A customer-centric strategy - 2017 Annual Integrated Report

GRI disclosures
103-2

2017 marked the opening of a new chapter in our history as we reached a key milestone in our transformation. With our portfolio upgrade largely completed, we are now focusing on the next step in our journey: fostering cultural change throughout the organization and speeding up our transformation thanks to digital, seeking to make Solvay more agile and customer-centric, with the capacity to innovate faster.

Click to explore

OUR NEW PROFILE

More
sustainable

More
global

More
balanced

More
specialty

More sustainable

49% of our product portfolio consists of sustainable solutions for our customers, well on the way to exceeding our target of 50% by 2025, according to our Sustainable Portfolio Management (SPM) methodology. SPM is a tool that helps Solvay identify opportunities which will have a positive impact on our performance. It has enabled us to reorient our activities toward more sustainable and expanding markets.

Sustainable business solutions

Sustainable Portfolio Management

~49%

Net sales with sustainable solutions

More global

Solvay has strengthened its geographic footprint. Each of the three key regions – the Americas, Europe, and Asia – generates around one third of the Group’s net sales. Such balanced geographic distribution reduces the impact of adverse regulatory, economic, and political developments.

~1/3rd

Net sales in each main region

More balanced

More than one half of the Group’s activities take place in markets expanding faster than growth in GDP. The portfolio transformation reached a key milestone in 2017, with the Group scaling back cyclical and low-growth businesses and divesting the polyamides business. By addressing a more diverse range of market segments, we are able to reduce our exposure to negative evolutions on our markets.

Innovative solutions for our markets

>50%

Net sales in GDP+ markets

More specialty

The breakdown in our activities today is approximately 40% Advanced Materials, 30% Advanced Formulations, and 30% Performance Chemicals. Roughly 70% of our net sales are generated by our growth engines.

Our activities are complementary: we operate a business model based on two growth engines (Advanced Materials and Advanced Formulations), backed up by a resilient cash contributor (Performance Chemicals) which enables us to generate capital to finance innovation.

~70%

Net sales from growth engines

OUR PRIORITIES FOR THE FUTURE

Strenghtening our management model

Delivering on our objectives

Generating organic and sustainable growth

Strengthening our management model

After focusing on upgrading our business portfolio, our next challenge consists in adapting our organization to make it simpler, more agile, and more outward-looking, and thus better meet our customers’ expectations. We are transforming the way we work, adapting our behaviors, driving a deep cultural change throughout the organization. Our digital transformation is under way, and there are already clear benefits. We are instilling a cultural change, based on customer focus, collaboration and entrepreneurship. Digital technologies will be an enabler for our transformation, boosting excellence in human resources, marketing and sales, supply chain, and industrial.

Delivering on our objectives

We are on track to deliver on our financial and extra-financial objectives; the growth and return on investment which we generate will ensure that we create sustainable value for our stakeholders. We will continue to deliver superior profit growth, allocate capital attentively, and maintain strong working capital discipline to grow cash generation and returns.

Our scorecard

Generating organic and sustainable growth

The transformation of the organization will strengthen our business model, supporting the rapid growth and the innovation capabilities of our GBUs (Global Business Units). It will not only provide us with the ability and agility to develop market-oriented competitive solutions for our customers, it will also enable disruptive innovation and the creation of significant synergies at Group level.

We are focusing primarily on our growth engines – Advanced Materials and Advanced Formulations – and targeting organic EBITDA growth. Growth in these sectors is underpinned by innovation, our technological leadership, and our presence across diversified markets.

With the portfolio transformation largely behind us, we are now in the process of driving cultural change within our company, getting rid of complexity and bureaucracy to free energies so that employees can really focus on what matters: our customers.
Pascal Juéry Member of the Executive Committee

Stakeholders speak – Customers

Innovating to help our customers grow

Our Research & Innovation organization is geared to favor breakthrough innovation, which our customers require to maintain the pace of their own technological progress. 85% of the Group’s R&I investments are directly managed by the GBUs while Corporate R&I is leading Solvay into new growth territories, incubating emerging competencies, and enhancing innovation excellence.

When it comes to innovation, speed is a keyword. The teams’ ability to collaborate and to pull together as a Group allows us to react quickly. This year, for instance, corporate and business teams worked together on the strategic acquisition of EnergainTM, a battery-related technology, strengthening Solvay’s capabilities in the development of high-voltage solutions for Li-ion batteries. As a result, our solutions portfolio now includes a key battery component of electrolyte, ensuring higher performance and greater safety. Our flexibility, agility, and capacity to make rapid choice was decisive in the success of the operation.

2,100

R&I employees

284

Patent applications

€ 325 million

R&I effort

€ 80 million

Allocated to funds and start-ups

Open innovation is all about accelerating innovation. We make smart investments in promising start-ups such as Multimechanics, an American software company whose virtual testing software allows us to innovate in new complex materials.
Nicolas Cudré-MaurouxGroup General Manager Research & Innovation
Research and innovation