Solvay Sa Act

Good afternoon, everyone, and welcome to Solvay's third quarter and first nine months of 2025 earnings call. I'm Geoffrey Loutremont, head of investor relations, and I'm joined here today on the call by our CEO, Philippe Queren, our CFO, Alex Bloom, and our COO, Lani Duval. This call is being recorded and will be accessible for replay on the investor relations section of Solvay's website later today. I would like to remind you that the presentation includes forward-looking statements that are subject to risks and uncertainties. The slides presented in today's call are also available on our website. We'll first discuss our third quarter earnings, then give an update on the operational excellence program and come back also on some recent development survey before taking your questions. Philippe, please go ahead.

Thank you very much, Geoffroy, and hello, everyone. As usual, I will start with a word on safety. While the number of injuries is stabilizing at low rates since the beginning of the year, the few accidents we saw in our operations remind us that we need to continue to work hard on the transformation of our safety culture. Changing the mindset and the behaviors is our main focus. Safety will always remain our number one priority. Slide six, please. So Alex will go through the earnings in detail, but I would like to give you a few messages first. So first, the overall environment remains difficult. We didn't see any improvement in the general macroeconomic indicators and the geopolitical and trade environment remains volatile. Our Coatis business continues to see very difficult market conditions related to the direct and indirect impacts of the increased tariffs for Brazilian imports to the US. Our Sodash business also continues to be under pressure, specifically in our seaborne export markets due to Chinese overcapacity. Our analysis of the situation is confirmed by the recent anti-involution regulation announced by the Chinese government and its intention to restructure industries where there is overcapacity. If and when they will target the older synthetic soda industry in China, we estimate that the market will rebalance and rapidly improve. But as long as demand remains subdued and supply remains as such, we expect to see continued price pressure in the Southeast Asian region. We continue to think that this situation is unsustainable for the region, with many players seemingly selling below their cash costs. In this context, we have reduced the quantities produced in our European soda ash exporting plants. The upside to this downside is we were able to save some CO2 emission rights consumption. And since we've been building our CO2 emission rights portfolio for quite some time at Solvay, and as our coal phase-out is more and more secured, we decided to sell part of our CO2 emission rights inventory in Q3, and that generated 40 million euros EBITDA and 50 million euro cash gain. So, allow me to be very clear about this. This is definitely not a one-off. but it is a business decision that we may repeat in the future should these market conditions persist. Now, before we move to financial, I would also like to spend a few minutes on the good work that we've done related to our transformation. Slide eight, please. So earlier this year, we shared with you our essential for generation strategy to establish Solvay as the leader in essential chemistry. Operational excellence is the first lever of this strategy and will allow us to accelerate the transformation of the company. We've been updating you regularly on the progress of our cost savings program with a commitment to generate 350 million euros of cost savings by 2028. Today, we have invited Lanny Duval, our Chief Operations Officer, to this call to give you a deeper understanding on what we do and how we achieve real results on the ground. Lanny, the floor is yours.

Thank you very much, Philippe. My job is to translate this strategic commitment into hard numbers across the company. Today I will zoom in on our industrial sites and describe how we approach the sustained improvements. Our savings targets are the results of two main programs. First, we may be a 163-year-old company, but we are becoming a digital-first company. Over the last 18 months, we've invested significantly in both infrastructure and in capability. We've created a world-class data structure where all key operational data resides, and we can leverage our scale to quickly deploy across the organization. Second, we're implementing what we call our Star Factory program, where all plans have a roadmap for improvement, in really all dimensions needed to operate our plants. All the examples that we are going to discuss are or will be implemented across all regions and all plants. Slide 10, please. Our maintenance strategy is important for our fixed cost and the reliability of our assets. This transformation in our operational performance comes from moving away from a time-based maintenance to condition-based monitoring, or what we call CBM. We utilize real-time data analysis to predict equipment failure and determine the optimal moment for intervention. By utilizing sensors to measure an asset status, CBM enables the collection of critical data, such as temperature, vibration, or sound, This data allows us to spot trends, predict potential failures, and determine the remaining lifetime of the equipment. This allows us to reduce the cost of the repair and plan for the intervention. This shifts our entire operation from being reactive to being proactive. This isn't a hypothetical pilot. We've deployed this on a global scale. We've gone from a couple of hundred sensors in 2023 to over 4,500 sensors today and 9,000 by 2027, creating a more resilient, reliable, and cost-effective industrial footprint. This is a good example of the value we are creating with our digital and data strategy and demonstrates our ability to quickly scale across the company in all regions. Vibration monitoring is not new or novel, but the deployment strategy at scale is a best-in-class practice. As an example, at the Dumball site, CBM helped to detect abnormal vibration on a fan and a malfunctioning of a lubrication valve. Thanks to the alerts generated by the IoT sensors, this could be quickly corrected and we saved a potential €100,000 repair cost. These examples highlight the effectiveness of the CBM in preventing failures before they escalate into more serious and costly issues. Again, the secret is how we have invested on our data platform and we are now perfectly set up for using advanced AI tools to further our impact. Another example, we are redefining how we manage material and energy performance across our industrial operations. This isn't just about efficiency. It's about unlocking 37 million in potential plant variable costs by 2027. which represents roughly 2% reduction compared to 2023. It's about building a smarter, safer, and more sustainable future. At the heart of this transformation is digitization. We are rolling out standard real-time dashboards, giving operations and engineers instant access to the metrics that they need. The helicopter view, as we call it, which is the standard in all of our control rooms, includes everything our employees need, such as safety indicators to ensure our people and processes are protected, real-time production levels to track throughput and performance, or material and energy consumption metrics to drive efficiency. This is not a technical upgrade. This is a cultural shift. It's about embedding performance thinking into every layer of the organization starting with the shop floor. It's about making sustainability and efficiency inseparable from operational excellence. Next slide, please. Continuously optimizing our industrial footprint is a core part of our strategy to enhance performance. Let me give you three examples. First, we've aligned our regional footprint with demand. In our peroxides business, we've taken decisive action in Pavoa in Portugal and Warrington in the UK and reduced our capacity in the European merchant market. Second, we recently announced different majors in our special chem operations in Germany to secure our long-term competitiveness. In practice, this means we will consolidate our special chem German production sites to improve efficiency. By relocating the Nakalok Tech Center and production operations from Garbson to Bad Wimpin, we will consolidate expertise into one location. We will establish Bad Wimpin as the global hub for production, innovation, and customer applications, reinforcing Solvay's position as a worldwide leader in automotive brazing. Third, our energy transition, which is a which is key to our long-term competitiveness. At our Torlavega soda ash plant in Spain, we could not ensure competitive production costs after a full coal phase-out. Hence, we will supply Latin American customers from our Green River plant with a very cost-efficient alternative. We decided to decrease the Torlavega production by one-third. This will allow for reduced fixed costs and capex at the site while making the energy transition project possible for the remaining capacity. Indeed, earlier this year, we announced moving forward with a biomass cogeneration unit that will reduce the CO2 emissions by half in 2027. These actions are taken to ensure our operations are lean, competitive, and ready for the future. The last example, our spend review challenge. This is a five-step process that brings together a multidisciplinary team to challenge traditional ways of working and create value. The team analyzes spending at a site level and covers all the site-related purchasing categories. Operations, procurement, and leadership all need to work closely together to create value for each site. This is an ongoing process. We started with the industrial categories and we've expanded to include facilities, R&D services and goods, onsite logistics and packaging. The SRC has the potential to return 15 to 20 million euros annually, primarily in fixed costs. In 2025, we have challenged €330 million in spending across 21 sites and identified €11.3 million in savings opportunities. But we're not stopping there. We plan to complete nine additional sites until the end of the year, aiming for a 5% savings on the addressable spend. An interesting case from our Qingdao site in China, where we redesigned the plastic pallets. to reduce the rate by 18% and allowing for 230,000 euros in annual savings. So this change is better for our bottom line, more efficient for us and our customers' operations, and better for the environment. We are currently investigating how to scale this initiative to other sites. Slide 12, please. We feel confident we will deliver the $350 million in gross annual savings by 2028, because we have invested in our digital transformation, have an execution at scale strategy, all while improving safety performance and providing a platform that is future-proof. The early results are speaking for themselves. We achieved $110 million in 2024, and are on our way to exceed 200 million by the end of 2025. At the core of our transformation is digitization. By embedding digital tools and building a common data infrastructure, we are ensuring that our operations are future-proof and AI-ready. We are already rolling out machine learning and exploring options for GenAI and agentic AI in operations. To conclude, I want to leave you with this. We are not just cutting costs. We are fundamentally improving how Solvay operates for the next generation. And this is how we contribute to the long-term financial resilience of Solvay. With that, I'll hand it over to Alex to walk us through the Q3 results.