UpdateSolvay’s Q4 net loss grows to €23m on demand slowdown

16 February 2012 11:53  [Source: ICIS news]

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LONDON (ICIS)--Solvay reported a fourth-quarter net loss of €23.0m ($30m) from a loss of €2.0m in the same period a year earlier, as the company witnessed a significant slowdown in demand for vinyls in Europe, and to a lesser extent in its polyamide segment, it said on Thursday.

The Belgian producer’s fourth-quarter net loss was reported in accordance with the International Financial Reporting Standards (IFRS).

Solvay’s fourth-quarter net sales on an IFRS basis nearly doubled to €3.0bn in the fourth quarter from €1.51bn in the same period a year earlier.

The company’s recurring earnings before interest, taxes, depreciation and amortisation (REBITDA) on an IFRS basis rose by 53.7% year on year to €355m in the fourth quarter of 2011, the company said.

“The first contribution by Rhodia to the group’s quarterly results is substantial. It confirms the ambition pursued to create a leading chemical player serving highly diversified markets globally, with reduced cyclical exposure,” the company said.

“With 2/3 of its sales in resilient market segments and 40% in fast growing regions, Solvay is well positioned to capture growth opportunities in promising business segments responding to the industry’s undergoing megatrends,” it added.

For the full year of 2011, the company’s net income on an IFRS basis fell steeply to €247m from €1.78bn in 2010, despite its net sales growing 35% year on year to €8.0bn. Solvay’s REBITDA rose by 30% to €1.21bn.

On a pro forma basis, which shows figures as if the acquisition of French specialty chemicals firm Rhodia had become effective from the 1 January, Solvay’s net sales for 2011 amounted to €12.69bn, an improvement of 14% year on year, as volumes across its business segments all increased.

The group’s REBITDA on a pro forma basis for 2011 amounted to €2.07bn, up 11% from 2010.

Solvay’s plastics segment recorded its 2011 net sales up by 10% year on year to €3.69bn on a pro forma basis while its REBITDA rose 6% to €590m, despite a slowdown in demand in electronics and photovoltaic cells.

Net sales in the group’s chemical segment in 2011 rose 10% year on year to €2.84bn, while its REBITDA grew by 4% to €491m. Rhodia’s 2011 net sales on a pro forma basis increased by 20% to €6.17bn, while its REBITDA grew 16% year on year to €1.12bn.

Looking ahead, the company said: “In an uncertain economic environment in Europe and in some segments of the demand, but differentiated from one world region to another, overall market conditions seem to progressively recover”.

With regard to the integration process combining Rhodia’s businesses, Solvay said cost savings programs related to procurement and logistics have been launched as planned and will generate savings of €250m per year once they are fully effective within 3 years. New corporate function organisations should be put into place in the first half of this year, Solvay added.

Solvay acquired Rhodia for €3.4bn in August 2011.

($1 = €0.77)

Additional reporting by Nurluqman Suratman

By: Franco Capaldo
+44 (0)20 8652 3214

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