How Solvay plans to GROW

Solvay has announced its new 'GROW' strategy, following what CEO Ilham Kadri described as "a comprehensive strategic review of our entire portfolio". The acronym comes from aims specific to the company's three realigned segments and the Solvay One operating model:

• Materials, comprising the high margin Specialty Polymers and Composite Materials businesses to accelerate Growth: Solvay will prioritise investment and innovation in this segment, leveraging synergies between them to create a "leading thermoplastics platform"
• Chemicals, comprising the Soda Ash, Peroxides, Silica, Coatis and Rusvinyl businesses, to deliver Resilient cash, focusing on cash generation and selective investment to that end
• Solutions, made up of the Novecare, Technology Solutions, Aroma and Special Chem businesses, to Optimise returns. Solvay said that it will "optimise these businesses, leverage its leadership positions, drive better returns and unlock value"
• Solvay ONE to Win, a new operating model to unleash the group's full potential "through resource prioritisation, tailored approach to customers, and a repeatable cost and cash playbook"
   

"We will focus on growth, cash and returns, and will prioritise investment in the highest return opportunities," said Kadri. "We will also create a more effective way to serve and innovate with our customers, as we increasingly deliver sustainable solutions that meet the needs of a more ESG-focused world."

Solvay aims to deliver E300-350 million in cost savings on a run rate basis by 2024, plus E500 million in additional cash flow through management of pension liabilities, debt and working capital. Mid-term targets include increasing underlying EBITDA to mid-single digit on average from 2020 to 2024; raising free cash flow conversion from 22% in 2019 to >30% in 2024; and, raising return on capital employed from 8% to 11% over the same period.