Our scorecard
Strategic objectives to drive sustainable value creation
2017 and 2016 underlying and restated*** information (except for environment and social data). 2015 pro forma figures.
Underlying EBITDA
Our 2017 performance
- Underlying EBITDA grew on average by 8.6% in the last two years1 on a basis comparable with our mid-term objectives.
- Adverse forex conversion effects of -1.5% and scope effects of -0.7% related to small divestments meant that reported underlying EBITDA growth was 7.5%.
- This earnings growth is at the top end of our strategic objectives and a clear indicator of the progress driven by our enhanced portfolio.
2018
Grow mid-to-high single digit
year on year average1
Key levers to achieve our objectives
- Volume growth driven by innovation and increased demand in key end-markets, including aerospace, automotive, electronics, batteries and healthcare as well as increased metal prices should stimulate higher demand in mining and modest peroxides growth.
- Excellence initiatives will support pricing power and offset inflation of fixed costs.
- Volumes in Advanced Materials were up mainly in automotive, where Solvay continue to benefit from the replacement of metal with high-performance polymers, smart devices and growing application in the healthcare market. Composites sales to aerospace ended the year slightly up, as the production ramp-up of the F-35 program and the LEAP engine compensated for the continuing decline in wide bodies.
- Advanced Formulations volumes grew, as 2017 marked a recovery year for the oil & gas market, and we have made great progress partnering with key industry customers, bringing them valuable solutions.
1 at constant scope & forex
2 Underlying EBITDA growth at constant scope and forex relative to 2016 conversion was 9.9%. As the scope and forex were already largely known at the time the mid-term objectives were set in the third quarter of 2016, the reported growth is taken for the calculation
Free Cash Flow
Our 2017 performance
Delivery on free cash flow is expected to exceed €2.4 billion cumulatively for 2016 - 2018 mid-term target, despite significant divestments. With €1.75 billion generated in the first two years, and more than €0.78 billion expected in 2018, Solvay is on track to materially exceed its free cash flow target on an equivalent portfolio basis.
* total
** continuing operations
Key levers to achieve our objectives
- Stronger EBITDA underpinned by sustained organic growth
- Reduced capital expenditure
- Disciplined working capital management
1 at constant scope & forex
CFROI
Our 2017 performance
CFROI improved to 6.9%, bringing it to the same level as prior to the Cytec acquisition in 2015. This 0.8 percentage point improvement demonstrates the strong focus on improving returns.
* 2016 figure not restated
2018
0.5-1
pourcentage points increase over 3 years
Key levers to achieve our objectives
- Focusing on growth in higher margin and less capital-intensive businesses
- Disciplined capital allocation
Greenhouse Gas Intensity
Our 2017 performance
- In 2017, our GHG intensity fell 4.4%, thanks to:
- Ebitda improvement of activities for a significant part
- New lasting emission reductions (150,000t CO2) relating to our Solwatt energy and CO2 efficiency program (deployed in 70 sites worldwide), new biomass-based heat production, and process improvement projects.
- Over the last two last years, we have achieved a 24% reduction, exceeding our target for 2018.
2018
–20%
compared to 2015
2025
–40%
compared to 2014
Our challenge
We remain more GHG-intensive than the average for the chemical industry.
Climate change and energy transition risks are high on the business and political agenda. It is imperative that businesses improve their environmental performance. While the 24% reduction in greenhouse gas intensity surpasses its objectives, Solvay remains vigilant and committed to improving over time.
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 or renewable electricity sourcing
- 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 our investment decisions
- Include a metric on GHG intensity in senior management remuneration
New sources of renewable energy
In 2017, Solvay was involved in two new projects that reduce emissions by 100,000t CO2 per year:
- biomass-based heat production at a French plant, in addition to projects already initiated in Germany and Brazil.
- the Solvay Jasper solar farm in South Carolina, United States, which is planned to start in 2018.
An area equivalent to
500
football fields
Enough power for
15,000
households
Sustainable Solutions*
Our 2017 performance
- At the end of 2017, 49% of our net sales were classified as “Sustainable Solutions”, significantly exceeding the objective, which reflects higher growth in this part of the portfolio.
- Changes in the scope of the portfolio (positive impact of the Cytec acquisition and divestment of less aligned businesses) explain most of the progress; innovation programs aimed at developing more sustainable solutions also contributed.
2018
40%
of Group sales
2025
50%
at least
of Group sales
Our challenge
Circular Economy principles bring new challenges. Solvay’s use of renewable raw materials and renewable energy is still low.
Key levers to achieve our objectives
- The Sustainable Portfolio Management (SPM) analysis forms part of key business processes at Group and GBU level. It helps analyze the portfolio and allocate resources to upgrade its sustainability.
- 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.
Training our managers in sustainability
In 2017, to better leverage sustainability as a key lever of differentiation on our markets, we designed a specific training module for the Group’s marketing and sales managers. Intended to help managers integrate sustainability into their mindset and everyday marketing practices, this program will be completed in 2018 by a module designed to help our salesforce engage our key customers and partners in sustainability topics, such as climate change, energy transition, and recycling: the objective is to identify and co-develop new business opportunities in these areas.
More than
50
key customers are committed in this journey with Solvay
* To be considered a sustainable solution, a product must serve in an application that demonstrates a lower environmental impact during its production phase together with a better social and environmental contribution along the value chain
Occupational accidents at Group sites
Our 2017 performance
- In 2017, one fatal accident occured at our facility in Devnya, Bulgaria.
- After a steady safety performance for two years, the number of medical treatment accidents fell 24% in 2017. However, the fatal accident in Bulgaria reminds us of the challenges we face.
- We focus on engagement as a way of reducing the number of people injured at our sites. Engagement activities we have pursued this year include Leadership Safety Visits (over 1,350 in 2017); Safety Days to stimulate interactions relating to HSE; and Safety Climate diagnostics, in which we discuss the onsite safety culture with employees.
2025
–50%
of occupational accidents with MTAR* < 0.50 compared to 2014
* Medical treatment accident rate, with or without work stoppage. Non-restated figures.
Our challenge
Eliminate all fatal and life-altering accidents.
Key levers to achieve our objective
- Safety Leadership: spending less time reacting to accidents and more time encouraging and supporting our employees and contractors to make safety a normal part of how they perform their work.
- Develop a shared understanding of the risks and mitigation measures for the Solvay Life Saving Rules.
Using drones for industrial maintenance
A new use of digital technology is enabling the Aroma Performance GBU to reduce the cost of its routine maintenance inspections. The Saint-Fons plant, near Lyon in south-eastern France, has decided to trial the use of a drone to survey the roofs. This initiative eliminates safety risks, and avoids the costly and time-consuming erection of scaffolding. Using a drone, an inspection takes minutes instead of weeks to complete, and at a fraction of the cost.
Employee engagement index*
Our 2017 performance
- A “pulse survey” was carried out to ask all Solvay employees about their satisfaction at work. The participation rate was 81% (vs. 79% in 2016). Satisfaction and pride remain high. Key areas for improvement include greater recognition for work done, and sharing of best practices among entities.
- Stress prevention and management: four practices are in place at over 50% of sites, including access to an employee assistance program.
- Diversity & Inclusion initiatives focus on 3 areas: fostering awareness through numerous Diversity & Inclusion workshops and specific local actions; trainings and development programs focusing on inclusive behaviors and leadership by women; challenging HR processes, i.e. the hiring process, succession planning.
2025
80%
Employee engagement index
Our challenge
- Pursue our effort to improve inclusion and increase diversity (of gender and geographies) in our teams.
- Drive cultural change across the Group to increase customer focus and collaboration.
- Improve our ways of recognizing employees’ performance.
Key levers to achieve our objective
- Stress prevention and management: more extensive practical tools and support will be available on sites.
- Diversity & Inclusion: we keep on implementing various initiatives.
Creating a new employee experience
We have a robust annual process to assess the level of engagement of our teams. Over the years, it has become a tool that managers use to develop actions for improvement.
Employee engagement is key to making our transformation a success, as we are driving a cultural change to foster a trusting, collaborative, and entrepreneurial mindset throughout the Group. The launch of Solvay Cares initiative created a lot of pride among our teams. We believe that, combining such innovative initiatives with digital tools, we will create an exciting employee experience and foster engagement.
There is room for improvement, however: increasing cultural and gender diversity in our teams remains a priority for Solvay.
Cécile Tandeau de Marsac, Member of the Executive Committee, Group General Manager Human Resources, French
* Measures employee engagement according to Group’s initiatives set to improve their well-being, including personal development, reward and recognition, inclusive culture, and work-life balance
Employees involved in societal actions
Our 2017 performance
70% of Solvay industrial sites have a Guidance Committee for societal actions.
2025
40%
of employees involved in societal actions
Our challenge
- Measure the real impact of Solvay’s local societal approach without excessive reporting burden.
- Embark and focus Solvay’s employees on the four key topics defined: science, youth employability and education, environment and solidarity
Key levers to achieve our objective
- As part of the Solvay Way practices, all the sites self-assess their progress in their approach to societal actions each year.
Education for disadvantaged children in China
The Solvay Adream Center, a standardized classroom sponsored by Solvay, was officially opened in 2017 at Sanhewan Primary School, Yunnan Province, China. As part of our social responsibility actions, we are helping the school provide quality education and help children grow confidently and with self-esteem, in association with the Shanghai Adream Charitable Foundation. This project is supported by eleven of our plants and R&I (Research & Innovation) centers in China. All employees are encouraged to volunteer to teach in the Center, following a training program provided by an NGO.
Around
300
students concerned
11
sites and R&I centers involved
*** reflecting the reclassification in discontinued operations of the polyamide activities to be sold to BASF.