Mercosur P L A S T I C S Market growth (~ 5%/y during the last 5 years), mainly driven by construction. High potential: in Latin America, 120 million people don t have drinking water and sewers Ongoing and future investments in Brazil to create a world class plant (350 kt PVC fully integrated) and maintain market share New PVC production with ethanol (sugar cane) based ethylene under study 25

26 Competitive position & Growth in South East Asia P L A S T I C S Market growth remains high (around 5%) in SEA SEA remains the major importer of EDC in the world Competitiveness based on vinyl chain integration, size, logistic network, trade agreements between SEA countries Reduced impact of China (reduction of export incentives, technology issues, costs of imported raw materials & energy,, ) Stepping up of the competitive position of Vinythai with world class chloralkali-vcm plant (400 kt/year). Development of PVC integration: potential purchase of APEX (120 kt) and further capacity expansion. Synergies with the new Epicerol plant to be exploited 26

27 P L A S T I C S Vinyl chain integration in SEA Production capacity 2000 PVC demand in SEA kt / year PVC APEX and further integration (2008) VCM EDC PVC VCM EDC Vinythai Other SEA producers 27

28 P L A S T I C S Russia Russia: PVC demand and net trade (kt/year) PVC market growth above 20% per year over the last 5 years, mainly driven by the construction sector. Need for large imports to meet demand. Competitive feedstocks and lack of world scale local plants Setup of RusVinyl Pipes 3% Flooring 7% World 40 % on average Sheets 8% Others 17% Net trade PVC Consumption Projection PVC consumption in Russia. Cables 14% Profiles 51%

29 P L A S T I C S JV 50/50 with SIBUR in Russia Russia s first world-scale, fully integrated vinyls plant Operational in 2010 Capacities : 330 kt/y (PVC) and 225 kt/y (caustic soda) (framework of 510 kt/y (PVC) and 335 kt/y (caustic soda)) Total investment (SolVin/SIBUR) : EUR 650m (talks with EBRD for possible participation) 29

30 REBIT evolution by region across the cycles P L A S T I C S RusVinyl 2012 (50%) Europe Mercosur Asie Russia 30

31 Leadership, competitiveness & growth: how to cope with cycles P L A S T I C S 12 months average SBU ECU Spread and ROI evolution Spread ROI Group objective juin-99 juin-00 juin-01 juin-02 juin-03 juin-04 juin-05 juin-06 31

32 PVC more competitive than other plastics with higher brent P L A S T I C S Correlation between SBU Spread ECU (US$/ton) and brent price (US$/ton) Spread ECU (US$/ton) Brent price (US$/bbl) 0 0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 32 Source : Harriman et Icis

33 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 number of factors, including general economic factors, interest rate and foreign currency exchange rate fluctuations; changing market conditions, product competition, the nature of product development, impact of acquisitions and divestitures, restructurings, products withdrawals; regulatory approval processes, all-in scenario of R&D projects and other unusual items. Consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements can be identified by the use of words such as "expects," "plans," "will," "believes," "may," "could" "estimates," "intends", "goals", "targets", "objectives", "potential", and other words of similar meaning. Should known or unknown risks or uncertainties materialize, or should our assumptions prove inaccurate, actual results could vary materially from those anticipated. The Company undertakes no obligation to publicly update any forward-looking statements"