developing a model of sustainable chemistry · 18/09/2014 developing a model of sustainable...

Developing a model of

Sustainable Chemistry

Michel Washer Deputy Chief Sustainability Officer

18/09/2014

Developing a model of Sustainable Chemistry 2

Our strengths

in the world

of chemistry

Health and

well-being

18/09/2014

Developing a model of Sustainable Chemistry

Expanding middle class

Resource

scarcity

Climate

change

CAGR 2013 - 2030

Demand

from Asia

Source: BCG

> 50%

in 2013

in 2030

> 60%

+4% in 2013

Global

chemical

demand

€ 3 trillion

3

Global chemical demand growth driven by

Asia and megatrends …

INVESTMENTS RATIONALIZATION INVESTMENTS

18/09/2014


* Germany Source: ACC April 2014, IMF April 2014

Gas price

in 2013 in US$/million

BTU

GDP CAGR

2013 - 2017

United States

3.7

2.9%

+40%

Europe

11.1*

1.4%

+2%

China

9.7

7.1%

+48% Chemical industry

output over 2012 - 2020

4

… in a contrasted macro-economic environment

18/09/2014


* Figures represent % of 2013 net sales (pro-forma Chemlogics)

25%

North America

11%

Latin America

33%

Europe

31%

Asia- Pacific & ROW

Diversified end-markets*

Balanced geographic exposure*

19% Industrial Applications

Automotive & Aeronautics

17%

25% Consumer Goods & Healthcare

12% Food, Agro & Feed Solutions

11% Energy & Environment

10% Building & Construction

6% Electrical & Electronics

5

Solvay well positioned on

growing markets

18/09/2014


Advanced Formulations

Performance Chemicals

Advanced Materials

Functional Polymers

6

90% of our sales from businesses where

Solvay ranks among the top 3 players

18/09/2014


A responsible value creating transformation

18/09/2014


€ 9,938 m net sales*

29,400 employees**

117 sites

56 countries

15 R&I centers

2013 data

* Before restatement resulting from the application of IFRS 11 adopted by the Group since January 1st, 2014

** Number of employees in full-time equivalent and including employees working for discontinued activities

Building a strong leader

contributing to the reshaping

of the global chemical industry.

Asserting ourselves as a model of

sustainable chemistry attracting

and developing talented people

who conceive, design and produce

solutions that address society’s

major challenges.

8

Building a new

model of Sustainable Chemistry

18/09/2014


9

Boosting our

Performance levers

18/09/2014


10

Creating

Responsible value

Chemlogics

GROW

REDUCE

OUR EXPOSURE

IMPROVE

OUR COMPETITIVENESS

Solvay’s position

in the global chemical market

Indupa

Chlor

Chemicals

PVC

18/09/2014


Solvay businesses

Evolution of the Group’s

average position

Value-creation potential

of market segments

11

Enhancing our

Business profile

> Large-scale alkoxylation plant in Texas, USA

> Large-scale alkoxylation plant in Singapore

> Specialty Surfactants plant in Germany

> Vanillin plant in China

18/09/2014


> Bicarbonate plant in Thailand

100 ktonnes/year

> Fluoro-polymers JV with 3F

> HDS plant in Poland

85 ktonnes/year

> Fluoro-polymers plant in China

> HPPO plant in Saudi Arabia

300 ktonnes/year

2014

2015 Expected

commissioning

Expected

commissioning

> PVC plant in Russia (in JV with Sibur)

330 ktonnes/year

Novecare

Specialty

Polymers

Silica

Aroma

Performance

Specialty

Polymers

Peroxide

Soda Ash &

Derivatives

Rusvinyl*

* Reported as equity investment

Novecare

12

Growing by developing our production facilities

18/09/2014


1,960 R&I staff

€ 280 m R&I efforts

15

R&I centers

252 patents filed

in 2013

22% New sales

ratio

Advanced

materials

Sustainable

energy

Organic

electronics

Eco-

processes

Renewable

chemistry

Advanced

formulations MEGATRENDS

2013 figures - R&I : Research & Innovation

6 major innovation fields allowing Solvay to meet the challenges of the next 20 years

13

Innovating to create

more sustainable solutions

18/09/2014


Commercial excellence*

+ € 670 m

Overall

Positive impacts of excellence programs on REBITDA (vs YE 2013)

+ € 300 m

Operational excellence

Innovation

+ € 250 m + € 120 m

by 2016

14

* Including Overall Equipment Efficiency

Striving for excellence across all areas

18/09/2014


Our financial and non-financial results

Adjusted, Group share

18/09/2014


(5)% yoy

(12)% yoy

€ 9.9 bn € 1,663 m

€ 487m € 378 m

Net Sales

REBITDA*

Free Cash Flow

Net Income

16

FY and H1 2014 results:

Delivering on a strategy

Adjusted, Group share

+2% yoy

+11% yoy

€ 5.2 bn € 953 m

€ (8) m € (186) m

Net Sales*

REBITDA

Free Cash Flow

Net Income

Delivery in a

Challenging economic

environment

FY 2013

Delivering on a Strategy

with strong set of results

H1 2014

Net Sales

* Before restatement resulting from the application of IFRS 11 adopted by the Group since January 1st, 2014

18/09/2014

Developing a model of Sustainable

Chemistry

Accidents involving persons at Group sites(1)

Accidents per million working hours.

Greenhouse gas emissions(2)

MtCO2 equivalent

2.92

1.06

2.59

20

13

20

12

20

11

MTAR : Medical Treatment

Accident Rate

Number of work accidents

leading to medical treatment

other than first aid

13.5

20

13

20

12

14.9

20

11

15.1

20

13

168

20

12

222

20

11

227

Energy consumption(2)

Petajoules(3)

(1) These data include the Chlorovinyls activities, which are planned to be contributed

to a joint venture with Ineos

(2) Historical financial perimeter. 2013 data don’t include the Chlorovinyls activities

(3) Unit of measurement of energy equal to 1015 joules

See 2013 Sustainable Developement Report for further information:

http://www.solvay.com/en/media/publications/index.html

17

Social and environmental results

18/09/2014


Poised

for growth

On track towards

2016 targets Stronger

18

Confident in our ability to build

a new model of Sustainable Chemistry

18/09/2014


A highly

demanding genuine

ESG commitment

Our sustainable vision

Climate change, increasing global population,

scarcity of raw materials, geopolitical

environment changes, development gaps,

biodiversity

Legal and regulatory framework, public

opinion

Chemistry is a major source of solutions

Sustainable Development policy

and 2020 targets

Anual Solvay Way self assessment

Portfolio management tools

Link to variable compensation of

ExCo and managers

(~7,500 people)

IndustriAll global agreement on

responsibility

18/09/2014


Global issues

Rising expectations

Business opportunities

18/09/2014


Achieving excellence in

safety, health and

occupational hygiene for

everyone on our sites

Realizing an increasing

share of our sales avec

With solutions that meet

the requirements of

sustainable development

Continuously improving

the performance of our

technologies, processes

and products throughout

their lifecycles

Reducing greenhouse gas

emissions, energy and

water consumption, and

the use of resources

Developing a wide-

ranging and balanced

social dialogue with

employee representatives

1

3

2

4

5

21

Our

sustainable

actions

18/09/2014


Energy &

climate*

Water* Emissions &

effluents*

People safety Sustainable

Portfolio

Management

(SPM)

Learning &

development

10% 10%

25%

1.0 20% 1 reduction in

greenhouse gas

emissions and primary

energy consumption

reduction in the

withdrawal of

groundwater and

drinking water

reduction in air

emissions of

substances with

acidification potential of our turnover in

the “Star” category

according to the SPM

assessment

Ensuring

10%

Implementing

Sustainable Water

Management at

week of training per

employee and per year

100%

Training

of our employees to

the Solvay Way

reference framework

100% of our sites under

water stress

10% reduction in air

emissions of

substances with a

photochemical oxidant

formation

20% reduction in water

emissions with

eutrophication

potential

Reaching a number of

a work accident with

medical treatment per

million hours lower

than

Process safety

100%

Having

of our production sites

with risk analysis

updated in the last five

years

100% of our R&I projects in

the “Star” or “Aligned”

category according to

the SPM assessment

* Base 2012, at constant activity perimeter.

At constant activity perimeter means that the absolute performance is corrected for changes in production volumes and for sites entering or leaving the Group perimeter.

Our sustainability targets

Regularly audited

(internally & externally)

Self-assessment

which allows each

entity to identify areas of im-

provement and to implement action plans

18/09/2014


Our way

The CSR

management tool

18/09/2014


Our 23 commitments toward our stakeholders

Global

Corporate Social Responsibility

agreement between

&

A global CSR agreement

Our agreement with IndustriALL is

the expression of the Group’s willingness to

respect fundamental social rights around the

world and

the Group’s standards for rich and balanced

social dialogue

Main chapters

ILO (International Labor Organization)

conventions

UN Global Compact

Commitments specific to Solvay on Safety,

Environment, and Social Dialogue

Global Safety Panel

Annual reviews are organized to monitor the

correct application of this agreement, based

on indicators

18/09/2014


Signed December 17, 2013, by Jyrki Raina (General Secretary of IndustriALL)

and Jean-Pierre Clamadieu (CEO of Solvay)

IndustriALL is a global union representing 50 million workers

in 140 countries in the mining, energy and manufacturing sectors

to cover 80%

of our portfolio

by YE 2014

• Questionnaire (yes/no, why, external

authoritative evidence to support the

claim)

• Neither propaganda nor green

washing

• Factual (listed on CMR product or

not)

• Not only from authorities (eco-

labeling system, consumers/

customers, …)

Market Alignment

Our unmatched

Sustainable Portfolio Management

Obstructed Exposed Neutral Aligned Star

18/09/2014


• Produce Ecoprofile

• Cradle to gate,

following

guidelines from

EcoInvent

• Shadow costs

• Monetize it

• Pull it back on the

average 5 year

sales price

Op

era

tio

ns

V

uln

era

bil

ity

0%

100%

50%

OBSTACLES CONCERNS BENEFITS

GROWTH RATE

> 10% pa no no

no no yes yes

yes yes

• Business

• Capital Expenditure

project

• Research & Innovation

project

9%

20%

18/09/2014


Examples of product - application combinations

Obstructed Exposed Neutral Aligned Star

20%

40%

60%

80%

100%

11% 41% 27% 12%

2020 target:

Operations vulnerability

Market alignment

27

2013

results

based on 64% of

2012 net sales

Renewable-based chemical

used in the manufacturing of

cigarette tows

Non-hazardous chemical

used for bleaching

magazine paper

Hazardous and very active

chemical (full reaction) used

in epoxy resins for windmill

blades; double-digit growth

Non-hazardous chemical

used in flame-retardant

coating for textiles

Bio-based chemical used in

hair care,

with strong market pull

for bio-based ingredients

Bio-based chemical used in

DIY decorative paint,

with no market pull for

bio-based ingredients

Non-biodegradable chemical

used in automatic

dishwasher tablets

Non-hazardous chemical for

water pipes enabling signifi-

cant reduction of leakages,

growing at GDP rate

Inert chemical used in the

rolling band of tires with EU

Ecolabel for fuel efficiency in

A or B category




C or D category

Building block for agro-

chemicals

Inert chemical acting as

abrasive in toothpaste

Inert chemical acting as filler

for sport shoe sole




F or G category

18/09/2014


10% of the annual variable bonus of 7,500 managers (including senior management) relates to CSR criteria

2013 sustainability objectives

Deployment of the Solvay Way

100% of site realized self-assesment

Entering into at least 2 sustainability indices

per GBU, Function and Corporate

Fatal accident leads to 0 score overall

for GBU 2 GBUs obtained 0 score

Accomplished in full Group

Accomplished in full Group

Walking the sustainable talk

Benelux

18/09/2014


Inventing a new model of

sustainable chemistry

18/09/2014

Annexes


30

Corporate Governance

18/09/2014


Committee Executive

Karim Hajjar Chief Financial Officer

Jacques

van Rijckevorsel

Vincent

De Cuyper

Roger Kearns Pascal Juéry

Each Executive

Committee member

supervises GBUs,

Functions and/or

Zones

Jean-Pierre

Clamadieu Chairman of the Executive Committee

and CEO

32

2009 Belgian Corporate Governance Code adopted for Governance matters

Solvay Code of Conduct applying to every employee and listing the guidelines that serve

as the framework for the Group’s decisions and operations

Audit Committee - Ensures conformity of Financial Statements and Communication,

monitors effectiveness of internal control systems, risk management & examines External

audit implementation

Finance Committee - Advices on financial matters such as dividend, indebtness, foreign

currency and energy exposure coverage, investments …

Compensation Committee – Compensation policy for BoD and ExCo

Nomination Committee - Appointments to the Board of Directors, to the ExCo and to

General Management positions

Separation of powers : Chairman of BoD and Chairman of ExCo

Independence (criteria based on Belgian law): 9 out of 15 members

Diversity: 4 women out of 15 members

Very high level of attendance; Evaluation on a pluri-annual basis

Evaluation of BoD and Committees every 3 years

Corporate Governance

References codes and values: the Group firmly believes in ethical behavior,

respect for people, customer care, empowerment and teamwork

Board of Directors: 15 members; represents the highest

management body of the Group

Committees of BoD: Specialized advisory Committees that report to

the BoD that takes decisions

18/09/2014


New compensation policy as from 2013, harmonized across the Group, aligned

with market practices, and comprising Fixed and Variable components (STI/LTI),

and other benefits (pension, death-in-service, disability, allowances)

Link between variable compensation and business performance

Short term incentive plan (STI): 50% (GM) to 60% (ExCo) of fixed component

60% linked to Group performance

30% to individual performance

(predetermined objectives approved by BoD or by ExCo)

10% related to Group Sustainable development indicators

Long Term incentive plan (LTI)

Stock price based

50% linked to pre-set Group performance targets over 3 years timeframe

(REBITDA and CFROI)

CEO Compensation: STI up to 150% of fixed component, LTI capped

Compensation policy

Board of Directors

Fixed emoluments only, set by the Shareholders Meeting

Executive Committee & General Managers

Compensation policy decided by BoD

18/09/2014


Solvay Way Network

The Solvay Way network

Sustainable Development Department (6)

19 Business Units

Champions

Operational

3 Zones

Champions

Cultural knowledge

9 Functions

Champions

Expert

Network of correspondents

based at production sites,

R&D centers, business

units, supplier function,

product-stewardship

function


based per zones

or

per expertise in

the Function


based at production sites,

R&D centers, business

units, supplier function,

product-stewardship

function

18/09/2014


Solvay Operating

Business Segments

18/09/2014


activities Our

Soda Ash & Derivatives

Peroxide

Acetow

Eco-Services

Emerging Biochemicals


Polyamide & Intermediates

Engineering Plastics

Fibras

Functional

Polymers

Novecare

Coatis

Aroma Performance

Advanced

Formulations

Specialty Polymers

Silica

Rare Earth Systems

Special Chemicals

Advanced

Materials

Corporate

& Business

Services Energy Services

Business Services

38

18/09/2014



Growth engine for the Group, this Segment offers the

innovative offering aligned with major societal trends:

population growth, new consumption patterns, etc.


€ 2,432 Net sales

€ 369 REBITDA

NOVECARE

COATIS

AROMA PERFORMANCE

million

million

2013 figures

39

18/09/2014



• The world’s leading

producer of specialty

surfactants; major player in

the polymers, guar and

phosphorus derivatives

markets

• Main markets:

Formulations entering in

mining and oil extraction,

plant protection,

shampoos, detergents,

paints and lubricants.

• World’s number one

producer of diphenols and

fluoroaliphatic derivatives


producer of triflic acid, and of

lithium salt for agro-

pharmaceutical, electronics,

and batteries markets

• Main markets: food and

perfumery, pharmaceutical,

agrochemical, electronics,

petrochemicals, energy

storage

• First Latin American

producer of phenol and

derivatives; leader in

oxygenated solvents

• Main markets: Phenols and

derivatives used in

production of synthetic

resins (foundries,

construction, abrasives).

Oxygenated solvents used

in automotive, adhesives,

inks, industrial coatings,...

NOVECARE COATIS AROMA PERFORMANCE

40

18/09/2014


Advanced Materials

Another growth engine and a leader on markets with high

entry barriers, the cutting-edge activities of this Segment

generate high returns on investment.

Advanced Materials

€ 2,551 Net sales

€ 646 REBITDA

SPECIALTY

POLYMERS SILICA

RARE EARTH SYSTEMS

SPECIAL CHEMICALS

million

million

2013 figures

41

18/09/2014


Advanced Materials


producer of specialty and

high-performance polymers

• Main markets: energy,

medical applications,

water, advanced

transportation and

communication devices

• World leader in applications

for energy-saving tires and

inventor of highly dispersible

silica

• Main market/products: fuel-

saving tires (Zeosil®),

industrial applications,

personal care (Tixosil®),

nutrition products, food and

animal nutrition

SILICA SPECIALTY POLYMERS

42

18/09/2014


Advanced Materials

• A World leader in fluor,

strontium and barium-

based specialties

• Main markets: energy

conservation and storage,

semiconductors,

electronics, automotive,

food processing, health

and high-performance

materials

SPECIAL CHEMICALS


supplier of specialty rare

earth formulations, with a

global market share of over

25%

• Main markets: catalytic

converters (Eolys™,

Actalys™, Optalys™ ), energy

saving light bulbs

(Luminostar™), high value-

added industries (flat screens,

precision optics, etc.)

RARE EARTH SYSTEMS

43

18/09/2014



Operating on mature markets with low cyclicality, this

Segment’s success is based on economies of scale,

competitiveness and quality of service


€ 3,125 Net sales

€ 724 REBITDA

ECO

SERVICES

PEROXIDES EMERGING BIOCHEM-ICALS

SODA ASH

& DERIVA-

TIVES

ACETOW

million

million

2013 figures

44

18/09/2014



• The world’s leading

producer of soda ash and

sodium bicarbonate

• Main markets : glass and

detergent industries,

pollution treatment, health,

food, animal feed industries

(Bicar® Z), SOLVAir®,

disinfection

• Leading global producer of

cellulose acetate tow for

cigarette filters; number 1 in

CIS and South America;

number 2 in Western Europe;

reference supplier of cellulose

acetate flakes

• Main markets: cigarette-filter

manufacturers, textile industry,

packaging cosmetics, food, and

Accoya® acetylation

technology used to make ultra-

resistant wood

• Leading global supplier of

hydrogen peroxide

• Main markets: chemicals,

mining industry, textile and

environment

PEROXIDES ACETOW SODA ASH & DERIVATIVES

45

18/09/2014



• Number one in sulfuric

acid regeneration in the

United States

• Produces and regenerates

the sulfuric acid used in

refineries, chemicals

manufacturing and other

industrial applications

• Leading producer of

chlorovinyl in Southeast Asia;

Inventor and world leader in

EPICEROL® technology;

• Main markets: consumer

markets and industry

(surface coatings, adhesives

and glues, etc.)

ECO SERVICES

EMERGING BIOCHEMICALS

46

18/09/2014


Functional Polymers

The GBUs in this Segment concentrate on polyamide 6.6.

Right now engaged in major competitiveness

improvement programs, they have opened new markets

by launching innovative solutions

Functional Polymers

€ 1,763 Net sales

€ 93 REBITDA

FIBRAS

ENGINEERING PLASTICS

POLYAMIDE &

INTERMEDIATES

million

million

2013 figures

47

18/09/2014


Functional Polymers

• A leading world producer

of polyamide 6.6 and adipic

acid

• Main markets: automotive,

industrial equipment,

construction, electrical

and electronic components

and ready-to-wear markets

• Global specialist in polyamide

6.6-based solutions

• Produces high performance

materials under the Technyl®

brand, bio-sourced polyamide

6.10 Technyl eXten® used in

automotive industry and in

manufacturing, Sinterline

powders for three-dimensional-

printing

• Main markets: automotive,

construction, renewable

energies

• Latin America’s number one

manufacturer of polyamide

(nylon)

• Manufactures and markets

yarns and fibers based on

polyamide 6.6, for textile and

industrial applications such

as EMANA® and AMNI®

brands, used to produce

high-performance ‘smart’

clothing

FIBRAS ENGINIEERING PLASTICS

POLYAMIDE & INTERMEDIATES

48

18/09/2014


Corporate & Business Services

This Segment brings together the functions and services

charged with achieving the Group’s objectives of

operational excellence, energy efficiency and

collaborative innovation.


€ 67 Net sales

€ (169) REBITDA

ENERGY SERVICES

BUSINESS SERVICES

million

million

2013 figures

49

18/09/2014



• A team of experts in energy and CO2

optimization dedicated to industries

• 2 missions:

> Optimize energy purchases, reduce

energy consumptions and CO2 emissions

of the Solvay group [at constant level of

production]; assist third parties and

customers in reducing both their energy

costs and their environmental footprints

> Develop projects in the renewable

energy and biofuel

ENERGY SERVICES

• Internal structure developing added-value shared

services for the Group in Information Systems

and the main administrative processes that are

Order to Cash, Procurement to Pay, Hire to

Retire and Record to Report covering the areas

of Accounting, Credit, Customer service, HR

administration and Payroll as well

as Procurement

• Mission and objectives: ensure business

continuity, optimize processes and costs, create

value and contribute to our customers’

satisfaction with best in class services

BUSINESS SERVICES

50

18/09/2014


This project has pushed the boundaries of innovation,

technical know-how and an entrepreneurial team spirit

that has made the impossible possible.

From day one and for ten years now, Solvay has been part

of the Solar Impulse adventurous and daring project, which

in 2004 many thought was inconceivable. Thanks to this

“Flying Lab” Solvay could put into practice its expertise in

advanced materials and sustainable energy, enabling Solar

Impulse to fly day and night on the sun’s energy only.

Solvay partner of Solar Impulse

51

18/09/2014


Halar®

Energy capture

Solstick®

Energy capture

KetaSpire® PEEK

PrimoSpire® SPR Light weight/metal

replacement

Solef® PVDF Energy storage

F1EC Energy storage Torlon® PAI

Structure

5 4

3

1

2

7

Solkane®

365 mfc Structure

6 Light weight/metal

replacement

Ixef® PARA

8

Light weight/metal

replacement

Polyamide® 6

9

Sinterline TM

Fomblin® Lubrication

10

11

Non-linear

numerical

modeling

Numerical simulations

Emana based

on Polyamide 6.6

12

For performance pilot wear

Inflatable

mobile

hangar

13

Beyond the airplane

52

Adjusted performance indicators exclusively exclude non-cash Purchase

Price Allocation (PPA) accounting impacts related to the Rhodia acquisition

Adjusted net income (Solvay share)

Net income (Solvay share) excluding non-cash Purchase Price Allocation

(PPA) accounting impacts related to the Rhodia acquisition

Free cash flow

Cash flow from operating activities (including dividends from associates and

joint ventures) + Cash flow from investing activities (excluding acquisitions

and sales of subsidiaries and other investments)

Net Sales

Sales of goods and value added services corresponding to Solvay’s know-

how and core business. Net sales exclude other revenues primarily

comprising commodity and utility trading transactions and other revenue

deemed as incidental by the Group

REBITDA

REBITDA is defined as operating result before depreciation and

amortization, non-recurring items, temporary step-up of inventories related

to the Rhodia and Chemlogics acquisitions and pre-operational

gain/(losses) of Rusvinyl resulting from financial expenses (not capitalized)

BoD

Board of Directors

bp

Basis point (0.01%)

18/09/2014


Glossary

REBITDA – Rec. CAPEX – Tax

Gross Assets + Working Capital

CFROI

(Cash Flow Return on Investment) =

53

R&I

Research & Innovation

BTU

British Thermal Unit : unit of measurement of energy

MTAR

Medical Treatment Accident Rate

Number of working accidents leading to medical treatment other than

first aid

Petajoule

Unit of measurement of energy equal to 1015 joules

SPM

Sustainable Portfolio Management

ILO

Industrial Labor Organization

CMR

Carcinogenic, Mutagene and Reprotoxic

STI & LTI

Short-Term Incentives & Long-Term Incentives

CSR & SRI

Corporate Social Responsibility & Socially Responsible Investment

PAC

Product-Application Combination

18/09/2014


Sustainable Portfolio Management Market alignment categories

Star PAC for which there is a positive signal, in line with sustainability

trends in the marketplace, with anticipated double-digit growth

Aligned PAC for which there is a positive signal resulting from

sustainability trends in the marketplace

Neutral PAC for which there are neither positive nor negative signals

resulting from sustainability trends in the marketplace

Exposed PAC for which there is a weak negative signal resulting from


Obstructed PAC for which there are strong negative signals resulting from


PAC: Product-Application Combination

www.solvay.com

developing a model of sustainable chemistry · 18/09/2014 developing a model of sustainable...

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