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[Audio Gap]giving you the overview of our Q1 results. And obviously, the main point of today is to take your questions.Fundamentally, we've delivered strong volume growth. We are growing our businesses, and I'll come to it. But fundamentally, what I would say is despite the fact we moved our sales up 6%, our EBITDA 9% on a like-for-like and an organic basis. So we can't defy gravity. So foreign exchange have taken that plus 9% EBITDA down to minus 3%. Not a surprise. We flagged that at the end of February, but that is a key feature that you would have taken note of.If I look at the volume growth and where is it coming from, to me, in many ways, it talks about the fact that the transformation that we've been working on for the past few years is beginning to bear fruit. I say that because I see very strong volume growth in specialty polymers and composites that have driven a 9% organic EBITDA growth in the Advanced Materials segment.What's also really worth noting is that this is addressing the lightweighting, the sustainable mobility solutions and the contribution we're making to that space. We are leaders there. In terms of aerospace, in terms of aeronautics composites, the F-35, the Boeing 787, the 737 platform.If I look at high-performance polymers, it's really broad based. Automotive is propelling us forward as well. So Advanced Materials, a big tick, a lot of good progress.Advanced Formulations actually had an even stronger quarter with double-digit organic EBITDA growth, pretty broad based as well, quite diversified markets that we serve. I'd say the volume growth was led by oil and gas in the Novecare business. We also saw the technology solutions generate strong growth in phosphorus and polymer additives. So that's really what's moved us forward.Performance Chemicals, we knew was going to be going through a bit of a transition with the new capacity that's now onstream but is performing very much in a solid way in a market that still is quite supportive. Any margin erosion is being contained, and fundamentally, it's delivering as we anticipated.That performance in the first 100 days of the year has given us the confidence to reconfirm the outlook that we gave. To remind you, that outlook indicates growth of 5% to 7% on an organic basis. I can't predict what exchanges are going to do. And we also said is no matter what happens to our EBITDA, we will deliver a stronger free cash flow from our continuing businesses.Final point to note is we'll recognize that the portfolio transformation of Solvay is largely behind us, but there is a new transformation that really was announced and has to do with the realignment of our functions to make us a lot more agile and as to adapt to our business portfolio and really adapt to where we do business with our evolving customers.We made an announcement on the 29th of March about the organizational update. What you see today is the fact that to enable us to make it happen, we made a provision of EUR 134 million. That will be payable and spent, if you like, over the next 3 years. What's really important is, at the end of those 3 years, our profitability as a consequence of that will be minimum of EUR 150 million higher to the cost reduction. But that's not really the driver. The real driver is to enable us to underpin superior growth -- organic growth. And that's really why we're doing to this.With that, I'll take your questions. Who'd like to go first?
Anyone, any questions?
Yes. It's [ Andrew ] from Bloomberg. Can you hear me okay?
Very good.
Just want -- I guess, let's start from the earnings maybe. I was just wondering what the latest is on the search for the new CEO and whether you can give some guidance in terms of what sort of person you might be looking for, someone on the -- strengths are in the restructuring side or perhaps in the -- or is the growth side more important? And what are the sort of principal challenges that, that person will have going forward?
That's a great question. But I'll be very frank with you. I don't know the answer to your questions because I'm not privy to that information. As you probably appreciate, the process is being run, I'd say, in a very controlled, effective way by the board, by the Chairman of the Board and the Nominations Committee. I don't have any information that's not in public domain. So I can speculate, but it's probably not helpful to you or anybody else if I did that. So I'm just as curious to see the answer to the questions you're asking as well. When you find out, let me know.
What's the feeling there? Do you feel it's close or [indiscernible]?
I really don't know. I think the board appreciates the need to move fast and to provide clarity, but I don't think it wants to sacrifice the quality or the rigor of the process it's undertaking to achieve that goal. What Jean-Pierre has said is that he's here essentially to the end of the year in any case. And I can tell you, when Jean-Pierre is here, I mean, he's here. His foot's on the gas pedal, so things continue. At this point in time, which I'm very relieved by, I'd say nothing has changed. It's very much business as usual. Yes, people ask themselves exactly the questions you're asking, but we've got plenty to keep us busy right now. So let's see.
Yes. On the same sort of vein, what -- in same sort of vein, what about Roger Kearns? Saw he went to Westlake. I mean, in that kind -- do you need -- again, do you need -- do you know -- can you just talk about the focus there for a replacement or...
Well, we've extended the Executive Committee, and we announced 3 new joiners at the time that Roger was -- announced his departure. Also the fact that Roger's leaving essentially for personal reasons. He's been out of the U.S. His kids, his family are in the U.S. They've left school, university, so going back and fundamentally, it's a quality-of-life choice as I understand it. I regret that. I really appreciated Roger. But to my mind, I salute and commend the fact that he's making these choices. I think many of us do in Solvay as well. The extensions are really bringing some more diverse experiences. We've got Cécile de Marsac, adds a bit of gender diversity, and it's interesting because adds a bit of a feminine touch on some of the questions we ask ourselves. And I really like that. It's a different challenge. We got 2 business, real industrial operators, Augusto Di Donfrancesco that was running the Specialty Polymers business. And if I can think of a turbo charger, Augusto being much close to that, very, very business driven, bottom line driven, very, very -- has diversity in a way, complementarity to the existing profiles. And you got Hua Du, who's Chinese, was Asia based, very, very close and a different way to look at the business. So Hua Du, for example, is going to be primarily looking at beyond the supervision responsibilities he's got. He'll be looking at enabling us to grow even better in the Asian markets. And I think, again, we're asking ourselves slightly different questions as a result of that. So I'd say is we're not standing still. We're not dependent on any one individual be it Roger, Jean-Pierre or anybody else. This is a very broad based, deep -- the deep bench, and we're moving. Does that help?
Yes. No, that helped. I mean, just -- Maybe just briefly if can with another. Jean-Pierre, I think last time around, was talking about like a lighter structure, and I guess, the provision you've booked today is about that. But can you sort of explain a little bit what it means sort of practically in terms [ of the nature of ] the company?
Well, practically means 600-plus positions will be suppressed. We hope to redeploy as many as possible. But the suppressions are really happening in the corporate and the shared service functions. The idea really is to put as many of our functional resources, our experts in the global business units directly much closer to the front line, have a much lighter corporate touch. Anything we do from a corporate point of view has got to be very, very much and is very much defined by is it a critical part of our governance policy standard setting or about offering an expertise that has to be shared and is a source of competitive advantage. Innovations, excellence are 2 examples of that, where we are going to leverage on that much more clearly. So essentially, what it means is a leaner corporate but much more focused on the things that matter the most to the bottom line. We're not going to try and be perfect and excellent at every single thing. We're going to be more pragmatic. I like the term 80-20. We want 80% of the impact, 20% of the effort, very, very, almost surgical in our focus. And that's a cultural change. It doesn't happen overnight. Next question? [ Robert ], [ Marine ] anybody else?
Julien Marion from Agefi Dow Jones. Just wanted to know if you have a bit more clearance and clarity over the FX impact for the whole year 2018?
Okay. Well, let me start by looking at Q1, and we can talk about the full year. Q1 last year had an average dollar-euro exchange rate to $1.065. This year, it's $1.229. Let's say $1.23. So we essentially have a nearly just over $0.16 difference. That alone -- if you just look at the mechanistic impact, that alone in Q1 is about EUR 30 million. Now there's more to it than dollar. That's one that's weighed the most in our results in Q1. I've got the impact of the Chinese RMB, the Brazilian reais. Even the [ sad real ] with our peroxides plant, all of that has conspired against and essentially contributed another EUR 10 million or so to our negative impact in Q1. That's the first point to make. If I look at the evolution of exchange rates last year, Q2, the average dollar-euro exchange rate was $1.10. Q3, Q4 was $1.17. We averaged the year at $1.13. We started the year at $1.25, and we gave an indication as to the foreign exchange for the full year of EUR 125 million. That's what we said in the February. At the moment, I'm not going to celebrate the fact that the dollar-euro is at $1.20 because, you know what, these things have a habit of turning very, very fast. If we look at various economic expectations from banks and others, they're still in the $1.25 range. Certainly, one has to be cautious. I'm not in a position to say the world has moved sufficiently for me to vary from the guidance I gave at the beginning of the year. What I would say is the comps Q2 will be somewhat narrower than Q1 and similarly for Q3, Q4 as well if exchange rates remain as they are. So I don't think I can predict exchange rates beyond this other than say to you we're anticipating a certain set of conditions. What I tried to do is not to try and predict absolute results. That's why we're going for this organic growth because we will control what we can control, sales, cost, cash, and we will demonstrate what was impact -- we will illustrate the impacts of evolution of exchange rates, which is what we've done. Does that help?
Yes. Just to be sure, you said that the FX impact [ further on ] Q1, like this $0.16 difference [ while has an -- another ] impact of EUR 30 million, EUR 30 million.
Correct, the total -- yes, let me just amplify. The total foreign exchange impact was of the order of EUR 43 million. What I'm saying is 75% of that negative impact was dollar-euro. The remaining 25% of that EUR 40-odd million was related to other currencies, which individually are modest but collectively add up to that EUR 10-plus million figure in Q1.
Okay. So 75% of this EUR 30 million impact was due to the U.S. dollar?
Correct, voila. Absolutely. Any other questions?
And there was an impact in revenues?
Can you -- sorry, can you repeat?
Is what impact was on revenues actually?
Yes, of course. It impacts revenues but also impacts favorably to a point some of our costs net-net and does impact our EBITDA, absolutely. What it essentially means, and this is something we probably have more exposure than others, because we have a much more substantial U.S. business compared to our past and compared to many of our peers, particularly with the acquisition of Cytec over 2 years ago, that means our U.S. profits are worth less in euros than previously. That is essentially what we're talking about as a prime example. If I said it differently, $100 million of profits last year would have been worth roughly EUR 92 million. This year, it will be worth a lot less than -- I can't do math arithmetically, but we're taking EUR 80-something million, so -- and is purely mechanistic. It's just the maths. Equity investors understand though. This is part of the value proposition for their investments. But the key point to note in all of this is to go beyond the, call it, gravity, not foreign exchange rate I can't control or predict and focus on the fact that the machine is delivering. There is strong volume growth. It's not new news. Obviously, this has been happening now for the last quite a few quarters, 6 quarters sequentially from memory. We're seeing consistent quality volume growth, and that's what this is about.
Karim, I've got another couple if there's nobody -- I'm sorry, there's somebody else.
Sorry, I've just got a quick more general question. I mean, if you look at the international trade environment at the moment, and obviously, the spat between The United States and the Europe seems to be limited to steel and aluminum for the time being. But is that -- also, if you look at potential -- the retaliatory measures, is that something that keeps you awake at night, this kind of possible hardening of trade stances across the globe?
That's a really, really great question. Thank you for asking it. At this stage, I haven't speculated around this is going to happen when I look at the outlook, et cetera. It's conceivable that if the Chinese put into effect the retaliation, the U.S. confirm, et cetera, yes, it would a have a bit of a dent. I'd say it's not going to be hugely material on our business, but it will have an impact, yes. Our first reaction will be to try to mitigate through pricing, et cetera, but let's see. But to answer your point, no, it doesn't keep me awake because it's relatively modest. I'd say these are part of the knocks in business we have to adapt. So it'll have an impact but not huge ultimately. But once we see those things being confirmed, if they happen, then, clearly, if there's any significant impact on our short-term expectations, we'll advise the market in due course. But there's not one for now for me. But I would say it's not about being complacent. We are vigilant. I've got the list of the hundred-plus [ industrial ] products. We know where we could be impacted. We looked at our supply chain. So I like to be prepared for those eventualities. We talk about trade, but the same applies to sanctions on Russia for example. We heard the news about Rusal. Rusal is a customer of Solvay. Again, not huge but every little bit can count. So we're there to meet our customers' needs provided we can do so legally. So again, if sanctions environment change, then these -- we can escape some of these effects. But again, none of that at this point is material to us. The real point is we're in an environment which has more geopolitical uncertainty perhaps than we've seen in the past. What I am reassured by, and that's why I say pleasingly, is that we have a very diversified portfolio. It takes a lot to knock holes into our performance. It really takes a lot. So I'm not sitting here losing sleep. Long answer to an important short question, I hope it helps. And maybe one final thing. At the risk of stating the obvious, we don't like protectionism. We think business, value, economies are best served without protectionist measures because, ultimately, everything is a global supply chain. We're all interconnected. But again, I don't want to get into the political territory of this other than state the obvious that business likes free trade, tariff-free trade. Sorry, I think there were other questions, so let's go to those.
Karim, I'll jump in the [indiscernible]. But could you comment a little bit about the Boeing 797 and what sort composite -- levels of composite are in that plane and also, the Airbus -- how you thought Airbus will approach like the C Series, Bombardier C Series. I understand -- well, I think they think that their composite wing is apparently more advanced than the one on the Airbus 350 (sic) [ A350 ]. So what -- just rolling that together, how -- does that affect the outlook at all for Cytec and how you adapt to those sort of moving ships?
One of the disadvantages of having a call is you can't see my body language. I'm smiling mildly, and the reason I'm doing that is because we have positions, as you all know, with both Airbus and Boeing. We also have the primary structure on the C Series that Bombardier is producing. So ultimately, we have -- let's say, we have fingers in many pies. Whether one wins or the other, I'm not going to pronounce myself. I don't think it's up to me to talk about the composite wing of Airbus compared to Boeing. What I would say is that all of those platforms are poised, in our view, for growth. Just yesterday, I was seeing Qantas' announcement that it was going to retire the 747 fleet and replace it by the 787, the Dreamliner. I think the 787 is what you meant on the 797, unless I missed something. It's a wonderful aircraft, I've flown it a few times,, and really makes a difference. A 10-hour journey feels like a 2-hour European hop, totally, totally different. And I can see the merits of that because the user experience be far better. So Airbus has the same. The Bombardier, I think, is an interesting question. I think the C Series complements the offering ultimately that Airbus does. So the fact that there is this mutual interest, I think, is helpful. I think C Series is stronger with the Airbus connection than without, so to us, it's a positive. I'd say it doesn't have an impact short term. I'd like to think it was different. But I think in a lot of these things, one has to be patient. And everything I've seen, everything I've seen in the last couple of years reaffirms the beliefs that we have, the convictions that we have that the choices we made to get into composites is the right one because I think these are really poised for a, I'd say, slow, steady but very, very attractive growth over time but they're not overnighters.
Is it pretty -- is it every time one of these new planes comes on, I mean, it's very -- could you put a sort of a percentage jump in the composite inquiries in these planes? Or is it just too difficult?
There are technical answers to that. I don't have them platform by platform at hand right now. We have disclosed what they're worth to us on the web, so you can see what's the magnitude, what's our business on each platform, the 787, et cetera, means to Solvay. But that's also why I think folks understand and have confidence in our ability to grow earnings over time in composites but also appreciate it doesn't happen as quickly as we see, for example, in our Specialty Polymers business. But fundamentally, what I would say is that if you look back over time, go back 10, 20 years, the composites penetration was in the order of 10% to 15%. We're now into the 40%, 50% range. So composites is displacing metal. Composite is displacing even aluminum. So for example, my understanding on Airbus, when the Rusal -- U.S. sanctions against Russia were announced, Rusal was a target. And I know that the main shareholder there is looking to reduce their shares to try and get away from that constraint. That's going to cause problems for people like Airbus and Boeing and others because they're dependent on companies like Rusal to provide their aluminum. But even if they can't get the aluminum, you can't put composites quickly. These are generational changes. But fundamentally, the growth has gone from 10%, 15%, 40%, 50%. I'm not suggesting it could go to 70%, 80%, 90%, I don't know. But even at 50% plus for the next 10, 15 years is excellent business, excellent, excellent business.
Are you covered if the C Series composite -- I mean, do you put -- do you supply the C Series composite wing with composite?
We supply primary -- the primary structures, the primary structure of the C Series, yes, exclusive.
How's that -- and that includes the wings? Sorry, my...
Elements of the wing but not -- normally, we're in secondary structures like winglets and things of that nature. I think, here, what we're saying is the main superstructure, the thing that is really structural, that's where we're in on the C Series. We're on the Boeing 777X, for example. That will come onstream in the next couple of years equally on the superstructures. Normally, we made our name, our reputation that our customers appreciate more on the secondary structures, although we've now moved into primary structures as well.
Okay. When we talk about composite and the excitement around that just at other end of the -- well, if it is indeed at the other end of the spectrum, just your thought -- when you look at a business like vanillin, and you're probably [ more than right to point ]. But what strategically and so -- and how does that fit in with the big Solvay?
Sure. Couple of things. One is it's a relatively modest niche business compared to our big businesses elsewhere, but it's a leader. It's a leader that's got a lot of opportunity to progress. So to my mind, I look at a few things. I look at its growth potential. I look at its cash generation. I look at its returns and our aroma performance business, which is vanillin, ticks all 3 boxes. And I don't see anything that changes that for now. One can always find good reasons to sell businesses, and it's not difficult to do that. But what I would say is that after 50 M&A deals in 4 years, we've got a portfolio that we think is coherent, balanced, has the right critical mass and will grow value. So I don't think that -- I don't see merit in further M&A. I wouldn't say never is never, but it's not the agenda for now. The real agenda's growth. I think [ if I look at ] aroma performance, they'll be net contributors to our growth aspirations as well. Again, remember, it's a leadership -- has leadership positions in vanillin, I think from memory, 50-plus percent of the market, just very, very strong player.Maybe time for one more question if you have any. Okay. Well, if there aren't any further questions, thank you for making time this morning. Clearly, if you have any follow-up questions, don't hesitate to go to Caroline. My hope is that the main takeaways that I've tried to convey to you are clear. Essentially, as expected, steady volume driven growth but not enough to defy gravity, by which, I mean foreign exchange. What's also pleasing for me at least is we've reconfirmed our outlook on profit growth and cash, and we're not standing still. The transformation continues with the organizational announcements that we have announced.And with that, I bid you a very good day, a safe day and an enjoyable one as well. Thank you.