SOLVAY: Strategy update reveals evolution, not revolution
Solvay’s recent strategic update under the helm of the new CEO Ilham Kadri revealed, unsurprisingly, an increased focus on growth and cash flow conversion/generation. After the extensive portfolio transformation of the past decade and in light of the organic growth prospects of mainly the Composites & Specialty Polymers businesses, we consider the strategy make sense, while the mid-single digit underlying EBITDA growth target until 2024 looks credible. We consider Solvay to be undervalued vs peers while its LT growth potential is probably underappreciated by the market. We stick to our Accumulate rating and € 115 target price.Solvay is engaged in chemical and plastic businesses worldwide. Co. offers chemical products such as advanced materials, barium strontium, calcium chloride, caustic soda, chlorinated products, fluor, peroxygen products, polyglycerols, precipitated calcium carbonate, soda ash, and sodium bicarbonate. It also provides specialty polymers, such as Spire ultra polymers, Solviva biomaterials, and sulfone polymers. Co. structures its activities around five operating segments: Advanced Formulations, Advanced Materials, Performance Chemicals, Functional Polymers and Corporate & Business Services, each with its own specific business model and each comprised of Global Business Units (GBUs).
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