EuroBusiness Media (EBM): Solvay, one of the world leaders in customized chemical solutions, reports results for the full-year 2014. Jean-Pierre Clamadieu hello, you are the CEO of Solvay. You reported solid results for the full-year 2014. When looking back at the year, what are some of the main headlines for you?
Jean-Pierre Clamadieu: Probably the two main headlines are that, first, the transformation of the Group is continuing and with a very strong dynamic. This in terms of portfolio, where we have seen significant movement in 2014, but also regarding our results-oriented culture and innovation. All of this demonstrates that the transformation that we started in 2012 is clearly ongoing. And obviously, the second element is the solid results that you just referred to. I think that we were able, in a challenging environment, to deliver a set of results which demonstrate that the transformation is indeed working.
EBM: Could you provide some more color on these results?
Jean-Pierre Clamadieu: In fact, quarter after quarter during 2014, we were able to post double-digit growth, so very much in line with our mid-term expectations. When we look at how this was delivered: strong impact of the excellence initiatives that we launched throughout the Group – they have provided us with more than €300 million of REBITDA for the full year. Strong impact of innovation: this was a year of strong delivery of innovation, especially in our growth engines. And when we look at the various businesses, or various segments and their contribution, clearly the businesses that we have identified as growth engines are indeed delivering growth.
EBM: What are some of the financial highlights?
Jean-Pierre Clamadieu: First, sales up 5%, slightly over € 10 billion. Second REBITDA: we have delivered € 1.8 billion, an 11% increase versus the previous year. And a very strong free cash flow generation: more than € 650 million, mostly in the last part of the year. We have also some exceptionals that we should not forget: around €600 million of impairments. Two elements to explain this: first, the preparation for our European PVC JV, INOVYN™, and second, the impact of the Russian situation. We have launched a new PVC plant in Russia as part of our JV with Sibur, our Russian partner, and we had to support the impact of the devaluation of the ruble. But most of this € 600 million are non-cash.
EBM: What is your update on INOVYN™?
Jean-Pierre Clamadieu: The project is moving and we are probably at its final stage now. We are expecting the approval of the divestiture by the European Commission, and once this is done, we will be able to close the deal in the following few weeks. I can just mention that both INEOS and Solvay are very committed to making this happen.
EBM: There has been a lot of turnover in your portfolio recently. What is the strategy of your portfolio review?
Jean-Pierre Clamadieu: It’s all about reinvesting in value. We have continued to divest businesses that we think won’t contribute to our long-term strategy: European chlorovinyls, I’ve just mentioned it. We have also decided to exit from our Eco Services business in North America because we want to focus on higher returns, lower cyclicality businesses.
On the acquisition front, we have improved our position in the automotive sector: we have just closed the acquisition of the Ryton® PPS business. It’s a polymer which is used in the automotive industry and which complements very well our current offering. We have also bought a small business in Germany, Flux, which allows us to improve our position within this sector. So, overall, bolt-on acquisitions which clearly help us to deliver on our strategic vision.
EBM: And what about Chemlogics? How is the low oil price affecting business prospects?
Jean-Pierre Clamadieu: First, I have to say that the integration of Chemlogics during 2014 was very successful. Chemlogics exceeded very significantly our expectations. It’s clear now that in the oil and gas markets we are facing a new scenario. It’s important to realize that Solvay’s position on tight oil is less than 5% of our sales. This business is going through some significant changes. We think that there will be opportunities for us. As the companies involved in tight oil exploration are looking to improve their competitiveness, they want to see new solutions being offered. We think that with Chemlogics we are very well positioned to bring these solutions that will help enhance the competitiveness of the U.S. oil and gas industry sector.
EBM: Can you give us an update on Indupa and the rumors on Acetow?
Jean-Pierre Clamadieu: Regarding Indupa, the situation is simple: we are disappointed to see that Braskem was not able to get the antitrust clearance that was necessary to execute the transaction that we had negotiated, but we will be restarting this as soon as possible. We have not changed our strategic view that Indupa could have a better owner than Solvay.
Regarding Acetow, we don’t comment on rumors. Acetow is clearly a good business and we will be looking at the best way for this business to contribute to our value creation. Regarding the portfolio overall, the focus will be to continue to upgrade our portfolio during the course of 2015.
EBM: How do you see Solvay’s transformation continuing and developing into 2015?
Jean-Pierre Clamadieu: Clearly, we need to accelerate our transformation in 2015, both in terms of portfolio upgrade, but also in terms of momentum within the company. It’s very important that we continue to deliver more and more on innovation. It’s very important that we continue to develop the excellence initiatives, which allow us to compensate for inflation and to sustain our pricing power.
EBM: And lastly, what do you expect for 2015?
Jean-Pierre Clamadieu: 2015 is another year full of uncertainties, but I see a number of positive elements which will allow Solvay to continue with its current momentum. One is the dynamic that we have created as part of the transformation of the company. Second, the exchange rate is clearly a positive for Solvay, with only one third of our sales in the eurozone. We will regain competitiveness in a number of businesses due to the current situation of the euro versus the dollar. Third, oil price: the current situation is also a net positive for the Group.
And as a sign of confidence, we have decided to increase our dividend by a bit more than 6% to €3.4 per share. On a different note, we are very proud to see that Solar Impulse, our flying lab, is about to start its round-the-world trip from Abu Dhabi in a couple of days – another example of the fact that, indeed, Solvay can bring breakthrough solutions to some of the challenges that the world is facing.
EBM: Jean-Pierre Clamadieu, CEO of Solvay, thank you very much.
Jean-Pierre Clamadieu: Thank you.
