Description

The allocation of resources to projects (capital expendidure (capex), mergers and acquisitions) could be misaligned with Solvay’s growth strategy, leading to an inefficient use of Group financial resources and resulting in poor cash conversion. Also, a major project could experience difficulties and so fail to reach its objectives.

Prevention and mitigation

To increase the likelihood that project objectives are met, the Group has set up processes to manage both capital investments and acquisitions, including risk identification, assessment, and mitigation steps.

  • The model of governance for major/medium-sized capex projects is designed to ensure that only the most effective capital projects are authorized and executed in the best possible way.
  • The Investment Committee provides the Comex an analytical view of the capex allocation efficiency for the Group and the capex plan, consistent with the Roadmaps and Business Strategy Reviews of the GBUs.
  • A performance analysis after implementation is conducted to assess the Capex efficiency. The lessons learned are used to continuously improve how the Group approaches the challenges inherent in the marketing, financial and industrial aspects of investment projects. 

The methodology used to tackle major capital projects has been extended to the GBUs: they can apply it for their medium-sized projects.

The Group has progressively deployed a Capex Excellence methodology for project portfolio optimization on smaller projects.

The combination of these actions has led to much better control over EBITDA conversion into cash and a conversion level comparable to similar companies in the Industry.