Our guest in this episode is Dr. Ilham Kadri, the CEO of Syensqo, a global speciality chemicals company listed in Brussels. In 2023, Ilham led the spin-off of Syensqo from Solvay, the 160-year old Belgian chemicals conglomerate.
In this interview, Ilham discusses the strategic rationale behind the decision to split Solvay into two separate entities, highlighting the aim to unlock the full potential of both companies. She explains how Solvay, a historic leader in commodity chemicals, and Syensqo, a new entity focused on specialty chemicals, were positioned to pursue their unique growth strategies. The conversation delves into the meticulous planning and execution required for the separation, emphasizing the importance of stakeholder engagement and maintaining operational continuity during a volatile global environment.
She highlights Syensqo’s focus on innovation and sustainability, detailing its ambitious goals for carbon neutrality and its role in advancing technological solutions. The episode also touches on the broader implications of the spin-off, including the strategic benefits of being a publicly listed company and the impact on stakeholders, from employees to investors. Dr. Kadri’s leadership and vision provide a comprehensive view of the complexities involved in creating two independent champions from a long-standing conglomerate.
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Disclaimer: The discussion in this episode is not financial advice, nor an investment recommendation, nor a solicitation to buy or sell any financial instruments or an offer for financial services or any other transaction. The information contained in the recording has no contractual value and is intended for informational purposes only. Amundsen Investment Management and the participants in this podcast may have holdings in the companies being discussed. Any views expressed are those of the guests only, and not of Amundsen Investment Management.
Per: Today we discuss the story of the spin-off of Syensqo from Solvay in December 2023, with Ilham Kadri, who led the process as the CEO of Solvay and then of Syensqo after the separation.
Per: Dr. Ilham Kadri, a scientist by training, is an experienced leader in the chemicals industry. She held leadership roles at Shell, UCB, Huntsman, Dow, and Sealed Air, before becoming the CEO of Diversey in the US, and then CEO of Solvay in 2019. Solvay is a leading global chemicals company, headquartered in Belgium, with a history going back to 1863.
Per: In 2022, Ilham announced a plan to separate the company in two, a commodity chemicals company, still named Solvay, and a specialty chemicals company focused on innovation, growth, and finding sustainable solutions for the materials that are present in our everyday lives, Syensqo. In this episode, Ilham shares her story of the rationale for and process of splitting the company, with a focus on handling a smooth transition for the company’s stakeholders.
Per: Ilham, thank you very much for joining us today. Maybe you can start by telling us a bit about your background and your journey to becoming the CEO of Solvay and Syensqo.
Ilham Kadri: Well, first of all, thank you for having me. Really glad to be part of your podcast. I grew up in Casablanca in Morocco, so a very humble home. We didn’t have the luxury to waste. We didn’t have running, safe, potable water. And there were frequent power cuts in my district. So I tell my team that I grew up very greedy with natural resources. And my grandma who raised me used to say that girls had two exits in their lives, one to the husband’s house and the other one to the grave. So she invited me and all the girls in my ecosystem to find our third exit or our door, and education changed my life. I got passionate about science very quickly, very early on, and this has followed me throughout my career. Thanks to scholarships, I could pursue my higher education and my passion for science in France, in Canada, and I became a chemist and physicist, etc. I often say that the journey is probably more important than the destination.
Ilham Kadri: My professional journey after my PhD thesis in polymer physics and chemistry took me in different types of roles from a lab chemist to managing people in a lab to sales and marketing and product management, etc., and leadership positions, and brought me around the world on four different continents, from Africa to the Middle East, to Asia, to the US, and now in Europe. My first CEO role was in the US, actually, a company called Diversey, a hygiene and cleaning company, where I could pay tribute to my grandmother, who was a cleaner. Not only did I turn around with my team, the company at that time was bleeding cash. It was a lagger in terms of personal capital employed or cash conversion. But I also founded the Hygieia Network, a non-profit foundation at the service of the cleaning industry.
Ilham Kadri: Back in 2019, I was honored to be appointed the CEO of Solvay, a 160-year-old company with a rich history here in Belgium. At the time when I joined, it was called the Sleeping Beauty, exiting a decade of M&As, underperforming financially with a heavy balance sheet, low cash conversion, greenhouse gas emissions-wise. We were not aligned even with Paris’ trajectory. During the last five years, almost six by the end of the year, we focused with the team on transforming the company to better meet the needs of our customers, the challenges of the modern world. We started by having an ambition. We didn’t have a big ambition, bigger than us, training, rehiring, selling assets, closing some where we believed we are not the right owners. We sold more than 1.7 billion euros of assets. We invested in innovation, in capacity. We delivered the balance sheet, which was pretty heavy when I joined.
Ilham Kadri: We achieved what I call the triple four over five years. Four billion less debt, 4.5 billion of cash, and four billion investments, believe it or not. Along the way, when we achieved our strategy, we realized that we have two sets of assets. One of resilient cash. Cash cows, really beautiful with technologies which have been around for 100 years plus, sort of commodities, but with a good barrier to entry, which we transform towards more environmentally friendly technologies, essential uses, which are mature. They were needed yesterday, they are needed today, and they will be needed in the future, such as products for your glass or tires. And then the specialty products, which are solving some very unique unmet needs like clean mobility. By December 2021, completing our strategy growth two years ahead of time, our businesses were ready for the next steps with the best balance sheets in the industry, allowing us to contemplate launching and creating two champions, both listed companies, both investment grade.
Ilham Kadri: For me, creating two good co-ops, it’s a dream coming true. In 2022, we announced the project, the separation. Today I have the honor to lead the specialty demerger called Syensqo.
Per: Can you explain to our listeners what Syensqo does? Because you’re a specialty company, so it’s often not easy to understand exactly what it does.
Ilham Kadri: Yeah, specialty can be a buzzword. But let me give you a few examples. We are in one out of two EV cars in the world. We are in almost every vehicle flying in the air. It contains Syensqo inside. About 90% of the advanced chips have science inside. We have solutions for green hydrogen technology on the market and we enable green hydrogen in electrolysis and fuel cells. One third of the world’s copper is recovered using our reagents. 170 million people worldwide rely on seawater treated through reverse osmosis using our products. One out of two dialysis patients in the world use science products. We are in your medicine packaging. 80% of medicine packaging has Syensqo inside. We are in 25% of all your shampoo. One out of five hair care products sold by our customers use our Guar solutions, which are biotechnology. I can go on, but thank you for giving me the opportunity to market Syensqo. It’s a new brand. So it’s a global specialty company that was established in December last year. We are a technology maker, yet we are agnostic to technology. As a scientist, what we do is we separate elements, we filter, we purify, we create. We take ordinary raw materials and we make sophisticated products and solutions which cater to the most pressing needs, the consumer’s most demanding needs.
Ilham Kadri: This is what we do. It’s a global company, 7 billion euros last year, 41% of our business is in America, 35% is in Asia Pacific, the rest is in Europe. We are headquartered here in Brussels, yet we are very, very global, as I told you. We follow our customers. We found those solutions, which are very unique. Half of our business is probably protected with IP or know-how and long-term contracts, like in the aerospace sector. Each year, 20% of our revenues are made with solutions and with products that are less than five years old. You see the innovation powerhouse we have inside the company and we bring such unique solutions to our customers and unmet needs.
Per: It’s quite a brave decision to be the CEO of Solvay and then decide to split the company in two. Most CEOs want to grow the company by acquisitions and become larger, right? So you decided to split it into almost equally sized companies at the time. What was the main strategic reason to do that?
Ilham Kadri: Solvay was rightly perceived as a conglomerate, therefore leading to an underwhelming valuation to the lowest common denominator. But the decision to separate into two independent companies was, first of all, an industrial one, aiming to unlock the full potential of both companies and champions. After an intense period of M&A activity under the previous management, indeed, we’ve done more than 50, 60 M&As in less than a decade, right? But then, frankly, we were also ready. I mean, I was not hired to split the company. I was hired to unleash the potential of Solvay and fix the balance sheet, as I told you, right? Create more cash, bring an ambition to the company, which we did financially and non-financially. And after our growth strategy success, as I told you, by summer 2021, we looked at, you know, the growth 2.0 strategy chapter.
Ilham Kadri: And we had many optionalities. We looked at staying as is, obviously. We looked at, you know, selling part of the business, right? And making massive moves, buying businesses as our balance sheet has been and is still very strong. But after a thorough analysis and discussion with our board of directors, we announced our intention to split Solvay into distinct companies as a project back in 2022. And the goal was to provide to each company its independence and flexibility to pursue their unique strategies and growth opportunities. Where you are under the same roof, you need to distribute the capital, right? Not evenly, you always do prioritization. Yet, if you don’t invest in your commodities, then you are not the right owner anymore, right? And they’re going to die. And they need decarbonization. And actually, they are beautiful assets, which create cash. And look at the company now, Independence, smaller, but really attracting value investors.
Ilham Kadri: One company which retained the Solvay name focuses on our historic businesses, including soda ash, peroxide, silica, and other businesses. These are well-established, mature businesses with strong market positions, right? I mean, very strong, you know, barrier to entry and steady cash flows. And the other one, Syensqo, was created to concentrate on our specialty chemicals, like composite material, like high-performance specialty polymers, formulation and solution business at the service of personal care, for example. And these are high-growth areas with significant potential for innovation and market expansion. And in fact, by separating these businesses, we aim to provide Syensqo with the agility and focus needed to drive technological advancements, structurally outperform our markets, and meet the evolving needs of our customers.
Ilham Kadri: So, as you can imagine, this is an IPO podcast, and I’m sure you had others, you know, sharing their experience. The separation process involved meticulous planning, execution, a lot of people working behind the scene while we were still managing a very volatile and uncertain world and business environments. I mean, at the time we announced the split, it was the same month as Russia was invading Ukraine. Can you imagine, right? And then we had to manage unprecedented inflationary environment. So we had, you know, to continue managing our businesses, thanks to our people, thanks to our business leaders.
Ilham Kadri: And to continue ensuring that both entities were set up for success with the right leadership, with the right resources, with the right structure in place. And on December 11, 2023, the split became effective and Syensqo began trading independently on Euronext Brussels. So yeah, I think all the homework, the heavy structural homework we did with Solvay since 2019, has allowed both Solvay and Syensqo today to operate with greater focus, accountability comes, right? Even 2024 is a tough year, but both companies are actually focusing on their agenda and ultimately with greater clarity and purpose, ultimately facilitating the creation of more value for customers, for employees, for shareholders. And I’m truly excited about what has happened. It’s a chapter of my life personally but chapter in the life of this beautiful 160-year-old Solvay business which now is two businesses and I’m excited about the future and the opportunities that lie ahead for both companies.
Per: As you said that Solvay has a very long history right I mean 1863 the founding as a startup basically at the time right?
Ilham Kadri: Absolutely.
Per: And you also have the Solvay family is still owning 30 percent of those Solvay and Syensqo now. How was the reception of the wider community in Belgium? I mean, Belgium has a lot of links to Solvay, basically. What was the reception of the split there?
Ilham Kadri: Well, listen, I think you have to put it in context, right? It’s a bold decision. It was unthinkable for some, dangerous for others, fueled by, you know, media sometimes with dramatic headlines, which has created, obviously, some emotion and passion around what’s going on. But listen, this is just about fear and expectations. So…
Ilham Kadri: We heard that Solvay will leave the Bell 20. We heard that the balance sheet is not strong enough. Well, our debt ratio at that time was one time, you know, the best one in the industry. We heard that liquidities are not there, that Syensqo cannot live by its own. So, yeah, I mean, the reality, and that’s what left us very grounded and balanced as board of directors and employees, the foundation was solid and we deployed the splits, you know, scenario, playbook, step by step.
Ilham Kadri: Including talking with rating agencies like Moody’s and S&P’s. We engage with our people, with the employees, with the union. We look at scenarios which includes just testing two years of COVID environment. So on the Belgium side, Solvay is indeed well known here. You’re right. There’s not a single street in Brussels where probably Solvay name doesn’t pop up. Some time to time, Solvay has a long and rich history and the decision to separate into those two independent companies was significant for both the family holding called Solvac, the retailers, family shareholders, and the wider community. But I think what we’ve done really well, and I will encourage everybody to do it in our 18 months of testing the concept, having the projects, and announced to the whole world, right? We did roadshows, we had engagements with family investors and non-family investors, answering hundreds of questions. And I think throughout the journey, we convinced, right? Solvac even published their letter of support because obviously you don’t wake up in the morning and you decide to split a 160-year-old, right, company. It has been a journey, a journey of first performance, right? Solid foundation, convincing.
Ilham Kadri: And Solvac indeed, as you mentioned, owns around 31% of Solvay and Syensqo today. They understood the strategic rationale behind the decision. They recognized that creating two focused entities, Solvac and Syensqo, would allow each of them to pursue its own trajectory and a growth one for Syensqo and prioritize the capital allocation more efficiently. Solvac understood that this allows the family office once in a lifetime to diversify their investments because they have been so far a monocompany holding. And what’s the step, right? We have now two companies, one dividend yield recognized by other value investors who joined the stock, created value very quickly, look at their share price. And the second one, a growth specialty company, which is taking on a journey of building its equity story, its brand, looking for new growth investors, right? We are branding the company with other growth investors, even outside Europe and ultimately leading, we believe, into a re-rating. So yeah, this alignment of the long-term vision of both entities for value creation was extremely well received by the family holding. By the way, we would not have done it without their approval, right? And by the way, the split was approved by our shareholders at 99.53%. That’s our exceptional AGM is a number, 99.5. It’s a number I will remember the rest of my life.
Per: You’ve been the CEO now of private equity-owned and public listed companies. What do you see as the benefit of being listed in Solvay or Syensqo versus being private equity-owned?
Ilham Kadri: Interesting question. I love both lives, by the way. I think they are pretty different. The commonality is performance. I think I learned from private equity owners. It depends on private equity owners, but normally the marriage is devoted to divorce at one point of time. It can be three, five years, ten years, whatever. So there is a timeline, which may be different when we talk about family-owned companies, right? I mean, Solvay has been 160 years at 30% level now in the hands of Solvac. So when you talk to the family shareholders and their next generation, their kids, right, and their young investors, and I met them just recently, they want the company to last another 100 years.
Ilham Kadri: Having had the experience of leading both private and public companies, I can say that there are some distinct benefits of being a publicly listed company. Obviously, access to capital offers access to capital markets. Allows to raise funds, which can be used to finance growth initiatives, research, M&A, other strategic initiatives. Get those long-only growth quality investors in the case of Syensqo now, right? It’s crucial for driving innovation and expansion. Enhanced visibility and credibility. Although, you know, with private equity, my company was pretty well known in the hygiene and cleaning sector. But, you know, going to the market every quarter or twice a year, whatever is your earnings calendar. It gives a signal to investors, customers, and partners that the company is here and meets stringent regulatory and financial reporting standards as well, rather than disappearing and coming after for a second sale or an IPO, right?
Ilham Kadri: Liquidities are important. Increased liquidity provides liquidity for both existing shareholders and other institutional investors. Valuation and continuous market feedback. If you are in the hands of private equity, obviously, I mean, I got great partners and quick decision making, different dynamic here. You get constantly this market’s feedback and this feedback can be valuable for management in assessing the company performance, strategic direction. Obviously, the incentives are different. Employees incentives allows to offer stock options and other equity-based incentives to employees. Powerful tool for attracting and retaining top talents, but we find other ways doing it in the private equity where they ask you to have your skin in the game, which I really liked. And actually I brought to my publicly listed companies. You get from day one in this corporate governance and framework and credibility, which can enhance stakeholder trust and confidence. It has its weight, right?
Ilham Kadri: I mean, it’s heavy. Private equities, when they go to IPO mode, they have to be ready, right? For such disclosure. And then the strategic flexibility allows the company to respond more effectively to market opportunities, challenges, whether through organic or inorganic type of approach with strategic acquisition. So there are also challenges and responsibilities associated with being a publicly listed company, such as the regulatory compliance, the market scrutiny, the benefits can significantly outweigh these challenges, depending on the assets you have in hand. There are some assets I wish they are just privates and they do their journey. And others, I believe, they are better publicly listed because they will get more recognition. So for Syensqo being listed on Euronext. Provides us with the resources, the visibility, the strategic flexibility needed to pursue our ambitions, goals and attract new growth investors. Today, we don’t have yet the register log of investors we want to have in our register. So we are really marketing our company with growth, long-only quality investors. We are selling our company every week because we believe that the right thing to do to drive long-term value for our shareholders and stakeholders.
Per: Building on that. One of the choices you made in the spinoff was to do a spinoff and not do an IPO spinoff where you would sort of specifically market Syensqo and have a transaction where you attracted a certain number of investors. What was your thinking on that? Maybe you didn’t need the capital, but it’s just a question on the marketing of the stock, right?
Ilham Kadri: Yeah, you’re right. We didn’t need that. We had, you know, very good balance sheets. We had a reference shareholder who committed to staying in the two companies and is committed to support each journey. And, you know, that’s a split or a spinoff or IPO. There are immense technicalities behind this, right? I think we see just top of the iceberg, but, you know, there is a hidden amount of activities. It took us 18 months and we took our time. At that time, I was challenged heavily, you know, even by some investors. Yeah, 18 months is too long. Why you cannot do it in 12? I said, because we want to take our time to have the right communication strategy, embark our employees, because it’s important to have the right dedicated support teams, making choices about the placements of employees. The process was carefully managing who, where. So yeah, I mean, we had all the optionalities on the table, but we had the balance sheets. We knew that we are going to become two investments grade and one strong investments grade, which we are committed to at Syensqo. We have the support from our key shareholders. We met the top 30 shareholders very frequently through the process. And then we submitted to their votes and ultimately they have been approving it with 99.5% of positive votes.
Per: You mentioned the employees. It’s an important process to manage because I imagine that within the conglomerate, your employees are also happy that they can maybe move between divisions or things like that. When you did actually split the company, how did you manage that process with employees? Did they get to choose or what was the process?
Ilham Kadri: Well, first of all, before answering your question, I think the employee engagement is important, right? Throughout the process, because obviously there was a lot of fear, expectation of the unknown and where I’m going to go. So. Throughout the process from day one, and this is March 2022, right? When we announced the project, we had multiple town halls meeting, Q&A sessions with employees to explain the journey, the details of the spinoff, address any questions or concerns they might have. We also say we don’t know. You see what I mean? We went to sessions and we may not have had the answers because we were through the journey. We were assessing the risk. And these sessions, I truly believe, are crucial for building trust and ensuring that employees felt informed and supported throughout the whole process. So for me, and I’ve done it with my IPO and I ran a dual path when it was about Diversey, either it went through an IPO or we finished with a private sale, you need to engage with employees early and often, address the concern, provide support. Clearly outlined the opportunities the spin-off presents for the career, their careers. I mean, for me, number one is the employee buy-in. It’s really critical for maintaining productivity, morale. It was really unthinkable. I mean, the week I was going to announce, and actually I delayed it by two weeks, that’s the small story, untold story. That week took place the Ukrainian war, right? The attack of Ukraine. And, you know, you don’t want to appear insensitive to what’s happening next door. So that’s why engaging with my leadership first and with all the employees was so important.
Ilham Kadri: And then we had a good governance. We established a robust leadership and governance structure throughout the journey and for both entities as early as July 1st, because I was already running the two companies since July 1st last year. December 8th, you saw the EGM, the Extraordinary General Meeting decision. But actually, we were already running the company before and the two companies separately before. And that was the learning from my previous splits where we didn’t do such six months of proof of concept. And we ended up day one having issues which we could have avoided. We protected the business, right? So the businesses were run with business leaders and with our teams, which were not distracted by the splits. And we appointed experienced leaders who can drive the operations during. And after the transition, but also with the dedicated task force, very strong, they were reporting to me directly. We created the dedicated task force with internal and external talents, just managing the splits, right? Knowing both the process of spin-off from prior experiences and people who know the organization very well. So it was really important to have that daily engagement. More than 200 meetings took place with only the leadership. Approximately, I mean, we did a bit of a run-up of how many meetings, 7,000 meetings that took place to deliver the project. For the IT cutover, more than 300 people have been mobilized for two days to ensure smooth separation. We also needed to separate more than 220 physical sites. Regarding the placement of employees, the process was carefully managed to ensure that both entities had the right talent to drive their respective agenda and strategies. In fact, only about, and this is probably a surprise, maybe a surprise for you, only 10% of the people were to be allocated. We didn’t start shopping around. If people were dedicated to soda ash, right, the business which stayed with Solvay or specialty polymers, the business which was going to go to Syensqo, we didn’t start shopping around and stealing talents. I’ve seen this in my career happening. And for the 10% and mainly in the functions and the leadership, we ran what I call skill alignments. We conducted the total review of the skills and the roles required for both companies, and we matched employees accordingly. And this was done very clinically, with no emotion, and with people who were agnostic and not knowing where they are going to go. So my leadership at that time, till the last minute, which was end of October, beginning of November, they didn’t know where they were going. It’s tough for those people, right? But I told them this is the recipe for success, including myself. This was done to ensure that each company had the necessary expertise to succeed in their specific markets. And part of our project task force was focused on change management, delivering a robust engagement program for our employees. And believe it or not, during summertime, because we had gaps, like we needed two CFOs, we needed GCs, two GCs, etc. We attracted people in the organization as early as July without knowing who will be their future boss. Can you believe it? At an executive leadership level. Because, you know, when I was interviewing specifically to, you know, I had to build two leadership teams, make proposal to my former board. Who is going to be the CEOs, the CFOs, the executive leadership. We had to hire for two board memberships, right? Because we didn’t have enough and some people were going to retire. And I’ll tell you, there was complete upgrade of the board of directors. We shrunk them. We had independent chairs, right? Nominated. We had to hire from outside. So what we did is we started advertising and marketing the project itself, regardless who is going to be the boss tomorrow. And that’s amazing. I’ve never done it before like this in my career, but learned from others’ mistakes and failures. So you’re right, the choice and the placement was so critical to the success you see now in running business without discontinuity and having customers delighted and having the two companies now really running their show separately.
Per: And I have to ask, yourself, becoming the CEO of Syensqo versus Solvay, what drove that decision?
Ilham Kadri: Well, I mean, it’s a board decision, number one. This is the most important probably decision a board has to make is to nominate, name, assess, and look around at all the capabilities and what’s around to pick up the best talents at that moment, at any given moment for a company. First of all, I was truly focused on making those two good calls happening. And my satisfaction, I always have an eye on Solvay today, although it’s independence. Run very separately because you need to prepare that. And we prepared this for the past five years and definitely two years of the split. So it was really important for me to focus on the journey, not the destination. It happens as my board obviously offered to me, and I’m honored to continue the journey with the demerger with Syensqo because it has its share of challenges and opportunities, right? As a newly separated company, of course, my heart was broken to see Solvay separated a lot of people I worked with, a lot of good friends. But at the same time, I was proud to see that our internal candidates, people I groomed and I prepared, right, for the past five years, getting the job. I mean, that’s the best testimonial and best legacy I can leave or I can take with me is to have our internal people getting the jobs and having all the ex-co and the gaps filled and seeing them succeeding. And now Syensqo having, you know, a board of directors with 60% women, believe it or not, we could find them with the first North American board of directors in our history and seeing the executive leadership, very international from different backgrounds, diversity of thoughts is in the room to be able to mirror the needs of our international markets. I remember 41% of our businesses in America, 35% is in Asia Pacific. So yeah, no, I mean, extremely honored. I don’t have, obviously, the ego of the size. I mean, I was asked the question you asked me first. It’s for me more about value creation. It’s about driving an agenda and small can be really nice and rich. And we went through these splits, which made me really busy and happy. And now I call Syensqo a startup of 13,000 explorers, we call ourselves, not employees around the world. And it feels very, very, very much as a startup. It’s great because we are changing the culture of the company. We are going from farmers to hunters, from running the show as is. Although in the past five years, we’ve been straightening the balance sheets and doing really a lot of cleanup, pruning the portfolio. But now we are looking at how we can grow and outperform our markets and our peers in a very competitive environment through IP, through innovation, through customer stickiness. It was a great thing to complete the merger successfully with no interruption because that’s what kept me up at night. Day one, day two, day three are going to be running smoothly for our customers. And since now 10 months, it’s just really going smoothly. I’m so proud and honored to be in the Syensqo journey.
Per: And you’re a scientist yourself. And I think that’s very important in your choices as well. The innovation and research agenda at Syensqo is quite substantial. I’m just wondering where you’re focusing that innovation budget and that research in practice. What direction are you taking?
Ilham Kadri: You’re right, it happens I’m a scientist. That’s why I really believe in science and innovation. We’ll find solutions to the many challenges humanity is facing. Our vision at Syensqo, and this is a new purpose we launched after the demerger, or at the demerger, is we are explorers creating breakthrough technologies that advance humanity. It says it’s all. I’ll give you some numbers. 15% of our workforce is dedicated to innovation. 25% of our human capital, of our 13,000 explorers, are market-facing, so they take care of the customer first. It’s the largest number and workforce dedication I’ve ever seen in my career, where I run both commodities and specialties. We filed 1,800 patents and more than 50%, as I told you, of our portfolio is IP protected. We have a scientific advisory board with four leading academics to support our growth innovation strategy with a Nobel Prize. Proud of Benferingape in part of it. We support fundamental science, notably through the Solvay Prize, the Ernest Solvay Prize. And, you know, we have four growth platforms in batteries. I mean, we are key in batteries, be it in generation to the lithium-ion batteries you see today, but also we are working on solid-state batteries, renewable material or biotechnology. We made a lot of Voltron acquisitions, like the ceramide technology in Korea, Jingyong Bio, rosemary extract in Morocco, or our waterborne seed for agro. Thermoplastic composites, composites material go into your… The aircraft which brings you to your favorite holiday destination is still composite thermosets, composite materials which are not recyclable. We are innovating in thermoplastic which are going to be more circular. We enable green hydrogen, as I mentioned. So investment in R&D is critical for the future. And we have state-of-the-art facilities for our scientists, our customers. We invested a lot in what we call application development labs. So customers can come with their mold, with their equipment, or we have their equipment in-house and can stay with us for a day, for two, for a week, and they co-innovate with us. So we have open innovation. We engage with the global network of innovators, startups. I mean, we have, you know, venture capital platform. We have now, we launched our syensqo.ai, our own artificial intelligence capabilities. We have privatized our own chat GPT, but more than that. What is important for me is to use all the data we have sometimes and structure them, make sense out of them for our researcher, for our sales, for our employees across function. So you see, I think this is our bread and butter is really innovation. Understand what is core to us. And this is what I told you is we purify, we separate, we create, we make any object lighter. If it’s mobile, it consumes less fuel, it emits less CO2. We are synonymous to sustainability for our customers because we are their scope three. And without us, there is no green deal. There is no sustainability. There is no battery. There is no green hydrogen. There is no bio shampoo. So I think that understanding of what is your core and continue innovating, cannibalize yourself. Remember, 20% of our business each year is made with product less than five years old. So we cannibalize ourselves. But I better cannibalize myself, myself, right? Then someone else does it for me. So I think that’s important. That’s at the heart of what we do, including bringing sustainable solutions to the world.
Per: And on the sustainability side, the chemical industry is one of the really difficult ones to decarbonize, right? And it receives sometimes a bit less focus than more traditional clean tech sectors. Explain a bit how you go about this. What pathways do you find to make the chemical industry more sustainable?
Ilham Kadri: When I joined Solvay back in 2019, we were not even aligned with the Paris trajectory. So when I said we didn’t have an ambition, we thought at that time that we would never align with Paris. Believe it or not, since 2019, every year, we cut our greenhouse gas emission two times what Paris requires from us. Paris required 2%. We were doing less than 1% before 2019, and we delivered 4% every single year. So in general, the chemical industry, first of all, is the mother of all industries, right? And when I came to the job, and I moved from the United States of America to Europe in 2019, I heard you are the problem. But my answer was, we are part of the solution. There is no recycling, no circular economy, no bio-based material, no green hydrogen, no low carbon or net zero, or quite simply, no progress without chemistry. Obviously, I’m a biased, I get it. I am a chemist by background and I am a scientist. But listen, we are the scope tree of every single customer out there. We are agnostic to sectors. We serve literally every single customer or sector. And you’re right, we represent what we call hard-to-abate industries. So over the five years, I had the honor to lead Solvay. We built ambitious goals. We aimed at Solvay to become carbon neutral by 2050, which Solvay continues to carry. And I pushed Solvay at that time to, we still had coal-fired power plants in Europe. This is our ancient traditional business, soda ash, and I asked the team to move away from coal, give me one plant every two years, which we did, by the way, non-binding France and in Germany, we moved to gas in the United States of America. But now talking about Syensqo, we have even more ambitious goal. We aim to be carbon neutral by 2040. And concretely how we do that is that we have initiative. We have 47 or 50 initiatives around the world that’s accelerating our energy transition. Believe it or not, I put an internal carbon pricing globally at Solvay back in March 2019, double the European carbon pricing, right? So when it was 25 euro a ton in March 2019, it was 50 euro internally, and which was 150 in 2021, we were running it at 100. So it was a right-left pocket, but we trained our muscle. And frankly, when inflation came in with the war and precedence in fashionary environments globally, we were ready. We had already stress-tested ourselves at 100 or even more. So our roadmap is called One Planet. It focuses on three pillars, climate, nature, and better life, people. And you can see it now in 2023. By the way, since 2019, I put the same rigor in the non-financials disclosure. There is a rigor in the financials. By the way, audited by our external auditor. So Syensqo, now 50% of our carbon reduction targets by 2030 have been already achieved in 2023, and the numbers are out there. We just announced our first one-planet target for nature, focusing on water at the New York Climate Week. And we are dedicated, right, to continue that. With regards to circularity, our scientists, engineers, can make a big difference by bringing, embedding circularity by designing our products is a new way of doing the molecule because normally a product or a chemical product is devoted to be burned or put in the bin. I mean, I’m not going to put in the bin my shirt tonight. Now I’m going to clean it and use it again and again. It’s called second life and subsequent usage must be part of the plan from the outset. So, and back in 2019, the share of sustainable solutions driven by circularity in our sales was like 2%, five years later, the figure now was 9%. And now at Syensqo, we have already 13% achieved in 2023. And by the way, for me, it’s not one or the other. One or, right, is both sustainability and profitability. And at Solvay, between 2019, when I took the helm of Solvay, the return on capital employed was barely 8%, the cost of capital. And when I exited Solvay, it was 15.2 or 3%. So we almost doubled our returns while we drove sustainability. And I think the last one is the third pillar, which is about people, or we call it better life. So from safety, and it’s in the top of our priorities because we are a people company, we are a manufacturing company. Bringing more diversity in the room. We are working on minimum living wage rights across the world. And I think you have to walk before running. Profitability is not negotiable because I’m not running a charity company. My shareholders and our stakeholders are looking for creating profitable business and creating prosperity. But if you can do it while becoming cleaner, while becoming the sustainability preferred supplier. To your customers, I call it, we are a formidable competitor. We are a formidable peer, right? And you build that long-lasting, sustainable ecosystems around you. And Syensqo is all about this. If I have to rename the company, and I’m not going to do it because that’s one of the most challenging tasks in splitting, is to find a new name. But I will call it the sustainability company, and it’s a profitable one. Look at our margins.
Per: Excellent. Now, you’ve led companies across the world, Europe now, Middle East, the US, and Syensqo is a global business. I’m just wondering, do you feel like the environment in Europe is conducive to developing innovative and sustainable industries? Or do you think there’s reforms needed in order to support that going forward?
Ilham Kadri: Wow, it’s a great question. And it’s focused on Europe, right? Well, listen, I mean, Europe has its uniqueness and challenges. And I think you’ve heard me, but other, I mean, we were 72 or 73 CEOs gathering in Antwerp and pushing what we call now the Antwerp Declaration, handing it over to Ms. President Ursula von der Leyen to be elected at that time. Meanwhile, she got the job. And meanwhile, we had Draghi’s report and later reports were actually very good reports, by the way, and they include all our clinical or the call for more competitiveness in Europe. All the 10 points of Antwerp Declaration are part of it. So in general, to produce in Europe, you need a strong regulatory framework, indeed, but also the right regulatory framework. So we have a strong regulatory framework. We need the right one. We need simplification, right, which was a commitment from Ms. President, up to 25% simpler regulation, because in just five years, the former European Commission published over 14,000 pages of new regulation. It’s just too much, right? And we are still lacking a predictable legal framework. So don’t get me wrong. We also have lots of regulation in other regions, but the overall environment is often more conducive to business. In Europe, we see too often impacts assessment. They are too optimistic. They’re underestimating the cost and the impacts for industry, not looking at the global competition and the competitiveness. Competitiveness is the big elephant in the room. And I’m so happy to see now having commissioners taking care of competitiveness. And on the top of the EU, there is no single market in a way. I mean, the old vision of single markets has now to be reimagined. And as the letter report, EU legislation is also further strengthened or weakened or whatever at national level, not only adding additional burden on the industry, but also further fragmenting the single market. So the single market is not single. You know, there are 27 markets with national bureaucracy and protectionist rules. And the reform and threatening of the single market has not been really a real priority this last year. So the recent Mario Draghi report points exactly at that. We have many strategic assets in Europe, first one being people and innovation. Remember, Europe has the oldest industry infrastructure in the world. And Europe has the Green Deal and nobody has a Green Deal like. And when we met. The 72 CEOs, including American or American headquartered companies, CEOs, were saying it’s not about the why. We all believe in the Green Deal. We all want to leave a legacy. But the regulatory framework in Europe is often too heavy, contradicting itself, putting European players and the small, medium-sized companies who are part of our ecosystem. They are suppliers, they are customers. Putting those European players competitiveness at risk versus the rest of the world. So we need more coherence in the regulatory framework to achieve our policy objectives. And I think you know the Antwerp Declaration asking for industrial deal, asking for strong public funding on clean tech deployments, asking for a globally competitive provider of energy. Energy is the other big elephant in the room, focusing on the infrastructure Europe needs. Increasing the EU’s raw material security, boosting the demand. I mean, we have the green technologies. Look at our company. We have infrastructure to support the green economy, but we need demand. We need to boost demand for net zero, for the low carbon, for circular products. And starting with the green public procurement, right? We need to leverage, enforce, revive the single market. We need to support innovation frameworks, smarter with, you know, faster permitting, because permitting time is still insane in Europe. And should the structure allow us to achieve these results? And then between you and me, we need regulatory recognition, because if I do all of this and I’ve done, you know, for years, sustainable and profitable, what is my regulatory recognition, right? In terms of demand, but also in terms of capital market. We need that capital union, right, in Europe to recognize that when you do all of this, that it shows on your valuations against other peers or against… protect yourself against dirty imports. So I think that’s, you hear it in my voice, it’s clé du coeur, but it’s one about saving the industry. We cannot build new on ruins. We cannot just continue pushing this without taking care of the tissu, the framework of the existing industry, which needs support and help.
Per: It’s certainly good to hear it at the Draghi report incorporated. There are messages.
Ilham Kadri: Yeah, we need execution though.
Per: Yeah, exactly. My last question is about women leadership. You’ve been a strong force for women leadership. As you described your board having 60% women and you’ve been a role model, I think, for many women. But unfortunately, there’s not enough good examples of women leading public companies. And in this podcast, we try to interview CEOs of companies that have IPO’d and unfortunately, there’s not that many women. So what do you think is needed to see more women in these senior roles?
Ilham Kadri: Yeah, it’s a big question and I’ve seen it throughout my 30 years in the industry. I think in the prestigious Fortune 500 listing last year, less than 11% of businesses are run by women. And yeah, the reality and the cold truth is that today we are still anecdotes in the business world. What we need, we need the pipeline. It’s about education, going back to how I started my podcast with you guys. It’s about having that pipeline from elementary school. It’s not about dollies for girls and trucks for boys. I think. Women and girls can do whatever they want, and we need more in science, technology, engineering and math fields. We don’t have enough in the pipeline, and then we lose them at critical moments in their career, be it maternity, be it dual career, be it simply inclusion. So we prepare the pipeline, one of the key priorities to prepare a stronger pipeline, training. We need to work on mindsets, on the culture, mentoring and sponsoring. We invest in women’s potential. Mentor speaks to you, sponsor. Speaks about you when you are not in the room. So we need more sponsors. We don’t need women only in publicly traded companies. We need them everywhere in every company, right? We need to spread the word, right? I mean, it’s half of humanity. I mean, just there are customers, there are buyers, right? And there is a real business case for having that. It’s not charity. I mean, I always put meritocracy above everything. I’m not going to hire a woman because it’s a woman, right? I mean- I’m going to hire the best for the job because I’m a business leader. But the pipeline has to allow more diversity, regardless of, it’s not only diversity of gender, it’s thoughts, it’s background. When I talk about American business having Chinese, when I’m doing business in China, and I think this is probably where I failed to make it sticky when, if I look at my career, right? Because often we talk about diversity and statistics of the… but we forgot that inclusion is actually more important. And that I is actually, for me, became even more important than having the diversity numbers hit. So I’ve been working with Solvay and Syensqo now with more about inclusive workplaces, putting equality at the center of it as well, because if not, we won’t attract and retain diversity. Diversity is what you see, and inclusion, equality is what you do. So we extended, for example, the minimum parental leave to all co-parents to 16 weeks in our company, regardless of… The orientation, geographic location, this is one of my proudest policies with the team. If you want more women at the top and diversity at the top, think about supporting them and their partners during critical times in their career. And it’s called maternity. So since 2021, we had like 651 babies who have enjoyed their father for 16 weeks. And I tell you, they are happy fathers, they are happy mothers, they are happy co-parents and happy parents. It’s an engaged employee. It’s someone who is going to go back. To the job and want to stick in the company, right? With that company. So we are mentoring and training. We do what we call the FAA mentoring program, which is a hundred days of A for ambition training for our high potentials, leadership developments, representation and role model, because if I can do it, everybody can do it. So bring, you know, more that ambition downstairs, right? Supportive network, but also, you know, accountabilities. It all comes back to performance. And listening to the ambition, supporting through, yeah, having an inclusive environment. So enabling the ambition to be told and discussed. But at the same time, performance prevails. We are a performance company. Stop, full stop, right? And I think that’s really important. And you can see it. I mean, we did baby steps. I mean, from 24% we came to 28%. It’s going to take time on the gender side, but we have, I’m very proud to see more diversity of thoughts, right, of background. Already in my leadership, I mean, nationalities, language, you know, social background, having more Asians, right, in the headquarter in Belgium here, or having, you know, our people now, we export and we bring them to China to understand China upside in and develop a Chinese strategy in China, not from the headquarters. So I think all of this and having those career pathways and succession planning. While in advance can help identify and prepare women, minorities in general for leadership positions. An organization in general should ensure that women have access to those challenging assignments and growth opportunities. I’m in front of you because I was given an opportunity to travel around the world, to run a business in the Kingdom of Saudi Arabia, in Japan, in the US, back in Europe. You see what I mean? In different roles from sales to products management to strategy to… M&A and building manufacturing plants in the middle of the desert. And I decided then to pick them up or not, right? It’s a personal decision. So I think we need to bring more of those challenging assignments and growth opportunities to women and support them, support the ecosystem, their families as well to move on. Because if not, there is no choice between the job and… kid, right? And a dual career, because they will have very often maybe a call for choosing one career than another, specifically for young couples, right? Or older couples. So I think you just need to build that ecosystem and it needs a public engagement from the school time, from the little age. And having those teachers, again, I’m in front of you as well, because teachers believed in me because they didn’t tell me that science is for boys. And I should follow literature, right? Studies, which I could equally have chosen, right? So they believed in me. They found me very good at mathematics. They said, yeah, you can do it. And with scholarship, you can dream to go maybe even outside your birth country, Morocco. And frankly, those are the birth of a passion, of a self-belief, of self-confidence, that whatever you dream about, you can make it happen.
Per: Thank you very much, Ilham. Some great insights there today.
Ilham Kadri: Thank you.
Per: Thank you for listening to IPO Stories. In future episodes, we will host CEOs, CFOs, advisors, and other participants in the IPO process to learn from their experience. Check for me, Ilham, today. If you liked the show, please follow us on Spotify or Apple Podcasts and share the show with people around you. If you have questions about the IPO process which you’d like us to address with future guests, please get in touch at contact@ipostories.com and follow our LinkedIn account, Amundsen Investment Management.
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