Earnings Release • Feb 27, 2019
Earnings Release
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Full year 2018 Financial report
Published on February 27, 2019 at 7:00 a.m.
Besides IFRS accounts, Solvay also presents underlying Income Statement performance indicators to provide a more consistent and comparable indication of the Group's financial performance. The underlying performance indicators 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 that would distort the analysis of the Group's underlying performance. The comments on the results made on pages 3 to 11 are on an underlying basis, unless otherwise stated.
| FY key figures | IFRS | Underlying | ||||
|---|---|---|---|---|---|---|
| (in € million) | FY 2018 | FY 2017 | % yoy | FY 2018 | FY 2017 | % yoy |
| Net sales | 10,257 | 10,125 | +1.3% | 10,257 | 10,125 | +1.3% |
| EBITDA | 1,930 | 2,029 | -4.9% | 2,230 | 2,230 | - |
| EBITDA margin | 21.7% | 22.0% | -0.3pp | |||
| EBIT | 986 | 976 | +1.1% | 1,546 | 1,527 | +1.3% |
| Net financial charges | (194) | (298) | +35% | (326) | (394) | +17% |
| Income tax expenses | (95) | 197 | n.m. | (305) | (299) | -2.0% |
| Tax rate | 26.1% | 27.5% | -1.4pp | |||
| Profit from discontinued operations | 201 | 241 | -17% | 216 | 159 | +36% |
| (Profit) loss attributable to non-controlling interests | (39) | (56) | -29% | (40) | (54) | -26% |
| Profit attributable to Solvay shareholders | 858 | 1,061 | -19% | 1,092 | 939 | +16% |
| Basic earnings per share (in €) | 8.31 | 10.27 | -19% | 10.57 | 9.08 | +16% |
| of which from continuing operations | 6.37 | 7.97 | -20% | 8.48 | 7.59 | +12% |
| Dividend [3] | 3.75 | 3.60 | +4.2% | 3.75 | 3.60 | +4.2% |
| Capex | (833) | (822) | -1.4% | |||
| of which from continuing operations | (711) | (716) | +0.8% | |||
| Free cash flow | 989 | 871 | +14% | |||
| of which from continuing operations | 830 | 782 | +6.1% | |||
| Free cash flow to Solvay shareholders | 725 | 466 | +56% | |||
| of which from continuing operations | 566 | 377 | +50% | |||
| Net financial debt [4] | (2,605) | (3,146) | +17% | (5,105) | (5,346) | +4.5% |
| CFROI | 6.9% | 6.9% | - | |||
| Research & innovation | (352) | (325) | -8.3% | |||
| Research & innovation intensity | 3.4% | 3.2% | +0.2pp |
[1] A full reconciliation of IFRS and underlying income statement data can be found on page 18 of this report.
[2] Earnings per share, basic calculation
[3] Recommended dividend for 2018 [4] Underlying net debt includes the perpetual hybrid bonds, accounted for as equity under IFRS.
(in € million)
Net sales were up +1.3% for the full year. Organic sales growth of +5.7% was driven by both volumes and prices, which more than offset forex conversion and scope effects.
The reduction in scope [1] had a -1.0% effect and comprised the divestments of the polyolefin cross-linkable compounds in Advanced Materials and formulated resins businesses, as well as part of the phosphorous business in Advanced Formulations.
Forex conversion had an adverse effect of -3.2%, mainly related to the depreciation of the U.S. dollar in the first half of the year, as well as that of the Brazilian real.
Volumes were up +3.3% overall. In Advanced Materials strong growth for Solvay's polymers and composites technologies in aeronautics, automotive and healthcare, was tempered by lower demand in smart devices and fluorinated gases used in insulation. Volumes in Advanced Formulations were up across business units, although growth in the shale oil & gas stimulation market in North America declined significantly in the fourth quarter. In Performance Chemicals, higher demand for peroxides and recovery in Coatis' domestic Latin American market supported volume growth, more than compensating for slightly lower soda ash volumes at the start of the year.
Prices rose +2.2% overall, partially reflecting higher raw material costs. In Advanced Formulations, pricing strength was recovered in the first nine months but turned negative in the fourth quarter following the oil and gas decline. In Performance Chemicals increases in peroxides and the Coatis business, offset the anticipated decrease in soda ash.
Underlying EBITDA was flat year on year, but grew organically by +5.3% excluding forex conversion and scope effects. Volume and mix drove the strong volume growth for the year. Growth was stronger in the first half versus the second half due to the slowdown in certain markets, including electronics and oil and gas. The underlying EBITDA margin remained solid at 22%.
Earnings per share
Underlying earnings per share [2] grew +16% to €10.57, including a €2.09 contribution from discontinued operations. On a continuing basis, underlying earnings per share grew +12% to €8.48, thanks to lower financial charges and the lower tax rate.
Volume growth had a +6.1% positive impact on EBITDA.
Net pricing was essentially flat, demonstrating Solvay's pricing capabilities amid higher raw materials and energy prices, and an adverse transactional forex effect.
Fixed cost increases had a -2.3% effect. These reflected investments to better support continued volume growth. Operational excellence and synergies partly offset inflation.
Other elements included a higher contribution from the PVC and peroxide joint ventures, amounting to half of the benefit, and a net positive effect of one-time events compared to 2017. .
Underlying EBIT was slightly up due to lower depreciation charges.
Underlying net financial charges [3] were 17% lower, reflecting the impacts of ongoing deleveraging and optimization of the debt structure.
The 1.4 percentage point reduction of the underlying tax rate limited tax impact of the higher tax base.
The underlying contribution from discontinued operations was €216 million, up 36% thanks to the strong performance of the polyamide activities that are planned to be sold. This more than compensated for the absence of contributions from Acetow, which was sold at the end of May 2017.
[1] Scope effects include acquisitions and divestments of smaller businesses not leading to the restatement of previous periods.
[2] Earnings per share, basis calculation.
[3] Underlying net financial charges include the coupons on perpetual hybrid bonds (accounted as dividends under IFRS, and thereby excluded from the P&L), as well as the financial charges and realized foreign exchange losses from the RusVinyl joint venture (part of earnings from associates under IFRS, and thereby included in the IFRS EBITDA).
Free cash flow from continuing operations reached €830 million versus €782 million in 2017. The increase is largely attributable to working capital phasing, with working capital needs €58 million lower than in 2017. Net working capital over sales rose slightly to 13.7% versus 13.0% at the end of 2017. Total free cash flow was €989 million and included a strong contribution from discontinued operations.
Free cash flow to Solvay shareholders was €725 million, of which €566 million from continuing operations. The increase of +56% follows lower financing payments as a result of continued deleveraging.
| (in € million) | ||||||
|---|---|---|---|---|---|---|
| (5,346) | +725 | -372 | -90 | -28 | +6 | (5,105) |
| Hybrid bonds (2,200) |
FCF to Solvay share |
Dividends to Solvay share |
Remeasu rements (forex) |
In/outflow from M&A |
Changes in scope & other |
Hybrid bonds (2,500) |
| IFRS net debt (3,146) |
holders | holders Operational deleveraging +353 |
IFRS net debt (2,605) |
|||
| December 31, 2017 |
December 31, 2018 |
Underlying net financial debt[1] reduced to €(5.1) billion, from €(5.3) billion at the start of the year, thanks to the strong operational deleveraging, bringing the underlying leverage ratio down from 2.2x to 2.0x. The dividend payments to Solvay shareholders of €(372) million were more than covered by free cash flow delivery. Remeasurements were €(90) million, attributable to the appreciation of the U.S. dollar by 4.7% over the year affecting the conversion of U.S. dollar-denominated debt. M&A activities had a net €(28) million impact.
Underlying gross financial debt was €(6.3) billion, including €(2.5) billion perpetual hybrid bonds. In June 2018 Solvay repaid €382 million on a euro-denominated bond that came to maturity. In November 2018 Solvay successfully placed a perpetual hybrid bond for €(300) million, to be used for general corporate purposes, including the possibility to refinance the existing €(700) million hybrid bond with a first call date in May 2019.
Provisions came down from €(3.9) billion to €(3.8) billion.
The operational deleveraging was €6 million. The net impact on employee benefits, mostly pensions was €113 million, thereby reducing pension liabilities by 5%. Provisions for environmental liabilities were also reduced. Other provisions were up, mainly due to the provision of €(177) million for the announced simplification plan.
Discounting costs were down from last year both for employee benefits and environmental related provisions. Net remeasurements mainly resulted from changes in demographic assumptions.
[1] Underlying net financial debt includes the perpetual hybrid bonds, accounted for as equity under IFRS.
[2] Impact of inflation, mortality, forex & discount rate changes
| Q4 key figures | IFRS | Underlying | ||||
|---|---|---|---|---|---|---|
| (in € million) | Q4 2018 | Q4 2017 | % yoy | Q4 2018 | Q4 2017 | % yoy |
| Net sales | 2,574 | 2,480 | +3.8% | 2,574 | 2,480 | +3.8% |
| EBITDA | 461 | 457 | +0.8% | 506 | 494 | +2.5% |
| EBITDA margin | 19.6% | 19.9% | -0.3pp | |||
| EBIT | 234 | 204 | +15% | 322 | 307 | +5.1% |
| Net financial charges | (57) | (86) | +34% | (78) | (90) | +13% |
| Income tax expenses | 37 | 206 | -82% | (73) | (60) | -22% |
| Profit from discontinued operations | 43 | (39) | n.m. | 47 | 2 | n.m. |
| (Profit) loss attributable to non-controlling interests | (9) | (16) | -42% | (10) | (14) | -33% |
| Profit attributable to Solvay shareholders | 247 | 269 | -7.9% | 209 | 145 | +44% |
| Basic earnings per share (in €) | 2.40 | 2.60 | -7.7% | 2.02 | 1.40 | +45% |
| of which from continuing operations | 1.98 | 2.98 | -33% | 1.57 | 1.38 | +13% |
| Capex | (275) | (287) | +4.3% | |||
| of which from continuing operations | (222) | (243) | +8.4% | |||
| Free cash flow | 571 | 388 | +47% | |||
| of which from continuing operations | 555 | 336 | +65% | |||
| Free cash flow to Solvay shareholders | 454 | 215 | n.m. | |||
| of which from continuing operations | 438 | 163 | n.m. | |||
| Net financial debt [2] | (2,605) | (5,105) |
[1] A full reconciliation of IFRS and underlying income statement data can be found on page 18 of this report.
[2] Underlying net debt includes the perpetual hybrid bonds, accounted for as equity under IFRS.
Net sales FY 2018
[1] The net sales and EBITDA pie charts exclude Corporate & Business Services, Corporate & Business Services had no material contribution to net sales and their contribution to EBITDA is negative, and therefore cannot be depicted.
| Segment review | Underlying | |||||
|---|---|---|---|---|---|---|
| (in € million) | Q4 2018 | Q4 2017 | % yoy | FY 2018 | FY 2017 | % yoy |
| Net sales | 2,574 | 2,480 | +3.8% | 10,257 | 10,125 | +1.3% |
| Advanced Materials | 1,093 | 1,047 | +4.4% | 4,385 | 4,370 | +0.4% |
| Advanced Formulations | 764 | 747 | +2.2% | 3,057 | 2,966 | +3.1% |
| Performance Chemicals | 716 | 679 | +5.5% | 2,808 | 2,766 | +1.5% |
| Corporate & Business Services | 1 | 7 | -83% | 7 | 23 | -69% |
| EBITDA | 506 | 494 | +2.5% | 2,230 | 2,230 | - |
| Advanced Materials | 275 | 260 | +5.9% | 1,197 | 1,202 | -0.4% |
| Advanced Formulations | 119 | 138 | -14% | 521 | 524 | -0.4% |
| Performance Chemicals | 172 | 170 | +0.9% | 729 | 749 | -2.7% |
| Corporate & Business Services | (60) | (74) | +19% | (218) | (244) | +11% |
| EBIT | 322 | 307 | +5.1% | 1,546 | 1,527 | +1.3% |
| Advanced Materials | 191 | 182 | +5.2% | 895 | 896 | -0.1% |
| Advanced Formulations | 82 | 94 | -13% | 381 | 374 | +2.1% |
| Performance Chemicals | 126 | 123 | +2.4% | 552 | 566 | -2.4% |
| Corporate & Business Services | (77) | (92) | +16% | (282) | (308) | +8.5% |
| Capex from continuing operations | (222) | (243) | +8.4% | (711) | (716) | +0.8% |
| Advanced Materials | (355) | (366) | +3.1% | |||
| Advanced Formulations | (148) | (130) | -14% | |||
| Performance Chemicals | (149) | (152) | +1.8% | |||
| Corporate & Business Services | (58) | (68) | +14% | |||
| Cash conversion | 56.0% | 50.8% | +5.2pp | 68.1% | 67.9% | +0.3pp |
| Advanced Materials | 70.4% | 69.5% | +0.8pp | |||
| Advanced Formulations | 71.6% | 75.2% | -3.6pp | |||
| Performance Chemicals | 79.5% | 79.7% | -0.2pp | |||
| CFROI | 6.9% | 6.9% | - | |||
| Advanced Materials | 10.0% | 10.3% | -0.2pp | |||
| Advanced Formulations | 6.9% | 6.7% | +0.1pp | |||
| Performance Chemicals | 8.3% | 8.4% | -0.1pp | |||
| Research & innovation | (352) | (325) | +8.3% | |||
| Advanced Materials | (171) | (157) | -8.9% | |||
| Advanced Formulations | (97) | (85) | -14% | |||
| Performance Chemicals | (27) | (29) | +6.5% | |||
| Corporate & Business Services | (58) | (55) | -5.3% | |||
| Research & innovation intensity | 3.4% | 3.2% | +0.2pp | |||
| Advanced Materials | 3.9% | 3.6% | +0.3pp | |||
| Advanced Formulations | 3.2% | 2.9% | +0.3pp | |||
| Performance Chemicals | 1.0% | 1.0% | -0.1pp |
Underlying EBITDA costs at €(218) million were lower than in 2017. Productivity programs and low insurance claims covered by the insurance captive of the company, helped to lower fixed costs, which more than offset inflation. The contribution from Energy Services was overall flat versus the prior year.
| Key figures | Underlying | |||||
|---|---|---|---|---|---|---|
| (in € million) | Q4 2018 | Q4 2017 | % yoy | FY 2018 | FY 2017 | % yoy |
| Net sales | 1,093 | 1,047 | +4.4% | 4,385 | 4,370 | +0.4% |
| Specialty Polymers | 476 | 475 | +0.1% | 2,009 | 2,025 | -0.8% |
| Composite Materials | 288 | 249 | +15% | 1,082 | 1,038 | +4.3% |
| Special Chem | 220 | 216 | +2.1% | 852 | 865 | -1.5% |
| Silica | 110 | 107 | +2.5% | 442 | 443 | -0.1% |
| EBITDA | 275 | 260 | +5.9% | 1,197 | 1,202 | -0.4% |
| EBITDA margin | 25.1% | 24.8% | +0.4pp | 27.3% | 27.5% | -0.2pp |
| EBIT | 191 | 182 | +5.2% | 895 | 896 | -0.1% |
| Capex from continuing operations | (355) | (366) | +3.1% | |||
| Cash conversion | 70.4% | 69.5% | +0.8pp | |||
| CFROI | 10.0% | 10.3% | -0.2pp | |||
| Research & innovation | (171) | (157) | +0.1% | |||
| Research & innovation intensity | 3.9% | 3.6% | +0.3pp |
Net sales were up +0.4% for the year due to higher volumes and mix. Organically sales rose +3.7%, excluding forex conversion and scope, driven by growth in Composite Materials, Specialty Polymers and Silica.
[1] Excluding forex conversion and scope effects.
Specialty Polymers delivered solid volume growth in the first half of the year. Demand from healthcare and from the automotive market, where Solvay sales significantly outpaced global car production growth, was solid throughout the year but signs of weakening were observed at the end of the year. The trend toward fuel-efficiency and electrification supported superior growth across all vehicle platforms. Second half sales were flat, however, as the anticipated lower demand for smart devices offset growth in other end-markets.
Composite Materials volumes grew at a high single-digit rate throughout the full year period. Demand for new single-aisle aircrafts utilizing the LEAP engine technology, as well as for the 787 program, drove growth in commercial aircrafts. In military, the ramp-up of the F-35 Joint Strike Fighter was also a significant contributor of the volume growth.
Volumes were essentially flat in Special Chem, as robust demand from electronics was offset by the tougher than foreseen phaseout of fluorinated insulation blowing agents. In addition, the shift from diesel to gasoline in automotive catalysts continued to pressure the business.
Silica sales into the fuel-efficient tire market grew in the year and prices were supportive, compensating for higher energy costs.
Underlying EBITDA was down -0.4%, but up +3.1% organically, excluding scope effects and forex conversion. Volume growth and higher prices compensated for the transactional forex effects and the increase in raw materials costs, mainly due to the surge of fluorspar prices in Special Chem. Fixed costs rose in Composite Materials reflecting a ramp up in manufacturing to support continued volume growth. The underlying EBITDA margin remained strong for the year at 27%.
| Key figures | Underlying | |||||
|---|---|---|---|---|---|---|
| (in € million) | Q4 2018 | Q4 2017 | % yoy | FY 2018 | FY 2017 | % yoy |
| Net sales | 764 | 747 | +2.2% | 3,057 | 2,966 | +3.1% |
| Novecare | 478 | 480 | -0.4% | 2,000 | 1,937 | +3.2% |
| Technology Solutions | 169 | 174 | -2.7% | 643 | 662 | -2.9% |
| Aroma Performance | 116 | 93 | +25% | 414 | 366 | +13% |
| EBITDA | 119 | 138 | -14% | 521 | 524 | -0.4% |
| EBITDA margin | 15.6% | 18.4% | -2.8pp | 17.1% | 17.7% | -0.6pp |
| EBIT | 82 | 94 | -13% | 381 | 374 | +2.1% |
| Capex from continuing operations | (148) | (130) | -14% | |||
| Cash conversion | 71.6% | 75.2% | -3.6pp | |||
| CFROI | 6.9% | 6.7% | +0.1pp | |||
| Research & innovation | (97) | (85) | -14% | |||
| Research & innovation intensity | 3.2% | 2.9% | +0.3pp |
(in €million)
+2.2%
Net sales were up +3.1% year on year driven by strong volumes and increased prices. Sales grew organically by +9.0% in 2018, excluding the impact from forex conversion and scope reduction.
In Novecare, both volumes and prices grew across multiple endmarkets. The strong growth of oil and gas in the first half year of the year reduced significantly in the fourth quarter as activity levels in the shale oil & gas stimulation market in North America declined rapidly, weighing on both volumes and margins. Other end-markets including coatings, agro, and home & personal care, showed robust growth throughout the year.
Technology Solutions delivered solid volume growth in the year, with new mine wins and strong demand in phosphorus specialties and polymer additives driving volume growth.
In Aroma Performance, volumes and prices were up significantly throughout the period, both in polymerization inhibitors and in vanillin ingredients, which benefited from the launch of new natural vanillin products.
Underlying EBITDA declined by -0.4%, but grew +8.1% organically, excluding scope effects and forex conversion, as a result of the volume and price increases across businesses. These increases more than compensated for higher raw material costs and slightly higher fixed costs. As a reminder, 2017 benefited from a one-time €17 million indemnity received for the loss of some assets in China. As a result, the underlying EBITDA margin was slightly reduced by -0.6 percentage point to 17% for the year.
Q4 2017
Q4 2018
| Key figures | Underlying | |||||
|---|---|---|---|---|---|---|
| (in € million) | Q4 2018 | Q4 2017 | % yoy | FY 2018 | FY 2017 | % yoy |
| Net sales | 716 | 679 | +5.5% | 2,808 | 2,766 | +1.5% |
| Soda Ash & Derivatives | 399 | 397 | +0.5% | 1,562 | 1,629 | -4.1% |
| Peroxides | 170 | 150 | +13% | 654 | 600 | +8.9% |
| Coatis | 130 | 106 | +23% | 509 | 410 | +24% |
| Functional Polymers | 17 | 26 | -32% | 82 | 126 | -35% |
| EBITDA | 172 | 170 | +0.9% | 729 | 749 | -2.7% |
| EBITDA margin | 24.0% | 25.1% | -1.1pp | 26.0% | 27.1% | -1.1pp |
| EBIT | 126 | 123 | +2.4% | 552 | 566 | -2.4% |
| Capex from continuing operations | (149) | (152) | +1.8% | |||
| Cash conversion | 79.5% | 79.7% | -0.2pp | |||
| CFROI | 8.3% | 8.4% | -0.1pp | |||
| Research & innovation | (27) | (29) | +6.5% | |||
| Research & innovation intensity | 1.0% | 1.0% | -0.1pp |
+5.5%
Net sales in the segment were +1.5% higher driven by price and volume increases, which more than offset forex conversion. Organically sales grew by +6.0% in the year, with the second half stronger than the first half.
Demand remained solid in Soda Ash & Derivatives throughout the year. Soda ash volumes ended slightly down, mainly due to logistic issues at the start of the year. Average soda ash prices were slightly lower year on year as expected, but improved in the second half. Bicarbonate volumes grew, mainly for flue gas treatment in the U.S.
Peroxides delivered strong volume growth globally, complemented by higher prices in Asia. The contribution from the HPPO plants supported the growth.
Record results for the Coatis business, with double-digit sales growth driven by higher volumes and prices. Both domestic demand in Latin America and exports improved, benefiting from Brazilian real depreciation.
Functional Polymers volumes were stable overall.
Underlying EBITDA dropped -2.7% due to forex conversion. Organically it rose +1.6% thanks to volume growth in Peroxides and Coatis and a higher contribution of the PVC joint venture in Russia and the peroxide joint venture in Latin America. Net pricing was stable, as the anticipated margin squeeze in soda ash was offset by the pricing power in Peroxides and Coatis. Overall, the performance of the segment was better than anticipated, resulting in overall EBITDA margin narrowing -1.1 percentage point to 26% for the year.
Q4 2017
Q4 2018
In line with fourth quarter trends, Solvay anticipates supportive market conditions to continue in most key markets, though growth is likely to be moderated by conditions in automotive, electronics and oil & gas. In this context Solvay remains focused on further developing its growth platforms.
Solvay currently expects 2019 EBITDA to grow modestly and to be back-ended compared to €2,330 million pro forma in 2018 [1].
Solvay will continue to focus on cost discipline and on deleveraging the balance sheet with continued solid operational free cash flow delivery
Solvay is mostly exposed to the U.S. dollar, with the main sensitivities per US\$/€0.10 change:
[1] The 2018 EBITDA figures used as a comparison basis are the pro forma figures, following the implementation of IFRS 16. Growth is expressed as organic growth, i.e. excluding scope and forex conversion effects. The full pro forma P&L and key figures can be found on page 34 of this financial report.
Solvay measures its financial performance using alternative performance metrics, which can be found below. Solvay believes that these measurements are useful for analyzing and explaining changes and trends in its historical results of operations, as they allow performance to be compared on a consistent basis.
| Tax rate | Underlying | ||
|---|---|---|---|
| (in € million) | FY 2018 | FY 2017 | |
| Profit for the period before taxes | a | 1,220 | 1,133 |
| Earnings from associates & joint ventures | b | 74 | 71 |
| Interests and realized foreign exchange gains (losses) on the RusVinyl joint venture | c | (21) | (24) |
| Income tax expenses | d | (305) | (299) |
| Tax rate | e = -d/(a-b-c) | 26.1% | 27.5% |
Underlying tax rate = Income taxes / (Result before taxes – Earnings from associates & joint ventures – Interests & realized foreign exchange results on the RusVinyl joint venture) – all determined on an underlying basis. The adjustment made to the denominator regarding associates and joint ventures is done because these contributions are already net of income taxes.
| (in € million) | FY 2018 | FY 2017 | |
|---|---|---|---|
| IFRS research & development costs | a | (297) | (290) |
| Grants netted in research & development costs | b | 25 | 26 |
| Depreciation, amortization & impairments included in research & development costs | c | (59) | (55) |
| Capex in research & innovation | d | (89) | (64) |
| Research & innovation | e = a-b-c+d | (352) | (325) |
| Advanced Materials | (171) | (157) | |
| Advanced Formulations | (97) | (85) | |
| Performance Chemicals | (27) | (29) | |
| Corporate & Business Services | (58) | (55) | |
| Net sales | f | 10,257 | 10,125 |
| Advanced Materials | 4,385 | 4,370 | |
| Advanced Formulations | 3,057 | 2,966 | |
| Performance Chemicals | 2,808 | 2,766 | |
| Corporate & Business Services | 7 | 23 | |
| Research & innovation intensity | g = -e/f | 3.4% | 3.2% |
| Advanced Materials | 3.9% | 3.6% | |
| Advanced Formulations | 3.2% | 2.9% | |
| Performance Chemicals | 1.0% | 1.0% |
Research & innovation measures the total cash effort in research and innovation, regardless of whether the costs were expensed or capitalized. It consists of research & development costs from the income statement before netting of related subsidies and royalties, and where depreciation and amortization are replaced by related capital expenditure.
Research & innovation intensity is the ratio of research & innovation to net sales.
| (in € million) | Q4 2018 | Q4 2017 | FY 2018 | FY 2017 | |
|---|---|---|---|---|---|
| Cash flow from operating activities | a | 786 | 649 | 1,720 | 1,590 |
| of which cash flow related to acquisition or sale of subsidiaries |
b | - | - | - | (36) |
| Cash flow from investing activities | c | (231) | (291) | (784) | 84 |
| of which capital expenditures required by share sale agreement |
d | (13) | (12) | (38) | (12) |
| Acquisition (-) of subsidiaries | e | - | (15) | (12) | (44) |
| Acquisition (-) of investments - Other | f | (4) | 2 | (4) | (11) |
| Loans to associates and non-consolidated companies | g | (3) | 3 | (3) | (7) |
| Sale (+) of subsidiaries and investments | h | 4 | (29) | 26 | 891 |
| Recognition of factored receivables | j | - | 21 | (21) | 21 |
| Free cash flow | k = a-b+c-d-e-f-g-h-j | 571 | 388 | 989 | 871 |
| Free cash flow from discontinued operations | l | 16 | 52 | 160 | 89 |
| Free cash flow from continuing operations | m = k-l | 555 | 336 | 830 | 782 |
| Net interests paid | n | (57) | (111) | (114) | (255) |
| Coupons paid on perpetual hybrid bonds | o | (27) | (27) | (111) | (111) |
| Dividends paid to non-controlling interests | p | (32) | (35) | (39) | (39) |
| Free cash flow to Solvay shareholders | q = k+n+o+p | 454 | 215 | 725 | 466 |
Free cash flow is calculated as cash flows from operating activities (excluding cash flows linked to acquisitions or disposals of subsidiaries), and cash flows from investing activities (excluding cash flows from or related to acquisitions and disposals of subsidiaries and other investments, and excluding loans to associates and non-consolidated investments, as well as related tax elements and recognition of factored receivables).
Free cash flow to Solvay shareholders is calculated as 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.
| (in € million) | Q4 2018 | Q4 2017 | FY 2018 | FY 2017 | |
|---|---|---|---|---|---|
| Acquisition (-) of tangible assets | a | (233) | (252) | (691) | (707) |
| Acquisition (-) of intangible assets | b | (41) | (35) | (142) | (115) |
| Capex | c = a+b | (275) | (287) | (833) | (822) |
| Capex from discontinued operations | d | (52) | (44) | (122) | (105) |
| Capex from continuing operations | e = c-d | (222) | (243) | (711) | (716) |
| Advanced Materials | (355) | (366) | |||
| Advanced Formulations | (148) | (130) | |||
| Performance Chemicals | (149) | (152) | |||
| Corporate & Business Services | (58) | (68) | |||
| Underlying EBITDA | f | 506 | 494 | 2,230 | 2,230 |
| Advanced Materials | 275 | 260 | 1,197 | 1,202 | |
| Advanced Formulations | 119 | 138 | 521 | 524 | |
| Performance Chemicals | 172 | 170 | 729 | 749 | |
| Corporate & Business Services | (60) | (74) | (218) | (244) | |
| Cash conversion | g = (f+e)/f | 56.0% | 50.8% | 68.1% | 67.9% |
| Advanced Materials | 70.4% | 69.5% | |||
| Advanced Formulations | 71.6% | 75.2% | |||
| Performance Chemicals | 79.5% | 79.7% |
Capital expenditure (capex) is cash paid for the acquisition of tangible and intangible assets.
Cash conversion is a ratio used to measure the conversion of EBITDA into cash. It is defined as (Underlying EBITDA + Capex from continuing operations) / Underlying EBITDA.
| Net working capital | 2018 | 2017 | ||||
|---|---|---|---|---|---|---|
| (in € million) | December 31 |
September 30 |
June 30 |
March 31 |
December 31 |
|
| Inventories | a | 1,685 | 1,744 | 1,624 | 1,549 | 1,504 |
| Trade receivables | b | 1,434 | 1,565 | 1,541 | 1,608 | 1,462 |
| Other current receivables | c | 719 | 1,123 | 820 | 730 | 627 |
| Trade payables | d | (1,439) | (1,312) | (1,289) | (1,358) | (1,330) |
| Other current liabilities | e | (850) | (1,140) | (889) | (953) | (848) |
| Net working capital | f = a+b+c+d+e | 1,550 | 1,980 | 1,808 | 1,576 | 1,414 |
| Sales | g | 2,830 | 2,840 | 2,820 | 2,809 | 2,717 |
| Annualized quarterly total sales | h = 4*g | 11,321 | 11,359 | 11,281 | 11,235 | 10,869 |
| Net working capital / sales | i = f / h | 13.7% | 17.4% | 16.0% | 14.0% | 13.0% |
| Year average | j = µ(Q1,Q2,Q3,Q4) | 15.3% | 13.8% |
Net working capital includes inventories, trade receivables and other current receivables, netted with trade payables and other current liabilities.
| Net financial debt | 2018 | 2017 | |
|---|---|---|---|
| December | December | ||
| (in € million) | 31 | 31 | |
| Non-current financial debt | a | (3,180) | (3,182) |
| Current financial debt | b | (630) | (1,044) |
| Gross debt | c = a+b | (3,810) | (4,226) |
| Other financial instruments | d | 101 | 89 |
| Cash & cash equivalents | e | 1,103 | 992 |
| Total cash and cash equivalents | f = d+e | 1,205 | 1,080 |
| IFRS net debt | g = c+f | (2,605) | (3,146) |
| Perpetual hybrid bonds | h | (2,500) | (2,200) |
| Underlying net debt | i = g+h | (5,105) | (5,346) |
| Underlying EBITDA (last 12 months) | j | 2,230 | 2,230 |
| Adjustment for discontinued operations [1] | k | 305 | 236 |
| Adjusted underlying EBITDA for leverage calculation [1] | l = j+k | 2,536 | 2,466 |
| Underlying leverage ratio [1] | m = -i/l | 2.0 | 2.2 |
(IFRS) net debt = Non-current financial debt + Current financial debt – Cash & cash equivalents – Other financial instruments. Underlying net debt represents the Solvay share view of debt, reclassifying as debt 100% of the hybrid perpetual bonds, classified as equity under IFRS. Leverage ratio = Net debt / Underlying EBITDA of last 12 months. Underlying leverage ratio = Underlying net debt / Underlying EBITDA of last 12 months.
[1] As net debt at the end of the period does not yet reflect the net proceeds to be received on the divestment of discontinued operations, whereas the underlying EBITDA excludes the contribution of discontinued operations, the underlying EBITDA is adjusted to calculate the leverage ratio. Polyamide's underlying EBITDA was added.
| CFROI | FY 2018 | FY 2017 | |||||
|---|---|---|---|---|---|---|---|
| As publi | Adjust | As calcu | As publi | Adjust | As calcu | ||
| (in € million) | shed | ment | lated | shed | ment | lated | |
| Underlying EBIT | a | 1,546 | 1,546 | 1,527 | 1,527 | ||
| Underlying EBITDA | b | 2,230 | 2,230 | 2,230 | 2,230 | ||
| Underlying earnings from associates & joint ventures |
c | 74 | 74 | 71 | 71 | ||
| Dividends received from associates & joint ventures [1] |
d | 25 | - | 25 | 18 | - | 18 |
| Recurring capex [2] | e = -2%*l | (324) | (326) | ||||
| Recurring income taxes [3] | f = -30%*(a-c) | (442) | (437) | ||||
| Recurring "CFROI" cash flow data | g = b-c+d+e+f | 1,416 | 1,415 | ||||
| Advanced Materials | 794 | 798 | |||||
| Advanced Formulations | 335 | 335 | |||||
| Performance Chemicals | 446 | 458 | |||||
| Corporate & Business Services | (158) | (176) | |||||
| Tangible assets | h | 5,454 | 5,433 | ||||
| Intangible assets | i | 2,861 | 2,940 | ||||
| Goodwill | j | 5,173 | 5,042 | ||||
| Replacement value of goodwill & fixed assets [4] |
k = h+i+j | 13,488 | 4,831 | 18,319 | 13,415 | 5,093 | 18,508 |
| of which fixed assets | l | 16,187 | 16,314 | ||||
| Investments in associates & joint ventures [5] |
m | 441 | 1 | 443 | 466 | 16 | 482 |
| Net working capital [5] | n | 1,550 | 179 | 1,728 | 1,414 | 111 | 1,525 |
| "CFROI" invested capital | o = k+m+n | 20,490 | 20,515 | ||||
| Advanced Materials | 7,918 | 7,777 | |||||
| Advanced Formulations | 4,878 | 4,972 | |||||
| Performance Chemicals | 5,373 | 5,450 | |||||
| Corporate & Business Services | 2,321 | 2,315 | |||||
| CFROI | p = g/o | 6.9% | 6.9% | ||||
| Advanced Materials | 10.0% | 10.3% | |||||
| Advanced Formulations | 6.9% | 6.7% | |||||
| Performance Chemicals | 8.3% | 8.4% |
Cash Flow Return On Investment measures the cash returns of Solvay's business activities. Movements in CFROI levels are relevant indicators for showing whether economic value is being added, though it is accepted that this measure cannot be benchmarked or compared with industry peers. The definition uses a reasonable estimate (management estimate) of the replacement cost of assets and avoids accounting distortions, e.g. for impairments. It is calculated as the ratio between recurring cash flow and invested capital, where:
Recurring income tax is normalized at 30% of (Underlying EBIT Earnings from associates and joint ventures)
[1] Excluding discontinued operations
[5] The adjustment reflects the difference between the estimated replacement value of goodwill and fixed assets, and the accounting value. The changes over time come from foreign exchange variations, new investments and portfolio moves. It also reflects the quarterly average over the year.
| Key value indicators | Mid-term objectives | Achieved | FY 2015 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| 2016 - 2018 | 2016 - | ||||||||
| 2018 | FY 2018 | FY 2017 | FY 2016 | pro forma | |||||
| as published | a | 2,230 | 2,230 | 2,284 | 2,336 | ||||
| Underlying EBITDA | (in € million) | restated | b | 2,230 | 2,075 | 2,125 | |||
| at constant scope & forex | c | 2,119 | 2,034 | 2,077 | |||||
| restated | = a(0) b(-1) / - 1 |
+5.0% | - | +7.5% | +7.5% | ||||
| growth[1] Average |
(in %) | forex at constant scope & |
= a(0) c(-1) / - 1 |
mid-to-high single-digit |
+8.3% | +5.3% | +9.7% | +9.9% | |
| for average calculation |
= a(0) c(-1) / - 1 |
mid-to-high single-digit |
+7.5% | +5.3% | +9.7% | +7.5% | |||
| Free cash flow (total) [2] | (in € million) | as published | > 2,400 | 2,736 | 989 | 871 | 876 | 492 | |
| CFROI | (in %) | as published | 6.9% | 6.9% | 6.3% | 6.1% | |||
| (+) Total improvement |
(in pp) | as published | +0.5pp - +1.0pp | +0.8pp | - | +0.6pp | +0.3pp | ||
| Greenhouse gas intensity |
(in kg CO2e / € EBITDA) | as published | ≤ 5.8 | 5.5 | 5.5 | 5.5 | 5.9 | 7.3 | |
| (-) Total improvement |
(in %) | -20% | -24% | -0.2% | -5.8% | -19% | |||
| (SPM) Sustainable solutions |
(in % of net sales) | as published | ≥ 40% | 50.0% | 50.0% | 49.0% | 43.0% | 33.0% | |
| (+) Total improvement |
(in pp) | +7.0pp | +17pp | +1.0pp | +6.0pp | +10pp | |||
| Occupational accidents at sites [3] Group |
(in # accidents / m working h) | as published | ≤ 0.69 | 0.54 | 0.54 | 0.65 | 0.77 | 0.77 | |
| (-) Total improvement |
(in %) | -10% | -30% | -17% | -16% | - | |||
| Employee engagement |
(index on 100% scale) | as published | ≥ 75% | 76.0% | 76.0% | 75.0% | 77.0% | 75.0% | |
| (+) Total improvement |
(in pp) | - | +1.0pp | +1.0pp | -2.0pp | +2.0pp | |||
| Employees involved in societal actions |
(in % of employees) | as published | ≥ 25% | 33.0% | 33.0% | 33.0% | 23.0% | 20.0% | |
| (+) Total improvement |
(in pp) | +5.0pp | +13pp | - | +10pp | +3.0pp |
[1] Mid-term 2016-2018 objectives for underlying EBITDA growth were given at constant scope and forex. Based on that calculation, the 2016 growth was +9.9%. As the scope and forex were already largely known at the time the objectives were set in the third quarter of 2016, the reported growth of +7.5% is taken for the calculation.
[2] The free cash flow objective in excess of €2.4 billion has been set at constant scope (and forex). Since then, a number of businesses have been divested (Acetow, Vinythai) or are in the process of being divested (Polyamide), so these activities will not contribute fully to cash flow generation over the three-year period, making achieving the target is even more challenging.
[3] The business scope for occupational accidents includes all sites under Solvay's operational control for which the Group manages and monitors safety performance.
Besides IFRS accounts, Solvay also presents underlying Income Statement performance indicators to provide a more consistent and comparable indication of Solvay's economic performance. These 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.
| FY consolidated income statement FY 2018 |
FY 2017 | |||
|---|---|---|---|---|
| Adjust Under Adjust |
Under | |||
| IFRS ments lying IFRS ments (in € million) |
lying | |||
| Sales [1] 11,299 - 11,299 10,984 |
- 10,984 |
|||
| of which revenues from non-core activities [1] 1,042 - 1,042 859 |
- 859 |
|||
| of which net sales 10,257 - 10,257 10,125 |
- 10,125 |
|||
| Cost of goods sold [1] (8,264) 2 (8,262) (7,898) |
2 (7,896) |
|||
| Gross margin 3,035 2 3,037 3,086 |
2 3,088 |
|||
| Commercial costs (373) - (373) (400) |
- (400) |
|||
| Administrative costs (1,006) 35 (971) (1,037) |
42 (996) |
|||
| Research & development costs (297) 3 (294) (290) |
3 (288) |
|||
| Other operating gains & losses (123) 197 74 (154) |
206 51 |
|||
| Earnings from associates & joint ventures 44 30 74 44 |
27 71 |
|||
| Result from portfolio management & reassessments (208) 208 - (188) |
188 - |
|||
| Result from legacy remediation & major litigations (86) 86 - (84) |
84 - |
|||
| EBITDA 1,930 301 2,230 2,029 |
201 2,230 |
|||
| Depreciation, amortization & impairments (944) 260 (684) (1,054) |
350 (704) |
|||
| EBIT 986 560 1,546 976 |
551 1,527 |
|||
| Net cost of borrowings (118) - (118) (201) |
31 (170) |
|||
| Coupons on perpetual hybrid bonds - (112) (112) - |
(111) (111) |
|||
| Interests and realized foreign exchange gains (losses) - (21) (21) - |
(24) (24) |
|||
| on the RusVinyl joint venture Cost of discounting provisions (77) 3 (74) (97) |
8 (89) |
|||
| Profit for the period before taxes 791 429 1,220 678 |
455 1,133 |
|||
| Income tax expenses (95) (210) (305) 197 (496) |
(299) | |||
| Profit for the period from continuing operations 697 219 915 875 |
(42) 834 |
|||
| Profit (loss) for the period from discontinued 201 15 216 241 operations |
(82) 159 |
|||
| Profit for the period 897 234 1,131 1,116 (124) |
992 | |||
| attributable to Solvay shareholders 858 234 1,092 1,061 (122) |
939 | |||
| attributable to non-controlling interests 39 - 40 56 |
(2) 54 |
|||
| Basic earnings per share (in €) 8.31 10.57 10.27 |
9.08 | |||
| of which from continuing operations 6.37 8.48 7.97 |
7.59 | |||
| Diluted earnings per share (in €) 8.27 10.52 10.19 |
9.02 | |||
| of which from continuing operations 6.34 8.44 7.92 |
7.53 |
[1] The comparative figures of non-core revenues and costs of goods sold have been restated for an amount of €93 million, following a change in presentation of revenues from non-core activities.
EBITDA on an IFRS basis totaled €1,930 million, versus €2,230 million on an underlying basis. The difference of €301 million is explained by the following adjustments to IFRS results, which are done to improve the comparability of underlying results:
EBIT on an IFRS basis totaled €986 million, versus €1,546 million on an underlying basis. The difference of €560 million is explained by the above-mentioned €301 million adjustments at the EBITDA level and €260 million of "Depreciation, amortization & impairments". The latter consist of:
Net financial charges on an IFRS basis were €(194) million versus €(326) million on an underlying basis. The €(131) million adjustment made to IFRS net financial charges consists of:
Income taxes on an IFRS basis were €(95) million, versus €(305) million on an underlying basis. The €(210) million adjustment includes mainly:
Discontinued operations generated a profit of €201 million on an IFRS basis and €216 million on an underlying basis. The €15 million adjustment to the IFRS profit is made for M&A costs related to the planned divestment of the polyamide activities.
Profit attributable to Solvay share was €858 million on an IFRS basis and €1,092 million on an underlying basis. The delta of €234 million reflects the above-mentioned adjustments to EBIT, net financial charges, income taxes and discontinued operations. There was no impact from non-controlling interests.
| Q4 2018 | Q4 2017 | |||||
|---|---|---|---|---|---|---|
| Adjust | Under | Adjust | Under | |||
| (in € million) | IFRS | ments | lying | IFRS | ments | lying |
| Sales [1] | 2,830 | - | 2,830 | 2,717 | - | 2,717 |
| of which revenues from non-core activities [1] | 256 | - | 256 | 237 | - | 237 |
| of which net sales | 2,574 | - | 2,574 | 2,480 | - | 2,480 |
| Cost of goods sold [1] | (2,135) | - | (2,135) | (1,986) | - | (1,986) |
| Gross margin | 695 | - | 696 | 731 | - | 731 |
| Commercial costs | (96) | - | (96) | (101) | - | (101) |
| Administrative costs | (260) | 9 | (251) | (274) | 10 | (264) |
| Research & development costs | (80) | 1 | (80) | (82) | 1 | (81) |
| Other operating gains & losses | (19) | 50 | 31 | (47) | 50 | 3 |
| Earnings from associates & joint ventures | 15 | 8 | 23 | 13 | 6 | 19 |
| Result from portfolio management & reassessments | (8) | 8 | - | (10) | 10 | - |
| Result from legacy remediation & major litigations | (13) | 13 | - | (27) | 27 | - |
| EBITDA | 461 | 45 | 506 | 457 | 37 | 494 |
| Depreciation, amortization & impairments | (227) | 44 | (183) | (253) | 66 | (187) |
| EBIT | 234 | 89 | 322 | 204 | 103 | 307 |
| Net cost of borrowings | (28) | - | (28) | (59) | 25 | (34) |
| Coupons on perpetual hybrid bonds | - | (29) | (29) | - | (28) | (28) |
| Interests and realized foreign exchange gains (losses) on the RusVinyl joint venture |
- | (3) | (3) | - | (4) | (4) |
| Cost of discounting provisions | (29) | 11 | (19) | (28) | 3 | (24) |
| Profit for the period before taxes | 177 | 67 | 244 | 118 | 99 | 217 |
| Income tax expenses | 37 | (110) | (73) | 206 | (266) | (60) |
| Profit for the period from continuing operations | 214 | (43) | 171 | 324 | (167) | 157 |
| Profit (loss) for the period from discontinued operations |
43 | 5 | 47 | (39) | 41 | 2 |
| Profit for the period | 257 | (38) | 218 | 285 | (126) | 159 |
| attributable to Solvay shareholders | 247 | (38) | 209 | 269 | (124) | 145 |
| attributable to non-controlling interests | 9 | - | 10 | 16 | (2) | 14 |
| Basic earnings per share (in €) | 2.40 | 2.02 | 2.60 | 1.40 | ||
| of which from continuing operations | 1.98 | 1.57 | 2.98 | 1.38 | ||
| Diluted earnings per share (in €) | 2.39 | 2.02 | 2.58 | 1.39 | ||
| of which from continuing operations | 1.98 | 1.56 | 2.96 | 1.37 |
[1] The comparative figures of non-core revenues and costs of goods sold have been restated for an amount of €(48) million, following a change in presentation of revenues from non-core activities.
EBITDA on an IFRS basis totaled €461 million, versus €506 million on an underlying basis. The difference of €45 million is explained by the following adjustments to IFRS results, which are done to improve the comparability of underlying results:
EBIT on an IFRS basis totaled €234 million, versus €322 million on an underlying basis. The difference of €89 million is explained by the above-mentioned €45 million adjustments at the EBITDA level and €44 million of "Depreciation, amortization & impairments". The latter consist of:
Net financial charges on an IFRS basis were €(57) million versus €(78) million on an underlying basis. The €(21) million adjustment made to IFRS net financial charges consists of:
Income taxes on an IFRS basis were €37 million, versus €(73) million on an underlying basis. The €(110) million adjustment includes mainly:
Discontinued operations generated a profit of €43 million on an IFRS basis and €47 million on an underlying basis. The €5 million adjustment to the IFRS profit is made for M&A costs related to the planned divestment of the polyamide activities.
Profit attributable to Solvay share was €247 million on an IFRS basis and €209 million on an underlying basis. The delta of €(38) million reflects the above-mentioned adjustments to EBIT, net financial charges, income taxes and discontinued operations. There was no impact from non-controlling interests.
| (in € million) | Q4 2018 | Q4 2017 | FY 2018 | FY 2017 |
|---|---|---|---|---|
| Sales [1] | 2,830 | 2,717 | 11,299 | 10,984 |
| of which revenues from non-core activities [1] | 256 | 237 | 1,042 | 859 |
| of which net sales | 2,574 | 2,480 | 10,257 | 10,125 |
| Cost of goods sold [1] | (2,135) | (1,986) | (8,264) | (7,898) |
| Gross margin | 695 | 731 | 3,035 | 3,086 |
| Commercial costs | (96) | (101) | (373) | (400) |
| Administrative costs | (260) | (274) | (1,006) | (1,037) |
| Research & development costs | (80) | (82) | (297) | (290) |
| Other operating gains & losses | (19) | (47) | (123) | (154) |
| Earnings from associates & joint ventures | 15 | 13 | 44 | 44 |
| Result from portfolio management & reassessments | (8) | (10) | (208) | (188) |
| Result from legacy remediation & major litigations | (13) | (27) | (86) | (84) |
| EBIT | 234 | 204 | 986 | 976 |
| Cost of borrowings | (31) | (48) | (131) | (172) |
| Interest on lendings & deposits | 4 | 4 | 13 | 15 |
| Other gains & losses on net indebtedness | (1) | (15) | (1) | (44) |
| Cost of discounting provisions | (29) | (28) | (77) | (97) |
| Profit for the period before taxes | 177 | 118 | 791 | 678 |
| Income tax expenses | 37 | 206 | (95) | 197 |
| Profit for the period from continuing operations | 214 | 324 | 697 | 875 |
| attributable to Solvay shareholders | 205 | 308 | 657 | 824 |
| attributable to non-controlling interests | 9 | 16 | 39 | 51 |
| Profit (loss) for the period from discontinued operations | 43 | (39) | 201 | 241 |
| Profit for the period | 257 | 285 | 897 | 1,116 |
| attributable to Solvay shareholders | 247 | 269 | 858 | 1,061 |
| attributable to non-controlling interests | 9 | 16 | 39 | 56 |
| Weighted average of number of outstanding shares, basic | 103,198,714 | 103,412,650 | 103,276,632 | 103,351,807 |
| Weighted average of number of outstanding shares, diluted | 103,473,072 | 104,133,128 | 103,735,303 | 104,084,395 |
| Basic earnings per share (in €) | 2.40 | 2.60 | 8.31 | 10.27 |
| of which from continuing operations | 1.98 | 2.98 | 6.37 | 7.97 |
| Diluted earnings per share (in €) | 2.39 | 2.58 | 8.27 | 10.19 |
| of which from continuing operations | 1.98 | 2.96 | 6.34 | 7.92 |
(in € million) Q4 2018 Q4 2017 FY 2018 FY 2017 Profit for the period 257 285 897 1,116 Gains and losses on hedging instruments in a cash flow hedge (51) (10) (47) 15 Currency translation differences from subsidiaries & joint operations 74 (101) 255 (790) Currency translation differences from associates & joint ventures 4 (7) (34) (40) Recyclable components 28 (118) 173 (815) Gains and losses on equity instruments measured at fair value through other comprehensive income 2 - 3 (1) Remeasurement of the net defined benefit liability [2] (238) (112) 26 95 Non-recyclable components (236) (112) 29 94 Income tax relating to components of other comprehensive income 62 77 1 37 Other comprehensive income, net of related tax effects (147) (153) 204 (684) Total comprehensive income 110 132 1,101 433 attributed to Solvay share 99 114 1,058 412 attributed to non-controlling interests 10 17 43 20
[1] The comparative figures of non-core revenues and costs of goods sold have been restated for an amount of €93 million in the full year and €(48) million in the fourth quarter, following a change in presentation of revenues from non-core activities.
[2] The net defined benefit liability remeasurement of €238 million in the fourth quarter mainly relates to negative return on plan assets, reduction of discount rates in UK and increase of inflation assumptions for France.
| Consolidated statement of cash flows | IFRS | ||||
|---|---|---|---|---|---|
| (in € million) | Q4 2018 | Q4 2017 | FY 2018 | FY 2017 | |
| Profit for the period | 257 | 285 | 897 | 1,116 | |
| Adjustments to profit for the period | 297 | 264 | 1,575 | 1,315 | |
| Depreciation, amortization & impairments (-) | 227 | 253 | 944 | 1,152 | |
| Earnings from associates & joint ventures (-) | (15) | (13) | (44) | (44) | |
| Additions & reversals on provisions (-) | 59 | 83 | 315 | 216 | |
| Other non-operating and non-cash items [1] | (8) | 10 | (12) | (179) | |
| Net financial charges (-) | 58 | 88 | 198 | 302 | |
| Income tax expenses (-) | (25) | (157) | 175 | (131) | |
| Changes in working capital | 386 | 228 | (148) | (216) | |
| Uses of provisions | (107) | (103) | (395) | (408) | |
| Dividends received from associates & joint ventures | 8 | 4 | 25 | 18 | |
| Income taxes paid (including income taxes paid on sale of investments) | (55) | (29) | (235) | (237) | |
| Cash flow from operating activities | 786 | 649 | 1,720 | 1,590 | |
| of which cash flow related to acquisition or sale of subsidiaries | - | - | - | (36) | |
| Acquisition (-) of subsidiaries | - | (15) | (12) | (44) | |
| Acquisition (-) of investments - Other | (4) | 2 | (4) | (11) | |
| Loans to associates and non-consolidated companies | (3) | 3 | (3) | (7) | |
| Sale (+) of subsidiaries and investments | 4 | (29) | 26 | 891 | |
| Acquisition (-) of tangible and intangible assets (capex) | (275) | (287) | (833) | (822) | |
| of which tangible assets | (233) | (252) | (691) | (707) | |
| of which capital expenditures required by share sale agreement | (13) | (12) | (38) | (12) | |
| of which intangible assets | (41) | (35) | (142) | (115) | |
| Sale (+) of tangible & intangible assets | 23 | 11 | 42 | 75 | |
| of which cash flow related to the sale of real estate in the context of | |||||
| restructuring, dismantling or remediation | 9 | 8 | 9 | 12 | |
| Dividends from financial assets measured at fair value through other | - | (1) | - | 2 | |
| comprehensive income | |||||
| Changes in non-current financial assets | 23 | 26 | - | (1) | |
| Cash flow from investing activities | (231) | (291) | (784) | 84 | |
| Proceeds from perpetual hybrid bond issuance | 298 | - | 298 | - | |
| Sale (acquisition) of treasury shares | (23) | (19) | (22) | (14) | |
| Increase in borrowings | 392 | 934 | 2,444 | 1,692 | |
| Repayment of borrowings | (1,175) | (1,851) | (2,994) | (2,584) | |
| Changes in other current financial assets | (35) | 390 | (25) | (27) | |
| Net interests paid | (57) | (111) | (114) | (255) | |
| Coupons paid on perpetual hybrid bonds | (27) | (27) | (111) | (111) | |
| Dividends paid | (33) | (35) | (411) | (396) | |
| of which to Solvay shareholders | - | - | (372) | (357) | |
| of which to non-controlling interests | (32) | (35) | (39) | (39) | |
| Other[2] | (10) | 1 | 123 | 13 | |
| Cash flow from financing activities | (671) | (718) | (811) | (1,684) | |
| Net change in cash and cash equivalents | (116) | (361) | 126 | (10) | |
| Currency translation differences | 1 | (6) | (14) | (52) | |
| Opening cash balance | 1,218 | 1,358 | 992 | 1,054 | |
| Closing cash balance | 1,103 | 992 | 1,103 | 992 |
| (in € million) | Q4 2018 | Q4 2017 | FY 2018 | FY 2017 |
|---|---|---|---|---|
| Cash flow from operating activities | 55 | 84 | 244 | 183 |
| Cash flow from investing activities | (52) | (44) | (122) | (105) |
| Cash flow from financing activities | - | - | (1) | (1) |
| Net change in cash and cash equivalents | 3 | 40 | 120 | 77 |
[1] Other non-operating and non-cash items for FY the year include the capital gain on the sale of the Phosphorus site in Charleston, U.S., for €22 million, offset by some other smaller transactions.
[2] Other cash flow from financing activities were positively impacted by cash-in related to margin calls in 2018.
| December | December | |
|---|---|---|
| (in € million) | 31, 2018 |
31, 2017 |
| Intangible assets | 2,861 | 2,940 |
| Goodwill | 5,173 | 5,042 |
| Tangible assets | 5,454 | 5,433 |
| Equity instruments measured at fair value through other comprehensive income | 51 | 44 |
| Investments in associates & joint ventures | 441 | 466 |
| Other investments | 41 | 47 |
| Deferred tax assets | 1,123 | 1,076 |
| Loans & other assets | 282 | 346 |
| Non-current assets | 15,427 | 15,394 |
| Inventories | 1,685 | 1,504 |
| Trade receivables | 1,434 | 1,462 |
| Income tax receivables | 97 | 100 |
| Other financial instruments | 101 | 89 |
| Other receivables | 719 | 627 |
| Cash & cash equivalents | 1,103 | 992 |
| Assets held for sale | 1,434 | 1,284 |
| Current assets | 6,574 | 6,057 |
| Total assets | 22,000 | 21,451 |
| Share capital | 1,588 | 1,588 |
| Reserves | 8,920 | 8,051 |
| Non-controlling interests | 117 | 113 |
| Total equity | 10,624 | 9,752 |
| Provisions for employee benefits | 2,672 | 2,816 |
| Other provisions | 883 | 793 |
| Deferred tax liabilities | 618 | 600 |
| Financial debt | 3,180 | 3,182 |
| Other liabilities | 121 | 180 |
| Non-current liabilities | 7,474 | 7,571 |
| Other provisions | 281 | 281 |
| Financial debt | 630 | 1,044 |
| Trade payables | 1,439 | 1,330 |
| Income tax payables | 114 | 129 |
| Dividends payable | 154 | 147 |
| Other liabilities | 850 | 848 |
| Liabilities associated with assets held for sale | 435 | 349 |
| Current liabilities | 3,902 | 4,128 |
| Total equity & liabilities | 22,000 | 21,451 |
| Consolidated statement of changes in equity | Revaluation reserve (fair value) |
IFRS | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in € million) | Share capital |
Share premiums |
Treasury shares |
Perpetual hybrid bonds |
Retained earnings |
Currency translation differences |
Equity instruments measured at fair value through other comprehensive income |
Cash flow hedges |
Defined benefit pension plans |
Total reserves |
Non controlling interests |
Total equity |
| Balance on December 31, 2016 | 1,588 | 1,169 | (274) | 2,188 | 5,899 | (39) | 8 | (5) | (828) | 8,118 | 250 | 9,956 |
| Profit for the period | - | - | - | - | 1,061 | - | - | - | - | 1,061 | 56 | 1,116 |
| Items of other comprehensive income | - | - | - | - | - | (795) | (3) | 22 | 128 | (649) | (35) | (684) |
| Comprehensive income | - | - | - | - | 1,061 | (795) | (3) | 22 | 128 | 412 | 20 | 433 |
| Cost of stock options | - | - | - | - | 10 | - | - | - | - | 10 | - | 10 |
| Dividends | - | - | - | - | (363) | - | - | - | - | (363) | (41) | (404) |
| Coupons of perpetual hybrid bonds | - | - | - | - | (111) | - | - | - | - | (111) | - | (111) |
| Sale (acquisition) of treasury shares | - | - | (7) | - | (7) | - | - | - | - | (14) | - | (14) |
| Other[1] | - | 1 | - | - | (33) | - | - | - | 34 | 1 | (117) | (116) |
| Balance on December 31, 2017 | 1,588 | 1,170 | (281) | 2,188 | 6,454 | (834) | 5 | 16 | (666) | 8,051 | 113 | 9,752 |
| Adoption IFRS 9 | - | - | - | - | (5) | - | - | - | - | (5) | - | (5) |
| Balance on January 1, 2018 | 1,588 | 1,170 | (281) | 2,188 | 6,449 | (834) | 5 | 16 | (666) | 8,046 | 113 | 9,747 |
| Profit for the period | - | - | - | - | 858 | - | - | - | - | 858 | 39 | 897 |
| [2] Items of other comprehensive income |
- | - | - | - | - | 217 | 4 | (42) | 22 | 200 | 4 | 204 |
| Comprehensive income | - | - | - | - | 858 | 217 | 4 | (42) | 22 | 1,058 | 43 | 1,101 |
| Perpetual hybrid bond issuance | - | - | - | 298 | - | - | - | - | - | 298 | - | 298 |
| Cost of stock options | - | - | - | - | 9 | - | - | - | - | 9 | - | 9 |
| Dividends | - | - | - | - | (378) | - | - | - | - | (378) | (40) | (418) |
| Coupons of perpetual hybrid bonds | - | - | - | - | (111) | - | - | - | - | (111) | - | (111) |
| Sale (acquisition) of treasury shares | - | - | (18) | - | (4) | - | - | - | - | (22) | - | (22) |
| Other | - | - | - | - | 11 | - | - | - | 8 | 19 | 1 | 19 |
| Balance on December 31, 2018 | 1,588 | 1,170 | (299) | 2,486 | 6,834 | (618) | 9 | (26) | (636) | 8,920 | 117 | 10,624 |
[1] The €(117) million reduction in equity related to non-controlling interest follows the completion of the Vinythai divestment in Q1 2017.
[2] The €217 million increase in equity related to currency translation differences is mainly related to the U.S. dollar increase versus the euro.
Solvay is a public limited liability company governed by Belgian law and quoted on Euronext Brussels and Euronext Paris. These condensed consolidated financial statements were authorized for issue by the Board of Directors on February 26, 2019.
On November 15, 2017, Solvay agreed to sell its U.S. facility in Charleston, South Carolina, and the phosphorus derivatives-based products made at the plant to German specialty chemicals company Lanxess. The products at the site are used primarily as intermediates in plastic additives, flame retardants and agricultural applications. The business represents sales of approximately € 65 million. Transaction was completed on February 8, 2018 for US\$68 million, leading to a net capital gain before tax of €22 million. Employees at the site were transferred.
On March 15, 2018, Solvay announced it had agreed to sell its Porto Marghera plant, which produces hydrofluoric acid, to Alkeemia, part of the Italian Fluorsid Group. The hydrofluoric acid is utilized by Solvay as a base chemical for the production of selected specialty polymers. This divestment is in line with Solvay Specialty Polymers' strategy to focus on specialties, where technology and innovation make the difference, to improve the sustainability of its productions. Fluorsid Group is one of the key players in the hydrofluoric acid and derivatives market at an international level. Alkeemia acquired Solvay Specialty Polymers' Porto Marghera branch of activities, and the employees at the site have been transferred. The sale closed on June 1, 2018. In connection with the disposal, an impairment loss of € (23) million has been recognized in the first quarter of 2018.
On March 29, 2018, Solvay announced it is taking a new step in its transformation, putting its customers at the core of its organization to enhance its long-term growth as an advanced materials and specialty chemicals company. Solvay announced plans to simplify its organization that needs to be adapted to its portfolio, which is now strongly focused on high-performance materials and tailored solutions, as well as to its changing customer base. The Group launched the relevant information/consultation procedures with employee representatives. These procedures were completed at the end of June. The Group is committed to supporting employees throughout this transformation while limiting job losses as much as possible. The simplification of the organization should lead to around 600 net redundancies, mainly in functional activities. The concentration of the R&I and support activities would involve the transfer to Lyon and Brussels, over four years, of about 500 employees who can rely on comprehensive support from the Group to help them relocate. In connection with the announced transformation, a restructuring provision has been recognized, with a net profit or loss impact of € (177) million. On top of this provision, other costs were already incurred in 2018 for an amount of € (8) million.
On October 16, 2018, Solvay announced that the divestment of Solvay's polyamide business to BASF is moving forward, as BASF has offered remedies involving part of the assets originally included in the scope of the acquisition, to address the competition concerns the European Commission has raised following an in-depth Phase II investigation. The European Commission examined these remedies and submitted them to market testing before completing its review procedure. The assets concerned by the remedies include innovation capabilities and manufacturing assets of Solvay's polyamide intermediate and engineering plastics business in Europe. The activities included in the proposed remedy scope are able to compete as successful stand-alone businesses under third party ownership. For BASF and Solvay this was a further step towards obtaining European Commission clearance for their agreement, and which was obtained in January 2019. Both companies will continue to run their businesses separately until completion of the transaction, which is expected in the second part of 2019 after all remaining closing conditions will have been fulfilled.
On November 27, 2018 Solvay successfully issued a perpetual hybrid bond for an aggregate nominal amount of € 300 million, to be used for general corporate purposes, including the possibility to refinance the existing € 700 million hybrid bond with a first call date in May 2019. The € 300 million hybrid bond has a first call date on March 4, 2024 and a coupon of 4.25% until this date, with a reset every 5 years thereafter. The hybrid bond ranks junior to all senior debt and is classified as equity (and accordingly, coupons will be deducted from equity in accordance with IFRS.
Solvay prepares its condensed consolidated financial statements on a quarterly basis, in accordance with IAS 34 "Interim Financial Reporting". They do not include all the information required for the preparation of the annual consolidated financial statements and should be read in conjunction with the consolidated financial statements for the year ended December 31, 2017. The consolidated financial statements for 2018 will be published in the annual report due in April 2019.
The condensed consolidated financial statements for the year ended December 31, 2018, were prepared using the same accounting policies as those adopted for the preparation of the consolidated financial statements for the year ended December 31, 2017, except for the adoption of new standards effective as of January 1, 2018, that are discussed hereafter. The Group has not early adopted any other Standard, Interpretation or amendment that has been issued but is not yet effective.
As of January 1, 2018, the Group applied, for the first time, IFRS 15 "Revenue from Contracts with Customers" and IFRS 9 "Financial Instruments". As required by IAS 34 for condensed consolidated financial statements, the nature and effect of these changes are disclosed below. Several other amendments and Interpretations apply for the first time in 2018, but do not have an impact on the condensed consolidated financial statements of the Group.
As from January 1, 2018, the Group no longer applies IAS 39 "Financial Instruments: Recognition and Measurement". IFRS 9 is applicable for annual periods beginning on or after January 1, 2018, and brings together all three aspects of the accounting for financial instruments: classification and measurement, impairment, and hedge accounting. Except for hedge accounting, retrospective application is required, but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions. The Group adopted IFRS 9 on January 1, 2018, and did not restate comparative information.
Overall, there is no significant impact on the Group's statement of financial position and equity. The Group observed an increase in the loss allowance resulting in a negative impact on equity as discussed below. In addition, the Group has implemented changes in classification of certain financial instruments.
Impairment: IFRS 9 requires the Group to recognize expected credit losses on all of its trade receivables: the Group applies the simplified approach and recognizes lifetime expected losses on all trade receivables, using the provision matrix in order to calculate the lifetime expected credit losses for trade receivables as required by IFRS 9, using historical information on defaults adjusted for the forward looking information. Impacts related to debt securities, loans, financial guarantees, and loan commitments provided to third parties, as well as cash and cash equivalents, are immaterial. The impact on the trade receivable allowances is as follows, while the impact on the Group's equity (net of deferred taxes of € 1 million) amounts to € (5) million:
| (in € million) | Allowances on trade receivable |
|---|---|
| Carrying amount as of December 31, 2017 - IAS 39 | (49) |
| Remeasurement - From incurred to expected loss model | (6) |
| Carrying amount as of January 1, 2018 - IFRS 9 | (55) |
Classification and measurement: the application of the classification and measurement requirements of IFRS 9 does not have a significant impact on the Group's consolidated statement of financial position or equity. It will continue measuring at fair value all financial assets previously held at fair value. The equity shares in non-listed companies, previously presented as available for sale financial assets, are intended to be held for the foreseeable future. The Group applies the option to present fair value changes in OCI, and therefore the application of IFRS 9 does not have a significant impact. The fair value gains or losses accumulated in other comprehensive income will no longer be subsequently reclassified to profit or loss, which is different from the previous treatment. Loans as well as trade receivables are held to collect contractual cash flows and give rise to cash flows representing solely payments of principal and interest. Thus, the Group will continue to measure those financial assets at amortized cost under IFRS 9. The effect of applying IFRS 9's classification and measurement requirements on financial assets is as follows:
| Financial assets |
IAS 39 December 31, 2017 |
Transition to IFRS 9 | IFRS 9 January 1, 2018 |
At date of transition |
|||||
|---|---|---|---|---|---|---|---|---|---|
| (in € million) | Carrying amount |
Reclassi fications |
Remeasu rements |
Carrying amount |
Impact on retained earnings [1] |
||||
| Loans and receivables (including cash & cash equivalents, trade receivables, loans and other current and non-current assets except pension fund surpluses) |
2,870 | (2,870) | - | - | - | ||||
| Financial assets measured at amortized cost | - | 2,870 | (6) | 2,864 | (5) | ||||
| Available-for-sale financial assets | 44 | (44) | - | - | - | ||||
| Equity instruments measured at fair value through comprehensive income |
- | 44 | 44 |
Regarding financial liabilities, the Group didn't make any reclassifications or remeasurements.
Hedge accounting: In accordance with IFRS 9's transition provisions for hedge accounting, the Group applies the IFRS 9 hedge accounting requirements prospectively from the date of initial application on January 1, 2018. The Group's qualifying hedging relationships in accordance with IAS 39 in place as at January 1, 2018 also qualify for hedge accounting in accordance with IFRS 9 and were therefore regarded as continuing hedging relationships. No rebalancing of any of the hedging relationships was necessary on January 1, 2018.
IFRS 15 supersedes IAS 11 "Construction Contracts", IAS 18 "Revenue" and related Interpretations and it applies to all revenue arising from contracts with customers, unless those contracts are in the scope of other Standards. The new Standard establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognized at an amount that reflects the consideration to which the Group expects to be entitled in exchange for transferring goods or services to a customer.
The Group adopted IFRS 15 on January 1, 2018, using the modified retrospective approach.
Financial assets and liabilities are first recognized when Solvay becomes a party to the contractual provisions of the instrument.
Amortized cost is the amount at which the financial asset or financial liability is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any loss allowance. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of a financial asset or to the amortized cost of a financial liability. When calculating the effective interest rate, the Group estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts.
Trade receivables are initially measured at their transaction price, if they do not contain a significant financing component, which is the case for substantially all trade receivables. Other financial assets are initially measured at fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset.
A financial asset is classified as current when the cash flows expected to flow from the instrument mature within one year.
All recognized financial assets will subsequently be measured at either amortized cost or fair value under IFRS 9. Specifically:
all equity investments are measured in the consolidated statement of financial position at fair value, with gains and losses recognized in profit or loss except that if an equity investment is not held for trading, nor contingent consideration recognized by an acquirer in a business combination, an irrevocable election can be made at initial recognition to measure the investment at FVTOCI, with dividend income recognized in profit or loss. This classification is determined on an instrument-by-instrument basis. Equity instruments in nonlisted companies previously classified as available-for-sale in accordance with IAS 39 are now classified and measured as equity instruments measured at FVTOCI. Upon derecognition, the cumulative gains or losses previously recognized in other comprehensive income are reclassified to retained earnings. The Group elected to classify irrevocably its non-listed investments existing as of December 31, 2017 under this category as it intends to hold these investments for the foreseeable future.
For instruments quoted in an active market, the fair value corresponds to a market price (level 1). For instruments that are not quoted in an active market, the fair value is determined using valuation techniques including reference to recent arm's length market transactions or transactions involving instruments which are substantially the same (level 2), or discounted cash flow analysis including, to the greatest possible extent, assumptions consistent with observable market data (level 3). However, in limited circumstances, cost of equity instruments may be an appropriate estimate of their fair value. That may be the case if insufficient more recent information is available to measure fair value, or if there is a wide range of possible fair value measurements and cost represents the best estimate of fair value within that range.
The impairment loss of a financial asset measured at amortized cost is calculated based on the expected loss model, representing the weighted average of credit losses with the respective risks of a default occurring as the weights. Expected credit losses are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate.
For trade receivables that do not contain a significant financing component (i.e. substantially all trade receivables), the loss allowance is measured at an amount equal to lifetime expected credit losses. Those are the expected credit losses that result from all possible default events over the expected life of those trade receivables, using a provision matrix that takes into account historical information on defaults adjusted for the forward looking information per customer. The Group considers a financial asset in default when contractual payments are 60 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
Impairment losses are recognized in the consolidated income statement, except for debt instruments measured at fair value through other comprehensive income. In this case, the allowance is recognized in other comprehensive income.
Financial liabilities are initially measured at fair value minus, in the case of a financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the issue of the financial liability. Subsequently, they are measured at amortized cost, except for:
A derivative financial instrument is a financial instrument or other contract within the scope of IFRS 9 with all three of the following characteristics:
The Group enters into a variety of derivative financial instruments (forward, future, option, collars and swap contracts) to manage its exposure to interest rate risk, foreign exchange rate risk, and commodity risk (mainly energy and CO2 emission rights price risks).
As explained above, derivatives are initially recognized at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in income or expense, unless the derivative is designated and effective as a hedging instrument. The Group designates certain derivatives as hedging instruments of the exposure to variability in cash flows with respect to a recognized asset or liability or a highly probable forecast transaction that could affect profit or loss (cash flow hedges).
A derivative with a positive fair value is recognized as a financial asset whereas a derivative with a negative fair value is recognized as a financial liability. Derivative instruments (or portions of them) are presented as non-current assets or non-current liabilities if the remaining maturity of the underlying settlements is more than twelve months after the reporting period. Other derivative instruments (or portions of them) are presented as current assets or current liabilities.
The Group designates certain derivatives and embedded derivatives, in respect of interest rate risk, foreign exchange rate risk, Solvay share price risk, and commodity risk (mainly energy and CO2 emission rights price risk), as hedging instruments in a cash flow hedge relationship.
At the inception of the hedge relationship, there is a formal designation and documentation of the hedging relationship and the Group's risk management objective and strategy for undertaking the hedge. So to apply hedge accounting: (a) there is an economic relationship between the hedged item and the hedging instrument, (b) the effect of credit risk does not dominate the value changes that result from that economic relationship, and (c) the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
The requirement under (a) above that an economic relationship exists means that there is an expectation that the value of the hedging instrument and the value of the hedged item will systematically change in opposite direction in response to movements in the same underlying (or underlyings that are economically related in such a way that they respond in a similar way to the risk that is being hedged).
The effective portion of changes in the fair value of hedging instruments that are designated in a cash flow hedge is recognized in other comprehensive income.
The gain or loss relating to the ineffective portion is recognized immediately in profit or loss.
As long as cash flow hedge qualifies, the hedging relationship is accounted for as follows:
Most hedged items are transaction related. The time value of options, forward elements of forward contracts, and foreign currency basis spreads of financial instruments that are hedging the items affect profit or loss at the same time as those hedged items.
Hedge accounting is discontinued prospectively when the hedging relationship (or a part of a hedging relationship) ceases to meet the qualifying criteria (after taking into account any rebalancing of the hedging relationship, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised.
When the Group discontinues hedge accounting for a cash flow hedge it accounts for the amount that has been accumulated in the cash flow hedge reserve as follows:
IFRS 15 establishes a five-step model to account for revenue arising from contracts with customers:
Under IFRS 15, revenue is recognized at an amount that reflects the consideration to which the Group expects to be entitled in exchange for transferring goods or services to a customer.
Sale of goods: Contracts can be short term (including based only on a purchase order) or long term, some have minimum off-take requirements. As the Group is in the business of selling chemicals, contracts with customers generally concern the sale of goods. As a result, revenue recognition generally occurs at a point in time when control of the chemicals is transferred to the customer, generally on delivery of the goods.
Distinct elements: a good or service that is promised to a customer is distinct if both of the following criteria are met: (a) the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e. the good or service is capable of being distinct); and (b) the Group's promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e. the promise to transfer the good or service is distinct within the context of the contract).
The revenue of the Group consists mainly of sales of chemicals, which qualify as separate performance obligations. Value-added services – mainly customer assistance services – corresponding to Solvay's know-how are rendered predominantly over the period that the corresponding goods are sold to the customer.
Variable consideration: some contracts with customers provide trade discounts or volume rebates. Trade discounts and volume rebates give rise to variable consideration under IFRS 15, and are required to be estimated at contract inception and subsequently at each reporting date. IFRS 15 requires the estimated variable consideration to be constrained to prevent overstatement of revenue.
Moment of recognition of revenue: revenue is recognized when (or as) the Group satisfies a performance obligation by transferring a promised good or service (i.e. an asset) to a customer. An asset is transferred when (or as) the customer obtains control of that asset. Substantially all revenue stems from performance obligations satisfied at a point in time, i.e. the sale of goods. Revenue recognition for those takes into account the following:
The Group sells its chemicals to its customers, (a) directly, (b) through distributors, and (c) with the assistance of agents. When the Group delivers a product to distributors for sale to end customers, the Group evaluates whether that distributor has obtained control of the product at that point in time. No revenue is recognized upon delivery of a product to a customer or distributor if the delivered product is held on consignment. Indicators of consignment inventory include
Agents facilitate sales and do not purchase and resell the goods to the end customer.
Products sold to customers generally cannot be returned, other than for performance deficiencies. Customer acceptance clauses are in many cases a formality that would not affect the Group's determination of when the customer has obtained control of the goods.
Revenue from services is recognized in the period those services have been rendered.
Warranties: warranties provide a customer with assurance that the related product will function as the parties intended because it complies with agreed-upon specifications. Substantially all warranties do not provide the customer with a service in addition to the assurance that the product complies with agreed-upon specifications, and are hence accounted for in accordance with IAS 37 "Provisions, Contingent Liabilities and Contingent Assets".
Solvay is organized in the following operating segments:
| (in € million) | Q4 2018 | Q4 2017 | FY 2018 | FY 2017 |
|---|---|---|---|---|
| Net sales | 2,574 | 2,480 | 10,257 | 10,125 |
| Advanced Materials | 1,093 | 1,047 | 4,385 | 4,370 |
| Advanced Formulations | 764 | 747 | 3,057 | 2,966 |
| Performance Chemicals | 716 | 679 | 2,808 | 2,766 |
| Corporate & Business Services | 1 | 7 | 7 | 23 |
| Underlying EBITDA | 506 | 494 | 2,230 | 2,230 |
| Advanced Materials | 275 | 260 | 1,197 | 1,202 |
| Advanced Formulations | 119 | 138 | 521 | 524 |
| Performance Chemicals | 172 | 170 | 729 | 749 |
| Corporate & Business Services | (60) | (74) | (218) | (244) |
| Underlying depreciation, amortization & impairments | (183) | (187) | (684) | (704) |
| Underlying EBIT | 322 | 307 | 1,546 | 1,527 |
| Non-cash accounting impact from amortization & depreciation of purchase price allocation (PPA) from acquisitions [1] |
(60) | (60) | (237) | (250) |
| Other legacy costs related to changes in portfolio (e.g. retention premiums) | - | - | - | (2) |
| Net financial charges and remeasurements of equity book value of the RusVinyl joint venture |
(8) | (6) | (30) | (27) |
| Result from portfolio management & reassessments | (8) | (10) | (208) | (188) |
| Result from legacy remediation & major litigations | (13) | (27) | (86) | (84) |
| EBIT | 234 | 204 | 986 | 976 |
| Net financial charges | (57) | (86) | (194) | (298) |
| Profit for the period before taxes | 177 | 118 | 791 | 678 |
| Income tax expenses | 37 | 206 | (95) | 197 |
| Profit for the period from continuing operations | 214 | 324 | 697 | 875 |
| Profit (loss) for the period from discontinued operations | 43 | (39) | 201 | 241 |
| Profit for the period | 257 | 285 | 897 | 1,116 |
| attributable to non-controlling interests | 9 | 16 | 39 | 56 |
| attributable to Solvay shareholders | 247 | 269 | 858 | 1,061 |
[1] The non-cash PPA impacts can be found in the reconciliation table on pages 18 to 21. For Q4 2018 these consist of €(60) million of amortization of intangible assets, which are adjusted in "Administrative costs" for €9 million, in "Research & development costs" for €1 million, and in "Other operating gains & losses" for €50 million. For FY 2018 these consist of €(237) million of amortization of intangible assets, which are adjusted in "Cost of goods sold" for €2 million, in "Administrative costs" for €35 million, in "Research & development costs" for €3 million, and in "Other operating gains & losses" for €197 million.
Compared to December 31, 2017, there are no changes in valuation techniques.
For all financial instruments not measured at fair value in Solvay's consolidated statement of financial position, the fair value of those financial instruments as of December 31, 2018, is not significantly different from the ones published in Note F32 of the consolidated financial statements for the year ended December 31, 2017. The consolidated financial statements for 2018 will be published in the annual report due in April 2019.
For financial instruments measured at fair value in Solvay's consolidated statement of financial position, the fair value of those instruments as of December 31, 2018, is not significantly different from the ones as published in the Note F32 of the consolidated financial statements for the year ended December 31, 2017. The consolidated financial statements for 2018 will be published in the annual report due in April 2019.
On January 18, 2019, the European Commission has cleared the divestment of Solvay's Polyamides activities to BASF, a key milestone in the completion of Solvay's transformation into an advanced materials and specialty chemicals company. The closing of the transaction is expected in the second part of 2019 after all remaining closing conditions will have been fulfilled. These conditions include the divestment of a remedy package to a third party buyer to address the European Commission's competition concerns. BASF has offered remedies involving part of the assets originally in the scope of the acquisition. These entail among others, the manufacturing assets of Solvay's polyamide intermediates, technical fibers and engineering plastics business as well as its innovation capabilities in Europe.
Jean-Pierre Clamadieu, Chief Executive Officer, and Karim Hajjar, Chief Financial Officer, of the Solvay Group, declare that to the best of their knowledge:
Deloitte confirmed that the fieldwork related to the audit of the consolidated financial statements of Solvay SA/NV (''the company'') and its subsidiaries (jointly ''the Group''), prepared in accordance with International Financial Reporting Standards as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium, is substantially completed. Deloitte confirmed that the financial information shown in this press release requires no comments on its part and is in agreement with the consolidated financial statements of the Group.
Deloitte also confirmed that it has reviewed the compliance, in all material aspects, of the alternative performance indicators as included in the Supplementary Information section.
Deloitte confirmed that it will issue an unqualified reasonable assurance opinion on the information shown on the extra-financial priority domains ''Greenhouse gas intensity'', ''Sustainable solutions'', ''Occupational accidents'' and "Employee engagement", which is prepared in accordance with Solvay's Reporting Framework. For "Employees involved in societal actions" Deloitte confirmed it will issue an unqualified limited assurance opinion with the following observation: "The process, definition, and underlying control environment of societal actions, though it was reinforced in 2018 compared to 2017, remains to be reinforced throughout 2019.".
The complete audit report related to the audit of the consolidated financial statements and of the social, environmental and other sustainable development information will be shown in the 2018 Annual Report that will be published on the Internet (www.solvay.com) in April, 2019.
This information provides a reference framework for evaluating the Group's performance over time following the adoption of IFRS 16, for contracts whereby the Group is the lessee. The Group adopted IFRS 16, using a modified retrospective approach, as of January 1, 2019, i.e. without restating prior reporting periods presented.
The pro forma information presents the impact on the Group's financial reporting as if the adoption of IFRS 16 had taken place on January 1, 2018. This pro forma financial information only pertains to leases that were classified as operating leases in accordance with IAS 17. The detailed basis for the preparation in the subsequent pages is an integral part of the pro forma financial information. At the end of this section, the accounting policy in accordance with IFRS 16 has been inserted.
| FY 2018 underlying key figures Underlying |
|||
|---|---|---|---|
| As | Pro | ||
| (in € million) | published | IFRS 16 | forma |
| EBITDA, of which | 2,230 | 100 | 2,330 |
| Advanced Materials | 1,197 | 28 | 1,225 |
| Advanced Formulations | 521 | 12 | 533 |
| Performance Chemicals | 729 | 32 | 761 |
| Corporate & Business Services | (218) | 29 | (189) |
| EBITDA margin | 22% | 23% | |
| Depreciation, amortization & impairments | (684) | (92) | (777) |
| EBIT | 1,546 | 8 | 1,554 |
| Net financial charges | (326) | (16) | (342) |
| Profit for the period before taxes | 1,220 | (8) | 1,212 |
| Income taxes | (305) | 2 | (303) |
| Profit for the period from continuing operations | 915 | (6) | 909 |
| attributable to Solvay shareholders | 876 | (6) | 869 |
| Basic earnings per share (in €) | 10.57 | (0.06) | 10.51 |
| Capex from continuing operations | (711) | (83) | (794) |
| Cash conversion | 68% | 66% | |
| Free cash flow from continuing operations | 830 | 16 | 846 |
| Free cash flow to Solvay shareholders from continuing operations | 566 | - | 566 |
| Net working capital | 1,550 | 7 | 1,557 |
| Net financial debt | (5,105) | (433) | (5,538) |
| Leverage ratio | 2.0 | 2.4 | |
| CFROI | 6.9% | 6.8% |
| (in € million) | Q1 | Q2 | Q3 | Q4 | FY |
|---|---|---|---|---|---|
| Sales | 2,809 | 2,820 | 2,840 | 2,830 | 11,299 |
| of which revenues from non-core activities | 317 | 221 | 249 | 256 | 1,042 |
| of which net sales | 2,492 | 2,600 | 2,591 | 2,574 | 10,257 |
| Cost of goods sold | (2,062) | (2,012) | (2,049) | (2,134) | (8,258) |
| Gross margin | 746 | 808 | 790 | 697 | 3,042 |
| Commercial costs | (91) | (93) | (93) | (96) | (373) |
| Administrative costs | (238) | (261) | (247) | (259) | (1,005) |
| Research & development costs | (70) | (71) | (76) | (80) | (297) |
| Other operating gains & losses | (50) | (7) | (47) | (19) | (123) |
| Earnings from associates & joint ventures | 11 | 8 | 10 | 15 | 44 |
| Result from portfolio management & reassessments | (145) | (58) | 2 | (8) | (208) |
| Result from legacy remediation & major litigations | (18) | (26) | (29) | (13) | (86) |
| EBITDA | 414 | 561 | 569 | 486 | 2,030 |
| Depreciation, amortization & impairments | (268) | (260) | (258) | (250) | (1,036) |
| EBIT | 146 | 300 | 311 | 236 | 994 |
| Net cost of borrowings | (36) | (33) | (33) | (32) | (134) |
| Cost of discounting provisions | (19) | (10) | (18) | (29) | (77) |
| Profit for the period before taxes | 91 | 258 | 260 | 175 | 783 |
| Income tax expenses | (12) | (76) | (42) | 37 | (93) |
| Profit for the period from continuing operations | 79 | 181 | 217 | 213 | 690 |
| attributable to Solvay shareholders | 70 | 172 | 206 | 203 | 651 |
| attributable to non-controlling interests | 10 | 9 | 11 | 9 | 39 |
| Profit (loss) for the period from discontinued operations | 37 | 51 | 69 | 43 | 201 |
| Profit for the period | 117 | 233 | 286 | 255 | 891 |
| attributable to Solvay shareholders | 107 | 223 | 275 | 246 | 852 |
| attributable to non-controlling interests | 10 | 9 | 11 | 9 | 39 |
| Basic earnings per share (in €) | 1.03 | 2.16 | 2.67 | 2.38 | 8.25 |
| of which from continuing operations | 0.67 | 1.67 | 2.00 | 1.97 | 6.30 |
| Diluted earnings per share (in €) | 1.03 | 2.15 | 2.65 | 2.38 | 8.21 |
| of which from continuing operations | 0.67 | 1.66 | 1.99 | 1.96 | 6.28 |
| Pro forma underlying figures | 2018 | ||||
|---|---|---|---|---|---|
| (in € million) | Q1 | Q2 | Q3 | Q4 | FY |
| Sales | 2,809 | 2,820 | 2,840 | 2,830 | 11,299 |
| of which revenues from non-core activities | 317 | 221 | 249 | 256 | 1,042 |
| of which net sales | 2,492 | 2,600 | 2,591 | 2,574 | 10,257 |
| Cost of goods sold | (2,062) | (2,012) | (2,049) | (2,133) | (8,256) |
| Gross margin | 746 | 809 | 791 | 697 | 3,043 |
| Commercial costs | (91) | (93) | (93) | (96) | (373) |
| Administrative costs | (230) | (253) | (237) | (251) | (970) |
| Research & development costs | (69) | (71) | (75) | (79) | (294) |
| Other operating gains & losses | (1) | 42 | 3 | 31 | 74 |
| Earnings from associates & joint ventures | 17 | 15 | 19 | 23 | 74 |
| EBITDA | 558 | 643 | 599 | 531 | 2,330 |
| EBITDA margin | 22% | 25% | 23% | 21% | 23% |
| Depreciation, amortization & impairments | (186) | (193) | (192) | (206) | (777) |
| EBIT | 372 | 450 | 407 | 325 | 1,554 |
| EBIT margin | 15% | 17% | 16% | 13% | 15% |
| Net cost of borrowings | (36) | (33) | (33) | (31) | (134) |
| Coupons on perpetual hybrid bonds | (27) | (28) | (28) | (29) | (112) |
| Interests and realized foreign exchange gains (losses) on the RusVinyl joint venture |
(7) | (3) | (8) | (3) | (21) |
| Cost of discounting provisions | (19) | (17) | (19) | (19) | (74) |
| Profit for the period before taxes | 282 | 369 | 319 | 242 | 1,212 |
| Income tax expenses | (67) | (87) | (76) | (73) | (303) |
| Tax rate | 26% | ||||
| Profit for the period from continuing operations | 215 | 281 | 243 | 170 | 909 |
| attributable to Solvay shareholders | 205 | 272 | 232 | 160 | 869 |
| attributable to non-controlling interests | 10 | 10 | 11 | 10 | 40 |
| Profit (loss) for the period from discontinued operations | 41 | 65 | 63 | 47 | 216 |
| Profit for the period | 255 | 347 | 306 | 217 | 1,125 |
| attributable to Solvay shareholders | 246 | 337 | 295 | 208 | 1,085 |
| attributable to non-controlling interests | 10 | 10 | 11 | 10 | 40 |
| Basic earnings per share (in €) | 2.38 | 3.26 | 2.86 | 2.01 | 10.51 |
| of which from continuing operations | 1.99 | 2.63 | 2.25 | 1.55 | 8.42 |
| Diluted earnings per share (in €) | 2.36 | 3.25 | 2.84 | 2.01 | 10.46 |
| of which from continuing operations | 1.98 | 2.62 | 2.24 | 1.55 | 8.38 |
| Capex | (207) | (210) | (211) | (298) | (925) |
| of which from continuing operations | (180) | (184) | (187) | (243) | (794) |
| Cash conversion | 68% | 71% | 69% | 54% | 66% |
| Free cash flow | 152 | 75 | 204 | 575 | 1,006 |
| of which from continuing operations | 110 | 22 | 155 | 559 | 846 |
| Free cash flow to Solvay shareholders | 141 | (65) | 195 | 454 | 725 |
| of which from continuing operations | 100 | (118) | 146 | 438 | 566 |
| Net working capital | 1,558 | ||||
| Net working capital / sales | 14% | ||||
| Net financial debt | (5,538) | ||||
| Leverage ratio | 2.4 | ||||
| CFROI | 6.8% | ||||
| Pro forma underlying figures | |||||
|---|---|---|---|---|---|
| (in € million) | Q1 | Q2 | Q3 | Q4 | FY |
| EBITDA | 558 | 643 | 599 | 531 | 2,330 |
| Advanced Materials | 295 | 349 | 299 | 282 | 1,225 |
| Advanced Formulations | 121 | 147 | 143 | 122 | 533 |
| Performance Chemicals | 185 | 195 | 200 | 180 | 761 |
| Corporate & Business Services | (44) | (49) | (44) | (53) | (189) |
| EBITDA margin | 22% | 25% | 23% | 21% | 23% |
| Advanced Materials | 27% | 31% | 28% | 26% | 28% |
| Advanced Formulations | 17% | 19% | 18% | 16% | 17% |
| Performance Chemicals | 28% | 28% | 28% | 25% | 27% |
| EBIT | 372 | 450 | 407 | 325 | 1,554 |
| Advanced Materials | 219 | 268 | 218 | 192 | 897 |
| Advanced Formulations | 85 | 108 | 106 | 82 | 381 |
| Performance Chemicals | 134 | 144 | 150 | 127 | 556 |
| Corporate & Business Services | (66) | (71) | (66) | (77) | (280) |
| Capex from continuing operations | (180) | (184) | (187) | (243) | (794) |
| Advanced Materials | (379) | ||||
| Advanced Formulations | (158) | ||||
| Performance Chemicals | (175) | ||||
| Corporate & Business Services | (82) | ||||
| Cash conversion | 68% | 71% | 69% | 54% | 66% |
| Advanced Materials | 69% | ||||
| Advanced Formulations | 70% | ||||
| Performance Chemicals | 77% | ||||
| CFROI | 6.8% | ||||
| Advanced Materials | 9.9% | ||||
| Advanced Formulations | 6.8% | ||||
| Performance Chemicals | 8.1% |
The IFRS 16 impact on EBIT, in columns b and f in the following reconciliation tables, is the net amount of the increase that results from the elimination of operating lease expenses under IAS 17, and the decrease that results from the recognition of the depreciation expense on the right-of-use assets. This affects different lines of the income statement presented by function.
| IFRS 16 impact Q1 2018 | IFRS | Adjust | Underlying | ||||
|---|---|---|---|---|---|---|---|
| (in € million) | As published |
IFRS 16 | Pro forma |
ments | As published |
IFRS 16 | Pro forma |
| a | b | c = a+b |
d | e = a+d |
f = b |
g = e+f = c+d |
|
| Sales | 2,809 | - | 2,809 | - | 2,809 | - | 2,809 |
| of which revenues from non-core activities | 317 | - | 317 | - | 317 | - | 317 |
| of which net sales | 2,492 | - | 2,492 | - | 2,492 | - | 2,492 |
| Cost of goods sold | (2,064) | 2 | (2,062) | - | (2,064) | 2 | (2,062) |
| Gross margin | 744 | 2 | 746 | - | 744 | 2 | 746 |
| Commercial costs | (91) | - | (91) | - | (91) | - | (91) |
| Administrative costs | (238) | - | (238) | 8 | (230) | - | (230) |
| Research & development costs | (70) | - | (70) | 1 | (69) | - | (69) |
| Other operating gains & losses | (50) | - | (50) | 49 | (1) | - | (1) |
| Earnings from associates & joint ventures | 11 | - | 11 | 6 | 17 | - | 17 |
| Result from portfolio management & reassessments | (145) | - | (145) | 145 | - | - | - |
| Result from legacy remediation & major litigations | (18) | - | (18) | 18 | - | - | - |
| EBITDA | 389 | 25 | 414 | 144 | 533 | 25 | 558 |
| Depreciation, amortization & impairments | (245) | (23) | (268) | 82 | (163) | (23) | (186) |
| EBIT | 144 | 2 | 146 | 226 | 370 | 2 | 372 |
| Net cost of borrowings | (32) | (4) | (36) | - | (32) | (4) | (36) |
| Coupons on perpetual hybrid bonds | - | - | - | (27) | (27) | - | (27) |
| Interests and realized foreign exchange gains (losses) on the RusVinyl joint venture |
- | - | - | (7) | (7) | - | (7) |
| Cost of discounting provisions | (19) | - | (19) | - | (19) | - | (19) |
| Profit for the period before taxes | 93 | (2) | 91 | 191 | 284 | (2) | 282 |
| Income taxes | (12) | - | (12) | (56) | (67) | - | (67) |
| Profit for the period from continuing operations | 81 | (1) | 79 | 136 | 216 | (1) | 215 |
| attributable to Solvay shareholders | 71 | (1) | 70 | 136 | 207 | (1) | 205 |
| attributable to non-controlling interests | 10 | - | 10 | - | 10 | - | 10 |
| Profit (loss) for the period from discontinued | 37 | - | 37 | 3 | 41 | - | 41 |
| operations | |||||||
| Profit for the period | 118 | (2) | 117 | 139 | 257 | (2) | 255 |
| attributable to Solvay shareholders | 109 | (2) | 107 | 139 | 247 | (2) | 246 |
| attributable to non-controlling interests | 10 | - | 10 | - | 10 | - | 10 |
| Capex | (184) | (184) | (23) | (207) | |||
| of which from continuing operations | (159) | (159) | (21) | (180) | |||
| Cash conversion | 70% | 68% | |||||
| Free cash flow | 147 | 147 | 4 | 152 | |||
| of which from continuing operations | 105 | 105 | 4 | 110 | |||
| Free cash flow to Solvay shareholders | 141 | 141 | - | 141 | |||
| of which from continuing operations | 100 | 100 | - | 100 |
| IFRS 16 impact Q2 2018 | IFRS | Adjust | Underlying | ||||
|---|---|---|---|---|---|---|---|
| (in € million) | As published |
IFRS 16 | Pro forma |
ments | As published |
IFRS 16 | Pro forma |
| a | b | c = a+b |
d | e = a+d |
f = b |
g = e+f = c+d |
|
| Sales | 2,820 | - | 2,820 | - | 2,820 | - | 2,820 |
| of which revenues from non-core activities | 221 | - | 221 | - | 221 | - | 221 |
| of which net sales | 2,600 | - | 2,600 | - | 2,600 | - | 2,600 |
| Cost of goods sold | (2,014) | 2 | (2,012) | - | (2,013) | 2 | (2,012) |
| Gross margin | 807 | 2 | 808 | - | 807 | 2 | 809 |
| Commercial costs | (93) | - | (93) | - | (93) | - | (93) |
| Administrative costs | (261) | - | (261) | 8 | (253) | - | (253) |
| Research & development costs | (71) | - | (71) | 1 | (71) | - | (71) |
| Other operating gains & losses | (7) | - | (7) | 49 | 42 | - | 42 |
| Earnings from associates & joint ventures | 8 | - | 8 | 7 | 15 | - | 15 |
| Result from portfolio management & reassessments | (58) | - | (58) | 58 | - | - | - |
| Result from legacy remediation & major litigations | (26) | - | (26) | 26 | - | - | - |
| EBITDA | 536 | 25 | 561 | 82 | 618 | 25 | 643 |
| Depreciation, amortization & impairments | (237) | (23) | (260) | 68 | (170) | (23) | (193) |
| EBIT | 299 | 2 | 300 | 149 | 448 | 2 | 450 |
| Net cost of borrowings | (29) | (4) | (33) | - | (29) | (4) | (33) |
| Coupons on perpetual hybrid bonds | - | - | - | (28) | (28) | - | (28) |
| Interests and realized foreign exchange gains (losses) on the RusVinyl joint venture |
- | - | - | (3) | (3) | - | (3) |
| Cost of discounting provisions | (10) | - | (10) | (7) | (17) | - | (17) |
| Profit for the period before taxes | 260 | (3) | 258 | 111 | 371 | (3) | 369 |
| Income taxes | (77) | 1 | (76) | (11) | (88) | 1 | (87) |
| Profit for the period from continuing operations | 183 | (2) | 181 | 100 | 283 | (2) | 281 |
| attributable to Solvay shareholders | 174 | (2) | 172 | 100 | 274 | (2) | 272 |
| attributable to non-controlling interests | 9 | - | 9 | - | 10 | - | 10 |
| Profit (loss) for the period from discontinued operations |
51 | - | 51 | 14 | 65 | - | 65 |
| Profit for the period | 235 | (2) | 233 | 114 | 349 | (2) | 347 |
| attributable to Solvay shareholders | 225 | (2) | 223 | 114 | 339 | (2) | 337 |
| attributable to non-controlling interests | 9 | - | 9 | - | 10 | - | 10 |
| Capex | (187) | (187) | (23) | (210) | |||
| of which from continuing operations | (163) | (163) | (21) | (184) | |||
| Cash conversion | 74% | 71% | |||||
| Free cash flow | 71 | 71 | 4 | 75 | |||
| of which from continuing operations | 18 | 18 | 4 | 22 | |||
| Free cash flow to Solvay shareholders | (65) | (65) | - | (65) | |||
| of which from continuing operations | (118) | (118) | - | (118) |
| IFRS 16 impact Q3 2018 | IFRS | Adjust | Underlying | ||||
|---|---|---|---|---|---|---|---|
| As | Pro | ments | As | Pro | |||
| (in € million) | published a |
IFRS 16 b |
forma c |
d | published e |
IFRS 16 f |
forma g |
| = a+b | = a+d | = b | = e+f = c+d | ||||
| Sales | 2,840 | - | 2,840 | - | 2,840 | - | 2,840 |
| of which revenues from non-core activities | 249 | - | 249 | - | 249 | - | 249 |
| of which net sales | 2,591 | - | 2,591 | - | 2,591 | - | 2,591 |
| Cost of goods sold | (2,051) | 2 | (2,049) | - | (2,051) | 2 | (2,049) |
| Gross margin | 789 | 2 | 790 | - | 789 | 2 | 791 |
| Commercial costs | (93) | - | (93) | - | (93) | - | (93) |
| Administrative costs | (248) | - | (247) | 10 | (237) | - | (237) |
| Research & development costs | (76) | - | (76) | 1 | (75) | - | (75) |
| Other operating gains & losses | (47) | - | (47) | 50 | 2 | - | 3 |
| Earnings from associates & joint ventures | 10 | - | 10 | 8 | 19 | - | 19 |
| Result from portfolio management & reassessments | 2 | - | 2 | (2) | - | - | - |
| Result from legacy remediation & major litigations | (29) | - | (29) | 29 | - | - | - |
| EBITDA | 544 | 25 | 569 | 30 | 574 | 25 | 599 |
| Depreciation, amortization & impairments | (235) | (23) | (258) | 66 | (169) | (23) | (192) |
| EBIT | 309 | 2 | 311 | 96 | 405 | 2 | 407 |
| Net cost of borrowings | (29) | (4) | (33) | - | (29) | (4) | (33) |
| Coupons on perpetual hybrid bonds | - | - | - | (28) | (28) | - | (28) |
| Interests and realized foreign exchange gains (losses) on the RusVinyl joint venture |
- | - | - | (8) | (8) | - | (8) |
| Cost of discounting provisions | (18) | - | (18) | - | (19) | - | (19) |
| Profit for the period before taxes | 262 | (2) | 260 | 60 | 321 | (2) | 319 |
| Income taxes | (43) | - | (42) | (34) | (77) | - | (76) |
| Profit for the period from continuing operations | 219 | (2) | 217 | 26 | 245 | (2) | 243 |
| attributable to Solvay shareholders | 208 | (2) | 206 | 26 | 234 | (2) | 232 |
| attributable to non-controlling interests | 11 | - | 11 | - | 11 | - | 11 |
| Profit (loss) for the period from discontinued operations | 69 | - | 69 | (6) | 63 | - | 63 |
| Profit for the period | 288 | (2) | 286 | 20 | 307 | (2) | 306 |
| attributable to Solvay shareholders | 277 | (2) | 275 | 20 | 297 | (2) | 295 |
| attributable to non-controlling interests | 11 | - | 11 | - | 11 | - | 11 |
| Capex | (188) | (188) | (23) | (211) | |||
| of which from continuing operations | (166) | (166) | (21) | (187) | |||
| Cash conversion | 71% | 69% | |||||
| Free cash flow | 200 | 200 | 4 | 204 | |||
| of which from continuing operations | 151 | 151 | 4 | 155 | |||
| Free cash flow to Solvay shareholders | 195 | 195 | - | 195 | |||
| of which from continuing operations | 146 | 146 | - | 146 |
| IFRS 16 impact Q4 2018 | IFRS | Adjust | Underlying | ||||
|---|---|---|---|---|---|---|---|
| As | Pro | ments | As | Pro | |||
| (in € million) | published a |
IFRS 16 b |
forma c |
d | published e |
IFRS 16 f |
forma g |
| = a+b | = a+d | = b | = e+f = c+d | ||||
| Sales | 2,830 | - | 2,830 | - | 2,830 | - | 2,830 |
| of which revenues from non-core activities | 256 | - | 256 | - | 256 | - | 256 |
| of which net sales | 2,574 | - | 2,574 | - | 2,574 | - | 2,574 |
| Cost of goods sold | (2,135) | 2 | (2,134) | - | (2,135) | 2 | (2,133) |
| Gross margin | 695 | 2 | 697 | - | 696 | 2 | 697 |
| Commercial costs | (96) | - | (96) | - | (96) | - | (96) |
| Administrative costs | (260) | - | (259) | 9 | (251) | - | (251) |
| Research & development costs | (80) | - | (80) | 1 | (80) | - | (79) |
| Other operating gains & losses | (19) | - | (19) | 50 | 31 | - | 31 |
| Earnings from associates & joint ventures | 15 | - | 15 | 8 | 23 | - | 23 |
| Result from portfolio management & reassessments | (8) | - | (8) | 8 | - | - | - |
| Result from legacy remediation & major litigations | (13) | - | (13) | 13 | - | - | - |
| EBITDA | 461 | 25 | 486 | 45 | 506 | 25 | 531 |
| Depreciation, amortization & impairments | (227) | (23) | (250) | 44 | (183) | (23) | (206) |
| EBIT | 234 | 2 | 236 | 89 | 322 | 2 | 325 |
| Net cost of borrowings | (28) | (4) | (32) | - | (28) | (4) | (31) |
| Coupons on perpetual hybrid bonds | - | - | - | (29) | (29) | - | (29) |
| Interests and realized foreign exchange gains (losses) on the RusVinyl joint venture |
- | - | - | (3) | (3) | - | (3) |
| Cost of discounting provisions | (29) | - | (29) | 11 | (19) | - | (19) |
| Profit for the period before taxes | 177 | (2) | 175 | 67 | 244 | (2) | 242 |
| Income taxes | 37 | - | 37 | (110) | (73) | - | (73) |
| Profit for the period from continuing operations | 214 | (1) | 213 | (43) | 171 | (1) | 170 |
| attributable to Solvay shareholders | 205 | (1) | 203 | (43) | 162 | (1) | 160 |
| attributable to non-controlling interests | 9 | - | 9 | - | 10 | - | 10 |
| Profit (loss) for the period from discontinued operations | 43 | - | 43 | 5 | 47 | - | 47 |
| Profit for the period | 257 | (1) | 255 | (38) | 218 | (1) | 217 |
| attributable to Solvay shareholders | 247 | (1) | 246 | (38) | 209 | (1) | 208 |
| attributable to non-controlling interests | 9 | - | 9 | - | 10 | - | 10 |
| Capex | (275) | (275) | (23) | (298) | |||
| of which from continuing operations | (222) | (222) | (21) | (243) | |||
| Cash conversion | 56% | 54% | |||||
| Free cash flow | 571 | 571 | 4 | 575 | |||
| of which from continuing operations | 555 | 555 | 4 | 559 | |||
| Free cash flow to Solvay shareholders | 454 | 454 | - | 454 | |||
| of which from continuing operations | 438 | 438 | - | 438 |
| IFRS 16 impact FY 2018 | IFRS | Adjust | Underlying | |||||
|---|---|---|---|---|---|---|---|---|
| As | Pro | ments | As | Pro | ||||
| (in € million) | published | IFRS 16 | forma | published | IFRS 16 | forma | ||
| a | b | c = a+b |
d | e = a+d |
f = b |
g = e+f = c+d |
||
| Sales | 11,299 | - | 11,299 | - | 11,299 | - | 11,299 | |
| of which revenues from non-core activities | 1,042 | - | 1,042 | - | 1,042 | - | 1,042 | |
| of which net sales | 10,257 | - | 10,257 | - | 10,257 | - | 10,257 | |
| Cost of goods sold | (8,264) | 7 | (8,258) | 2 | (8,262) | 7 | (8,256) | |
| Gross margin | 3,035 | 7 | 3,042 | 2 | 3,037 | 7 | 3,043 | |
| Commercial costs | (373) | - | (373) | - | (373) | - | (373) | |
| Administrative costs | (1,006) | 1 | (1,005) | 35 | (971) | 1 | (970) | |
| Research & development costs | (297) | - | (297) | 3 | (294) | - | (294) | |
| Other operating gains & losses | (123) | - | (123) | 197 | 74 | - | 74 | |
| Earnings from associates & joint ventures | 44 | - | 44 | 30 | 74 | - | 74 | |
| Result from portfolio management & reassessments | (208) | - | (208) | 208 | - | - | - | |
| Result from legacy remediation & major litigations | (86) | - | (86) | 86 | - | - | - | |
| EBITDA | 1,930 | 100 | 2,030 | 301 | 2,230 | 100 | 2,330 | |
| Depreciation, amortization & impairments | (944) | (92) | (1,036) | 260 | (684) | (92) | (777) | |
| EBIT | 986 | 8 | 994 | 560 | 1,546 | 8 | 1,554 | |
| Net cost of borrowings | (118) | (16) | (134) | - | (118) | (16) | (134) | |
| Coupons on perpetual hybrid bonds | - | - | - | (112) | (112) | - | (112) | |
| Interests and realized foreign exchange gains (losses) | ||||||||
| on the RusVinyl joint venture | - | - | - | (21) | (21) | - | (21) | |
| Cost of discounting provisions | (77) | - | (77) | 3 | (74) | - | (74) | |
| Profit for the period before taxes | 791 | (8) | 783 | 429 | 1,220 | (8) | 1,212 | |
| Income taxes | (95) | 2 | (93) | (210) | (305) | 2 | (303) | |
| Profit for the period from continuing operations | 697 | (6) | 690 | 219 | 915 | (6) | 909 | |
| attributable to Solvay shareholders | 657 | (6) | 651 | 218 | 876 | (6) | 869 | |
| attributable to non-controlling interests | 39 | - | 39 | - | 40 | - | 40 | |
| Profit (loss) for the period from discontinued operations | 201 | - | 201 | 15 | 216 | - | 216 | |
| Profit for the period | 897 | (6) | 891 | 234 | 1,131 | (6) | 1,125 | |
| attributable to Solvay shareholders | 858 | (6) | 852 | 234 | 1,092 | (6) | 1,085 | |
| attributable to non-controlling interests | 39 | - | 39 | - | 40 | - | 40 | |
| Capex | (833) | (833) | (92) | (925) | ||||
| of which from continuing operations | (711) | (711) | (83) | (794) | ||||
| Cash conversion | 68% | 66% | ||||||
| Free cash flow | 989 | 989 | 16 | 1,006 | ||||
| of which from continuing operations | 830 | 830 | 16 | 846 | ||||
| Free cash flow to Solvay shareholders | 725 | 725 | - | 725 | ||||
| of which from continuing operations | 566 | 566 | - | 566 | ||||
| Net working capital | 1,550 | 7 | 1,557 | |||||
| Net working capital / sales | 15% | 14% | ||||||
| Net financial debt | (2,605) | (433) | (3,038) | (2,500) | (5,105) | (433) | (5,538) | |
| Leverage ratio | - | 2.0 | 2.4 | |||||
| CFROI | 6.9% | 6.8% |
As from mid-2017, the Group launched a project to review all lease contracts, so to determine how to account for them in accordance with IFRS 16. In this respect, key parameters are their respective remaining lease terms (taking into account early termination and renewal options) and lease payments due. In 2018, the Group continued its implementation efforts, and undertook an extensive review of its operating lease contracts, challenging the non-cancellable period of the leases, especially with respect to buildings. It developed processes, IT tools, and internal controls, so to ensure IFRS 16 compliance.
The pro forma lease liabilities presented at December 31, 2018 have been calculated based on lease payments due over the remaining respective lease terms. The discount rate is the lessee's incremental borrowing rate, i.e. the rate the lessee would have to pay to borrow over a similar term, and with a similar security (e.g. taking into account a parent company guarantee), the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The respective rates are those applicable as of January 1, 2019 and take into account the remaining lease term at that moment. The lease liabilities have been translated into the reporting currency of the Group (Euro) using the exchange rates as of December 31, 2018.
The operating lease expense, determined in accordance with IAS 17, and included in EBITDA, has been eliminated.
Next, in accordance with IFRS 16,
The interest and depreciation expense have been translated into the reporting currency of the Group (Euro) using the average exchange rates for the period.
| Free cash flow | 2018 | ||||||
|---|---|---|---|---|---|---|---|
| (in € million) | Q1 | Q2 | Q3 | Q4 | FY | ||
| Free cash flow from continuing operations |
As published | a | 105 | 18 | 151 | 555 | 830 |
| of which lease payments included in cash flow from operations |
Pro forma | b | (25) | (25) | (25) | (25) | (99) |
| Payment of lease liabilities | Pro forma | c | (21) | (21) | (21) | (21) | (83) |
| Free cash flow from continuing operations |
Pro forma | d = a-b+c | 110 | 22 | 155 | 559 | 846 |
| Free cash flow from discontinued operations |
Pro forma | e | 42 | 54 | 49 | 16 | 160 |
| Free cash flow | Pro forma | f = d+e | 152 | 75 | 204 | 575 | 1,006 |
| Net interests paid | Pro forma | g = h+i | (9) | (53) | (6) | (61) | (130) |
| of which interests paid on lease liabilities |
Pro forma | h | (4) | (4) | (3) | (4) | (16) |
| of which net interests paid | As published | i | (5) | (49) | (2) | (57) | (114) |
| Coupons paid on perpetual hybrid bonds | As published | j | - | (84) | - | (27) | (111) |
| Dividends paid to non-controlling interests |
As published | k | (1) | (2) | (3) | (32) | (39) |
| Free cash flow to Solvay shareholders from continuing operations |
Pro forma | l = d+g+j+k | 100 | (118) | 146 | 438 | 566 |
| Free cash flow to Solvay shareholders from discontinued operations |
Pro forma | m | 42 | 54 | 49 | 16 | 160 |
| Free cash flow to Solvay shareholders | Pro forma | n = l+m | 141 | (65) | 195 | 454 | 725 |
Free cash flow measures cash flows from operating activities, net of investments. It excludes any M&A or financing related activities, but includes elements like dividends from associates and joint-ventures, pensions, restructuring costs, etc.
Prior to the adoption of IFRS 16, operating lease payments were included in the free cash flow. Following the application of IFRS 16, because leases are generally considered to be operating in nature, the free cash flow incorporates the payment of the lease liability (excluding the interest expense). Not including this item in the free cash flow would result in a significant improvement of the free cash flow compared to prior periods, whereas the operations themselves have not been affected by the implementation of IFRS 16.
Impact of IFRS 16 on free cash flow from discontinued operations is immaterial.
result, the free cash flow to shareholders is unaffected by the implementation of IFRS 16.
Free cash flow is defined as (a) cash flows from operating activities (excluding cash flows linked to acquisitions or sales of subsidiaries), (b) cash flows from investing activities (excluding cash flows from or related to acquisitions and disposals of subsidiaries and other investments, and excluding loans to associates and non-consolidated investments, as well as related tax elements and recognition of factored receivables), and (c) payment of lease liabilities presented in the cash flows from financing activities.
Free cash flow does not include any interest paid, as this is considered financial in nature. As a result, compared to the accounting for operating leases in accordance with IAS 17, the free cash flow improves by the amount of interest paid on the lease liabilities. Free cash flow to shareholders includes all the lease payments, i.e. the payment of the lease liabilities and the interests paid on those. As a
| Capex | 2018 | |||||
|---|---|---|---|---|---|---|
| (in € million) | Q1 | Q2 | Q3 | Q4 | FY | |
| Acquisition (-) of tangible assets | a | (158) | (140) | (160) | (233) | (691) |
| Acquisition (-) of intangible assets | b | (26) | (47) | (28) | (41) | (142) |
| Payment of lease liabilities | c | (23) | (23) | (23) | (23) | (92) |
| Capex | d = a+b+c | (207) | (210) | (211) | (298) | (925) |
| Capex from discontinued operations | e | (27) | (27) | (24) | (55) | (131) |
| Capex from continuing operations | f = d-e | (180) | (184) | (187) | (243) | (794) |
| Advanced Materials | (379) | |||||
| Advanced Formulations | (158) | |||||
| Performance Chemicals | (175) | |||||
| Corporate & Business Services | (82) | |||||
| EBITDA | g | 558 | 643 | 599 | 531 | 2,330 |
| Advanced Materials | 295 | 349 | 299 | 282 | 1,225 | |
| Advanced Formulations | 121 | 147 | 143 | 122 | 533 | |
| Performance Chemicals | 185 | 195 | 200 | 180 | 761 | |
| Corporate & Business Services | (44) | (49) | (44) | (53) | (189) | |
| Cash conversion | h = (g+f)/g | 68% | 71% | 69% | 54% | 66% |
| Advanced Materials | 69% | |||||
| Advanced Formulations | 70% | |||||
| Performance Chemicals | 77% |
Capital expenditure (capex) is cash paid for the acquisition of tangible and intangible assets.
Prior to the adoption of IFRS 16, capex was not affected by operating leases. Following the adoption of IFRS 16, right-of-use assets are recognized, representing the right to control the use of an identified asset. Payments of the lease liabilities are considered payments for the right-of-use assets, in other words, payments made for the acquisition of those assets. As a consequence, following the adoption of IFRS 16, capex includes the payments of the lease liabilities.
Capex is defined as (a) cash paid for the acquisition of tangible and intangible assets presented in cash flows from investing activities, and (b) cash paid on the lease liabilities (excluding interests paid), presented in cash flows from financing activities.
Note: the cash flows have been translated into the reporting currency of the Group (Euro) using the average exchange rates for the period.
| As publi | Adjust | ||||
|---|---|---|---|---|---|
| (in € million) | shed | IFRS 16 | ment | Pro forma | |
| Underlying EBIT | a | 1,546 | 8 | - | 1,554 |
| Underlying EBITDA | b | 2,230 | 100 | - | 2,330 |
| Underlying earnings from associates & joint ventures | c | 74 | - | - | 74 |
| Dividends received from associates & joint ventures | d | 25 | - | - | 25 |
| Recurring capex | e = -2.3%*m | - | - | (388) | |
| Recurring income taxes | f = -30%*(a-c) | - | - | (444) | |
| Recurring "CFROI" cash flow data | g = b-c+d+e+f | - | - | 1,449 | |
| Advanced Materials | 798 | ||||
| Advanced Formulations | 335 | ||||
| Performance Chemicals | 456 | ||||
| Corporate & Business Services | (140) | ||||
| Tangible assets | h | 5,454 | - | ||
| Intangible assets | i | 2,861 | - | ||
| Rights-of-use assets | j | - | 428 | ||
| Goodwill | k | 5,173 | - | ||
| Replacement value of goodwill & fixed assets | l = h+i+j+k | 13,488 | 428 | 5,105 | 19,021 |
| of which fixed assets | m | 16,889 | |||
| Investments in associates & joint ventures | n | 441 | - | 1 | 443 |
| Net working capital | o | 1,550 | 7 | 171 | 1,728 |
| "CFROI" invested capital | p = l+n+o | 21,191 | |||
| Advanced Materials | 8,035 | ||||
| Advanced Formulations | 4,929 | ||||
| Performance Chemicals | 5,657 | ||||
| Corporate & Business Services | 2,569 | ||||
| CFROI | q = g/p | 6.8% | |||
| Advanced Materials | 9.9% | ||||
| Advanced Formulations | 6.8% | ||||
| Performance Chemicals | 8.1% |
The CFROI formula is adapted to take into account:
At inception of a contract, which generally coincides with the date the contract is signed, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
An asset is typically identified by being explicitly specified in a contract. However, an asset can also be identified by being implicitly specified at the time that the asset is made available for use by the customer. If the supplier has a substantive substitution right, then the asset is not identified.
To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether, throughout the period of use, it has:
The Group determines the lease term as the non-cancellable period of a lease, together with both:
In its assessment, the Group considers the impact of the following factors (non-exhaustive):
The Group recognizes a right-of-use asset and a lease liability at the lease commencement date, which is the date that the lessor makes the asset available for use by the Group.
The right-of-use asset is initially measured at cost, which comprises:
After the commencement date, the right-of-use asset is measured at cost less any accumulated depreciation and any accumulated impairment losses. Right-of-use assets are depreciated using the straight-line depreciation method, from the commencement date to (a) the end of the useful life of the underlying asset, in case the lease transfers ownership of the underlying asset to the Group by the end of the lease term, or the lease contains a purchase option that the Group is reasonably certain to exercise, or (b) the earlier of the end of the useful life and the end of the lease term, in all other cases.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the respective Group entity's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise the following:
payments of penalties for early terminating the lease, if the Group is reasonably certain to exercise an option to early terminate the lease.
Service components (eg utilities, maintenance, insurance, …) are excluded from the measurement of the lease liability.
After the commencement date, the lease liability is measured by:
| (in € million) | December 31, 2018 |
IFRS 16 | January 1, 2019 |
|---|---|---|---|
| Rights-of-use assets | - | 428 | 428 |
| Loans & other assets | 282 | (10) | 272 |
| Other receivables | 719 | (1) | 718 |
| Total assets | 22,000 | 417 | 22,417 |
| Total equity | 10,624 | 8 | 10,632 |
| Other provisions | 883 | (16) | 868 |
| Financial debt | 3,180 | 433 | 3,613 |
| Trade payables | 1,439 | (8) | 1,431 |
| Total equity & liabilities | 22,000 | 417 | 22,417 |
Right-of-use assets and lease liabilities amounted to €425 million before the following reclassifications:
These amounts are the opening balances as of January 1, 2019.
On January 1, 2019, following the adoption of IFRS 16, both Assets held for sale, and Liabilities associated with assets held for sale increase by €20 million for the right-of use assets and lease liabilities related to Polyamide.
On January 1, 2019:
the Group used the practical expedient available on transition to IFRS 16 related to onerous contracts, adjusting the right-of-use assets at January 1, 2019 by the amount of any provision for onerous leases recognized in the statement of financial position immediately before January 1, 2019. Such positively impacted the retained earnings as of January 1, 2019 by €8 million.
May 7, 2019 First quarter 2019 results
Bisser Alexandrov +32 2 264 3687
Investor relations
Geoffroy Raskin +32 2 264 1540 [email protected]
relations Caroline Jacobs +32 2 264 1530 [email protected] Jodi Allen +1 609 860 4608 [email protected]
Victoria Binoche +33 1 44 94 86 72 [email protected]
Media
This press release may contain forward-looking information. Forward-looking statements describe expectations, plans, strategies, goals, future events or intentions. The achievement of forward-looking statements contained in this press release is subject to risks and uncertainties relating to a number of factors, including general economic factors, interest rate and foreign currency exchange rate fluctuations, changing market conditions, product competition, the nature of product development, impact of acquisitions and divestitures, restructurings, products withdrawals, regulatory approval processes, all-in scenario of R&I projects and other unusual items. Consequently, actual results or future events may differ materially from those expressed or implied by such forward-looking statements. Should known or unknown risks or uncertainties materialize, or should our assumptions prove inaccurate, actual results could vary materially from those anticipated. The Company undertakes no obligation to publicly update or revise any forward-looking statements.
Solvay is an advanced materials and specialty chemicals company, committed to developing chemistry that addresses key societal challenges. Solvay innovates and partners with customers worldwide in many diverse end markets. Its products are used in planes, cars, batteries, smart and medical devices, as well as in mineral and oil & gas extraction, enhancing efficiency and sustainability. Its lightweighting materials promote cleaner mobility, its formulations optimize the use of resources and its performance chemicals improve air and water quality.
Solvay is headquartered in Brussels with around 27,000 employees in 62 countries. Net sales were €10.3 billion in 2018, with 90% from activities where Solvay ranks among the world's top 3 leaders, resulting in an EBITDA margin of 22%. Solvay SA (SOLB.BE) is listed on Euronext Brussels and Paris Bloomberg: SOLB.BB - Reuters: SOLB.BR) and in the United States its shares (SOLVY) are traded through a level-1 ADR program. (Financial figures take into account the announced divestment of Polyamides.)
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