Aerospace & Defense

webinar
February 28, 2023
 With Ilham Kadri
you today CEO and President of the Executive Leadership
Team of Solvay

Carmelo Lo Faro
President, Materials Segment

Aerospace & Defense webinar

Our highly attractive Materials business
is part of SpecialtyCo

SpecialtyCo
Consumer
Materials
~€7.8bn & Resources

FY2022

3 Aerospace & Defense webinar

Aerospace & Defense represents a key market

MATERIALS

29 22 22 12

% of net sales
% % % %

Automotive Aerospace & Defense Electronics & Industrial Healthcare & Consumer

Net sales Organic sales growth EBITDA margin

Materials (‘22-’26F)

FY 2022 ~€4.1bn ~10% >30%

4 Aerospace & Defense webinar Note: Percentages shown refer to percentage of Net sales of Solvay’s Materials segment
We are an advanced material provider
to OEMs and suppliers

Provide advanced
Design, manufacture & Provide finished parts &
materials to produce
assemble aircrafts systems to OEMs
parts

ADVANCED
OEMs MATERIAL SUPPLIERS Tier 3, 2 & 1 suppliers

Solvay is 1 of 3 qualified
carbon fiber composites
suppliers globally

5 Aerospace & Defense market

 30% weight
Advanced reduction vs
aluminum
5 times
stronger vs
aluminum &
Improved
aerodynamics
Superior
manufacturing
& design

materials superior
properties1
flexibility

SOLVE
Up to
the industry’s
most critical 25%
performance and Increased Reduced
sustainability challenges fuel greenhouse
efficiency & gas emissions2

(1) Superior corrosion, fatigue & thermal resistance

(2) Mainly CO2, NOx
6 Aerospace & Defense market
Aerospace & Defense is a key market
within our Materials business
AEROSPACE & DEFENSE

~60% ~30% ~10%

% of net sales
Commercial aviation Defense Space & Launch
Narrow and wide body, engines, Fixed wing defense, Space, missiles &
business jets, civil rotorcraft military rotorcraft launch systems

Aerospace Net sales ’21-’22 Sales growth Organic volume growth

(‘22-’26F)
& Defense
FY 2022 ~€0.95bn ~30% ~10%
7 Aerospace & Defense market Note: Percentages shown refer to percentage of Net sales of Solvay’s Materials segment
Aerospace & Defense key takeaways

Double digit market Attractive business Actively pursuing

growth outlook, with broad portfolio next-gen solutions
supported by post and high barriers to leveraging our unique
COVID rebound entry affording stable innovation capabilities
growth

8 Aerospace & Defense webinar

 With
you today Carmelo Lo Faro
President, Materials Segment

Aerospace & Defense webinar

 Double digit market
growth outlook,
supported by post
COVID rebound

10 Aerospace & Defense webinar

Attractive market growth outlook
Aero industry recovery is underway following a period of decline

COMPOSITE AEROSTRUCTURES MARKET VALUE (INDEXED TO 2016)

~ 5-7% p.a. ~ -11-13% p.a. ~ 9-11% p.a.

2016 2019 2022 2026F

Key market
drivers Market growth driven Decrease due to narrow Increasing build rates,
by higher build rates body build rate supported by a COVID
and introduction of new slowdown (i.e., recovery, and increasing
programs 737MAX) followed by advanced material
COVID crisis penetration
Source: External market reports

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Build rates
Strong outlook, supported by post COVID rebound and mainly driven by
narrow-body airplanes
Projections Commercial narrow body
Long-term high single digit growth
2,500 BUILD RATES BY SEGMENT (IN # PLANES) 6-7% p.a.

COVID
737 MAX supply issue
Commercial narrow body

Commercial wide body

2,000
Defense

Commercial wide body

1,500 Long-term low single digit growth
1-2% p.a.

1,000

500 Defense
Highly resilient long-term mid-single
digit growth, 4-5% p.a.

0
96 98 00 02 04 06 08 10 12 14 16 18 20 22 24F 26F

Note: Build rates of main Commercial aviation & Defense programs shown
12 Source: Solvay internal data; External market reports Aerospace & Defense webinar
Advanced material penetration
Continued increase across airplane programs over time
PERCENTAGE OF COMPOSITES USED IN AIRCRAFTS
~50%
F-35 787 A350
~40 %

A220 777x
%
~25
F18
A320 777 A330 V22
Commercial Programs
~10 %

F15 767 F16 737 Military Programs

Composites used
% (% of aircraft weight)

1960s-1970s 1980s-1990s 2000s-2020s+

Note: Programs shown are examples only
Source: Solvay internal data
13 Aerospace & Defense market
Our technology is integral to many parts of an
airplane Primary structures
(e.g., empennage, fuselage) Secondary structures
(e.g., engine nacelles, fairings) OUR PRODUCTS

Bonding
TSC

Thermoset composites

TPC

Thermoplastic composites

ADH

Surface coatings Adhesives & surfacing

SpP

Interiors & galleys Specialty polymers

Engines

14 Aerospace & Defense market

 Attractive business with
broad portfolio and high
barriers to entry
affording stable growth

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Solvay maintains leadership in this attractive market
with double-digit growth expected in the mid-term

Solvay Market Solvay Market Solvay Market

11% p.a. 5-7% p.a. -9% p.a. -11-13% p.a. ∼10% p.a. 9-11% p.a.

Solvay A&D net sales (€ bn)

1.6

1.4
1.3
1.2
1.2

1.0 0.9 0.9

0.8

0.6

0.4

0.2

2016 2019 2022E 2026F

Protected by Long-standing
Specified on all Certified
Broad Portfolio customer
High barriers to entry major programs
relationships Global Assets
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Commercial Aviation
Solvay is specified in all main airplane programs KEY EXAMPLES

SPECIFIED IN KEY AIRPLANE

& ENGINE PROGRAMS

Solvay value Key airplane programs Order backlog (Dec ‘22)

per shipset
777x ~440

>$1m C919 ~100 Major supplier of Primary and

787 ~575 primary & secondary secondary structures
structures for A220 for Biz Jets
$0.5-$1m A220 ~550
737 ~4,200
A350 ~410

<$0.5m 767 ~120

A330 ~200
A320 ~6,100

Secondary structures, Trusted long-term

structural adhesives advanced material supplier
Strong visibility on long-term orderbook and surfacing films for of Safran for engine &
of our main customers, worth ~€5bn A350 and 787 family nacelle programs

17 Aerospace & Defense market

Defense
Long-standing partnerships with key OEMs EXAMPLE
PRIMARY SUPPLIER FOR F-35
LEADING POSITION IN
THE U.S. DEFENSE MARKET

Leading position with strong heritage and over 50 years

of industry experience

Supplying hundreds of products across all main Unique

defense programs (e.g., Black Hawk, Osprey, Apache, F-35, F-18, portfolio of
F-16, A400M)
>50
Offering customized high performance material
products
solutions, with strong focus on heat exposed parts supplied

Access to main OEMs & tier 1 suppliers

(e.g., >30 year-long partnership with Lockheed Martin)
SUPPLYING THE HIGHEST COMPOSITE
DEFENSE PROGRAM BY TOTAL VALUE

18 Aerospace & Defense market

Strong customer co-development
across the entire lifecycle of the aircraft programs
Years Decades
Design Prototyping Test & Certification Industrialization Operating life

Virtual engineering Part manufacturing Material & part testing Continuous support of the airplane program

SOLVAY INNOVATION CENTERS

One-team
approach
5 6 3
to customers
AMERICAS EMEA ASIA

>100 Researchers

• Allows 10-20x increased manufacturing rate

CYCOM® EP2750 on the back of reduced curing time
Co-development >3 years of closed collaboration to develop
case example • Reduced production cost, making composite
a next generation composite material
parts cost competitive with metals

19 Aerospace & Defense market

Agile and evolving footprint

STRONG AEROSPACE & DEFENSE FOOTPRINT* AGILE & EVOLVING FOOTPRINT

CLOSE TO OUR MAIN CUSTOMERS

Footprint optimization program

launched before COVID

AMERICAS EMEA ASIA Accelerated through COVID

(3 sites closed) to adapt cost
structure in line with market needs
(annual cost reduction of ~€70M)

Continuous optimization of agile

footprint

20 *Selection of sites shown. Aerospace & Defense market

 Actively pursuing
next-gen solutions
leveraging our unique
innovation capabilities

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Deep industry expertise and understanding
of our customers’ needs

Industrialization and Greener New and more

Productivity transportation demanding applications

Reduction of emissions Focus on primary

Need for faster and lower-cost
and increasing importance structures and new
production
of sustainability market segments

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Enabling the next generation of aircrafts
Resin Infusion
Bonding technology
Multi-functionality
Resin infusion technologies Thermoplastic composites
Out-Of-Autoclave technologies
Innovation themes

Carbon fiber based composites

Adhesives & Sealants
Fiberglass based composites
Thermoset prepregs

R&D timing: ‘50s-’70s ‘70s-’00s ‘00s-’20s 2020+

Initial adoption in space & launch Adoption in secondary airplane Adoption in primary airplane Next-gen of space & launch
Target markets

and expansion into tertiary parts structures (e.g., spoilers, rudders, structures (e.g., fuselage, wings) Advanced air mobility
in airplanes (e.g., interior parts) ailerons, flaps)

23 Aerospace & Defense market

 KEY MARKET DRIVERS
Driving innovation for the
future of Commercial Aviation
Lighter weight and lower Developing the innovations required for next-generation aircraft with breadth and
depth of technical expertise and a legacy of innovation
emissions
Meet customers needs for faster,
Continue to drive adoption of composite
Greater productivity more cost-effective production
materials by replacing metal in primary
efficiencies processes with lighter-weight
structures
materials that do even more

Sustainability and Innovation Themes

circularity

Out of Bonding Resin Multi- Thermoplastic

autoclave technology infusion functionality composites

● Increased production ● Improved reliability & ● Structural integration & Next level of materials Next generation
efficiency performance performance performance providing: composite materials
providing:

~€3bn ● Improved quality control

● Lower cost
● Lower energy
● Light weighting
● Faster assembly
● Increased design
● Manufacturing flexibility:
compatible with in/out of
autoclave curing
● Electrical conductivity
● Vibration/noise
dampening
● Faster and simpler
production processes

Addressable market1 by 2040 ● Lower recurring ● Embedded sensors ● Similar/superior

consumption freedom
manufacturing costs mechanical
● Antimicrobial surfaces performance
● Potentially recyclable
24 Aerospace & Defense webinar 1) Addressable materials market for primary structures
 KEY MARKET DRIVERS
Actively accelerating
technology for Space market
Solution provider for innovative and high Innovation via new manufacturing
Commercialization performance lightweight materials for techniques, to lower cost of launch
of space space applications (e.g., composite fairings, vehicles (e.g., Out-Of-Autoclave, Automated
nozzle ablatives, adhesives) Fiber Placement)

More small launch

vehicles for growing NASA Space Long-term agreement
Gemini
satellite network Shuttle SRB for Vega programs

Strong track
record with 1965 1969 1970s - 2011 2021
Focus on reusability >50 years of
of launch vehicles experience
Arianne rocket - James
Apollo 11 Webb telescope

€1bn1 Proud supplier of ablative materials for use in the

Artemis mission’s solid rocket motor (SRM) nozzles,
Addressable market by 2040 successfully launched on 16th November 2022

Note: (1) Composites market for Space.

25 Aerospace & Defense webinar Source: External market reports
 KEY MARKET DRIVERS
Pioneer in developing
Advanced Air Mobility market
Ideal material supplier for AAM with a comprehensive portfolio and strong legacy,
Concentration of population able to assist with technical challenges through all stages of the process
in urban areas

Scale AAM vehicle production through Solving the AAM industry’s most
innovative composite technologies critical challenge: light weighting
Need for sustainable
transportation solutions

Mobility as a Service MULTIPLE RELATIONSHIPS ESTABLISHED

(MaaS) acceleration

~€6bn Electric air-taxi Hybrid water Indoor inspection

Addressable market by 2040 program landing aircraft drone
VX4 Seagull ASIO
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 Thermoplastic Composites Platform

Potential to reinvent how to produce and recycle composite resins

Up to 30-50% Up to 40% Recyclability

5x faster reduced more &
manufacturing1 weight2 cost-effective2 circularity

Addressable market by 2035

Note:
>€1bn3, thereof ~€400m Aero&Def
(1) (1) Compared to thermoset composites
(2) (2) Compared to metal components
(3) (3) High temperature Thermoplastic composites total market

27 Aerospace & Defense market

Ongoing TPC adoption across industries drives
the experience curve
1980 2020 2030+

Electronics & Other

Automotive
(e.g., carbon wrapped eMotors)

Expansion to Energy
transition
(e.g., onshore applications,
hydrogen tanks)

Translation of capabilities
to Energy
(e.g., offshore risers, flexible pipes)
Expansion to
Primary structures
Continued penetration in (e.g., wings, fuselage)
First adoption in A&D and Adv. Air Mobility
(penetration from military to Secondary structures
commercial programs) (e.g., window frames)

A&D Energy Automotive Electronics & Other

28 Aerospace & Defense market

High-end composite materials market
expected to grow 4x by 2035,
and >10x by 2050
Estimated carbon materials market size
(€bn, 2022-2050F)
Automotive

X10

Energy

X 4

A&D
2022 2035F 2050F

29 Aerospace & Defense market

Recap: Aerospace & Defense key takeaways

Double digit market Attractive business Actively pursuing

growth outlook, with broad portfolio next-gen solutions
supported by post and high barriers to leveraging our unique
COVID rebound entry affording stable innovation capabilities
growth

• Growth driven by higher build • Broadest product portfolio to • Market maker posture to drive
rates in commercial narrow meet all customer needs innovation and focus on
body • Specified into all main supporting the industry in
commercial & defense programs solving its main challenges
• Increasing advanced material
penetration across all • Visibility on €5bn customer order • Actively supporting the
segments book backlog development of new market
• Long-standing customer segments: commercial launch
relationships with a high degree and advanced air mobility
of co-development

30 Aerospace & Defense market

Q&A

solvay.com