UpdateBelgium's Solvay Q2 net profit up 2% on higher selling prices

27 July 2012 10:38  [Source: ICIS news]

(adds segment detail, further comment throughout)

SolvayLONDON (ICIS)--Solvay’s second-quarter adjusted net profit rose by 2% year on year to €258m ($319m), buoyed by higher selling prices and favourable currency effects, the Belgium-based producer said on Friday.

The comparable 2011 second-quarter results are presented on a pro forma basis (as if the acquisition of French specialty chemicals firm Rhodia had become effective from the 1 January 2011).

The company’s net sales during the quarter rose by 1% year on year to €3.33bn reflecting an improvement in its Chemicals segment and in Rhodia. A fall in volumes was more than compensated by a rise in average selling prices and favourable currency effects, Solvay said.

The group’s second-quarter earnings before interest and taxes (EBIT) were up by 2% at €466m.

“In the current uncertain environment, the good performance achieved in the quarter highlights the group’s solid fundamentals,” the company said.

“Our growth engines continued to deliver strongly, mostly compensating for challenged cycle-sensitive businesses. We reinforced our expansion in high-growth countries, namely in China and India, with the commissioning of new production and R&D facilities. The building of the new Solvay is now well on-track and we are committed to realize our value-creative ambition,” it added.

Solvay’s recurring earnings before interest, tax, appreciation and depreciation (REBITDA) during the period were down by 6% year on year at €565m, partly because of lower demand and a margin squeeze in its Vinyls and Polymide Materials businesses, the company said.

The group’s Plastics segment reported sales in the second quarter up by 1% year on year to €998m, with REBITDA falling 27% to €146m, as its Vinyls business continued to suffer from slow demand and difficult market conditions.

Its Chemicals business saw sales in the quarter rise 5% year on year to €760m, while REBITDA increased 8% to €139m.

Rhodia, which Solvay acquired for €3.4bn in August 2011, saw second-quarter sales fall 1% year on year to €1.57bn, although its REBITDA grew 3% to €318m driven by strong results from its Consumer Chemicals and Acetow & Eco Services businesses.

For the first six months of this year, Solvay's net income fell by 25% year on year to €383m, while sales rose by 2% at €6.57bn, it said.

“Despite the slowing in demand observed in June in some business segments, the ongoing major transformation of the group combined with our ability to fully deliver on our cost saving targets lead Solvay to reiterate its expectation to achieve a full year REBITDA similar to the strong 2011 pro forma level,” the company added.

($1 = €0.81)

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

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