Solvay 2019 4th Quarter & Full Years Results

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PROFIT

Underlying^[1] EBITDA (FY: €2,322m -0.4%; -2.8% organic^[2])

• Underlying EBITDA was stable over the year, in line with expectations. Positive forex impact offset a modest decrease on an organic^[2] basis.
• Double digit volume growth in Composite Materials, higher pricing in Performance Chemicals and strong focus on cost discipline helped mitigate demand headwinds in the automotive, electronics and oil & gas markets throughout the year.
• Underlying EBITDA margin maintained at 23% for 2019, reflecting the resilience of Solvay's businesses in a challenging market environment.

• Advanced Materials (FY: €1,143m -9,3% organic^[2])
  • Strong demand for composites from aerospace customers contributed to delivery of a record performance in 2019, despite an anticipated slowdown in the fourth quarter due to reduced 737MAX build rates.
  • Specialty Polymers significantly impacted by market headwinds, particularly in automotive and electronics; despite headwinds, maintained leading position across all key markets.
• Advanced Formulations (FY: €490m -12% organic^[2])
  • Resilient performance in coatings, agro, personal care, flavors and fragrances offset by softer mining environment and increasingly challenging conditions in the oil & gas market.
  • Cost measures partly mitigated the impact of lower volumes.
• Performance Chemicals (FY: €852m +10% organic^[2])
  • In a supportive market environment, higher prices were achieved in soda ash and peroxide leading to a strong full year performance.

Underlying EPS^[3] from continuing operations (FY: €8.02 -4.7%)

• Underlying EPS ^[3] from continuing operations reflects the lower EBITDA, higher depreciation and tax rate, partly offset by lower financial charges following debt optimization measures.

CASH

FCF to Solvay shareholders^[4] from continuing operations (FY: €606m +€40m; FY: total €801m +€76m)

• Strong free cash flow, driven by the Company’s renewed focus on cash and disciplined working capital management.
• Record total cash generation led to operational deleveraging of net financial debt of €414 million, and provisions of €157 million.

FCF conversion^[4](FY: 27.8% +1.8pp)

• The free cash flow conversion ^[4] improvement reflects higher than forecast cash generation.

RETURNS

ROCE (FY: 8.1% -0.1pp)

• Stable returns largely reflect sustained investments for future growth.

FY dividend (€3.75 recommended)

• Stable total dividend recommended of €3.75 gross per share. This leads to a final gross dividend of €2.25 payable on May 20, 2020, following the payment of the interim gross dividend of €1.50 per share in January 2020.

OUTLOOK

2020 full year outlook

Solvay expects organic underlying EBITDA growth ^[2] between 0% and -3% on a year over year basis, free cash flow conversion of 28% and ROCE to be stable around 8%.

CEO Ilham Kadri commented:

“We delivered record total free cash flow and cash conversion in 2019, allowing us to deleverage substantially. Our focus on customers and costs amid the challenging market backdrop enabled us to achieve stable EBITDA. As we look ahead, we are taking additional efficiency measures to further align our structure to our G.R.O.W. strategy and confront continuing headwinds. Today, we also released our Solvay ONE Planet sustainability goals, which, together with our new Purpose, will enable us to create long-term value for our shareholders in line with our G.R.O.W. strategy.”

All comparisons are made year on year with 2018 pro forma figures, as if IFRS 16 had already been implemented in 2018, unless stated otherwise.

^{[1] Underlying figures adjust IFRS figures for the non-cash Purchase Price Allocation (PPA) accounting impacts related to acquisitions, for the coupons of perpetual hybrid bonds classified as equity under IFRS but treated as debt in the underlying statements, and for other elements to generate a measure that avoids distortion and facilitates the appreciation of performance and comparability of results over time.
[2] Organic growth excludes forex conversion and scope effects, as well as the effect from the implementation of IFRS 16 in 2016. Reported growth compares to the published 2018 pro forma figures, adjusted for the implementation of IFRS 16.
[3] Underlying earnings per share, basic calculation.
[4] Free cash flow to Solvay shareholders is the free cash flow after payment of net interests, coupons of perpetual hybrid bonds and dividends to non-controlling interests. This represents the cash flow available to Solvay shareholders, to pay their dividend and/or to reduce the net financial debt. The free cash flow conversion ratio is calculated as the ratio between the free cash flow to Solvay shareholders (before netting of dividends paid to non-controlling interest) and underlying EBITDA.}

Attachment

• 2019Q4_PressRelease

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