Financial Statements - Solvay

and optional overtime and taking of
postponed holidays made it possible
to avoid stockpiling fi nished products.
4. Strict cost control
Strict cost control at every level has
enabled us to keep our activities
profi table in a diffi cult environment.
In 2008, the Group began reaping
the benefi ts of centralizing its fi nance
and human resources back-offi ce
functions in Portugal, with estimated
savings of EUR 27 million at the
Group level.
At the start of the year, operational
and functional managers had already
been instructed to pay particular
attention to the trend of general
expenses in their own areas. These
measures were intensifi ed in the fall
of 2008.
In this way, commercial and
administrative expenses, expressed
in current EUR, will be lower in 2009
than in 2008.
5. Targeted restructuring
The Group policy of seeking leadership
based on the competitiveness
of its businesses has led it to
undertake targeted restructurings.
The Group is keen that these take
place in a calm social climate, with
due respect for its Values.
Numerous initiatives were taken in
this area, reducing the total Group
headcount by almost 2 000 FTE (full
time equivalent) positions in 2007 and
2008. The main restructurings were:
Pharmaceuticals:
• The “INSPIRE” program targets
annual synergies of EUR 300 million
by 2010. The efforts made in
2008 generated EUR 80 million of
additional savings, on top of the
EUR 160 million achieved by the
end of 2007.
• The network of production sites
has been selectively reorganized,
down to 11 sites at the end of 2008
compared with 18 in 2005.
• Despite a major expansion of sales
forces in emerging markets, the
total Pharmaceuticals Sector workforce
has fallen by 428 FTE since
the beginning of 2007.
Chemicals:
• Terminations of activities:
> Caprolactones (sale fi nalized in
early 2008);
> Precipitated calcium carbonate
activity put up for sale.
• Restructuring:
> Reorganization of the fl uorinated
chemistry activities is under way:
− closure of the Tarragona (Spain)
production unit;
− halting production of 134a at
the Porto Marghera (Italy) site;
− workforce reductions at
Hannover, Bad Wimpfen and
Frankfurt (Germany);
> Closure of the Bussi sul Tirino
(Italy) chloromethane unit;
> Closure of the strontium
carbonate production site at
Reynosa (Mexico) by the Solvay-
CPC joint venture.
> Cost reduction measures are
under review at the Peptisyntha
(Belgium) site.
Plastics:
• Sale of SEP (Solvay Engineered
Polymers);
• Modernization of production units:
PVC production units at Tavaux
(France) and Santo André (Brazil);
• Plant closures: Solvay Solexis
at Hillsborough (USA), Inergy at
Oppama (Japan) and Blenheim
(Canada). The closing of Inergy at
Nucourt (France) and Benvic at
Jemeppe (Belgium) are planned in
2009;
• Restructurings are being
implemented whenever necessary,
such as at Solvay Solexis at
Thorofare (USA), and at Pipelife in
Ireland and Spain.
Mission, Vision, Values, Strategy
6. Very selective investment
in 2009 and measures to
track and reduce working
capital needs
The Group is taking care to maintain a
healthy fi nancial situation. In this way
it ended 2008 with a net debt/equity
ratio of 34%.
In parallel with cost controls, other
major measures have been decided
on in order to maintain a healthy
fi nancial situation despite the
deteriorating fi nancial and economic
situation.
Capital expenditure:
The capital expenditure budget
for 2009 has undergone major
adjustments to bring it in line with the
current economic environment.
Two thrusts have been decided on:
fi rst, to limit investment strictly to
the level of depreciation, but without
reducing expenditure on health, safety
and the environment, and second,
to concentrate strategic investment
on ten or so projects in line with
our emphasis on the Sustainable
Development of our activities and
geographic expansion.
In all, the capital expenditure budget
for 2009 should reach EUR 638
million, down EUR 682 million from
the actual expenditure in 2008 (which
included around EUR 300 million
for the acquisitions of Innogenetics
(Belgium) and Alexandria Sodium
Carbonate Company (Egypt)).
5
Solvay Global Annual Report 2008
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