Solvay hit by 40% fall to Euro34m in Q1 chemical profits

29 April 2004 13:09  [Source: ICIS news]

LONDON (CNI)--Belgium’s Solvay on Thursday blamed rising competition, a strong euro and a significant drop in caustic soda prices at the start of the year for poor first quarter results in its chemicals sector.

 

Earnings before interest and tax (EBIT) from continuing chemicals operations plummeted 40% to Euro34m ($40m) on sales down 5% at Euro578m.

 

Solvay said the first months of the year had been marked by a significant drop in caustic soda prices. In addition, the strengthening euro had weighed on export margins, it said.

 

Some mitigation of the depressed European soda ash market, however, was seen on the American side where a better balance of supply and demand allowed Solvay to increase prices there.

 

The firm said it had managed to sustain prices and volumes at its hydrogen peroxide business. However, it had been unable to compensate for the phase-out of fluoride product Solkane 141b with sufficient sales of Solkane 365mf. Fluoride activity was also adversely affected by the weak dollar.

 

At group level (chemicals, plastics, pharmaceuticals and processing), EBIT rose 10% to Euro201m despite a 2% fall in sales to Euro1.88bn.

 

The plastics sector remained solid with a 2% increase to Euro57m in EBIT from continuing operations. Sales grew by 8% to Euro508m, mainly due to a significant recovery in volumes of specialty polymers and helped by the improved electronics and semiconductor markets. Fluorinated fluids and polyvinylidene fluoride (PVDF) were also on the rise, said Solvay.

 

The firm said there had been a month-by-month improvement in the global demand for vinyls, which has gradually pushed up polyvinyl chloride (PVC) prices.

 

Earnings in the pharmaceuticals sector more than doubled to Euro93m from Euro42m despite revenues falling 5% to Euro414m. The sector benefited from signing a collaborative agreement with US pharmaceutical firm Wyeth over its mental health compounds and Wyeth’s anti-depressant Effexo XR.

 

The processing sector suffered a 11% fall to Euro15m in EBIT on sales down 3% at Euro336m.

By: Glenda Thisdell
+44 20 8652 3214

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