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RATING 1998

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GYNAECOLOGY 24 % 43 % (1998 sales : EUR 313 M) e.g. ... Gynaecology Estrogel Hormone Replacement Therapy (USA) Estratest Sexual disfunction (USA) ... – PowerPoint PPT presentation

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Title: RATING 1998


1
SOLVAY a different chemical and pharmaceutical
Group
Faster growth in pharmaceuticals World
leadership for the 17 other SBUsthrough -
Innovation - Competitiveness
- April 20, 1999 - Brussels
2
1998 RESULTS HIGHLIGHTS
Record level over the last 5 years 98/97 Net
current earnings 377 Mio EUR 15 Net
earnings 378 Mio EUR 11 Cash flow 885
Mio EUR 5 AND ALSO IMPROVED
COMPETITIVENESS
3
RESULTS HIGHLIGHTS
Millions of EUR(2)
1998(3) (M USD)
1998/ 1997
Consolidated figures
1998
1997
Sales 7,709 7,451 - 3 8,694Gross
margin 1,962 2,059 5 2,402 EBIT
(1) 548 609 11 711Net debt expenses - 39 -
54 38 - 63Unallocated expenses and
income - 7 - n.s. -Taxes (on earnings before
extraordinary items) - 175 - 178 2 - 208 Net
earnings before extraordinary items 327 377
15 440Net extraordinary items 14 1 -
93 1Net earnings 341 378
11 441 Depreciation 498 507 2 591Cash
flow 839 885 5 1,032 Capital
expenditures 743 640 - 14 747Research and
development 284 292 3 341
(1) EBIT Earnings before net debt expenses,
taxes and unallocated items (2) 1 EUR 40.3399
BEF, (3) 1 USD 34.575 BEF (12.31.1998)
4
EBIT/SALES (1994-1998)
12
Pharmaceuticals
8
GROUP
4
0
1994
1995
1996
1997
1998
12
Chemicals
8
Plastics
4
Processing
0
1994
1995
1996
1997
1998
5
GROUP EBIT 11 in 1998 compared to 1997
Millions of EUR
H2
272
284
H1
337
264
6
EBIT GROWTH IN ALL SECTORS
Sales EUR 1167 M 11
Sales EUR 2425 M - 2
Sales EUR 2428 M - 12
Sales EUR 1431 M 1
EBIT ()
7
1
Millions of EUR
14
81
80
63
103
100
H2
80
69
124
31
114
89
92
H1
1234
55
49
44
96 97 98
96 97 98
96 97 98
96 97 98
Chemicals
Plastics
Processing
Pharmaceuticals
Total 1998 EBIT EUR 609 M ( 11 versus 1997)
() E.B.I.T. Earnings before net debt expenses,
taxes and unallocated items
7
SALES BY MARKET1998
The Americas 31
Asia-Pacific 4 (EUR 256 M)
US 22 (EUR 1,660 M) (EUR 2,334 M)
Middle-East Africa 2 (EUR 136 M)
Europe 63 (EUR 4,725 M)
Total sales EUR 7,451 M
8
RETURN ON EQUITY (ROE)

1995
1994
1996
1997
1998
9
NET DEBT TO EQUITY ()
10
EARNINGS PER SHARE1994-1998
EUR /share
5.00
Net earnings Net earnings before extraordinary
items
3.00
1.00
11
SOLVAY DIVIDEND POLICY
That policy is, and will remain, to increase our
dividend whenever possible and, if possible, not
to decrease it
12
GROSS NET DIVIDEND
EUR /share
Net Dividend Gross Dividend
13
SOLVAY SHARE PRICE PERFORMANCEin 1998 and early
1999
EUR
Brussels price index
Solvay share
MSCI index
1998
1999
Jul-98
Source Datastream
14
OUR ORGANIZATION
15
DECENTRALIZATION IN 18 SBU
  • business management
  • marketing
  • R D
  • production
  • sales

16
CENTRALIZATION OF OUR CORPORATE COMPETENCES
  • legal matters
  • top technical projects
  • energy
  • automatisation
  • process coordination
  • environment
  • human ressources
  • finance cash, reporting, shareholders
  • Information Technology

17
18 STRATEGIC BUSINESS UNITSCLASSIFIED BY SECTOR
Chemicals
Plastics
  • Polyolefins
  • Vinyls
  • PVC compounds
  • Specialty polymers
  • Soda ash derivatives
  • Chlor chemicals
  • Hydrogen peroxide
  • Detergent
  • Fillers
  • Salt
  • Fluor
  • Barium/Strontiumcarbonates
  • Caprolactones

Processing
  • Automotive
  • Industrial films
  • Pipes and fittings
  • Decoration

Pharmaceuticals
18
OUR STRATEGY
19
I. GLOBAL STRATEGY FOR GROWTH IN PHARMACEUTICALS
20
1. GROWTH THROUGH EXISTING PRODUCTS in 4
therapeutic areas
  • WORLD USA
  • GASTROENTEROLOGY 10 17 (1998 sales EUR
    407 M) e.g. CREON?? 11 22
    ? ROWASA? mainly in USA 22
  • PSYCHIATRY 9 25 (1998 sales EUR
    325 M) e.g. LUVOX? 12 ? 23 LITHOBID?
    ? only in USA 59
  • GYNAECOLOGY 24 43 (1998 sales EUR 313
    M) e.g. ESTRATAB? only in USA 69 ?
    ESTRATEST? only in USA 33 ?
  • CARDIOLOGY 3 (1998 sales EUR 70
    M)e.g.PHYSIOTENS? (mainly sold in Europe) 43
    of sales in EUR

21
2. GROWTH THROUGH GLOBALIZATION in the US for
Primary Care in Japan for Luvox (expected
launch in June 1999) in Central and Eastern
Europe
in M EUR in 1997 1998
(1998) Europe 610 638 55 USA/Canada 301 ? 3
79 32 Export 139 150 13 TOTAL 1,050 1,167
100
(Sales)
26
22
3. GROWTH THROUGH A SPECIALIZED RD PROGRAMMajor
RD projects
Filed Psychiatry Luvoxâ Depression (USA ) Phase
III Psychiatry Flesinoxan Depression, general
anxiety disorders Luvoxâ OCD relapse,
Pediatric (USA) Gastroenterology Creonâ
Pancreatic exocrine insufficiency (Japan)
Gynaecology Estrogelâ Hormone Replacement
Therapy (USA) Estratestâ Sexual disfunction
(USA) Combi-patch Hormone Replacement
Therapy (USA) Femoston Hormone Replacement
Therapy (Europe) Cardiology Tedisamil Chronic,
stable angina pectoris Phase II Psychiatry DU
127090 Psychosis DU 125530 Depression Gastr
oenterology Cilansetron Irritable Bowel
Syndrome Tarazepide Motility
Disorders Creonâ Diabetes Cardiology Tedi
samil Atrial fibrillation SLV
306 Hypertension, Congestive Heart Failure Phase
I Psychiatry Luvoxâ CR Depression,
anxiety SLV 308 Depression, Parkinson
disease Gastroenterology SLV 305 Motility
disorders Cardiology Moxonidine Transdermal in
Hypertension
23
4. GROWTH THROUGH ACQUISITIONS
1997/98 3 Hormone Replacement Products for the US
market ? Estrogel ? Innovative
combi-patch ? Prometrium (launched in June
98) 1999 Further acquisitions of products,
products lines or companies
(In Phase III)
24
II. GLOBAL STRATEGY FOR LEADERSHIP IN EACH
SBU through - INNOVATION -
COMPETITIVENESS
25
SBU Soda ash derivatives
  • Leadership n1 in the World
  • Innovation
  • new projects for environmental protection
    (Bicar, Neutrec)
  • Competitiveness
  • Savings on energy costs through cogeneration
    agreements
  • Increase of average plant capacity(about 675,000
    t/unit/year)
  • new dense soda ash line in Bulgaria
  • USA start up date of expansion at Solvay
    Minerals Inc. postponed in phase with world demand

26
SBU Chlor chemicals
  • Leadership Caustic soda n1 in Europe and n3
    in the World
  • Innovation pilot unit for co-production of
    caustic soda and Precipitated calcium carbonate
    in the US
  • Competitiveness
  • Further cost reduction measures
  • Review of electricity contracts all over Europe

27
SBU Hydrogen peroxide and SBU detergents
  • Leadership n1 in the World
  • Innovation
  • new ultra-high purity H2O2 for electronic grade
  • new pulp and paper production process with
    minimum effluents
  • new use of oxydising property of H2O2 in the
    chemicals industry
  • Competitiveness
  • Increase of the Groups average unit size (40,000
    t/y)
  • Start-up of a new competitive 85,000 tons/year in
    the US
  • Restructuring in Asia-Pacific

28
SBU Fillers
  • Leadership leading producer in Europe for
    specialties
  • Innovation
  • Acquisition of precipitated calcium carbonates of
    Zeneca in UK (with 1998 sales of EUR 17 M)
  • Build up of a new precipitated calcium carbonate
    unit at Quimperlé (France)
  • Competitiveness cost savings across the board

29
SBU Salt
  • Leadership n4 in the the World and n1 in
    Europe
  • Innovation
  • Acquisition of Vatel specialties products in
    Portugal
  • New high added value products such as pearl salt
    for dialysis
  • Competitiveness Rationalization at the salt
    mine in Borth (Germany)

30
SBU Fluor
  • Leadership n 4 in the World and n2 in
    Europe
  • Innovation Pilot unit in Tavaux (France) for
    new HFC substitutes (3rd generation)
  • Competitiveness strengthening of world
    leadership

31
SBU Barium/Strontium
  • Leadership n1 in the World in barium and
    strontium carbonates
  • Innovation / Competitiveness
  • Expansions in progress in Hönningen (Germany) in
    special grade barium
  • Agreement with Xinji (China) for the marketing of
    its products by Solvay worldwide

32
SBU Caprolactones
  • Leadership Leading position
  • Innovation development of a biodegradable
    polymer
  • Competitiveness Start up of a new production
    unit in Great Britain in 1998

33
SBU Polyolefins
  • Leadership
  • n3 in the World in High-density Polyethylene
    (HD-PE)
  • Relatively medium size in Polypropylene
    (growing market but in excess capacities)
  • Innovation
  • Growth in specialty products
  • Competitiveness
  • Cooperation agreements with Fina for HD-PE in
    Belgium ? production sharing in world scale
    plants ? joint research programs ? mutual
    acquisition of production licences

34
SBU Vinyls
  • Leadership
  • n4 in the World and n2 in Europe
  • Innovation
  • Specializations (e.g. PVC-suspension at
    Martorell, Spain)
  • Vinyloop selective recycling of PVC mixed
    materials
  • Competitiveness
  • Rationalizations (e.g. Ferrara, Italy) and
    Partnerships (75-25 with BASF for PVC and PVDC
    in Europe and with Atochem in Spain)
  • Additional cost reduction measures all over the
    world

35
SBU PVC Compounds
  • Innovation
  • Joint venture with Shanghai Chlor Alkali Chemical
    (Chine) for the production and the marketing of
    PVC compounds and PVDC in China
  • Competitiveness
  • Production plants restructuration all over

36
SBU Specialty Polymers
  • Innovation
  • Growth in technical compounds such as PVDC IXAN
  • Competitiveness
  • Joint venture with Dyneon for the production of
    VF2 (monomer) and PVDF SOLEF in Alabama, USA
    (with start-up end 1999-early 2000)

37
SBU Automotive
  • Leadership n1 in the World in plastic fuel
    gas tanks
  • Innovation
  • Growth in the fuel systems in the USA, France,
    Spain and Roumania
  • Innovative design of air intake manifold for
    Daimler-Chrysler early 1998
  • Competitiveness
  • Creation of Plastauto (joint venture with Plastic
    Omnium)in Brazil
  • New subsidiaries in Japan and in Poland

38
SBU Industrial films
  • Leadership Leader in Europe for waterproofing
    sheets and films for medical supply
  • Innovation / Competitiveness
  • Acquisition of Drayfil in waterproofing in Spain
  • Cooperation agreement with O Sullivan and
    Tatsuta Chemical Corp.
  • Sale of polyolefins extruded foils in the US
  • Expansion of key-activities in the USA and in
    Central Europe

39
SBU Pipes and Fittings(Joint Venture 50 with
Wienerberger)
  • Leadership n2 in Europe
  • Innovation Development of new products for the
    oil industry and co-extruded PVC pipes
  • Competitiveness
  • development of new markets (Poland, Greece)
  • Acquisition of Davinyl (Sweden) and Mabo
    (Scandinavia, Poland and Baltic States)

40
SBU Decoration
  • Leadership N1 in Europe and n2 in the World
    in decorative adhesives
  • Competitiveness / Innovation Focus on
    Specialties

41
INVESTMENT AND RD PROJECTSin all Strategic
Business Units
Millions of EUR
1,144
1,027
of which 66 for Pharmaceuticals
999
932
804
778
RD expenses
Capitalexpenditures
42
HEADCOUNT REDUCTION- as of 1/1/99 -
Number of persons ()
50 000
- 3
- 5
- 8
  • Over 7 years (92 99)
  • Headcount net reduction
  • represents
  • 29 of total 1992 headcount
  • 13 754 persons

- 3
- 8
40 000
- 3
- 5
30 000
45 350
39 874
43 163
38 616
35 400
34 445
46 858
33 104
() Headcount with the same consolidation method
as of 01.01.99
43
COMPETITIVENESS AND PRODUCTIVITY
1991-98 SALES PER EMPLOYEE INCREASED BY 67
1991-98 EBIT PER EMPLOYEE DOUBLED
67
X 2.1
18,400 EUR
225,100 EUR
134,790 EUR
8,835 EUR
44
1999 TRENDS
 Depending on the global economic context,1999
could be a more difficult yearfor the Chemicals
and Plastics Sectors, as it has already been the
case during the last few months of 1998.On the
other hand, earnings of the Pharmaceuticals
Sector should continue to grow favorably. 
45
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