Solvay
2019 Annual Integrated Report

Value creation

Scorecard

In 2020, we took a step further as part of our G.R.O.W. strategy and defined new mid-term financial objectives for 2024. Our Solvay ONE Planet sustainability program features ten new goals for 2030 that will replace the previous 5 priority targets.

Underlying EBITDA growth

2019 performance: €2,322 million

  • Stable over the year, in line with expectations. Positive forex impact offset a modest organic1 decrease.
  • Double-digit volumes growth in Composite Materials, higher pricing in Performance Chemicals and strong focus on cost discipline contributed to mitigate demand headwinds in the automotive, electronics and oil & gas markets.
  • Underlying EBITDA margin maintained at 23%, demonstrating the resilience of Solvay’s businesses amid a challenging market environment.

More content

Business review

1: at constant forex and scope

2024 Objective

Mid-single digit/year average

on an organic basis,
at constant forex and scope

trigger

Free Cash Flow conversion2

2019 performance: 27.8% (+1.8pp)

The FCF conversion improvement reflects better than forecasted cash generation.

More content

Business review

2: Free cash flow to Solvay shareholders is the 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. The free cash flow conversion ratio is calculated as the ratio between the free cash flow to Solvay shareholders (before netting of dividends paid to non-controlling interest) and underlying EBITDA.

2024 Objective

exceed

30%

on an organic basis,
at constant forex and scope

ROCE (Return on Capital Employed)

2019 performance: 8.1% (–0.1pp)

  • Stable returns largely reflect sustained investments for future growth.

2024 Objective

exceed

11%

on an organic basis,
at constant forex and scope

read more
trigger

Key levers to achieve our objectives

  • Focus on growth in higher margin and less capital-intensive activities
  • Disciplined capital allocation

Greenhouse Gas Emissions

2019 performance

  • Greenhouse gas emissions reduced from 12.3 Mt CO2 eq. in 2018 to 12 Mt CO2 eq. in 2019 mainly by achieving a reduction in CF4 emissions.

2030 Objective

–26%

compared to 2018, at constant scope

read more
trigger

Our challenge

  • Climate change and energy transition are high on the agenda. It is imperative that future growth of businesses is not at the expense of the planet. We are committed to improving our environmental performance over time.
  • In early 2020, we have set a new ambitious goal to double the rate at which we reduce our emissions: we will cut them by 26% by 2030 at constant scope compared with 2018. It aligns our trajectory with the “well below 2°C temperature increase” objective in the Paris Agreement.

Key levers to achieve our objectives

  • Continuously improve energy efficiency
  • Improve the CO2 footprint of our energy mix through initiatives such as conversion to biomass firing and renewable electricity sourcing (e.g. investment in a new biomass boiler in Rheinberg, Germany). As of early 2020, approved projects alone will lead to a 600,000 tons reduction in CO2 by 2025 with a strong pipeline to ensure the decrease continues.
  • Reduce GHG emissions released from our chemical processing operations.
  • Apply an internal carbon price (€25/metric ton of CO2 eq.) to GHG emissions in all investment decisions.
  • Include a GHG emissions metric in the calculation of senior management compensation.

More content

Greenhouse gas emission management
Health, safety and environment management
Energy
Bold steps in sustainability

2019 achievement

Reducing emissions as ONE Group in Italy

Our manufacturing operations in the Specialty Polymers’ Spinetta plant, in Italy, lead to the by-production of CF4, a greenhouse gas with a global warming potential higher than CO2. Bonding a project team from research and innovation to engineering and operations, an innovative clean technology has been developed in-house and started in 2019 with a massive reduction of 0.5 million tons CO2.

read less

Sustainable solutions1 (SPM)

2019 performance

  • End 2019, 53% of our net sales were solidly positioned as “Sustainable Solutions”, offering both positive effects of their use in our end markets and improved manufacturing footprint.
  • Higher growth in this part of the portfolio is explained mainly by changes in scope (divestment of less aligned businesses) and by the development of innovative and sustainable solutions.

1: To be considered a sustainable solution, a product must serve in an application that demonstrates a lower environmental impact during its production phase and an enhanced social and environmental contribution along the value chain. Sustainable Portfolio Management identifies business accelerators or obstacles to help Solvay deliver higher growth and superior sustainable value.

2030 Objective

65%

of Group sales

read more
trigger

Our challenge

  • Grow our solutions through innovation, organic growth, investment, etc.
  • Increase use of renewable raw materials and energy in line with the challenges of circular economy principles.

Key levers to achieve our objectives

  • Sustainable Portfolio Management (SPM) analysis is a key business process at Group and GBU level, allocating resources to upgrade the sustainability of our portfolio.
  • All innovation and acquisition projects and Capex investments above €10 million are evaluated using the SPM tool to enhance their contribution to more sustainable and higher growth.
  • Engagement in the circular economy through ongoing innovation initiatives to design new products, materials and chemical processes as well as new projects in collaboration with customers.

More content

Sustainable Portfolio Management
Sustainable business solutions
Circular economy
Market-driven innovation

2019 achievement

Recognition for Solvay’s sustainable solutions

In 2019, The World Alliance for Efficient Solutions awarded 7 Solvay products sustainable solutions labels, after we demonstrated they protect the environment while being economically profitable. The labels went to Solef® PVDF, a fluorinated polymer that improves the performance and durability of electric vehicles when applied in batteries; our seed booster AgRHO® S-Boost™; SOLVAir®, an industrial exhaust cleaning solution; our Capterall® waste water treatment to remove pollutants in multiple industries; our parasite control system, PARAMOVE® for use in aquaculture, Alve-One®, a 100% safe solution in plastic foam applications, and MAX HT® technology that helps alumina refineries reduce their environmental impact.

read less

Occupational accidents at Group sites1

2019 performance

  • Our 2019 improvement results from our relentless focus on safety
  • The MTAR1 decreased by 18% from 0.54 in 2018 to 0.44 in 2019, thanks in particular to the rollout of safety leadership training sessions.
  • Progress was made on our “Creating Safety” journey, introduced in 2018 at top management level. 25 sites carried out “Safety Climate” assessments to understand the status of their safety culture. Employees and contractors were trained at site level to increase risk awareness and foster safety leadership.
  • Several Global Business Unit and Function leadership teams held training sessions aimed at adopting a shared vision of Solvay’s objective to create safety, instead of only preventing accidents.

 

1: MTAR: rate of accidents with medical treatment, with or without work stoppage

2030 Objective

ZERO

accident mindset

read more
trigger

Our challenge

  • Eliminate all fatal and life-altering accidents and in fine achieve a zero-accident mindset to protect the safety and security of all employees.

Key levers to achieve our objective

  • Continue to focus on engagement and safety culture to reduce the number of people injured on our sites, for example through Safety Leadership or Safety Climate assessments of onsite safety culture, including discussions with employees.
  • Develop a shared understanding of the risks and mitigation measures for the Solvay Life Saving Rules.

More content

Employee health & safety
Health, safety and environment management

1: MTAR: rate of accidents with medical treatment, with or without work stoppage

2019 achievement

Training customers through virtual reality

Solvay GBU Peroxides North America is helping customers to learn to handle our chemicals safely through virtual reality simulations. In partnership with Houston-based HTX Labs, the team organizes immersive hands-on training simulations. As well as a differentiating customer offer, the initiative is in line with our Creating Safety journey and customer centricity mindset. The first module focused on handling hydrogen peroxide and 100% of trainee feedback judged it more effective than traditional training methods.

read less

Employees involved in local societal actions

2019 performance

  • In 2019, Solvay’s first World Citizen Day substantially increased the number of employees involved in societal action (from 33% to 47%), with 168 sites representing more than 94% of Group’s employees worldwide involved.
  • 87% of Solvay industrial sites created a working group that defines the appropriate societal actions to be undertaken to answer the major issues in their region.
  • These local initiatives mainly focus on Solidarity and Youth employability with no significant differences across the regions
  • The Sustainable Guar Initiative continues to expand in India. The purpose of this business program is to teach and promote sustainable agricultural practices among guar bean farmers in Rajasthan along with enhancing livehood and well-being of their family.
trigger

More content

Societal actions
Bonding with the world around us

2019 achievement

Supporting open innovation in China

Solvay Research & Innovation colleagues in China worked to support a group of students from the Ningbo Institute of Materials Technology and Engineering with their participation in a Young Talents Chemical Innovation Challenge backed by China’s chemical industry. Solvay’s support helped the five students take second prize for an innovation to substantially reduce use of plastic in electric vehicles and architecture thermal insulation and so increase the spectrum of application of novel high-performance materials. Solvay’s involvement is part of ongoing collaboration between our R&I team in China and local universities, research institutes and industrial partners.

read less