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Brussels September 14, 2001

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Title: Brussels September 14, 2001


1
  • PLASTICS

 A FUNDAMENTAL STRATEGIC CHANGE FOR SOLVAY 
Brussels - September 14, 2001 Analysts and
Investors Meeting
2
 Strategic turning pointin the Plastics
sector  H. Lefebvre, General Managerfor the
Plastics sector
3
MAJOR CHANGES IN PLASTICS PORTFOLIO
Target boost growth and reduce cyclicality
1. Size of Plastics SPECIALTIES has increased by
50 (100 owned) with the acquisition of high
performance engineering polymers (from BP,
) ? 45 of Plastics EBIT on average 2. The
Plastics Essentials are in Joint
ventures/alliances with first-class partners to
optimize competitiveness ? in European PVC
with BASF, TotalFinaElf ? in HDPE with
BP 3. Withdrawal from non-competitive PP business
4
TRANSACTION WITH BP compelling strategic
rationale
  • Contribution of this transaction
  • Double digit projected sales growth for high
    performance Polymers
  • Expansion in high added value Specialty Polymers
  • Divestiture of cyclical PP activities
  • Strengthening of the security of ethylene supply
  • Specialty Polymers is a global leader in selected
    niches
  • One of the world leaders in HDPE
  • Sale of PP where Solvay was not among the global
    leaders ( 12)
  • Solvays Key Strategic Objectives
  • Enhance future growth prospects and innovation
  • Improve profitability and reduce earnings
    cyclicality
  • increase Specialty focus
  • secure raw material supply
  • Develop global leadership positions

5
PLASTICS SPECIALTIES ? 45 of Plastics EBIT on
average
Specialty polymers and performance
compounds (after the BP transaction)
  • Leading global position in niche
    markets(electronics, telecommunications,
    automotive, )
  • Sales of approximately EUR 900 M
  • 13 manufacturing sites and 2 RD centers(USA
    Europe)
  • Double-digit projected sales growth over the next
    5 years for high performance polymers
  • Strong global marketing presenceNorth America
    (46 of sales), Europe (41), AsiaROW (13)

6
SOLEF Polyvinylidene fluoride(Solvay product)
  • Market ELECTRICAL ELECTRONICS
  • Product Anode and cathode binders used by Sony
    Corporation in its lithium ion batteries.
  • Suitable for films via solvent casting film or by
    melt extrusion (to considerably lower the cost of
    lithium ion batteries)
  • Considerable expertise in assisting customers to
    make component films using SOLEF PVDF binders,
    especially in the area of making pastes, drying
    films and maintaining good adhesion.

7
IXEF Polyarylamide(Solvay product)
  • Market TELECOMMUNICATIONS
  • Product Shieldbox of Ericsson A2618s
  • (internal part)
  • Ixef is ideal for complex thin walled parts,
    where rigidity, strength and dimensional
    stability are vital.
  • With a superb surface finish and a metallised
    coating for EMI Shielding (Electro Magnetic
    Interference), Ixef can be used for both
    internal and external parts.
  • Quick, in depth and reliable support, through all
    stages of development are essential.

8
Radel R Polyphenylsulfone and Amodel
Polyphtalamide(from BP)
  • Market FIBER OPTICS INDUSTRY
  • Product Components used in fibre optic
    transmission systems. Specifically a popular
    connector design and housing for a
    transmitter/receiver.
  • Radel R offers latch performance as exhibited by
    its superior ductility and toughness as well
    chemical resistance.
  • Amodel is being used for the VCSEL (Vertical
    Cavity Surface Emitting Laser) housing because
  • most cost/effective solution for meeting the
    stringent dimensional tolerances needed for fibre
    optic systems
  • compatible with soldering techniques used to
    obtain the high density circuitry needed
  • It can be electroplated for EMI/RFI shielding to
    eliminate interference of the fibre optic signal
    by other radio frequencies.

9
Amodel Polyphtalamide (from BP)
  • Market AUTOMOTIVE
  • Product ABS (anti- lock brake system)
    components
  • a widely known and demanded feature by consumers
    on their cars is to have ABS (anti- lock brake
    system) to improve the safe operation and help
    keep control of their car during difficult
    driving conditions of snow, rain, ice, etc...
  • Amodel resins are used in these applications by
    the leading producers of these systems to many of
    the major car makers around the world.

10
Radel R Polyphenylsulfone (from BP)
  • Market AIRCRAFT
  • Product Commercial Aircraft Interior Panels
    like passenger service units (PSUs)
  • used in the industry by major manufacturers of
    commercial aircraft to produce interior panels in
    the passenger cabin such as the passenger service
    unit above the passengers seat that houses the
    lights, air conditioning controls, and vents and
    flight attendant call button.
  • meet the low flammability, low toxicity and low
    smoke generation standards mandated by the FAA as
    well as the stringent regulations applied by the
    plane maker.

11
NEW PLASTICS PORTFOLIO
(proforma 2000 sales)
Before
After
37 Group Sales ()
32 Group Sales ()
() with PP sales included and 100 consolidation
of Solvay Indupa () with 51 consolidation of
Solvay Indupa () including performance
compounds
12
FINANCIAL IMPACT OF BP TRANSACTION ON SOLVAY
(1) Solvay increases high rated EBITDA and exits
low rated EBITDA markets
Pro Forma
NetChange
85 acquisition of BP specialty
polymers 15Divestment of PP -34impact of the
creation of the 2 HDPE joint ventures
2000 NEW
2000 OLD
M EUR
Sales
9,366
8,766
(600)
EBITDA
1,232
1,298
66
5
Margin
13
15
including PP business with sales of EUR 503 M
and EBITDA of EUR 15 M
13
FINANCIAL IMPACT ON SOLVAY (2)
  • as from October 2001
  • Solvay stake in HDPE JV will be consolidated
    proportionnally
  • EUROPE 50
  • USA 51
  • Specialty polymers from BP will be fully
    consolidated

14
FINANCIAL IMPACT ON SOLVAY (3)
  • IN CASH
  • Cash payment from BP of EUR 80 M
  • Sale of forex exchange position (EUR 22 M)
  • EXTRAORDINARY ITEMS
  • Gain on sale of HDPE to BP offsets by
  • goodwill on the acquisition of 50 of BP HDPE
    business
  • capital losses on the sale of PP
  • PP operational losses
  • charges for restructurings in the Group
  • goodwill on acquired specialty polymers charged
    to Groups equity (subject to Boards
    approval)
  • no material impact on 2001 extraordinary items

15
CLEAR CONTRIBUTION TO SOLVAY STRATEGY
1. Reduction of SOLVAY exposure to cyclical
markets
  • about - 1 Billion sales - 10 of Group
    sales

2. Growth in high-margin Specialties
  • 300 Million sales 3 of Group
    sales (double digit growth and margins)
  • Proforma EBITDA MARGIN INCREASE of 5

16
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