Syensqo launches its 5-year growth strategy to create significant
value
Press release Regulated informationInside
information
Syensqo launches its 5-year growth strategy to create
significant value
Brussels, November 13, 2023 - 7:00 CET/CEST
Today marks a new era for Syensqo and its
stakeholders as it sets out its new, more focused growth strategy
as it prepares to begin life as an independent, listed company
(subject to approval by Solvay’s shareholders at the Extraordinary
General Meeting approval on December 8, 2023). Syensqo presents its
new mid-term financial targets and sustainability commitments at
its inaugural Capital Markets Day. The presentation prepared for
the Capital Markets Day is available on Syensqo’s website
(www.syensqo.com/en/investors/spinoff) and key highlights are
summarized below.
Syensqo’s future senior leadership team,
announced on November 3rd, 2023, is committed to accelerating value
creation by delivering superior revenue growth, margin expansion
and increasing returns. Achieving Syensqo’s mid-term targets is
expected to deliver more than €7bn of cash1 between 2024 and
2028.
Syensco believes the separation will create one
of the leading global pure play specialty chemical companies,
driven by its mission to be the innovation leader in its industry
and its unique portfolio of technologies, solving the unmet needs
of its customers across the globe. Syensqo’s unique portfolio of
solutions is aimed at addressing disruptive megatrends, including
electrification, lightweighting, connectivity, and quality of
life. In addition, Syensqo is at the heart of the transition
towards a climate-neutral economy, which is expected to drive new
sources of value and support its long-term growth.
Syensqo’s long-term ambition is to be the prime
innovation partner to its customers, grow at around two times the
rate of its end markets, and deliver superior returns.
Mid-term financial
targets2 to 2028
Syensqo sets its 2028 financial targets (on an
organic basis) as follows:
- 5% to 7% net sales growth3 over
2024-2028
- Underlying EBITDA Margin (in %)
to mid-20s by 2028
- ROCE4 to mid-teens by 2028
Prioritizing growth while maintaining
strong investment grade rating
Syensqo is expected to have a strong balance
sheet and foundation for accelerated growth, with an expected
strong investment grade rating.
Launching its One Planet sustainability
commitments
Syensqo’s One Planet targets represent a
commitment to making the world a better place, and act as a driver
of revenue growth. Syensqo’s specific targets include:
- -23% Scope 3 GHG emissions5 by
2030 compared to 2021
- Carbon neutrality on Scope 1 and
2 GHG emissions by 2040, with -40% Scope 1 and 2 GHG emissions by
2030 compared to 2021
- Increasing circular economy sales
to 18% of total sales by 2030
- Aiming for Gender parity across
our organization by 2033 for mid and senior management
Financial advisors
In relation to the separation, BNP PARIBAS and
Morgan Stanley are acting as Financial Advisors and Lead ECM
Advisors, Berenberg, Deutsche Bank AG and J.P. Morgan SE are acting
as ECM Advisors, Bank Degroof Petercam SA/NV, BofA Securities
Europe SA and Société Générale are acting as Co-Advisors. STJ
Advisors is acting as Independent Equity Capital Markets Advisor to
the Company.
Definitions
Circular economy sales refers
to: (i) sales of products increasing durability in the use phase
downstream in the value chain; (ii) sales based on recycled or
renewable materials and renewable energy (based on costs weighted
as described below); and (iii) sales of products enabling recycling
at the end of life downstream in the value chain.
Focus five categories of Scope
3 GHG emissions (categorized according to the Greenhouse Gas
Protocol corporate value chain (Scope 3) accounting and reporting
standard and the GRI-305 Sustainability Reporting Standard) are (1)
purchased goods and services (Category 1), which include impacts of
upstream transportation and distribution (Category 4) and waste
generated in operations (Category 5), (2) fuel- and energy-related
activities (Category 3), (3) processing of sold products (Category
10), (4) use of sold products (Category 11) and (5) end-of-life
treatment of sold products (Category 12).
Free Cash Flow is equal to cash
flows from operating activities (excluding cash flows linked to
acquisitions or disposals of subsidiaries and cash outflows of
voluntary pension contributions, as they are deleveraging in nature
as a reimbursement of debt and cash flows related to internal
management of portfolio such as one-off costs of internal
carve-outs and related taxes), cash flows from investing activities
(excluding cash flows from or related to the acquisitions and
disposals of subsidiaries, and cash flows associated with the
partial demerger project) and other investments, and excluding
loans to associates and non-consolidated investments, and
recognition of factored receivables and increase/decrease of
borrowings related to environmental remediation. In addition,
because leases are generally considered to be operating in nature,
free cash flow incorporates the payment of the lease liability
(excluding the interest expense) recorded in cash flow from
financing activities in accordance with IFRS 16.
Levered (Pre-Capital Expenditures) Cash
Flow is defined as Free Cash Flow after payment of net
interests, coupons of perpetual hybrid bonds and dividends to
non-controlling interests, but before capital expenditures.
ROCE is calculated as the ratio
between Underlying EBIT (before adjustment for the amortization of
purchase price allocation) and capital employed. Capital employed
consists of net working capital, tangible and intangible assets,
goodwill, rights-of-use assets, investments in associates and joint
ventures and other investments, and is taken as the average of the
situation at the beginning and at the end of each period. In future
periods, ROCE is expected to be calculated in accordance with this
definition, subject to potential adjustments to eliminate material
distortions associated with the full consolidation of the results
of any joint ventures under IFRS.
Underlying EBIT is calculated
by applying the adjustments to EBIT listed in the Registration
Document in Section 9.3, “Alternative Performance Measures.” EBIT
is equal to earnings before interest and taxes (which includes the
Syensqo group’s share of earnings from associates and joint
ventures).
Underlying EBITDA Margin is
defined as underlying EBITDA as a percentage of net sales.
Underlying EBITDA is calculated by applying the adjustments to
EBITDA listed in the Registration Document in Section 9.3,
“Alternative Performance Measures.” EBITDA is equal to earnings
before interest, taxes, depreciation and amortization. It is equal
to EBIT (which includes the Syensqo group’s share of earnings from
associates and joint ventures), after adding charges for
depreciation, amortization and impairment.
__________________________________________________________
1 Refers to Levered (Pre-Capital
Expenditures) Cash Flow. See “Definitions” below2 See
“Definitions” below for definitions of financial metrics3
Average annual organic sales growth over the period4 Return
on Capital Employed5 See “Definitions” below
About Syensqo
Syensqo is a science company developing
groundbreaking solutions that enhance the way we live, work, travel
and play. Inspired by the scientific councils which Ernest Solvay
initiated in 1911, we bring great minds together to push the limits
of science and innovation for the benefit of our customers, with a
diverse, global team of more than 13,000 associates.
Our solutions contribute to safer, cleaner, and
more sustainable products found in homes, food and consumer goods,
planes, cars, batteries, smart devices and health care
applications. Our innovation power enables us to deliver on the
ambition of a circular economy and explore breakthrough
technologies that advance humanity.
Learn more at https://www.syensqo.com/en/investors/spinoff
Important legal information
This press release is an advertisement relating
to the intention of Syensqo SA/NV (“Syensqo” or the “Company”) to
proceed with the listing and admission of its shares to trading on
the regulated markets of Euronext in Brussels and Paris (the
“Admission”) in the context of the separation of Solvay SA/NV
(“Solvay”). This press release does not constitute a
prospectus.
This press release has been prepared by the
Company, and access to it has been granted to you, solely for your
information in connection with the Admission. The information
contained in the press release has not been independently verified.
The contemplated separation of Solvay and the Admission are subject
to general market conditions and customary closing conditions,
including the approval by Solvay’s shareholders at an extraordinary
general meeting expected to be held on December 8, 2023 (or on a
subsequent date to be announced by Solvay and the Company), of the
contemplated partial demerger of Solvay (the “Partial Demerger”).
The Company will keep the market informed, if and when appropriate,
in accordance with applicable laws and regulations.
This press release is an advertisement and not a
prospectus or other offering document for the purposes of
Regulation (EU) 2017/1129 of June 14, 2017 (as amended, the
“Prospectus Regulation”) or Regulation (EU) 2017/1129 as it forms
part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018, as amended (the “UK Prospectus Regulation”),
and the allocation of shares of Syensqo to Solvay’s shareholders as
part of the contemplated Partial Demerger is expected to be carried
out in circumstances that do not constitute “an offer to the
public” within the meaning of the Prospectus Regulation or the UK
Prospectus Regulation.
You should read the registration document
prepared by the Company for purposes of the Admission (the
“Registration Document”), which is available to investors at no
cost through the corporate websites of the Company and Solvay
(www.solvay.com), as well as at the registered office of Syensqo,
at Rue de la Fusée 98, 1130 Brussels, Belgium. The Registration
Document includes a detailed description of the Company, its
businesses following completion of the Partial Demerger, strategy,
financial condition, results of operations and risk factors. The
approval of the Registration Document by the Belgian Financial
Services and Markets Authority (the “FSMA”) should not be
understood as an endorsement of the shares of the Company to be
admitted to trading on the aforementioned regulated markets. The
Registration Document will be supplemented by a supplement, which
will be approved by the FSMA. The Registration Document (and the
supplement) will, together with a securities note (the “Securities
Note”) and a summary of the prospectus, become the constituent
documents of the prospectus to be published by the Company for
purposes of the Admission (the “Prospectus”). Once the Prospectus
has been approved by the FSMA, the Prospectus will be published and
made available at no cost through the corporate websites of the
Company and Solvay (www.solvay.com), as well as at the registered
office of Syensqo, at Rue de la Fusée 98, 1130 Brussels, Belgium.
The Prospectus will also be passported to the French Autorité des
marchés financiers. The approval of the Prospectus by the FSMA
should not be understood as an endorsement of the shares of the
Company to be admitted to trading on the aforementioned regulated
markets.
Any potential investor should make their
investment solely on the basis of information that will be
contained in the Prospectus once it is published. Potential
investors should read the Prospectus before making an investment
decision in order to fully understand the potential risks and
rewards associated with the decision to invest in the Company’s
shares.
Key risk factors for consideration
The following is a selection of the key risks
that relate to the Company’s industry and business, operations and
financial condition, based on the probability of their occurrence
and the expected magnitude of their negative impact. In making this
selection, the Company has considered circumstances such as the
probability of the risk materializing on the basis of the current
state of affairs, the potential impact that the materialization of
the risk could have on the Company’s business, financial condition,
results of operations and prospects, and the attention that
management would on the basis of the current expectations have to
devote to these risks if they were to materialize. The risk factors
listed below should not be regarded as a complete and comprehensive
statement of all potential risks and uncertainties that the Company
faces. Please refer to Chapter 1, “Risk factors” of the
Registration Document and Chapter 1, “Risk factors related to the
shares being admitted to trading” of the Securities Note for
additional information.
- The Group may not realize its
objective to grow faster than many of its markets, which can be
impacted by different business cycles.
- The Group is dependent on the
availability of energy, including natural gas, and certain raw and
intermediate materials.
- Increases in the price of energy
products and other inputs could harm the Group’s business.
- The Group may face difficulties
resulting from its international operations.
- The Group uses and sells some
hazardous materials, chemicals and biological and toxic, organic
and inorganic compounds, and produces industrial emissions and
discharges.
- The Group’s past and present
production and use of PFAS substances exposes it to significant
liabilities.
- The Group may be subject to
liabilities for current and legacy environmental clean-up and
remediation costs.
- Complying with evolving
antitrust, fraud, corruption and bribery, tax, and other laws and
requirements may be difficult or costly.
- The Group’s separation from
Solvay SA may result in a loss of business opportunities and
decreased purchasing power and result in a loss of synergies.
- The Company’s combined financial
statements are not necessarily representative of the results it
would have achieved as a standalone public company and may not be a
reliable indicator of its future results.
- The Group’s ability to operate
its business effectively may be impacted if it fails to put in
place a new governance and organizational structure and appropriate
internal controls, or if it is not able to retain key senior
managers and employees following the Partial Demerger.
- The Group will depend on services
provided by Solvay SA under a transition services agreement
following the Partial Demerger.
- The Group must abide by certain
restrictions that could affect its business, in order to preserve
the tax-free treatment of the Partial Demerger for U.S. federal
income tax purposes.
- An active trading market for the
shares of the Company may not develop or be sustained, and may not
be liquid enough to enable investors to sell their shares in the
Company effectively in terms of timing or value.
- Substantial sales of the shares
of the Company may occur in connection with the Partial Demerger,
which could cause the Company’s share price to decline.
Cautionary statements concerning forward-looking statements
Certain statements contained herein may be
forward-looking statements including, but not limited to, the
statements about the Partial Demerger, as well as other statements
that are predictions of or indicate plans, strategies, goals,
future events or intentions. In particular, these statements relate
to (and include data relating to) Company management’s business
strategies, capital expenditures and other investments, growth of
existing operations and expansion plans, its financial situation
and its cash flow, as well as forecasts, other future events,
trends or objectives and expectations concerning, in articular, the
markets in which it operates, its strategy, its growth and its
results. These statements involve risks and uncertainties because
they relate to events and depend on circumstances that may or may
not occur in the future. The statements in the press release are
based upon various assumptions, many of which are based, in turn,
upon further assumptions. The statements are not historical facts
and should not be construed as a guarantee that the stated facts
and/or data will occur. Although the Company believes that these
assumptions were reasonable when made, these assumptions are
inherently subject to significant known and unknown risks,
uncertainties, contingencies and other important factors which are
difficult or impossible to predict and are beyond its control. As
such, undue reliance should not be placed on such statements.
Should one or more of these risks and uncertainties materialize, or
should any underlying assumptions prove incorrect, or any other
factor impact those statements, the Company’s and the Solvay
Group’s actual results, plans, objectives and expectations, as well
as the timing and consummation of the Partial Demerger and related
transactions, may differ materially from those expressed or implied
in the forward-looking statements. The inclusion of such statements
should not be regarded as a representation that such results,
plans, trends or objectives will be achieved. Important factors
that could cause actual results, plans, trends and objectives to
differ materially from those expressed in such statements include,
among others, Solvay’s and the Company’s ability to satisfy the
necessary conditions to consummate the Partial Demerger, or that
the Partial Demerger will be completed, within the expected time
frame, on the expected terms or at all; the Company’s ability to
realize the anticipated benefits of the Partial Demerger, in full
or at all; the expected tax treatment of the Partial Demerger;
potential uncertainty during the pendency of the Partial Demerger
that could affect the Company’s financial performance; the
possibility of disruption, including changes to existing business
relationships, disputes, litigation or unanticipated costs in
connection with the Partial Demerger and related transactions;
uncertainty of Solvay’s or the Company’s financial performance and
ability to succeed as standalone publicly traded companies
following completion of the Partial Demerger; negative effects of
the announcement or pendency of the Partial Demerger and related
transactions on the value and future market price of the Company’s
securities as a standalone publicly traded company and/or on its
financial performance; general economic factors, such as interest
rate, currency exchange rate fluctuations and changing market
conditions; competition, including technological advances, new
products and patents attained by competitors; challenges inherent
in new product research and development; the impact of business
combinations, divestitures and restructurings, including any
reorganizations to be carried out in connection with the
contemplated transaction; adverse litigation or government action,
including related to product liability claims; changes to
applicable laws and regulations, including tax laws and
import/export and trade laws; the impact of products withdrawals;
regulatory approval processes; the ability to implement its R&I
projects and efforts; the ability to capture any opportunities and
market share growth from its principal end-markets or the
identified growth platforms, to the extent realized; the ability to
identify and invest in value-creating projects and apply its
value-based pricing model; the ability to deliver on its strategic
initiatives; and the ability to improve efficiency in the use of
its existing assets. The Company undertakes no obligation to
publicly update or revise any of these forward-looking statements,
whether to reflect new information, future events or circumstances
or otherwise, except as required by applicable laws and
regulations.
Financial information included in this press
release
The financial information for the years 2020,
2021 and 2022 and for the six-month period ended June 30, 2023 has
been derived from the combined financial statements of SpecialtyCo
(defined as the Solvay business units being transferred to Syensqo
as part of the Partial Demerger). The combined financial statements
have been prepared in accordance with IFRS from the consolidated
financial statements of Solvay SA. However, they may not be
indicative of the future performance of Syensqo and do not
necessarily reflect SpecialtyCo’s financial position, results of
operations, capital structure and cash flows had it operated as an
independent standalone company during such periods. The combined
financial statements of SpecialtyCo for the years 2020, 2021 and
2022 are included in the Registration Document, and the interim
combined financial statements of SpecialtyCo for the six-month
period ended June 30, 2023 are available on the website of the
Company. Information derived from such combined financial
statements in this press release is qualified by the detailed
information contained therein, including in the notes
thereto.
Certain financial information for periods prior
to 2020 relating to the business units of Solvay that will form
part of SpecialtyCo after completion of the Partial Demerger is
presented herein for purposes of illustrating indicative trends.
However, the financial information for those business units was
prepared on a basis that is different from the basis of preparation
of the combined financial statements of SpecialtyCo. Accordingly,
the trend information presented herein may be different from the
trends that would be shown had combined financial statements of
SpecialtyCo been prepared for such periods. Investors should not
place undue reliance on such trend information.
In addition, this press release refers to
certain non-GAAP financial measures, or alternative performance
measures, used by the Company in analyzing SpecialtyCo’s operating
trends, financial performance and financial position and providing
investors with additional information considered useful and
relevant regarding SpecialtyCo’s results. These non-GAAP financial
measures are not recognized measures under IFRS or any other
generally accepted accounting standards, and they generally have no
standardized meaning and therefore may not be comparable to
similarly labeled measures used by other companies. As a result,
none of these non-GAAP financial measures should be considered in
isolation from, or as a substitute for, SpecialtyCo’s combined
financial statements and related notes prepared in accordance with
IFRS. For a definition of each non-GAAP financial measure included
in this press release and a reconciliation from such non-GAAP
financial measure to the relevant line item, subtotal or total in
SpecialtyCo’s financial statements, please refer to Section 9.3,
“Alternative Performance Measures” of the Registration
Document.
Certain calculated figures (including data
expressed in thousands or millions) and percentages presented in
the press release have been rounded. Where applicable, the totals
presented in this press release may slightly differ from the totals
that would have been obtained by adding the exact amounts (not
rounded) for these calculated figures.
Disclaimer
This press release is for informational purposes
only and is not intended to, and does not, constitute an offer or
invitation to sell or solicitation of an offer to subscribe for or
buy, or an invitation to purchase or subscribe for, any securities
of the Company or Solvay, any part of the business or assets
described herein, or any other interests or the solicitation of any
vote or approval in any jurisdiction in connection with the
transactions described herein or otherwise, nor shall there be any
sale, issuance or transfer of securities in any jurisdiction in
contravention of applicable law. This press release should not be
construed in any manner as a recommendation to any reader
thereof.
The securities of the Company have not been and
will not be registered under the U.S. Securities Act of 1933, as
amended, and neither Solvay nor the Company intend to make a public
offer of securities in the United States.
The distribution of this press release may be
restricted by law in certain jurisdictions and persons into whose
possession any document or other information referred to herein
comes, should inform themselves about and observe any such
restriction. Any failure to comply with these restrictions may
constitute a violation of the securities laws of any such
jurisdiction.
This press release is directed solely to persons
in the United Kingdom who (i) have professional experience in
matters relating to investments, such persons falling within the
definition of “investment professionals” in Article 19(5) of the
Financial Services and Markets Act 2000 (Financial Promotion) Order
2005, as amended (the “Financial Promotion Order”) or (ii) are
persons falling within Article 49(2)(a) to (d) of the Financial
Promotion Order or (iii) other persons to whom an invitation or
inducement to engage in investment activity (within the meaning of
Section 21 of the Financial Services and Markets Act 2000) may
lawfully be communicated or caused to be communicated, (all such
persons together being referred to as “relevant persons”). This
press release is directed only to relevant persons and must not be
acted on or relied on by persons who are not relevant persons.
No representation or warranty or undertaking,
express or implied, is made by the Company, Solvay or any of their
affiliates, shareholders, directors, advisors, employees and
representatives or any other person as to, and no reliance should
be placed upon, the fairness, accuracy, completeness or correctness
of the press release or the opinions contained therein or any other
statement made or purported to be made in connection with the
Company or Solvay, for any purpose whatsoever, including but not
limited to any investment considerations. No responsibility,
obligation or liability whatsoever, whether arising in tort,
contract or otherwise, is or will be accepted by the Company,
Solvay or any of their affiliates, shareholders, directors,
advisors, employees and any respective representatives or any other
person for any loss, cost of damage howsoever arising from any use
of the press release, or for information or opinions or for any
errors, omissions or misstatements contained therein or otherwise
arising in connection therewith.
Contacts
Media
relations |
|
|
|
Investor
relations |
Nathalie van
Ypersele+32 478 20 10 62Perrine
Marchal+32 478 32 62 72Laetitia
Schreiber+32 487 74 38
07media.relations@solvay.com |
|
|
|
Jodi
Allen+1 609 860 4608Sherief
Bakr+44 7920 575 989Bisser
Alexandrov+33 6 07 63 52
80Imtiyaz Lokhandwala+1 609 860
3959investor.relations@solvay.com |
Emails and websites remain under the Solvay domain until
separation, except for Syensqo’s website
(www.syensqo.com/en/investors/spinoff).
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