Solvay Sa Act

Good day and welcome to today's Solvay 2024 Full Year Results Conference Call. Throughout today's recorded presentation, all participants will be in a listen-only mode. Later, we will conduct a question and answer session. You may register for questions at any time by pressing star 1 on your telephone keypad. And now, I'd like to hand the call over to Geoffroy Dutremont, Head of Investor Relations. Please go ahead, sir.

Good afternoon, everyone, and welcome to Solvay's 2024 earnings call. My name is Jean-Paul Outremont, Head of Investor Relations, and I'm joined here today on the call by our CEO, Philippe Queren, and our CFO, Alexandre Blum. This call is being recorded and will be accessible for replay on the Investor Relations section on Solvay's website later today. I would like to remind you that the presentation includes forward-looking statements that are subject to risk and uncertainty. The slides presented in today's call are also available on the website. In today's call, we will discuss our full-year earnings, and Philippe will also give you his perspective on the first year of the new survey and remind you who we are. Philippe?

Thank you, Geoffroy, and hello, everyone. As usual, we will start with a word on safety. And unfortunately, after the loss of one of our colleagues in August last year, we have to report two new losses in the fourth quarter of 2024, one in Bulgaria and another one in Spain. These are very tragic and sad news, and I would like to express my deepest sympathies and thoughts to the families and colleagues of the three contractors who lost their lives. Safety is above everything we do at Solvay. All of us should return home safely after our day's work. We've made important steps in line with our strive for zero accidents. We've launched what we call SAFE, safety as first engagement. And as part of SAFE, we address safety in our meetings. We extended the Solvay life-saving rules. We introduced a new process for our permit to work, but this year has shown that this is not enough. Therefore, we decided to take immediate action, and we launched a safety culture transformation program which aims at elevating safety performance across all our sites and to achieve also a transformative shift in the safety culture across the group. To do so, we've created a dedicated group safety task force to completely lead on safety with the assignment to accelerate on all aspects that are needed. Safety is a fundamental commitment of Solvay. We will never compromise on that, and you can count on me. Now, let me take a few minutes to step back and look at the achievements of last year. 2024 marked a pivotal chapter in Solvay's history. The spin-off has unlocked significant value and empowered us to create a more focused and a more agile organization. First, we successfully navigated the organizational shift, ensuring our 9,000 employees were fully engaged in this new era. Secondly, our streamlined structure enabled us to accelerate our transformation, exceeding our projected cost savings for the year. Thirdly, we continue to drive the energy transition of our plants, one after the other, and we remain on track to meet our ambitious sustainability goals. We connected with a lot of customers, and we will continue to build strong partnerships to support them in their innovations. Think about the microchip producers for electronic grade H2O2, our entire customers with circular silica. Finally, despite a volatile economic landscape, we solidified our financial position through a successful 1.5 billion Euro bond issuance, and we delivered a solid set of results that surpassed our initial projections. Slide seven, you see an overview of this solid financial performance. As usual, Alex will provide more details in a few minutes, but let me share the following message with you. Everybody will agree that the environment has not been very supportive in 2024. However, our unique profile and strong focus on what we can control allowed us to deliver solid earnings above expectations. More specifically, I would like to highlight the BDA of 1,052,000,000, supported by cost savings well above our own forecast, thanks to the acceleration of some initiatives. Our free cash flow of 361 million euros, with a capex at 355, shows that the resilience of our businesses allows us to generate enough cash to support all our commitments energy transition payment of our dividend to shareholders and investment in future growth this is a great achievement so month after month with deep industrial roots and a well-defined strategy Solvay consistently demonstrates the resilience of its financial results. I'm very happy with the energy I see in the company, and that gives me a lot of confidence for the future as well. And our future is essential. One year after the split, it is probably a good time to remind you who we are and repeat a few key elements of our strategy. We are essential chemistry, making progress possible for generations. At Solvay, we do not invent new molecules. The ones we have in our portfolio existed already decades ago and will still be needed for a very long time. All the products we sell are essential to our daily life. Take Sodash. One of the major uses of Sodash is to enable the production of glass. a single day when we are not surrounded by glass. With no soda ash, window glass would be a luxury. Silica is essential to the tire industry. Without our highly dispersible silica, we would still have tires, but those tires wouldn't have the same performance in terms of fuel efficiency, CO2 emissions, and safety. Smartphones. Without semiconductor chips, there's no smartphone. And without products like our hydrogen peroxide or our rare earth oxides, there's no chips. And these are just a few examples. Most of our businesses share those same characteristics. They are critical to the products you use every day. Moving to slide nine. Our ambition is clear. We want to be the best in what we do. We want to be a leader in essential chemistry. And our purpose that we've just seen, we are essential chemistry, making progress possible for generations, is the beacon that is guiding our ambition. The core values, the core value drivers supporting the strategy will be what will make the difference between a winning company and the others. Market leadership, cost leadership, and sustainability. Our key enablers of that strategy are the way we need to operate and what we should expect from our teams, our operating model, and our people and culture. The strategic priorities we need to focus on to make a difference and deliver the financial results we aim for, sustainable cash flows, and attractive returns. Those priorities are the few strategic levers that we have selected. We will come back to them later on. Our products are not commodities, but they are not specialties neither. They have very unique characteristics that make them different. We can define them around the six following dimensions. Let me explain a few of them. Looking solely at the product, essential chemicals would be in most cases close to a commodity. There may be a few references and performance matters, but very often it would be sold on spec, and the product would basically be the same for all producers. But if you look at the technology, essential chemicals will be closer to specialty. Our processes are not available off the shelf. A strong expertise and know-how are required to be able to design and operate our plants. That's how we can license some of our technologies, like our mega plant technology for hydrogen peroxide. They are not totally unique, but only a few companies own and master the technology. Similarly, the way we interact with customers is different from commodity players. In all of our businesses, we need to know our customers, understand their needs, how they use our products and build relationships. While we don't sell value, we don't just apply an index that will vary every month or every quarter. And we tend to have stable long-term supply agreements and strong innovation programs with our customers. Being essential is also being focused. Our portfolio of products is simple. Five monotechnologies, sodas, bicar, peroxide, silica, fluorine, and rare earth, and one very strong regional business, Coetis, more focused on the Latin American market. We can be much more focused and much more reactive than before the split. And we serve... A high number of customers in a wide range of end markets, take automotive, construction, healthcare, or electronics, each account for less than 20% of our overall sales. This brings resilience, and resilience is important for our clients and for all our stakeholders. Being close to our customers is another key element when you want to build long-term partnerships. This is why at Solvay, more than 80% of our sales are actually regional or local to local. And this brings a lot of advantages, such as competitiveness, when you know that essential products can be expensive to transport. It's also good for security of supply. And it's the best protection against tariffs. In the following slides, I will deep dive into our strategic levers as they are driving our choices for resource allocation and also for setting priorities. So the first one is operational excellence. This means continuous progress and optimization of operations and systems. Our initial plan was to achieve more than 300 million euros of savings by 2028. We are now increasing that target to 350 million. And we accelerate the delivery as we expect 200 million already by the end of this year. That will contribute to ensure our businesses remain competitive and that will improve their position as benchmarks in their respective industries. For each of our manufacturing sites, we've built detailed plans to optimize our operations. For each of our corporate functions, we're building a target operating model. And as you can imagine, digitalization is a key component of those plans. For example, we use more and more devices to monitor the equipment and improve the reliability of our assets. And as a result, our maintenance costs. We also implement digitalization and the AI capacities in all our support functions, especially in our global business services centers. But digitalization is not everything. Here are a few other examples. We're saving on our transportation costs by changing the transport mode, the lot size, the number of rotations. We improve yields on our energy and raw materials consumptions. We continue to take initiatives in procurement as well. Now, moving to our next strategic lever, sustainability and the energy transition. In 2024, we have taken the time to redefine the sustainability agenda of the company while aligning it with a new solar profile. So today, I'm very happy to launch four generations. Four generations is our new sustainability roadmap. We have refreshed our ambition, added new commitments, redefine our processes and our governance. But the ultimate goals remain the same. Reduce our impact, create trust and value. This roadmap is structured around two pillars. Planet progress, focused on climate and nature, and better life for people and communities. It will be deployed in all our sites around the world. And it will be deployed through the Star Factory Program, which aims at designing the factories of the future. It is also integrated into the incentives in all layers of the management with safety, CO2 emissions, and diversity as the main KPIs. Next slide, please. This slide summarizes the KPIs we track as part of our four generations roadmap. We confirm our main climate targets, carbon neutrality by 2050, with an interim target of reducing greenhouse gas emissions by 30% by 2030. We are well advanced, minus 17% so far. In 2024, we maintain our greenhouse gas emissions reduction scope one and two despite increased levels of production in some of our businesses. This was achieved through the strategic execution of our energy transition project and our successful exit from coal at two of our plants in 2024 in Germany and in Wyoming, USA. We have added an additional voluntary commitment regarding biodiversity. We are already recognized for our good practices on biodiversity in several of our sites, like in Brazil, in Italy, and in Spain. We are now pledging to allocate 30% of our land around our sites to support nature conservation and restoration efforts by 2030. We will partner with the IUCN, that's the International Union for the Conservation of Nature, to achieve this target. Several projects are already underway, like the reforestation project in Brazil, the tiny forest in the Netherlands, or the mangrove project that we have in Thailand. Regarding safety, the overall trend is positive, yet the three tragic accidents we experienced in 2024, which I addressed earlier, served really as a critical reminder. Vigilance is non-negotiable. We must and we will do better. We've made also tangible progress in advancing diversity within Solvay, putting us on course to reach 30% of gender parity by 2030. And finally, a word on the United Nations Living Wage Initiative. I'm happy to confirm that we're on track to have 100% of our employees at the right level in 2025. This is one year earlier than planned. Now, moving to the energy transition roadmap and the need to accelerate its execution. This is really a strategic imperative. It's driven by our commitment to the planet, the clear expectations of our customers, but also by the fundamental need to remain competitive, particularly in Europe, where the rising cost of energy and of carbon emissions creates a distinct economic advantage for sustainable businesses. This is critical for our long-term success. We act on decarbonization, and our track record is there. Both Alex and I have successfully deployed some of the largest global decarbonization projects within the group in the past, and thanks to this, Solvay in general has already reduced its CO2 emissions by half in the past 20 years. Our roadmap outlines clear milestones, minus a 30% emissions cut by 2030, a further one-third reduction by 2040, and net zero by 2050. Implementation will involve coal phase-out, the rollout of eSolvay, and other technological breakthrough projects. We will invest as Solvay a capex that is affordable. It would be 30 to 35 million euros annually until 2030, increasing to 50 million per year by 2040, which will be complemented by strategic third-party financing for some of the key large projects. Third strategic lever, process innovation. This is how Solvay started, by revolutionizing the sodash process in the 19th century. So, you know, we understand very well the importance of staying ahead of the curve and continuously improving our processes. It can take many forms, from bringing improvements to existing processes, for example, new generations of catalysts for our peroxides plants, to finding technologies to offer circular materials, like our silica with the rice husk ash process in Italy, or digital tools to transform the way we operate at the level of the shop floor. With our flagship e-survey process, we reinvent a new way to manufacture sodash. And we are making rapid progress. We are reaching technological feasibility, and we can now work on the economical equation. Finally, production capacity. Production capacity both to sustain our market share in our traditional markets and to capture growth in targeted high-potential opportunities that our products can serve. In our traditional markets, growth is close to GDP. We invest when our customers need it. This can be through expanding our production capacity, building new units, or increasing production through partnerships. But it always entails sites where we have a competitive advantage and where we have a clear roadmap in terms of sustainability. Beyond these core and markets, Each global business unit has growth applications where we see high potential opportunities and where we want to invest. Here are a few examples. In our soda ash and derivatives business, we have now buy car applications such as Solvair Marine, an innovative technology used as a dry exhaust gas treatment system for sulfur oxide and particle removal for the shipping industry. In silica circular highly dispersible, silica is expected by tire manufacturers to increase the share of circularity in their total sales. In special ,, we will inaugurate the first production of rare earth oxide for permanent magnet in a few weeks from now. So that concludes my 2024 update for today. Our strategy, I hope, is clear, solid. The split allows us to be much more focused on what is important for Solvay and its businesses, and I would like now to hand over to Alex for the review of the financials.