Solvay Q1 net income up 26% on lower charges, sales down 2%

13 May 2013 17:54  [Source: ICIS news]

LONDON (ICIS)--Solvay’s first-quarter group net income rose 26% year on year to €63m ($82m), on lower one-off charges and lower taxes, the Belgian specialty chemical producer said on Monday.

The company’s first-quarter net income was reported in accordance with International Financial Reporting Standards (IFRS).

Solvay’s first-quarter net sales on an IFRS basis fell to €3.10bn from €3.01bn in the same period a year earlier. Net sales grew 1% in its Consumer Chemicals business as well as in the Performance Chemicals segment but fell in Solvay’s Advanced Materials (9)% and in Functional Polymers (2)% units.

A 2% drop in group volumes was primarily due to "challenging market conditions in Europe for polyamide and essential chemicals, persistent sluggish electronics global demand in Rare Earth Systems and, as anticipated, lower CER [certified emission reduction] volumes in its phase-down,” Solvay said.

The company added that prices at group level were stable year on year over the quarter.

“Europe’s economic slowdown weighed on demand and trading conditions impacting all of our activities in the region,” the company said.

“Our businesses in North America and Asia performed well, but remained subdued in Latin America. Meanwhile, our growth engines continued to deliver. Furthermore, we made significant headway in strengthening our foundations, while our efficiency programs remained on track.

"The planned chlorovinyls joint venture with INEOS will be a major step in the reshaping of our portfolio and one that will substantially enhance our business profile,” it added.

Solvay’s recurring earnings before interest, tax, appreciation and depreciation (REBITDA) during the period amounted to €454m on an IFRS basis, down compared with €473m in the same period the year before.

The company said REBITDA growth in its Consumer Chemicals and Advanced Materials businesses performed well but it was insufficient to make up for the decline in Performance Chemicals and Functional Polymers.

“As expected, the lower sales of carbon credits [CER], an activity which is being phased-out, weighed on the Group’s performance overall. However, in a challenging trading environment, higher selling prices more than offset a rise in raw materials and energy costs year-on-year,” it added.

Looking ahead, Solvay said it does not expect any significant improvement in the macroeconomic environment but still forecasts it will improve 2013 REBITDA compared with 2012 "excluding the impacts of the exceptional pricing of guar and the sale of carbon credits (combined totalling €190m in 2012).

($1 = €0.77)

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

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