Value and strategy, Solvay's response to a changing world
2001 was a year that shook the world. On September 11, a system of references was shaken; reference points which we believed certain were lost. Beyond the human drama and political questions, economic life took on a different face.
Solvay has successfully confronted this situation, in the strength of its reaffirmed values and its constantly honed strategy, a strategy that is enabling the Group to resist more effectively and to grow despite a sluggish world economy.
Our values In 2001 we updated our Mission, defined our Vision and reaffirmed our Values. This was the occasion for all our senior managers, the world over, to dialogue with their team members. It was also an opportunity for everyone to find sure points of reference, for our personal lives, for our economic plans and for our enterprise philosophy.
Our two-dimensional strategy > strengthening of our leadership in all our activities, by constantly developing their competitiveness and their capacity to innovate
> faster development of Pharmaceuticals and of Specialties in the three other sectors: Chemicals, Plastics and Processing.
Strategic operations
What have we done to implement this strategy?
Let us focus on our two most significant operations.
The acquisition of Ausimont (from the Montedison group), announced at the end of 2001, is undoubtedly the largest acquisition in the history of the Solvay group. This makes the Group a world leader in the fast-growing, high added-value and research-intensive area of fluorinated specialties (polymers, elastomers, chemical compounds).
This acquisition follows on the other major agreements concluded with BP. As of October 1, 2001, Solvay acquired BP's Specialty Polymers operations, Solvay and BP set up two joint-owned high density polyethylene producing enterprises, one in the USA and the other in Europe, and Solvay sold its polypropylene operations to BP.
Other important deals should also be mentioned here, among others covered in this report:
> the joint venture launched at the start of 2002 with the Kali und Salz (K+S) Group in the European salt sector
> the sale of Solvay's Decoration activities to the German group Langbein-Pfanhauser Werke (LPW) at the end of 2001, with Solvay acquiring LPW's calendered and laminated films businesses in the United Kingdom and the USA
> the sale of air intake systems for the automotive industry to the German group Mann+Hummel at the start of 2002.
2001 results The Solvay group closed the year with net income of EUR 403 million, down just 7% on the high levels of 2000, despite the global economic slowdown in 2001. Net income in the second half of the year was 10% above the second half of 2000. This resistance, which is above average for our areas of business, is due to the determined implementation of
our strategy.
Parallel with this, we succeeded during the year in significantly trimming our fixed costs, whilst avoiding drastic restructurings and job losses.
On the contrary we have been able, with pleasure, to hire young people and deploy the values in which we believe.
Our policy is to increase our dividend whenever possible and, where possible, never to reduce it. The Board of Directors is proposing to the General Meeting that it declares a net dividend of EUR 1.70 per share, unchanged as compared to 2000.
Two directors are leaving us on reaching the age of 70 in 2002.
We would like to thank Mr de Royère for his 6 years of enlightened advice on the Board. We would also thank Baron José del Marmol, a Director since 1990, but who has been present in the Group's control bodies for 40 years.
The Board is proposing to the General Meeting that it appoints Mr Jean-Martin Folz, CEO of the PSA Group, as a Director to replace Mr de Royère. The Board also proposes that Mr Jean van Zeebroeck be appointed to replace Baron José del Marmol. Jean van Zeebroeck is General Secretary and Senior Counsel in the Owens Corning group. He is also a Director of Solvac S.A., a post he will be resigning to join our Board.
Let us now turn towards 2002
It is far from clear what 2002 has in store for us. All economists agree in telling us that it will be a difficult year, without venturing much further than that.
Even so, we are better armed that ever to face the new economic situations. We have reprofiled our activities portfolio according to our particular skills, market opportunities and risks. We have emphasised the notion of leadership, both of our activities and our managers, and we have carefully and strategically selected our investments.
We are pursuing our expansion in Pharmaceuticals and Specialties, in brief, we are continuing to apply our strategy of growth and change.
In 2001 the Group demonstrated its creativity and took advantage of new opportunities. It will do the same in 2002. We are confident in our ability to act and react, confident in the solidity of our Group on the triple foundation of our shareholders, our customers and the skills and enthusiasm of our employees.
2001 was a year of intense activity, in which we achieved many important things: acquisitions, divestitures, partnerships and other agreements.
For all employees this represented major efforts on top of their necessary everyday tasks.
We recognize this and thank them heartily for this.
Aloïs Michielsen
Chairman of the Executive Committee
