Pharmaceuticals Sector - Solvay

“We must
manage the
present as
a consequence
of the future”
4
In 2006 Baron Daniel Janssen
will step down as Chairman
of the Board of Directors, to
become an Honorary Chairman,
alongside Mr Yves Boël and
Mr Jacques Solvay. He will be
replaced by Mr Aloïs
Michielsen, who will hand on
the position of Chairman of
the Executive Committee to
Christian Jourquin on
May 9, 2006.
It is my duty and my pleasure
to render particularly grateful
homage to Baron Daniel
Janssen for the direction which
he has imparted to the Group
during his 12 years as Chairman
of the Executive Committee
and during the past 8 years as
the Chairman of the Board of
Directors. It is he who gave the
impulse for the developments
in Pharmaceuticals and for
the geographic expansion in
Asia and the Eastern European
countries in particular, all of
which were undertaken with
the greatest respect for our
founding values.
I thank him warmly.
Aloïs Michielsen
Chairman of
the Executive Committee
Solvay Global Annual Report 2005
2005: a new record year
on the path of growth
2005 is a new record year for the Group, following
the very good results posted in 2004.
We can all be very proud of this performance, achieved
against a diffi cult background of rising energy costs, in
particular for oil and gas, which reached unprecedented
peaks during 2005 and remain very high.
It is true that we have benefi ted from a generally
propitious economic climate in terms of demand and
prices for our products. But this has also required us to
be present in strong markets, at the right time and with
the right products. This we were.
Our strategy of leadership and faster development in
Pharmaceuticals and Specialities, and of geographic
deployment in high-growth zones, is proving a winning
one. In addition, we are benefi ting from results of the
Group-wide Innovation initiative, which is bringing new
product, processes and applications, as well as improvements
at all levels.The efforts we have been called to
make in order to strengthen our competitiveness are also
bearing fruit, thanks to the wise, and at times diffi cult,
decisions we have taken in the technical, fi nancial and
administrative areas.
In 2005 the Group found itself again on the path of
growth, with a double digit increase in sales - +18% -
to which our three Sectors contributed in a relatively
balanced way, with +14% for Chemicals, +13% for Plastics
and +30% for Pharmaceuticals. This is an excellent result
with which we can be justly pleased.
Our performances in 2005 were impressive. In brief:
Sales at EUR 8.6 billion were up 18%.
REBIT rose by 23% compared with 2004, giving us an
operating margin (REBIT/sales) of 11%, up from 2004.
Our net income of EUR 816 million is a new absolute
record, taking cash fl ow well past the EUR 1 billion mark
to EUR 1.3 billion.
Group ROE (return on equity) reached 22%, well above
our objective of 15%.
We have achieved all this and maintained a healthy
fi nancial situation whilst undertaking a major acquisition,
that of Fournier Pharma, at a cost of EUR 1.2 billion.
This performance met with a favourable response in our
share price during the last two years.
The Group has also suffered a signifi cant reverse.
We have been advised that fi nes will be imposed on us
in 2006 for anti-competitive activities in the hydrogen
peroxide area dating back to the late 1990s.
We have therefore re-launched a programme to
strengthen compliance with our Values and these rules.
Let us manage the present as
a consequence of the future
Our performance in 2005, following that of 2004, can
only confi rm our strategic and organizational choices:
– we have more than attained the objectives of our 1998
strategic review, focused on faster growth in
Pharmaceuticals and in Specialties;
– the broadening of these objectives at the 2004 strategic
review, with priority given to sustainable and profi table
growth, based on Innovation and developing our
business in the high growth areas of Asia, the Americas,
Central and Eastern Europe, is refl ected in many
concrete initiatives taken in 2005;
– the organization of our Group into Business Units,
supported by high-performance Competence Centres
and Business Support Centres, is now in place and is
proving its effectiveness.
Our bases are very solid. Let us therefore turn resolutely
towards the future:
– innovation is the keystone of our strategy of growth.
A greater spirit of innovation throughout the Group is
essential to develop the products, processes, services
and solutions that will provide tomorrow’s business
growth. Innovation will be the wellspring of our
competitiveness and of jobs;
– we will pay greater attention to Asia. Globalization is