Solvay S.A.


Solvay full year 2020 results: Record Free Cash Flow and Cost Reductions

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February 24, 2021 at 7 a.m.

Solvay full year 2020 results

Record Free Cash Flow and Cost Reductions


  • Net Sales for the full year 2020 were down 10% organically, due to the impact from Covid on civil aero and oil & gas volumes, which were moderated by resilient demand in healthcare, consumer goods, personal care, and electronics. In the fourth quarter, net sales increased 5% sequentially versus Q3 driven by strong demand in automotive and electronics markets.  Full year and fourth quarter sales, excluding civil aero and oil & gas, were down 5% and up 6% respectively, as a result of strong demand in automotive and electronics markets in Q4.
  • Cost savings of €332 million were delivered in 2020, of which €175 million were structural savings.  This result reflects the decisive nature of the Group’s response as it also accelerated and deepened the delivery of its strategic cost reduction programs. 
  • Underlying EBITDA margin for 2020 was 21.7%, and the EBITDA reduction was contained to 13.9% organically versus 2019 due to the volume impact from the Covid-19 pandemic. These results illustrate both the quality and resilience of the portfolio, and the delivery of cost mitigation actions.
  • Underlying Net Profit was €618 million in 2020, with €96 million in the fourth quarter.
  • In the face of a challenging 2020, Solvay delivered a record Free Cash Flow of €963 million, including around €260 million of one time benefits, reflecting swift actions taken, including disciplined working capital and effective capex management.
  • The balance sheet was strengthened in 2020 with the significant reduction in net debt and provisions of €1.2 billion and €0.6 billion respectively, following the strong delivery in FCF.
  • Total proposed dividend of €3.75 per share, subject to Shareholders' approval
Q4 2020Q4 2019yoy% organic     Underlying, (in € million) FY 2020FY 2019yoy% organic
2,2142,440-9.3%-4.1%Net sales8,96510,244-12.5%-10.1%
21.0%21.5%-0.6pp-EBITDA margin21.7%22.7%-1.0pp-
161261-38.3%-FCF to shareholders from continuing operations963606+58.8%-
----FCF conversion ratio (LTM)51.1%27.8%+23.4pp-

CEO Quote

"I’m proud of the significant progress we made in 2020. We launched our Group’s Purpose and progressed on our ambitious ONE Planet roadmap as we deliver our G.R.O.W. strategy.  As the crisis unfolded, we quickly adapted priorities to accelerate our cost and cash delivery, demonstrated the resilience of our business, while supporting our people through the launch of a Solidarity fund. I want to thank our employees for their perseverance, our customers for their valued partnerships, and our investors for their continued support.  Building on the Q4 momentum and the strategic foundation now in place, we will emerge leaner and stronger, with innovation fueling our return to top-line growth."    


First quarter 2021 EBITDA is estimated to be between €520 million and €550 million, and Free Cash Flow is expected to be between €600 and €650 million for full year 2021. Free cash flow indications reflect the benefits of reduced pension and financial charges, higher restructuring costs, reinvestment in working capital and capex to support innovation and growth. 

Additional structural cost savings are estimated at €150 million in 2021, more than offsetting fixed cost inflation, expected at around €75 million. This would take cumulative cost reductions over 2 years (2020-2021) to €325 million.


New Strategic Initiatives

  • Cost Savings Target Raised to €500 million

In January, Solvay launched a new chapter of its strategic transformation aimed to further align its structure to its G.R.O.W. strategy. This builds on previous plans announced in 2020, and represents a profound simplification of all support functions to serve the business more effectively. The plan will lead to an additional net reduction of approximately 500 roles by the end of 2022 and incremental cost savings of €75 million. Subject to discussions with social partners, this plan together with previously announced plans will increase the mid-term cost savings target from €300 million announced in November 2019 to €500 million by 2024, of which €175 million has been delivered in 2020. As a consequence of the new restructuring plan, a non-cash restructuring provision of around €170 million will be recognized in Q1 2021.

  • Portfolio and Business Update

As part of the G.R.O.W. strategy, the Materials, Chemicals and Solutions segments were given distinct mandates reflecting different paths to value creation. Building upon this strategy, Solvay is taking steps to organize its Soda Ash & Derivatives business into a separate and fully controlled legal structure. These steps will reinforce internal financial and operational transparency and accountability, in line with its mandate of optimizing cash flow generation and returns, while increasing future strategic flexibility.

Also aligned with its strategic simplification, and following the optimization of several businesses, Solvay has reached agreements1 to sell its interests in six commodity business lines.  To date, these include the recent transactions for barium and strontium products (part of Special Chem), the European sodium percarbonate business (part of Peroxides), and the commodity amphoterics business (part of Novecare), the sodium chlorate business and related assets in Portugal (part of Peroxides), certain fluorine chemicals and its site in Korea (part of Special Chem) and the process materials product line (part of Composites). The Group expects completion of these transactions, which collectively represent annual sales of around €300 million, in the first half of 2021. Solvay will continue to explore other opportunities to further simplify its portfolio. 

Solvay also reached an agreement to purchase a seed coating technology to bolt-on to its existing agro products within the Novecare business. This is a natural extension to Solvay’s own AgRHO® family of sustainable seed boosting solutions and supports the drive toward more bio-based, sustainable technologies.

1 The completion of the transaction would remain subject to prior consultation with employee representatives and/or approval by the relevant regulatory authorities.

Solvay ONE Planet Progress Update

Solvay increased and broadened its ESG commitments in 2020.  This is an integral element of the G.R.O.W. strategy and is directly aligned with its Purpose of bonding people, ideas, and elements to reinvent progress. Solvay’s ambitions center around three main pillars, including climate change, resource scarcity and promoting a better life. These are fully embedded into Solvay’s key decisions. Performance is measured and assessed regularly, and the extent of progress affects Short Term Incentive Plans for both leaders and employees. Solvay made good progress on many of these initiatives during 2020, though results reflect the combination of structural improvements and the temporary decline in economic activity levels. 


Safe harbor
This press release may contain forward-looking information. Forward-looking statements describe expectations, plans, strategies, goals, future events or intentions. The achievement of forward-looking statements contained in this press release is subject to risks and uncertainties relating to a number of factors, including general economic factors, interest rate and foreign currency exchange rate fluctuations, changing market conditions, product competition, the nature of product development, impact of acquisitions and divestitures, restructurings, products withdrawals, regulatory approval processes, all-in scenario of R&I projects and other unusual items. Consequently, actual results or future events may differ materially from those expressed or implied by such forward-looking statements. Should known or unknown risks or uncertainties materialize, or should our assumptions prove inaccurate, actual results could vary materially from those anticipated. The Company undertakes no obligation to publicly update or revise any forward-looking statements.


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