Solvay, Enabling tomorrow Fortuna beleggingsclub September 7, 2017
SAFE HARBOR This presentation may contain forward-looking information. Forwardlooking statements describe expectations, plans, strategies, goals, future events or intentions. The achievement of forwardlooking statements contained in this presentation is subject to risks and uncertainties relating to 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 or future events may differ materially from those expressed or implied by such forwardlooking statements. 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 or revise any forwardlooking statements This document does not constitute an offer to sell, or the solicitation of an offer to subscribe for or buy, any securities. 2
WE ARE A WORLD LEADER IN THE CHEMICAL INDUSTRY 27,000 employees Top 3 1 Market position [1] 2 3 58 countries 10.9 bn net sales 140 Industrial sites 2.3 bn underlying EBITDA 21 Major R&I sites 21% EBITDA margin 2016 3 [1] Applicable to ~90% of portfolio
CREATING A FUTURE WITH MORE POTENTIAL THROUGH IN-DEPTH TRANSFORMATION MORE responsibility MORE talents Asking MORE from chemistry MORE innovative sustainable solutions Profit STRONGER & RESILIENT GROUP Cash Returns 4
IN-DEPTH TRANSFORMATION UPGRADING THE PORTFOLIO ACQUISITIONS Cytec Energain Form. resins XLC Rhodia Chemlogics Ryton Refrigerants Indupa Vinythai Dacarto Benvic Pipelife Eco Services PCC Inovyn Acetow DIVESTMENTS 2011 2012 2013 2014 2015 2016 2017 5
LEADING TO CHANGE IN PROFILE NET SALES MORE GLOBAL MORE DIVERSIFIED MORE SPECIALTY MORE SUSTAINABLE 2010 6.5 bn >50% in Europe ~20% in GDP+ markets ~25% specialty products <20% sustainable solutions 2016 10.9 bn ~33% in each main region >50% in GDP+ markets >60% specialty products >40% sustainable solutions Europe Asia & RoW Latin America North America Automotive & aerospace Resources & environment Electrical & electronics Agro, feed & food Consumer goods & healthcare Building & construction Industrial applications Advanced Materials Advanced Formulations Performance Chemicals Functional Polymers Sustainable solutions Neutral impact Challenged applications (according to SPM methodology) 6
LEADING TO FINANCIAL DELIVERY PROFIT CASH RETURNS EBITDA margin Cash conversion HOLT CFROI [2] 21.0% 16.2% 15.1% 16.6% 16.7% 17.5% 18.5% 65.2% 62.0% 57.4% 51.7% 50.4% 59.3% 5.0% 5.4% 5.8% 7.0% 50.2% 4.2% 4.3% 2.7% Solvay Median and range of peers [1] 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016 2010 2011 2012 2013 2014 2015 2016 [1] Akzo Nobel, Arkema, BASF, Clariant, DSM, Evonik, Lanxess (metrics as could be deducted from reporting) [2] HOLT CFROI is a proprietary cash flow return on investment metric of Credit Suisse calculated as an IRR taking into account i) the cash flow generated by a company In the past and prospectively and ii) the amount and estimated lifespan of its operating assets. The metric does not include goodwill and is expressed in real terms (i.e. real returns and not nominal ones). 7
SUSTAINABLE VALUE CREATION GUIDED BY FINANCIAL & EXTRA-FINANCIAL TARGETS 3 year objective 2016-2018 11 year objective 2015-2025 3 year objective 2016-2018 PEOPLE PLANET GHG intensity Sustainable Solutions Accident rate Employee engagement -20% +7pp increase to 40% -10% Maintain at 75% -40% reduction to 4.8 Contribute to Society +25pp increase to 50% Innovate Sustainable solutions Light-weighting materials -48% Sustainable energy reduction Ecofriendly to 0.50 materials +8pp increase to 80% Air & water care Smart & efficient processes Act Responsibly Mid-to-high single digit % yoy > 2.4bn cumulative >60% each year EBITDA [1] growth Free cash flow Cash conversion CASH PROFIT SOCIETY Societal actions +5pp increase to 25% Operating +20pp responsibly increase to 40% Empowering people +0.5-1.0pp increase CFROI RETURNS At constant forex & scope [1] underlying EBITDA 8
ON TRACK TO REALIZE FINANCIAL & EXTRA-FINANCIAL TARGETS 3 year objective 2016-2018 realized in 2016 realized in 2016 3 year objective 2016-2018 PEOPLE PLANET GHG intensity Sustainable Solutions Accident rate Employee engagement -20% +7pp increase to 40% -10% Maintain at 75% -19% +10pp -0% +2pp 7.5% 0.9bn 59% Mid-to-high single digit % yoy > 2.4bn cumulative >60% each year EBITDA [1] growth Free cash flow Cash conversion CASH PROFIT SOCIETY Societal actions +5pp increase to 25% +0.3pp +0.5-1.0pp increase CFROI RETURNS At constant forex & scope [1] underlying EBITDA 9
MULTI-SPECIALTY PORTFOLIO REFLECTED IN BUSINESS STRUCTURE ADVANCED MATERIALS Providing solutions for sustainable mobility, lightweighting, C0 2 and energy efficiency ADVANCED FORMULATIONS Customized specialty formulations for surface chemistry & liquid behavior, maximizing yield & efficiency & minimizing eco-impact PERFORMANCE CHEMICALS & FUNCTIONAL POLYMERS Leading positions in chemical intermediates through scale & technology, developing applications & industrial innovation for optimized costs MORE Growth, Returns & Resilience 10
INNOVATION DRIVING FUTURE GROWTH 2016 21 R&I centers 2,340 R&I employees 350 m R&I efforts 80 m Invested in funds and start-ups 240 Patent applications 11
DEVELOPING INNOVATIVE SOLUTIONS TO CREATE VALUE TO OUR CUSTOMERS ELECTRICAL & ELECTRONICS AGRO, FEED AND FOOD Connectivity & energy efficiency Design and connectivity Safety Sustainable solutions Process efficiency Sustainable living & environmental protection Agriculture Feed Food High purity H 2 O 2 Electronics require high purity for high technical components BICAR Z sodium bicarbonate helps fight acidosis and thus contributes to animal health 12
DEVELOPING INNOVATIVE SOLUTIONS TO CREATE VALUE TO OUR CUSTOMERS CONSUMER GOODS & HEALTHCARE AUTOMOTIVE & AERONAUTICS Improving the quality of life Consumer goods Healthcare An innovative material to replace metal in removable partial denture frames, to enabling a digital workflow that accelerates the work of dental laboratories and dentists Cleaner mobility Lightweighting Electrification Powertrain efficiency Green technology Solvalite TM 730 Launch of the new innovative thermoset prepreg resin system specificaly developed for high volume automotive applications Solef PVDF Li-Ion battery materials 13
SOLVAY OFFERS UNIQUE LIGHTWEIGHTING SOLUTIONS Solvay s unique portfolio Driving sustainable mobility BROADEST HIGH-PERFORMANCE POLYMER RANGE AEROSPACE AUTOMOTIVE Polymers & alloys Foams Thermoplastic polymers & alloys Fiber reinforced compounds (short & long fiber) Thermoset resins & formulations Composites thermoset & thermoplastics Applications Current Future Primary structure Secondary struct. Jet engines Cabin interior Under the hood Battery tray Upperbody/hood Chassis Downstream intermediates Sandwich structures CREATING NEW CLASSES OF MATERIALS Customers & collaborations Most major OEMS worldwide PROVIDING SOLUTIONS FOR Lightweight materials for transportation Production cycle time acceleration Total cost reduction UNDERPINNED BY Reduction of fuel consumption Decreasing CO 2 emissions Increasing driving autonomy Supported by regulatory framework for cleaner vehicles (aeronautics in discussion) 14 FY 2015 results 25/02/2016
PILOTING TOWARDS SUSTAINABLE MOBILITY Fundamental Value of Composites Lightweighting Aerodynamics Fatigue life Corrosion resistance Lean manufacturing lower part cost Increased passenger comfort Life-of-program maintenance costs SOLVAY ENABLING SOLUTIONS 15
DRIVING SUSTAINABLE MOBILITY ON THE ROAD New Industry Paradigm: Sustainability Shared Mobility Connectivity Regulations driving CO 2 emissions reductions Car sharing services and self-driving cars Safety: Zero casualties SOLVAY ENABLING SOLUTIONS Lightweighting Powertrain Efficiency Electrification 16
DRIVING SUSTAINABLE MOBILITY BEYOND TODAY MORE value creation 777 and A320 Empennage Boeing 787 Airbus A350 New Single Aisle Aircraft Serial Auto Entry into transport Military aircraft Start of some civil aircraft Current applications Adoption on wing/fuselage Cost advantage with scale and vertical integration Innovations under development Industrial scale and economics Value creation 1970 2000-2020 2020+ ARTISANAL INDUSTRIALIZATION 34
MORE SUSTAINABLE SOLUTIONS TO DRIVE SUPERIOR RETURNS OVER TIME SUSTAINABLE PORTFOLIO MANAGEMENT (in % of net sales) 2010 2016 2025 KEY LEVERS Low Environmental footprint of production & supply chain High Low 19% 64% 17% Market sustainability High 43% 50% Sustainable solutions Neutral impact Challenged applications Portfolio Capex R&I priorities KEY IMPACTS Part of the solution Enhanced profitability 18
NO SUSTAINABILITY WITHOUT SHAREHOLDER REWARD Gross dividend [1] in /share DELIVERY ON COMMITMENTS over 30 years 4 3 >5% CAGR 2 1 0 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Committed to stable / growing dividend 19 [1] Adjusted for bonus factor from capital increase end 2015
SOLVAY ENABLING TOMORROW MORE DARING CLEANER FUTURE