2009 Reference document - Solvay

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2 Presentation 18 Group Activities of the Enterprises Products Markets Trademarks Competitors High-performance silica Tire industry, rubber technical parts, elastomers and silicones, sports shoes, animal food and nutrition, oral hygiene. Rare earth-based compositions, alumina for washcoats Reference Document Rhodia 2009 Luminescent materials for flat panel displays and low-energy light bulbs. Polishing powders for precision optics, flat screens, luxury accessories and electronic components. Formulations for automotive pollution abatement for gasoline and diesel powered vehicles Diphenol product branch Synthesis of aromas and olfactory notes for the food industry, fine perfumes, cosmetics and detergents. Performance products for industry: polymerization inhibitors, agrochemicals, conventional photography Key factors of success and strategy Relying on its advanced technology, the Enterprise’s strategy is to pursue profitable and sustainable growth by: 1 differentiating itself with a comprehensive and innovative product offering that is positioned in growth markets driven by demand for new products and environmental regulations; 1 creating unique partnerships with certain major account clients; 1 diversifying its supply sources, particularly in the area of rare earths; 1 strengthening its global presence by developing its positions in geographic areas with high growth. Market conditions and key events in 2009 The global economic crisis has severely affected the automotive industry, the market for electronics and other industries served by the Enterprise. The practice of destocking combined with the low level of final demand resulted in a significant slowdown in business activity during the first half of the year by the Enterprise’s three segments (silica, rare earths and diphenols). Zeosil®, Zeosil® Premium, Tixosil®, Tixolex® Luminostar®, Cerox®, Opaline®, Superamic®, Neolor®, Eolys®, Actalys®, Optalys®, Acilys®, Stabilys , Eolys® Powerflex Rhovanil®, Rhovanil® Natural, Rhodiarome®, Rhodiantal®, Rhodiascent® Evonik, Huber, PPG, OSC NeoMaterial, DKK, MEL, producteurs chinois, Innospec, Infineum, Sasol, Mitsui, SDK Borregaard, Jiaxing, Mitsui, Ube, Eastman Penalized in the first quarter by the high cost of raw materials in stock, the Enterprise’s discipline on selling prices in a context of declining raw material and energy prices has enabled it to limit the effects of the economic downturn. In the second half of the year, the Enterprise benefited from a gradual improvement in demand in all the markets that it serves. The Silica business In the market for tires with low energy consumption, despite a temporary decline earlier this year, demand for high-performance silica maintained its momentum in the medium term and the Zeosil ® product line continued to increase its share market. The latest innovation, Zeosil ® Premium, has been well received by the Enterprise’s tire customers and the first products based on this technology have been put on the market. The increasing penetration of high-performance technologies has accelerated in Asia and North America driven by the growing importance of environmental issues. To meet this demand, Rhodia has finally continued building a new plant for high-performance silica in Qingdao (China), which was temporarily suspended during the first half of the year. New regulations requiring tire makers to reach rolling resistance thresholds and put an energy label on their products is contributing to making this technology a global benchmark.
The Rare Earths business On the market for automotive catalysis Over the year, the global auto business has remained down compared to 2008, with strong geographic differences. The slowing of the market stabilized in the second quarter of 2009, and the effects of various government support measures for the auto sector were fully felt from the third quarter on. Sustained by changes in laws and increased environmental awareness, this market benefited from progressive implementation of standards in the emerging countries that converge with those prevailing in Europe and the United States. The additive Eolys ® , which is the technological reference in particle filters for diesel engines, continued to be deployed in Europe, with more than 4.2 million vehicles equipped to date. Launched this year at the Auto Show in Frankfurt, Eolys ® Powerflex is a new generation particularly suited to the use of biofuels. In addition, materials for Optalys ® catalytic converters and the Stabilys range of alumina supplement the existing offer for treatment of polluting emissions from gasoline engines. They allowed the formulation of durable catalysts that are very efficient in precious metals, and experienced very strong growth in the second half. This strong demand has justified an investment in new production capacity. On the lighting and high-precision polishing markets On the lighting market, growing requirements for energy savings generated increased demand for rare earths-based luminescent materials (Luminostar ® line) to produce energy-efficient light bulbs. This market is driven by the introduction of regulations that ban incandescent light bulbs, which are energy-intensive, in an increasing number of countries (USA, Europe, Japan, China). The demand for luminescent materials for backlighting LCD screens continued to grow. On the precision polishing market, the Cerox ® Opaline ® lines have suffered from the global economic slowdown and related inventory adjustments. However, the beginning of a recovery was recorded at the end of the fourth quarter. The demand for performance materials (Superamic ® line) for portable electronic devices was also affected by inventory adjustments earlier this year. In the second half, uncertainties related to possible measures to strengthen control of exports from China have sharply boosted demand destined for other Asian countries. Group Activities 2 Presentation of the Enterprises The Diphenols business activity On the market for flavors and fragrances The economic crisis resulted in Silcea customers destocking during the first part of the year, especially in the fragrance industry. By the third quarter of 2009, demand had rebounded strongly and drops in volume had significantly subsided. The market for flavors for consumer foods, in particular, has returned to normal levels, while the fragrance market remains affected. Overall demand for vanillin has retained its growth in the medium-term. Responding to increasing market requirements in terms of traceability and food safety, the recognized excellence of Rhodia’s product offering has helped increase marginal income, despite unfavorable market conditions. On the market for performance products for industry The market for polymerization inhibitors for the petrochemical industry has suffered significantly from the economic crisis and ended the year in decline, despite a recovery since the third quarter of 2009. This rebound has been accompanied by a rebalancing of the market between the various regions of the world. Asia has become the main market. This increase in the Asian market benefits Rhodia, which invested in a new plant in China in 2007. Meanwhile, demand for agrochemical intermediates suffered in 2009 from its exposure to the sugarcane market (ethanol) that has been in trouble during the year. After the recovery observed since mid-2009 in the automotive industry, changes in legislation to reduce emissions should continue to benefit the Enterprise’s rare earths business. The applications of this business in the area of high precision polishing and lighting is also enjoying favorable growth prospects, particularly in the segment for flat-screen TVs and low energy consumption light bulbs. In addition, with its high-performance silica technology, the Enterprise has strengthened its position in the replacement tires segment, which was less exposed to falling demand than the new vehicles tires segment. Closely related to consumer goods, the diphenols business (food flavorings, olfactory notes for detergents) remains exposed to a lesser extent to market cycles overall. Lastly, on the Asian market, where Silcea has a solid industrial and commercial base, the Enterprise continues to enjoy favorable growth prospects, thus seeing its share of revenues increase. Reference Document Rhodia 2009 19 2
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Photos credits Rhodia photo library
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