Download This
description
Transcript of Download This
March 1999
1998 RESULTS1998 RESULTS
GROWTH THROUGH INCREASED GROWTH THROUGH INCREASED COMPETITIVENESS AND INNOVATIONCOMPETITIVENESS AND INNOVATION
©, SOLVAY S.A., 1999SOLVAYSOLVAY 2PPT-4908-2/ALR/03.99
I. I. 1998 RESULTS HIGHLIGHTS1998 RESULTS HIGHLIGHTS
Record level over the last 5 years : Record level over the last 5 years : 98/9798/97Net current earnings : Net current earnings : 377 Mio EUR 377 Mio EUR + 15 %+ 15 %
Net earnings : Net earnings : 378 Mio EUR 378 Mio EUR + 11 %+ 11 %
Cash flow :Cash flow : 885 Mio EUR885 Mio EUR + 5 %+ 5 %
AND ALSO …AND ALSO …
IMPROVED COMPETITIVENESSIMPROVED COMPETITIVENESS
©, SOLVAY S.A., 1999SOLVAYSOLVAY 3PPT-4908-3/ALR/03.99
SalesSales 7,7097,709 7,4517,451 - 3% 8,6948,694Gross margin 1,962 2,059 + 5% 2,402
EBIT EBIT (1)(1) 548548 609609 + 11% 711711Net debt expenses - 39 - 54 + 38% - 63Unallocated expenses and income - 7 - n.s. -Taxes (on earnings before extraordinary items) - 175 - 178 + 2% - 208
Net earnings before extraordinary items Net earnings before extraordinary items 327327 377377 + 15% 440440Net extraordinary items + 14 + 1 - 93% + 1Net earningsNet earnings 341341 378378 + 11% 441441Depreciation 498 507 + 2% 591Cash flowCash flow 839839 885885 + 5% 1,0321,032Capital expenditures 743 640 - 14% 747Research and development 284 292 + 3% 341
(1) EBIT : Earnings before net debt expenses, taxes and unallocated items; (2) 1 EUR = 40.3399 BEF, (3) 1 USD = 34.575 BEF (12.31.1998)
Millions of EUR(2)
Consolidated figures Consolidated figures 1998/1998/1997199719981998 19981998(3)(3)
(M USD)(M USD)
RESULTS HIGHLIGHTSRESULTS HIGHLIGHTS
19971997
©, SOLVAY S.A., 1999SOLVAYSOLVAY 4PPT-4908-4/ALR/03.99
GROUP EBIT : + 11 %GROUP EBIT : + 11 %in 1998 compared to 1997in 1998 compared to 1997
Millions of EUR
400
598
528548
609
0
100
200
300
400
500
600
700
1994 1995 1996 1997 1998
337
272
264
284
H1H1
H2H2
©, SOLVAY S.A., 1999SOLVAYSOLVAY 5PPT-4908-5/ALR/03.99
GROUP NET CURRENT EARNINGSGROUP NET CURRENT EARNINGS Record level over the last 5 yearsRecord level over the last 5 years
172
311 286
327377
0
50
100
150
200
250
300
350
400
1994 1995 1996 1997 1998
+15%Millions of EUR
©, SOLVAY S.A., 1999SOLVAYSOLVAY 6PPT-4908-6/ALR/03.99
Millions of EUR885
839819763
667
500
600
700
800
900
1994 1995 1996 1997 1998
+5%
CASH FLOWCASH FLOWRecord level over the last 5 yearsRecord level over the last 5 years
98/94 : + 30 %98/94 : + 30 %
©, SOLVAY S.A., 1999SOLVAYSOLVAY 7PPT-4908-7/ALR/03.99
Capitalexpenditures
INVESTMENT PROJECTS AND R&DINVESTMENT PROJECTS AND R&Din all Strategic Business Unitsin all Strategic Business Units
493 511
743640
803
285 293
305 284292
341
694
0
200
400
600
800
1000
1200
1994 1995 1996 1997 1998 1999budget
804804778778
1027102799999911441144
932932
Millions of EUR
R&D expenses
of which 66 % for of which 66 % for PharmaceuticalsPharmaceuticals
of which 66 % for of which 66 % for PharmaceuticalsPharmaceuticals
©, SOLVAY S.A., 1999SOLVAYSOLVAY 8PPT-4908-8/ALR/03.99
NET CURRENT EARNINGS PER SHARENET CURRENT EARNINGS PER SHARE1994-19981994-1998
1.98
3.673.32
3.794.38
0
1
2
3
4
5
1994 1995 1996 1997 1998
In EUR/share
+16%
©, SOLVAY S.A., 1999SOLVAYSOLVAY 9PPT-4908-9/ALR/03.99
PERFORMANCES PER SHAREPERFORMANCES PER SHARE1994-19981994-1998
1.67
1.23
1.82
1.36
1.82
1.36
1.98
1.49
2.07
1.55
0
0,5
1
1,5
2
2,5
1994 1995 1996 1997 1998
In EUR/share
Gross dividend Net dividend
©, SOLVAY S.A., 1999SOLVAYSOLVAY 10PPT-4908-10/ALR/03.99
II. CONCENTRATE ON CORE ACTIVITIESII. CONCENTRATE ON CORE ACTIVITIESin 4 SECTORSin 4 SECTORS
with faster growth in pharmaceuticalswith faster growth in pharmaceuticals
Total : EUR 609 M (USD 711 M)
1998 EBIT1998 EBIT(*)
(*) EBIT : Earnings before net debt expenses, taxes and unallocated items
ProcessingProcessing12 %
(EUR 75 M)
PlasticsPlastics34 %(EUR 205 M)
PharmaceuticalsPharmaceuticals22 %
(EUR 135 M)
ChemicalsChemicals32 %(EUR 194 M)
©, SOLVAY S.A., 1999SOLVAYSOLVAY 11PPT-4908-11/ALR/03.99
272
192 194
87
192 205
61 4675
97118
135
0
50
100
150
200
250
300
Total 1998 EBIT : EUR 609 M (+ 11 % versus 1997)(1) E.B.I.T. = Earnings before net debt expenses, taxes and unallocated items
EBIT GROWS IN ALL SECTORSEBIT GROWS IN ALL SECTORS
ChemicalsChemicals PlasticsPlastics ProcessingProcessing PharmaceuticalsPharmaceuticals
Mi ll
ions
of
EU
R
+63%
+1% +7%
+14%
96 97 9896 97 98 96 97 98 96 97 98
Sales EUR 1167 M+ 11 %
SalesEUR 2425 M- 2 %
Sales EUR 2428 M- 12 %
Sales EUR 1431 M+ 1 %
114
80
124
81
44
31
55
80 H2H2
H1H1
EBIT (1)
92
100
89
103
1234 49
69
©, SOLVAY S.A., 1999SOLVAYSOLVAY 12PPT-4908-12/ALR/03.99
CHEMICALS SECTORCHEMICALS SECTOR EBIT 98/97 : + 1 %EBIT 98/97 : + 1 %
Key elements of strategy :Key elements of strategy :
To concentrate on 9 Strategic Business UnitsTo concentrate on 9 Strategic Business Units
To maintain world leadershipTo maintain world leadership (soda ash, H2O2,...)
To reinforce our low cost structureTo reinforce our low cost structure
To develop growing activities such as fluorinated products and new To develop growing activities such as fluorinated products and new high added value productshigh added value products (fillers, ultra high purity H2O2, Neutrec process, caprolactones,...)
©, SOLVAY S.A., 1999SOLVAYSOLVAY 13PPT-4908-13/ALR/03.99
Major trends in 1998 :Major trends in 1998 :
relatively strong demand both in Europe and in the USA
but lower demand in Asia and Latin America reduced potential US exports to these regions
increasing exports from US to Europe
Integration of SBU Calcium Chloride as of January 1, 1999Integration of SBU Calcium Chloride as of January 1, 1999
SODA ASH SODA ASH (1)(1)(with calcium chloride)(with calcium chloride)
33 % of 1998 chemicals sales 33 % of 1998 chemicals sales
©, SOLVAY S.A., 1999SOLVAYSOLVAY 14PPT-4908-14/ALR/03.99
Competitiveness objectives remain priorities for all sitesCompetitiveness objectives remain priorities for all sites
Bulgaria : Bulgaria : Investment program to improve quality and reduce costs continues : start up of a second dense soda ash line, new storage silo, various projects for increasing product quality, process automation and improving environmental protection
Savings on energy costs thanks to cogeneration units Savings on energy costs thanks to cogeneration units at Rosignano, Italy (Q2/97) Torrelavega, Spain (Q3/98) and Dombasle, France (end 98)
USA : USA : start up date of expansion at Solvay Minerals Inc. postponed in phase with world demand
Belgium : Belgium : closure of calcium chloride unit in Couillet and concentration on Rosignano Rosignano unit
SODA ASH SODA ASH (2)(2)(with calcium chloride)
33 % of 1998 chemicals sales
©, SOLVAY S.A., 1999SOLVAYSOLVAY 15PPT-4908-15/ALR/03.99
CAUSTIC SODACAUSTIC SODA(with associated chlorine and allyl)
27 % of 1998 Chemicals Sales- European price fluctuation -
Source : TECNON, March 99
EUR/Metric ton (Liquid market)
150
170
190
210
230
97 98 99
©, SOLVAY S.A., 1999SOLVAYSOLVAY 16PPT-4908-16/ALR/03.99
unfavorable weather conditions (early 1998) and tough competition
cost reduction measures underway
SALT
©, SOLVAY S.A., 1999SOLVAYSOLVAY 17PPT-4908-17/ALR/03.99
Major trends in 1998 :Major trends in 1998 : Cost reduction all over Solvay’s units
Progressive price recovery in EuropeLow prices in USA and rest of the world
Improvement of competitiveness in 1998 :Improvement of competitiveness in 1998 :Further improvement of competitiveness in the USA with the
start-up of a highly competitive 85,000 t/y unit in Deer-Park (USA) and
mothballing of the previous 50,000 t/y unit
HYDROGEN PEROXIDE
40
60
80
100
120
97 98
60
80
100
120
97 98
USAUSA EuropeEurope
Source :Harriman Chemsult
Price index Price index
©, SOLVAY S.A., 1999SOLVAYSOLVAY 18PPT-4908-18/ALR/03.99
FLUORINATED PRODUCTS
Key facts in 1998 :Key facts in 1998 :
increase in prices and volumes
further growth expected
decision to build a pilot unit in Tavaux (France) for new HFC substitutes
©, SOLVAY S.A., 1999SOLVAYSOLVAY 19PPT-4908-19/ALR/03.99
Key facts in 1998 :Key facts in 1998 :
increase in volumes
pressures in Asia on barium carbonates in a very competitive environment
Germany : expansions in progress in special grade bariumcarbonate for supplying the cathodic screens industry
and in strontium carbonate
China : agreement with XINJI for the marketing of barium carbonate worldwide
BARIUM AND STRONTIUM CARBONATES
©, SOLVAY S.A., 1999SOLVAYSOLVAY 20PPT-4908-20/ALR/03.99
PLASTICS SECTORPLASTICS SECTOREBIT 98/97EBIT 98/97 : + 7 % + 7 %
Key elements of strategy :Key elements of strategy : To concentrate on 4 Strategic Business UnitsTo concentrate on 4 Strategic Business Units
In PVC, HDPE and PP : In PVC, HDPE and PP :
competitiveness across the value chain higher added value products selective geographical diversification synergies with downstream integration
In Specialty PolymersIn Specialty Polymers
high added value products reinforcement of PVDC strength
©, SOLVAY S.A., 1999SOLVAYSOLVAY 21PPT-4908-21/ALR/03.99
PVC
Major trends in 1998 :Major trends in 1998 : progressive decrease of margins progressive decrease of margins
further cost reductionsfurther cost reductions all over the world
Improvement of competitiveness in 1998 :Improvement of competitiveness in 1998 : plants rationalizationplants rationalization (e.g. closure of Ferrara PVC unit in
Italy) and specializationspecialization (PVC Suspension in Martorell)
strategic alliances strategic alliances for achieving worldwide competitive structure (e.g. joint venture with BASF and industrial
agreement for PVC production with ATOCHEM in Spain)
©, SOLVAY S.A., 1999SOLVAYSOLVAY 22PPT-4908-22/ALR/03.99
PVC MARGINS OVER ETHYLENEPVC MARGINS OVER ETHYLENEWestern Europe
(Suspension)
Source : TECNON, March 99
PVC marginsPVC margins
PVC pricePVC price
Ethylene priceEthylene price
EUR/ton
0
200
400
600
800
97 Jul97 98 Jul98 99
©, SOLVAY S.A., 1999SOLVAYSOLVAY 23PPT-4908-23/ALR/03.99
POLYOLEFINS
HDPEHDPEgrowth in specialty resins (pipes for gas and water distribution)
in Europe and in Asia
higher average margins in H1/98 versus H1/97 but erosion in H2/98 due to faster price decrease than for ethylene (Europe + USA)
Improvement of competitiveness in 1998 :Improvement of competitiveness in 1998 :
industrial and technological cooperation agreements with PETROFINA
PPPP pressure on margins in Europe and in the US due to overcapacities
©, SOLVAY S.A., 1999SOLVAYSOLVAY 24PPT-4908-24/ALR/03.99
HDPE MARGINS OVER ETHYLENEHDPE MARGINS OVER ETHYLENE(injection moulding)(injection moulding)
USAUSA EUR/ton
Source : TECNON, March 99
EUROPEEUROPE
HDPE marginsHDPE margins
Ethylene priceEthylene price
HDPE priceHDPE price
USD/ton
HDPE marginsHDPE margins
Ethylene priceEthylene price
HDPE price HDPE price
0
200
400
600
800
1000
97 98 990
200
400
600
800
1000
97 98 99
©, SOLVAY S.A., 1999SOLVAYSOLVAY 25PPT-4908-25/ALR/03.99
PVC COMPOUNDS
Letter of intent to study the feasability of a Joint Letter of intent to study the feasability of a Joint VentureVenture in Chinain China (for PVC blends and compounds)
SPECIALTY POLYMERS
USA :USA : Joint venture with Dyneon for producing VF2 and PVDF
©, SOLVAY S.A., 1999SOLVAYSOLVAY 26PPT-4908-26/ALR/03.99
PROCESSING SECTORPROCESSING SECTOREBIT 98/97 : + 63 %EBIT 98/97 : + 63 %
Key characteristics :Key characteristics :
Benefiting from Solvay's experience in plastics productionBenefiting from Solvay's experience in plastics production
Mastering sophisticated technologies such as coextrusionMastering sophisticated technologies such as coextrusion
Enhancing plastic resins developmentEnhancing plastic resins development
Key elements of strategy :Key elements of strategy :
To concentrate on 4 Strategic Business UnitsTo concentrate on 4 Strategic Business Units
To reinforce market shares in very selective market segmentsTo reinforce market shares in very selective market segments
©, SOLVAY S.A., 1999SOLVAYSOLVAY 27PPT-4908-27/ALR/03.99
AUTOMOTIVE
strong growth strong growth in sales for the fuel systems in the USA, France and Spain
strengthening presence on new marketsstrengthening presence on new markets through new subsidiaries(Poland, Asia) and Joint Venture in Brazil
INDUSTRIALS FILMS
good results in Europegood results in Europe e.g. for stationery thanks to continuous innovation efforts
further growthfurther growth in Europe with reinforcement of leading positionreinforcement of leading position through acquisition (e.g. Drayfil in waterproofing in Spain)
©, SOLVAY S.A., 1999SOLVAYSOLVAY 28PPT-4908-28/ALR/03.99
PIPES AND FITTINGS
sustained growth in 1998 sustained growth in 1998 in Europe in a very competitive context
development of new markets (e.g. Poland, Greece) and new products (co-extruded PVC)
cost reductions
geographical and products diversification through acquisitions of Davinyl A.B. in Sweden and of MABO in
Scandinavia, Poland and Baltic States
DECORATION
sale of the wallpaper sale of the wallpaper activity to the German LPW Group
results affectedresults affected by the Russian crisis (lower exports)
highly competitivehighly competitive environment
©, SOLVAY S.A., 1999SOLVAYSOLVAY 29PPT-4908-29/ALR/03.99
SOLVAY CHOOSES PHARMACEUTICALSSOLVAY CHOOSES PHARMACEUTICALS
Key elements of strategy :Key elements of strategy :
Non-cyclical and growingNon-cyclical and growing activity smoothing ups and downs of Solvay's Chemicals and Plastics
Specialisation on four therapeutic areas four therapeutic areas : Psychiatry, Gastroenterology, Gynaecology and Cardiology
Faster development especially in the US, Faster development especially in the US, through
growth of existing products portfolio
strong R&D pipeline (66 % of total 99 R&D Budget)
acquisitions of products, product lines and companies
©, SOLVAY S.A., 1999SOLVAYSOLVAY 30PPT-4908-30/ALR/03.99
SOLVAY CHOOSES PHARMACEUTICALSSOLVAY CHOOSES PHARMACEUTICALSStrategy for growth throughStrategy for growth through
Existing products in 4 therapeutic areas
Increased globalisation
Specialized R&D program
Acquisitions of products / products lines or companies
©, SOLVAY S.A., 1999SOLVAYSOLVAY 31PPT-4908-31/ALR/03.99
1. PHARMACEUTICALS HIGHLIGHTS1. PHARMACEUTICALS HIGHLIGHTSEBIT 98/97 :EBIT 98/97 : + 14 %+ 14 %
with H2/98 vs H2/97 : + 17 %with H2/98 vs H2/97 : + 17 %
1998 Sales :1998 Sales : (in EUR)Europe + Export :Europe + Export : + 5 %+ 5 %
USA + Canada :USA + Canada : + 26 %+ 26 %Total :Total : + 11 %+ 11 %
Market developments :Market developments : New launches of products in the US :
Prometriumfor the Hormone Replacement Therapy and secondary amenorrhea
Estratab in its extention for the prevention of osteoporosis Commercial organisations in Central Europe, Scandinavia,
Greece, China, South Africa, Philippines, … Expansion of US network to Primary Care
©, SOLVAY S.A., 1999SOLVAYSOLVAY 32PPT-4908-32/ALR/03.99
GROWTH THROUGH EXISTING PRODUCTS GROWTH THROUGH EXISTING PRODUCTS in 4 therapeutic areasin 4 therapeutic areas
WORLDWORLD (IN EUR)(IN EUR) USAUSA (IN (IN EUR)EUR)
GASTROENTEROLOGYGASTROENTEROLOGY + 10 %+ 10 % + 17 % + 17 %(1998 sales : EUR 407 M)
e.g. e.g. CREONCREON+ 11 %+ 11 % + 22 % ROWASAROWASAmainly in USAmainly in USA + 22 %
PSYCHIATRYPSYCHIATRY + 9 %+ 9 % + 25 % + 25 %(1998 sales : EUR 325 M)
e.g. e.g. LUVOXLUVOX + 12 %+ 12 % + 23 %LITHOBID only in USAonly in USA+ 59 %
GYNAECOLOGYGYNAECOLOGY + 24 %+ 24 % + 43 % + 43 % (1998 sales : EUR 313 M)
e.g. e.g. ESTRATABESTRATAB only in USAonly in USA + 69 % ESTRATESTESTRATEST only in USAonly in USA + 33 %
CARDIOLOGYCARDIOLOGY + + 3 %3 % (1998 sales : EUR 70 M)
e.g.e.g. PHYSIOTENSPHYSIOTENS(mainly sold in Europe) : + 43 % : + 43 % of sales in EUR
©, SOLVAY S.A., 1999SOLVAYSOLVAY 33PPT-4908-33/ALR/03.99
2. GROWTH THROUGH GLOBALIZATION2. GROWTH THROUGH GLOBALIZATIONwith faster development especially in the USwith faster development especially in the US
in M EUR in % 1997 1998 (1998)
Europe 610 638 55 %
USA/CanadaUSA/Canada 301301 379379 32 %32 %
Export 139 150 13 %
TOTAL 1,150 1,167 100 %
+ 26 %
©, SOLVAY S.A., 1999SOLVAYSOLVAY 34PPT-4908-34/ALR/03.99
Psychiatry 38 %(Depression, Anxiety, Psychosis, “Neurology”)
Gastroenterology 18 %(Pancreatic Exocrine Insufficiency, Irritable Bowel Syndrome, Gastric Emptying)
Gynaecology 15 %(Menopause, Osteoporosis)
Cardiology 29 %(Ischaemic Heart Disease,Congestive Heart Failure,Arrhythmia)
3. GROWTH THROUGH A SPECIALIZED 3. GROWTH THROUGH A SPECIALIZED R&D PROGRAMR&D PROGRAM
R&D 1998 : EUR 175 M
©, SOLVAY S.A., 1999SOLVAYSOLVAY 35PPT-4908-35/ALR/03.99
PHARMACEUTICALS DEVELOPMENTSPHARMACEUTICALS DEVELOPMENTSMajor products already launchedMajor products already launched
PsychiatryFluvoxamine Depression in Europe
OCD in the USA (incl. treatment for children and
teenagers) Gastroenterology
Creon Pancreatic exocrine insufficiency (USA, Europe)
GynaecologyEstratab Hormone Replacement Therapy
in the USA and Europe
Osteoporosis in the USAPrometrium Hormone replacement therapy
CardiologyPhysiotens Hypertension in Europe
©, SOLVAY S.A., 1999SOLVAYSOLVAY 36PPT-4908-36/ALR/03.99
PHARMACEUTICALS FUTURE DEVELOPMENTSPHARMACEUTICALS FUTURE DEVELOPMENTSMajor R&D projectsMajor R&D projects
Filed Psychiatry Luvox Depression in JapanOCD in JapanDepression in the USA
Phase III Psychiatry Flesinoxan Depression, anxiolytic properties (international development)
Luvox OCD relapse, Pediatric (in the USA)Gastroenterology Creon Pancreatic exocrine insufficiency in Japan
Gynaecology Estrogel Hormone Replacement Therapy in the USA
Estratest Libido loss (in the USA)Combinationtransdermalpatch Hormone Replacement Therapy in the US
Femoston Hormone Replacement Therapy in EuropeContinuous
Cardiology Tedisamil Chronic, stable angina pectoris (international development)Phase II Psychiatry DU 127090 Psychosis
DU 125530 Psychiatric disorders Gastroenterology Cilansetron Irritable Bowel Syndrome
Tarazepide Motility Disorders Creon Diabetes
Cardiology Tedisamil Atrial fibrillation SLV 306 Congestive Heart Failure
Phase I Psychiatry Luvox CR Depression, OCDSLV 308 Depression
Gastroenterology SLV 305 Gastroesophageal Reflux DeseaseCardiology Moxonidine Hypertension
patch
©, SOLVAY S.A., 1999SOLVAYSOLVAY 37PPT-4908-37/ALR/03.99
4. GROWTH THROUGH ACQUISITIONS4. GROWTH THROUGH ACQUISITIONS
1997/98 3 Hormone Replacement Products :
Estrogel®
Innovative combi-patch
Prometrium® (already launched in June 98)
1999 + Further acquisitions of products, products lines
or companies
©, SOLVAY S.A., 1999SOLVAYSOLVAY 38PPT-4908-38/ALR/03.99
1999 TRENDS
« « Depending on the global economic context,Depending on the global economic context,1999 could be a more difficult year1999 could be a more difficult year
for the Chemicals and Plastics Sectors, for the Chemicals and Plastics Sectors, as it has already been the case as it has already been the case
during the last few months of 1998.during the last few months of 1998.On the other hand, earnings of the Pharmaceuticals On the other hand, earnings of the Pharmaceuticals
Sector should continue to grow favorably.Sector should continue to grow favorably. » »