The world has continued to change very rapidly. So has the Solvay group. We have been able to seize interesting opportunities in accordance with our strategy for change :
faster growth in pharmaceuticals. Acquisitions and the launch of five drugs have contributed to the rapid growth in sales (15% in 2000 and 14% on average from 1996 to 2000).
rapid growth in a limited number of carefully selected activities, with an increasingly marked presence in the specialties and advanced materials markets. In 2000, growth in these areas was strong and our investments were numerous.
reinforced leadershipand global position in each activity through innovation and competitiveness. We have strengthened our leadership in several fields. In automobile fuel tanks we have merged our interests with those of Plastic Omnium to form Inergy Automotive Systems, confirming our leadership throughout the world.A major deal will fundamentally restructure our Plastics Sector. The agreement signed with BP in December 2000, which is due to be implemented on July 1, 2001, will completely alter three of our four plastics businesses :
specialty polymers - in which Solvay is becoming a world leader in a high-technology, fast-growing business - will grow with the acquisition of BP's engineering plastics;
Solvay and BP's high-density polyethylene will be merged throughout the world creating one of the world's largest players in this business;
polypropylene - in which we have not had global critical size - will be transferred to BP.
A cash supplement will be paid to Solvay to balance this huge exchange of activities between BP and Solvay.
We are open to and focusing on any other steps for growth, large or small, which will enable the Solvay group to increase its value and its earnings per share regularly and rapidly.
The year 2000
The year 2000 was marked by a first half buoyed by strong global economic growth and a second half curbed by the substantial hike in energy prices and a very serious slowdown in business inthe United States. In a volatile world economic climate, our Group experienced an eventful but constructive year.
After strong growth in our results in the first half, we were confident that our Group would again exceed its earnings per share growth targets. Because of the poor second half, our net earnings per share before extraordinary items only increased by 2.4% for the year as a whole, even though our sales increased by 13% (15% in pharmaceuticals).
But we will not stop at that. We are maintaining our resolve
to continue to post average annual growth of 10% in our net earnings per share;
to achieve an ROE (Return on Equity) of 15%.
Our cash flow has achieved an all-time high, reaching nearly one billion euros. Over the last five years, net earnings before extraordinary items have grown by an average of 11% per annum.
Furthermore, as our policy is to increase dividends whenever possible, and if possible never to reduce it, the Board of Directors proposes to the Shareholders' Meeting the payment of a net dividend of EUR 1.70 per share (compared to a net dividend for 1999 which amounted to EUR 1.65).
The year 2001
What can we expect in 2001?
First of all, we have to finish the major restructuring of the Plastics Sector by finalizing the asset exchange between BP and Solvay scheduled for July 1, 2001.
Other opportunities will present themselves and must be seized. We are in an excellent position to do this :
our pharmaceuticals and our specialty chemicals and plastics have rapid growth rates;
our essential chemical products such as carbonates and hydrogen peroxide are continuing to increase their competitiveness and are generating high, stable cash flows;
our financial structure is very sound, enabling us to make substantial acquisitions when the occasion presents itself;
our management teams are top quality both in terms of day-to-day management and negotiating international acquisitions/divestitures.
We must provide our customers with the best responses to their expectations. Among these are information and knowledge. We must share these not only throughout the Group, but also with our customers, by using the enormous potential of the Internet. This is a new culture that we are assimilating, seizing this unique opportunity to radically transform our working methods and our organization.
But there is a right way to do it. Our customers, staff and communities expect our company, wherever it has a presence, to demonstrate its responsibility in terms of health, safety and the environment. This expectation is growing. In what we do, by our products, by our desire to be at the leading edge of progress, even to anticipate it, we wish to be trustworthy partners.
Our Group has always held respect for human beings in high esteem and we continue to maintain this desire to be a good corporate citizen.
The Board of Directors will propose that the Shareholders' Meeting nominate an American, given that our Group has almost a third of its activities in North America. The Board will thus increase from 15 to 16 members. The American proposed is Mr Whitson Sadler, from January 1, 2002. Mr Sadler has managed the different Solvay businesses in the United States for 25 years, and on December 31, 2001, at the age of 60, will retire from his present executive position. Recently, Mr Sadler was Chairman of the Board of the American Chemistry Council. He is an outstanding businessman and is highly respected by his peers in American industry.
We would like to thank all our customers, partners, shareholders and especially all our collaborators for what has been accomplished in 2000 and what will be accomplished in 2001 through both loyalty and their openness to change.
Aloïs Michielsen Daniel Janssen
Chairman of the Executive Committee Chairman of the Board of Directors.
