Opening New Frontiers

Transcription

1 Opening New Frontiers Roadshow presentation 2Q11 results 1

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3 AGENDA Solvay, an industrial group active in Chemistry Friendly offer on Rhodia 2Q11 results 3

4 SOLVAY GROUP SOLVAY at a glance SOLVAY AN INDUSTRIAL GROUP ACTIVE IN CHEMISTRY Clear leadership positions Diversified customer base Significant Asian & Latin American exposure Competitiveness Conservative financial structure Strong product innovation Towards sustainability 4

5 SOLVAY GROUP Clear leadership positions EUROPE WORLD Specialty Polymers Fluorinated polymers High performance engineering polymers Special Chemicals Niche player Niche player Essential Chemicals Soda ash Hydrogen peroxide Vinyls 2 3 5

6 SOLVAY GROUP Broadest portfolio of high and ultra high performance polymers PVDC PPA PARA PPS LCP PSU PESU PPSU PEEK PAI PI SRP/ HPS PEI PTFE PVDF FEP MFA PFA FKM/ FFKM PFPE ECTFE Solvay Arkema BASF Daikin DuPont Dyneon EMS Evonik Kuraray MEP SABIC Ticona Victrex 6

7 SOLVAY GROUP Leadership positions SODA ASH Nameplate capacities as of 1 Jan 2011 in million tons SHANDONG HAIHUA ORIENTAL CHEMICAL HYDROGEN PEROXIDE Nameplate capacities as of 1 Jan 2011 in thousand tons EKA FMC FMC TATA CHEMICALS +40% ARKEMA EVONIK +60% SOLVAY SOLVAY EUROPE + CIS NAFTA AFRICA ASIA-PACIFIC EUROPE NAFTA Latin America ASIA-PACIFIC AFRICA PVC Nameplate capacities as of 1 Jan 2011 in million tons CAUSTIC SODA Nameplate capacities as of 1 Jan 2011 in million tons INEOS VINYLS OXIVINYLS SOLVAY FORMOSA PLASTICS SHINETSU INEOS VINYLS OXIVINYLS SOLVAY FORMOSA PLASTICS SHINETSU EUROPE NAFTA Latin America ASIA-PACIFIC EUROPE NAFTA Latin America ASIA-PACIFIC AFRICA Source: Solvay, calculations based on information publicly available in external publications, in particular IMS, Harriman Chemsult, CMAI, SRI 7

8 SOLVAY GROUP Diversified customer base in % of 2010 sales (continuing operations, excluding Inergy Automotive Systems (= EUR 6.5 bn)) Contruction and architecture Chemical industry Paper & packaging Water and Environment Electrecity and Electronics Glass industry Detergents, cleaning and Hygiene products Consumer goods Automotive industry 13% 9% 7% 7% 6% 5% 4% 4% 23% of Group sales Vinyls, Specialty Polymers, Fluor of Group sales Electrochemistry, Soda Ash, Fluor of Group sales Vinyls, Hydrogen peroxide, Specialty Polymers of Group sales Pipelife, Soda ash, Specialty Polymers of Group sales Specialty Polymers, Vinyls of Group sales Soda ash of Group sales Soda Ash, Hydrogen peroxide, Electrochemistry of Group sales Vinyls, Specialty Polymers of Group sales Specialty Polymers 8

9 SOLVAY GROUP Worldwide diversified activities 2010 SALES BREAKDOWN BY REGION 59% 16% 14% 11% 2010 FIXED ASSETS BREAKDOWN BY REGION 55% 22% 11% 11% 9

10 SOLVAY GROUP Developments in emerging countries RUSSIA & EASTERN EUROPE RusVinyl ASIA Construction of a new production unit of vinyls (2013) China Construction of H 2 O 2 plant with Huatai Group (2011) RUSSIA & EASTERN EUROPE ASIA Construction of two Specialty Polymers plants (1H12 and 1H14) Project to construct Epicerol plant (2013) Agreement with Tianjin Soda Ash Plant to acquire 30% participation in a soda ash plant Thailand Construction of HPPO plant with Dow Chemicals (3Q11) Construction of Epicerol plant (2012) 10

11 SOLVAY GROUP Vertical integration in main raw materials PRODUCT HYDROGEN (H 2 O 2 ) 60 % coverage of our needs FLUORSPAR (FLUORINATED PROD.) 75% coverage of our needs SALT (PVC / NAOH / SODA ASH) 100% coverage of our needs (1) LIMESTONE / TRONA (SODA ASH) 100% coverage of our needs (1) this doesn t exclude opportunistic purchases 11

12 SOLVAY GROUP From raw materials to finished products LIMESTONE TRONA Soda ash Sodium bicarbonate Ethylene (partly integrated) SALT BRINE Caustic soda Chlorine Chlorinated derivatives : organic (epichlorhydrin) inorganic VCM PVC VDC PVDC Hydrogen peroxide Peracetic acid Persalts FLUOR SPAR Hydrogen peroxide Inorganic fluorides HFC Brazing, electronic,... Refrigerants, foam blowing agents,... PVDF PTFE PFA/MFA ECTFE FKM FFKM PFPE 12

13 SOLVAY GROUP Competitiveness example of PVC SOLVAY S CAPACITY PER SITE WELL ABOVE THE AVERAGE (1) Average capacity per site in 2010 in W.Europe +51% Average capacity per site in 2010 in SE Asia +107% SolVin Others Vinythai Others SIGNIFICANTLY LOWER FIXED COSTS Fixed cost/t of capacity of VCM/PVC evolution SolVin Indupa Vinythai (1) SOURCE: CMAI 13

14 SOLVAY GROUP Conservative financial structure NET CASH SURPLUS OF EUR 2.6BN AT THE END OF 2Q11 Gross financial debt: EUR 2.8bn Cash and cash equivalents: EUR 5.3bn NO SIGNIFICANT DEBT MATURITY DATES BEFORE 2014 (end of June 11) EMTN bonds Hybrid bonds Retails bonds Total gross debt 2.8 SOLVAY S FINANCIAL STRUCTURE AFTER RHODIA S ACQUISITION Should continue to be conservative Net financial debt of the combined entity 1 : EUR 1.9bn ~1x combined Net Debt / REBITDA End of 2010 pro forma figure 14

15 SOLVAY GROUP Shareholding structure and Board composition Total issued capital 84,701,133 shares Solvac (Founding families holding company listed on NYSE Euronext) : 30% Solvac (to cover share option program) : 3% Solvac (treasury share: 880,766 shares as of 28 July 2011) : 1% 16 Board Members Nationalities : 8 Belgian, 1 Dutch, 3 French, 1 German, 1 Spanish, 1 CH Executives : 2 (CEO & CFO), Chairman is previous CEO Independent Directors : 9 Some Directors are members of the founding families 15

16 NEW BUSINESS DEVELOPMENT Innovation in new and promising areas Organic Electronics Organic Light Emitting Diodes Organic Field Effect Transistors Organic Memories Nanotechnologies Electronics and IT Manufacturing and Materials Healthcare and life sciences Sustainable Energies Fuel cells Organic Photovoltaics (OPV) Hydrogen Storage New Batteries Renewable Based Materials and White Biotechnologies Renewable raw materials Process improvement using biotech New products 16

17 SOLVAY GROUP Towards sustainability Solvay is aiming to radically transform itself to bring more value to its customers, while reducing both its and their energy and environmental impact STRATEGIC MANAGEMENT REVIEW 2008 focused on Sustainable Development and our long-term vision SUSTAINABILITY REPORT with quantified targets PERFORMANCE INDICATORS 2010 quantified follow-up 17

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19 AGENDA Solvay, an industrial group active in Chemistry Friendly offer on Rhodia 2Q11 results 19

20 SOLVAY-RHODIA Offer Highlights Rhodia s board unanimously supports the offer Cash Offer of EUR 31.6 per share of Rhodia 1 50% premium to pre-announcement closing price 44% premium to last 3 months average price Offer for equity linked OCEANE bonds Enterprise Value: EUR 6.6 bn Represents EV / REBITDA 2010 multiple of 7.3x 2 1 Ex-dividend of 0.5 EUR per share 2 VE / REBIDA 2010 = 8.5x Excluding CERs 20

21 SOLVAY-RHODIA Strategic rationale for the acquisition New growth and enlarged portfolio Increases scale with global leadership, 90% revenues made in segments with # 1, 2 or 3 positions Gears towards high growth markets and emerging regions Better balanced end markets and product complementarities Business and cultural fit Performance driven cultures with decentralized structures Core capabilities sharing Commitment to innovation with focus on sustainable development VALUE CREATION Enhanced financial profile REBITDA x 2 Cost synergies of EUR 250m over 3 years 21

22 SOLVAY-RHODIA Create a major global chemical player 1 From continuing operations SALES 2010, EUR bn REBITDA 2010, EUR bn Operating Cash Flow 2010, EUR bn 12,0 1,9 1,2 6,8 (1) 1,0 (1) 0,7 (1) Solvay Solvay & Rhodia Solvay Solvay & Rhodia Solvay Solvay & Rhodia 22

23 SOLVAY-RHODIA Strong leadership positions DIVERSIFIED PORTFOLIO WITH STRONG LEADING POSITIONS Segment Global market position Description Specialty Polymers #1 High-Performance Engineering Polymers, Fluorinated Polymers Polyamide Materials #2 PA 6.6 polymers, Intermediates & engineering plastics Consumer Chemicals #1 Specialty Surfactants, Phosphorus Chemistry, Diphenols for vanillin Advanced Materials #1 High-Performance Silicas, Rare Earths Systems Oxygen #1 Hydrogen Peroxide Minerals #1 Soda Ash, Sodium Bicarbonate #1, 2 global positions > 60 % of combined sales #1, 2, 3 global positions > 90% of combined sales 23

24 SOLVAY-RHODIA Strong footprint in developing regions 40% OF SALES FROM EMERGING MARKETS 1 Includes net sales and other revenues 2 Includes Eastern Europe NORTH AMERICA 17% WESTERN EUROPE 43% ASIA / PACIFIC REST OF THE WORLD (2) 25% LATIN AMERICA (1) 14% Solvay regional sales split Rhodia regional sales split % Sales combined Pro forma 24

25 SOLVAY-RHODIA Diversified end-markets portfolio Proforma 2010 Consumer goods Construction Automotive Energy, Water & Environment Electronics SOLVAY 4% 22% 9% 7% 7% RHODIA <40% >5% >20% 10% >5% COMBINED 19% 15% 14% 8% 6% 25

26 SOLVAY-RHODIA Innovation and technology focus to develop sustainable solutions for the future Solvay Developing low-carbon business opportunities: Specialty Polymers (e.g., light-weight and bio-based engineering polymers) EPICEROL to produce epichlorohydrin Innovation strongly focused on sustainability Fuel cell technology New generation of batteries Hydrogen storage Organic photovoltaic cells Rhodia Focus on sustainable products Advanced Materials (e.g. energy-saving light bulbs) Polyamide (e.g., light-weight plastics for automotive industry) Consumer Chemicals Energy Services (e.g. Carbon emission trading) Innovation aiming to further develop sustainability solutions (~90% of innovation) Recycling Recycling 26

27 SOLVAY-RHODIA Targeted synergies Cost synergies: EUR 250 m Targeted synergies: Based on good practices for business combinations 2/3 external 1/3 internal (mainly G&A) Achieved within 3 years Represents 2.1% of combined sales Represents 4.8% of Rhodia s sales (versus 4 to 9% cost synergies benchmark) Revenue synergies Driven by: Enlargement and globalization of customer base Benefiting across products from emerging markets platform 27

28 SOLVAY-RHODIA A solid financial performance to start from A EUR 12bn Chemicals Group REBITDA and REBIT x 2 Maintained conservative financial leverage (~1x combined Net Debt / REBITDA 2010) 2010 (EUR m) Solvay (1) + Rhodia = Combined Sales 6,796 5,226 12,022 REBITDA 1, ,924 REBITDA margin 15.0% 17.3% 16.0% REBIT ,204 REBIT margin 8.9% 11.5% 10.0% Operating Cash Flow ,165 Net Financial Debt (2.9) bn 1.2 bn 1.9 bn (2) Employees 16,800 14,100 30,900 (1) From continuing operations (2) Including 2010 dividend, transaction cost and fair value of debt 28

29 AGENDA Solvay, an industrial group active in Chemistry Friendly offer on Rhodia 2Q11 results 29

30 SOLVAY GROUP New organisation to foster sustainable growth Plastics Specialty Polymers : Global Business Unit Solvay's fluorinated polymers and high performance engineering polymers are used in a wide array of applications and markets, such as Electricity and Electronics, Water and Environment, Automotive and Consumer Goods Chemicals Special Chemicals : Global Business Unit Solvay's Special Chemicals such as high-purety fluorine, fluorinated gases, Barium, Strontium and wet chemicals are among others used for applications in Energy, Electronics, Agrochemicals, food & Feed, Healthcare & Performance Materials Vinyls : Regional Business Units Solvay's Vinyls are mainly used for Construction and Architecture, Water and Environment, Packaging and Consumer Goods Essential Chemicals : Regional Business Units Solvay's Essential Chemicals such as soda ash, bicarbonate, caustic soda and hydrogen peroxide are widely used in the Chemical and Glass industry and for applications in the fields of Water and Environment, Detergents, Cleaning and Hygiene products and Paper 30

31 SOLVAY GROUP Successful pricing power on strong demand SALES IN EURm 2Q11 1H Scope & Forex % 4% Price Volume Scope & Forex -37 7% Volume % Price Q10 2Q11 1H10 1H11 31

32 SOLVAY GROUP Excellent profitability REBITDA UP TO EUR 304m REBITDA MARGIN: Up to 18% in EURm % 17% 18% Q10 1Q11 2Q11 1H10 1Q11 2Q11 Chemicals Plastics CBS/NBD Group margin 32

33 2Q11 PLASTICS RESULTS REBITDA: EUR 197m, up by 22% REBITDA (EURm) and margins (%) REBITDA (EURm) and margins (%) Specialty Polymers 82 27% 10% 98 30% 15% Vinyls 65 11% 10% 99 15% 15% 2Q10 2Q11 2Q10 2Q11 RECORD REBITDA MARGIN Continued buoyant demand Increased margins thanks to better product mix, higher sales prices and operating excellence supporting high R&D pipeline REBITDA SHARPLY UP IN THE THREE REGIONS Favorable business dynamics: sustained demand in Asia, South America and recovering demand in Northern Europe Increased margins on ethylene and caustic soda 33

34 2Q11 CHEMICALS RESULTS REBITDA: EUR 127m, up by 6% REBITDA (EURm) and margins (%) REBITDA (EURm) and margins (%) Special Chemicals Essentials Chemicals % 16% 10% 16% 24 19% 18% 10% 15% 2Q10 2Q11 2Q10 2Q11 EXCELLENT REBITDA PERFORMANCE Excellent performance of fluorinated chemicals : higher volumes and sales prices compensate for increased costs Profitability of Molecular Solutions under review CONFIRMED RESILIENCE ACROSS CYCLES Strong demand; volumes up by 6%, mainly in soda ash with increased commercial presence in South America & Asia Successful pricing power: 10% higher sales prices compensating for rising energy costs 34

35 SOLVAY GROUP 26% of sales in emerging regions Group s sales breakdown by region 1H11 S.America EMEA: 60% North America: 14% ASIA South America: 11% EMEA Asia: 15% N.America 35

36 SOLVAY GROUP Net energy expenses Net energy expenses in % of sales 11.2% 12.7% 13.5% Initiatives in energy management Exeltium in France OPERATING Refuse Derived Fuel cogeneration plant at Bernburg OPERATING Conversion to membrane electrolysis Tavaux & Lillo

37 SOLVAY GROUP Other elements of the income statement In EURm 1H11 1H10 REBIT Non recurring items Financial charges Tax charges Result from continuing operations Result from discontinued operations Non-controlling interests Net income Solvay share

38 SOLVAY GROUP Cash management Strict industrial working capital management June 2011 vs June 2010 Industrial working capital +10% Sales +17% CAPEX focused on a limited number of strategic projects CAPEX in EURm 2009 BDG BDG 2011* 2009 BDG 2010 BDG2011* * calculated using equity method for Joint ventures Spent CAPEX (1H11) 38

39 PLASTICS Strategic developments PVC plant in Russia (2013) New Specialty Polymers plants in China (1H12 & 1H14) Specialty Polymers capacity extensions in Europe (2012) Electrolysis conversion membrane in Belgium (2012) 39

40 PLASTICS RusVinyl Financing Agreement signed in St Petersburg on June 17, 2011 State-of-the-art Vinyls plant in Russia Commissioning 2013 BUENOS AIRES 50/50 JV SolVin SIBUR Total investment: EUR 1.5 billion Debt financing: EUR 750m Sberbank of Russia (EUR 150m) EBRD (EUR 150m) BNP Paribas, ING Bank and HSBC (EUR 450m) Solvay investment share: EUR ~ 250m EBRD equity share: EUR 52m PVC Production capacity (kt/y) Average PVC plant in Russia 135 RusVinyl

41 CHEMICALS Strategic developments HPPO plant in Thailand (2H11) 30% share in a soda ash plant in China (2011) EPICEROL plant in Thailand (2012) Electrolysis conversion membrane in France (2012) 41

42 CHEMICALS New HPPO plant in Saudi Arabia Intention to form 50/50 JV with Sadara (50/50 Aramco and Dow) Hydrogen Peroxide for PO plant in Saudi Arabia BUENOS AIRES 3 rd megaplant and 3 rd region Commissioning 2H15 HPPO production capacity of Solvay will represent over 50% of its total H 2 O 2 capacity Current H 2 O 2 capacity H 2 O 2 capacity as from 2H15 HPPO: 45% HPPO: > 50% 1.2 million tons/year ~ 1.5 million tons/year

43 NEW BUSINESS DEVELOPMENT R&D and venture capital R&D commitment budgeted in 2011 EUR 145m R&D in the new business development EUR 35m Focus of New Business Development: Printable Organic Electronics Financing EUR 10m Plextronics polymer-based materials and technologies for printed electronics: such as OLED displays and lighting and organic photovoltaic cells (OPV) New and Renewable Energies Nanotechnologies Renewable Chemistry: renewable based materials & white biotechnologies Number of first new patent filings 1H11 vs 1H10 54 vs 34 43

44 SOLVAY GROUP Performance summary - HY 2011 STRONG SALES DEVELOPMENT SALES 3 388m EXCELLENT REBITDA PROFITABILITY 589m +17% +26% NET INCOME SHARPLY UP RESULT CONT. OP.* 274m SOUND CASH GENERATION OPERATING CASH FLOW 103m *From continuing operations 44

45 RHODIA Friendly cash offer for Rhodia CREATING A MAJOR GLOBAL CHEMICAL PLAYER Increases scale with global leadership 90% revenues made in segments with # 1, 2 or 3 positions Geared towards high growth markets and emerging regions Better balanced end markets and product complementarities Innovation and technology focus 45

46 RHODIA Indicative offer calendar Acquisition offer announced & filing Regulators approvals Closing & Settlement 2011 April May June July August September 04/04 Announcement of the offer 15/06 30/06 05/08 Opening of the offer Notification to the European Commission European Commission expected approval date 46

47 SOLVAY GROUP Outlook 2011 The Solvay Group is attentive to the macro-economic developments and the evolution of energy and ethylene costs. In the context of the current business climate and based on its strategy of sustainable and profitable growth, Solvay expects to improve its annual operating result, both in Chemicals and Plastics activities in Press release of July 28,

48 This presentation contains certain statements that may be deemed forward-looking statements. All statements (other than statements of historical fact) that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by Solvay s and/or Rhodia's management in light of its experience and its perception of historical trends, current economic and industry conditions, expected future developments and other factors they believe to be appropriate. The forward-looking statements included in this presentation are also subject to a number of risks and uncertainties resulting from numerous factors, including economical, political and technological factors that may affect the operations of Solvay and Rhodia, their markets, products, services and prices. Such forward-looking statements are not guarantees of future performance, and actual results and developments may differ from those envisaged by such forward-looking statements. This presentation does not constitute and cannot be construed as an Offer or invitation to purchase any securities of Rhodia by Solvay. The Offer when made will be made solely by means of the Offer document setting out the terms and conditions of the Offer. In accordance with French law, the Offer documents setting out the terms and conditions of the Offer will be subject to review by the French market authority (AMF). Shareholders and other investors are invited to read carefully all documents relating to the Offer prior to making any decision with respect to the Offer. 4848