Solvay Group Presentat ionJune 2002
««LOOKING AT SOLVAY LOOKING AT SOLVAY DIFFERENTLYDIFFERENTLY»»
!! VALUES AND STRATEGY :VALUES AND STRATEGY :SOLVAY ’S RESPONSE TO A SOLVAY ’S RESPONSE TO A CHANGING WORLDCHANGING WORLD
!! MAJOR RECENT STRATEGIC MAJOR RECENT STRATEGIC CHANGES IN SOLVAY’S CHANGES IN SOLVAY’S PORTFOLIOPORTFOLIO
© 2002, SOLVAY S.A.SOLVAY PPT / Groupe anglais / ALR /05.02 1
CHEMICALS SECTORCHEMICALS SECTOR
© 2002, SOLVAY S.A.SOLVAY PPT / Groupe anglais / ALR /05.02 2
CHEMICALS SECTORCHEMICALS SECTOR
Soda ashSaltCaustic sodaBarium/StrontiumFluorHydrogen peroxyde Total 2001 sales : EUR 2,751 M
Fluorinated products (after the acquisition of Ausimont) 2 2Advanced functional minerals among the world leadersCaprolactones among the world leaders Sodium bicarbonate 1 2Ultrapure hydrogen peroxide 2 4Ultrapure barium/strontium 1 2Soda ash 1 1Hydrogen peroxide 1 1Persalts 1 1Barium / Strontium carbonates 1 1Caustic soda 1 3
Leadership positions Europe World
Essentials
Specialties
© 2002, SOLVAY S.A.SOLVAY PPT / Groupe anglais / ALR /05.02 3
% of chemicals salesChemicals industry 24 %Glass industry 22 %Detergents 10 %Paper industry 8 %Construction and civil engineering 6 %Treatment of water and environment 4 %Food industry 4 %Automotive industry 2 %Human health 1 %Electric and electronic industry 1 %Other industries 18%TOTAL 100 %
CHEMICALS SECTORCHEMICALS SECTORMajor markets in Major markets in 20012001
© 2002, SOLVAY S.A.SOLVAY PPT / Groupe anglais / ALR /05.02 4
MAJORMAJOR MARKETSMARKETS OF CHEMICAL PRODUCTSOF CHEMICAL PRODUCTS
Soda ash Hydrogen peroxide/DetergentsGlass industry, chemicals industry, detergents, paper industry, Chemicals industry, detergents, paper industry, food industry, environmental technologies, pharmaceuticals environmental technologies, pharmaceuticals industry, industry, metallurgy, construction and civil engineering, textile, … electronics, metallurgy, textile, consumer goods, …
Fluor Barium and strontiumChemicals industry, construction (insulation), automotive industry, Glass industry, chemicals industry, paper industry, pharmaceuticals industry, electronics, metallurgy, … electronics, metallurgy, …
Advanced Functional Minerals CaprolactonesChemicals industry, paper industry, food industry, pharmaceuticals Chemicals industry, shoes industry, resins for surface industry, metallurgy, … coating…
Electrochemistrys/SaltGlass industry, chemicals industry, detergents, paper indsutry,food industry, water treatment and environmental technologiesmetallurgy, textile, …
© 2002, SOLVAY S.A.SOLVAY PPT / Groupe anglais / ALR /05.02 5
CHEMICALS SECTORCHEMICALS SECTOR2001 Sales breakdown by SBU2001 Sales breakdown by SBU
Soda ash33%
Electrochemistry/salt30%
Hydrogen peroxide/persalts
15%
Fluor products*12%
Caprolactones1%
Barium / Strontiumcarbonates
6%
Advanced functional minerals3%
Sales in 2001 : EUR 2,751 M
* without Ausimont (acquired in 2002)
© 2002, SOLVAY S.A.SOLVAY PPT / Groupe anglais / ALR /05.02 6
1. INCREASING CONTRIBUTION 1. INCREASING CONTRIBUTION fromfrom SPECIALTIESSPECIALTIESFluorinated products, advanced functional minerals,caprolactones, ultra-pure H2O2 and disinfectant, sodium bicarbonate, ultrapure barium and strontium carbonates
"" 25% of25% of 2001 Chemicals EBIT*2001 Chemicals EBIT*2. LEADERSHIP2. LEADERSHIP andand COMPETITIVENESS in ESSENTIALS:COMPETITIVENESS in ESSENTIALS:
Soda Ash, Caustic Soda, Barium & Strontium Carbonates, H2O2
3.3. FULL INTEGRATION in FULL INTEGRATION in feedstocksfeedstocks ::salt, HCl recycling, fluor spath, …
4. LESS DEPENDENCE on energy4. LESS DEPENDENCE on energy : cogeneration, …5.5. REDUCTION of CYCLICALITY :REDUCTION of CYCLICALITY :
reduction of exposure to Electrochemistry and Salt
THE CHEMICALS THE CHEMICALS SECTORSECTORSTRATEGYSTRATEGY
* without Ausimont (acquired in 2002)
© 2002, SOLVAY S.A.SOLVAY PPT / Groupe anglais / ALR /05.02 7
88%
12%
75%
25%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Essentials Specialties
1997
THE CHEMICALS SECTORTHE CHEMICALS SECTOR
Essentials Specialties
-- in % of EBIT in % of EBIT --
Without Ausimont
2001
More balanced portfolio between specialties/essentials
© 2002, SOLVAY S.A.SOLVAY PPT / Groupe anglais / ALR /05.02 8
CHEMICALS 2001 : SALES (+ 6%), EBIT (+ 23%)CHEMICALS 2001 : SALES (+ 6%), EBIT (+ 23%)Resilience to the economic evolution
thanks to its specific product mix made of :
# SPECIALTIES : ! FLUORINATED PRODUCTS :
# sales in organic Solkane®
$ sales in inorganic compounds (weak market conditions)! ADVANCED FUNCTIONAL MATERIALS and CAPROLACTONES :
are progressing satisfactorily
# ESSENTIALS! SODA ASH :
% Europe : strong demand and # prices% USA : still high energy costs but capacity rationalization
! CAUSTIC SODA : strong price increase (X2) and cost reductionBUT deteriorating market conditions for HYDROGEN PEROXIDE
and BARIUM AND STRONTIUM CARBONATES
© 2002, SOLVAY S.A.SOLVAY PPT / Groupe anglais / ALR /05.02 9
MAJORMAJOR RECENT ACHIEVEMENTSRECENT ACHIEVEMENTS! Fluorinated activities :
& Acquisition of Ausimont& Decision to build a plant (15,000 tons/y) in Tavaux (France)
for the large-scale production of Solkane® 365mfc(new insulating and blowing agent with no effect on the ozone layer)
! Salt : Creation of Esco - European Salt Company& JV with K+S (D) for salt (sold to external customers) in Europe
! Sodium bicarbonate :& Decision to build a new sodium bicarbonate production line (80 kt/year) in Spain -
operational in October 2002& Distribution agreement with Takuma (Japan) to market sodium bicarbonate - Bicar® -
for purifying combustion gases in Japan! Caprolactones :
& multi-stage expansion in UK to more than double its capacity for caprolactonepolymers over the next 3 years (1st step in 2002 and further expansions through 2004)
! Innovation : financial participation (15%) and research agreement with Ecophos(new approach to the production of upgraded phosphoric acid, using the hydrochloric acid generated by Solvay'sproduction processes)
! E-business : two pilot tests on Elemica network - privileged solution for ERP connection with customers and chemical goods suppliers for the order fulfillment
© 2002, SOLVAY S.A.SOLVAY PPT / Groupe anglais / ALR /05.02 10
SODA ASHSODA ASHSTRATEGYSTRATEGY ::! to further improve worldwide competitiveness and leadership! to develop specialtiesCompetitiveness andCompetitiveness and LeadershipLeadership :: N°1 world, N°1 Europe! world leader in the production of soda ash :
with sites in Western Europe, Bulgaria and the USA! reduction of costs all over! highest productivity both in US and European plants! cogeneration units on most sites in EuropeSpecialtiesSpecialties! n°2 in the world, N°1 in Europe! development of Bicar® : new line in Spain (operational in Oct. 2002)! development of the NEUTREC® incineration flue gas cleaning process :
RESOLEST® platform in France (process and recycle residual sodiumchemicals) and partnership Takuma (J) to promote it in Japan
! further development of innovative projects : Bicarjet®, Ecophos®, …
© 2002, SOLVAY S.A.SOLVAY PPT / Groupe anglais / ALR /05.02 11
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11stst WORLDWIDE PLAYER IN SODA ASHWORLDWIDE PLAYER IN SODA ASH-- 01/01/200201/01/2002 --
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© 2002, SOLVAY S.A.SOLVAY PPT / Groupe anglais / ALR /05.02 12
HYDROGEN PEROXIDESTRATEGYSTRATEGY ::! to further improve competitiveness through cost reductions and maintain leadership! to further develop high purity grades
Competitiveness and LeadershipCompetitiveness and Leadership :: N°1 world, N°1 Europe! world leader with facilities in Europe, USA, Asia and Brazil! client proximity, first-class logistics and global network of competitively sized
production units ! reduction of overall costs! new technology to produce propylene oxyde through H2O2 in large chemical
processes (200 kt/y)
SpecialtiesSpecialties! electronic grades :
% primary use : clean surface of wafers during chip fabrication% customers are highly international
! disinfectant : new, higher quality products (ASEPTICPER®) and success of Proxitane AHC® brand in Foot & Mouth Disease
© 2002, SOLVAY S.A.SOLVAY PPT / Groupe anglais / ALR /05.02 13
GROWTH IN LARGE CHEMICAL APPLICATIONGROWTH IN LARGE CHEMICAL APPLICATIONtoto produce Propyleneproduce Propylene OxideOxide (PO) in(PO) in largelarge scalescale plantplant
Agreement signed with BASF : Solvay would become BASF’s partner
for the supply of H2O2 for the production of PO
"50/50 joint venture (capacity of 200kt/y in a single unit) if BASF decides to implement the H2O2 route to manufacture PO (expected within the next two years)
© 2002, SOLVAY S.A.SOLVAY PPT / Groupe anglais / ALR /05.02 14
11stst WORLDWIDE PRODUCER IN WORLDWIDE PRODUCER IN HH22OO22-- 01/01/200201/01/2002 --
000 tons
535
390
330 310
235 225
130100
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© 2002, SOLVAY S.A.SOLVAY PPT / Groupe anglais / ALR /05.02 15
ELECTROCHEMISTRYELECTROCHEMISTRYANDAND DERIVED SPECIALTIESDERIVED SPECIALTIES
restructuring efforts bearing fruit
STRATEGYSTRATEGY ::to concentrate on activities linked to PVC and to concentrate on activities linked to PVC and selected organicselected organiccompoundscompounds
Competitiveness and LeadershipCompetitiveness and Leadership :: better focus through!cost reduction measures
e.g. decision to concentrate the manufacturing of solid caustic soda in Europe at Jemeppe (Belgium) and Tavaux (France) by end of 2002
!conversion from mercury cells to membranese.g. diaphragm electrolysis at Rheinberg (Germany) to be modernized and partly converted to membrane technology by the end of 2003
© 2002, SOLVAY S.A.SOLVAY PPT / Groupe anglais / ALR /05.02 16
CAUSTIC SODA CAUSTIC SODA PRODUCERSPRODUCERS0101/01/2002/01/2002
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WesternEurope
Asia Pacific
Rest of theworld
Mio tons
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© 2002, SOLVAY S.A.SOLVAY PPT / Groupe anglais / ALR /05.02 17
FLUORINATED PRODUCTSSTRATEGYSTRATEGY ::!! to further adapt portfolio with new products developmentto further adapt portfolio with new products development!! to further develop geographical to further develop geographical presencepresence
LeadershipLeadership ::! the acquisition of Ausimont makes Solvay one of the world’s main producers :
with facilities in Europe, North America and Namibia (raw materials)! well diversified portfolio! strong R&D :
% HFC : 3rd generation (cell gas for insulation foam, refrigeration, pharma aerosols)% Lithium battery, solvents, ...
! acquisitions :% AUSIMONT in 2002% NAFTA : CATOOSA (USA), NORFLUOR (USA) & CHEMTECH (Mexico)% EUROPE : Refrigeration business from Hoechst in 1996% NAMIBIA : Fluorspar (raw material) in 1997
! capacity extensions in growing products % Solkane® 134a (for refrigerant) capacity doubled in Germany% Pharmaceutical use of Solkane® 227 + pilot study for HFC 134a-pharma grade% building of a first industrial-level plant for HFC365mfc used as a blowing agent in
polyurethane foams (operational in 2002)
© 2002, SOLVAY S.A.SOLVAY PPT / Groupe anglais / ALR /05.02 18
SOLVAY FLUORSOLVAY FLUORTop products 2001
Leading productsLeading products• S141b (HCFC)
Foam• S22 (HCFC)
Refrigerants/feedstock for PTFE• S134 a (HFC)
Refrigerants• S142b (HCFC)
Foam/feedstock for PVDF• Nocolok
Brazing flux for aluminium-heat exchangers• S227 (HFC)
Pharma grade and fire extinguishing
S 22
S 134a S 142b
HFNocolok
S 227IXOL
SF6Org.
Intermed.S22/142b Ambi Cryolith
0
%NV
Total 2001 : 344 Mio EURO
10
S 141b
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FORWARD LOOKING STATEMENT“To the extent that any s tatements made in this presentat ion contTo the extent that any s tatements made in this presentat ion contain informat ion that is not his tor ical , these s tatements are essain informat ion that is not his tor ical , these s tatements are essent ial ly forwardent ial ly forward -look ing.look ing. TheTheachievement of forwardachievement of forward -look ing s tatements contained in this presentat ion is subjec t to look ing s tatements contained in this presentat ion is subjec t to r isk s and uncertaint ies because of a number of fac tors , inc ludinr isk s and uncertaint ies because of a number of fac tors , inc luding general g general economic fac tors , interes t rate and foreign currency exchange raeconomic fac tors , interes t rate and foreign currency exchange rate fluc tuat ions ; changing market condit ions , product compet it ionte fluc tuat ions ; changing market condit ions , product compet it ion, the nature of product , the nature of product development , impact of acquis it ions and dives t itures ,development , impact of acquis it ions and dives t itures , res t ruc tur ingsres t ruc tur ings, products withdrawals ; regulatory approval processes and other , products withdrawals ; regulatory approval processes and other unusual it ems . Cunusual it ems . Consequent lyonsequent ly,ac tual result s may differ material ly from those expressedactual result s may differ material ly from those expressed o ro r implied by such forwardimplied by such forward -look ing s tatement slook ing s tatement s. ForwardForward -look ing s tatements can be ident ified by thelook ing s tatements can be ident ified by the use ofuse ofwords suchwords such as "as "expectsexpects ," "plans ," "," "plans ," "wil lwil l ," "," "believesbelieves ," "," "maymay," "," "couldcould " "" "es t imateses t imates ," "," "int endsint ends", "", "t arget st arget s", "object ives", "", "object ives", "potent ialpotent ial ", and", and other wordsother words ofof s imilar meanings imilar meaning. ShouldShouldknownknown oror unknown r isk sunknown r isk s o ro r uncertaint ies material izeuncertaint ies material ize, o r, o r should our assumpt ions prove inaccurateshould our assumpt ions prove inaccurate, ac tual resul t s could vary mater ial ly from those ant ic ipatedactual resul t s could vary mater ial ly from those ant ic ipated. TheTheCompany undertakesCompany undertakes no obl igat ionno obl igat ion to publ ic ly update any forwardto publ ic ly update any forward -look ing s tatementslook ing s tatements "
and … Innovation