SOLVAY (EBR:SOLB) 2018 first nine months results: Volume growth sustained

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08/11/2018 07:00

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Underlying EBITDA: EUR1,725 million -1% (+6% organically [1])
  • Sales and underlying EBITDA grew 6% organically, driven by higher volumes in each operating segment and pricing power.
  • Underlying EBITDA fell 1% overall due to forex conversion headwinds and a small reduction in scope.
  • Third quarter volume growth was softer in Advanced Materials in specific end-markets.
  • EBITDA margin was down slightly at 22%.
  • Advanced Materials: EUR922 million -2% (+3% organically [1])
    • Volume growth continued in polymers and composites technologies for aeronautics, automotive and healthcare.
    • Sales dipped in smart devices and fluorinated gases used in insulation, mainly in the third quarter, as anticipated.
  • Advanced Formulations: EUR403 million +4% (+16% organically [1])
    • Volume growth was strong across end-markets, although the growth rate in the North American shale oil & gas market is stabilizing.
    • Pricing power more than compensated for higher raw material prices.
  • Performance Chemicals: EUR557 million -4% (+2% organically [1])
    • Solid demand and improving soda ash prices limited margin erosion.
    • Peroxides volumes and prices rose in tight market conditions.
Underlying EPS from continuing operations: EUR6.91 +11%
  • The 19% reduction of net financial charges reflected continued deleveraging and optimization of Solvay`s capital structure.
  • Underlying tax rate was 2.5 percentage points lower at 25%.

Free cash flow from continuing operations: EUR275 million vs EUR446 million in 2017
  • Free cash flow from continuing operations was lower than in 2017 due to higher working capital needs.
  • Free cash flow to Solvay shareholders increased 7% to EUR271 million on a strong contribution from discontinued operations and lower financial payments.
  • Interim dividend of EUR1.44 gross per share, a 4.3% increase [2], will be payable on January 17, 2019.
2018 outlook confirmed
  • Under current circumstances, Solvay expects underlying EBITDA to grow organically at around 5% to 6%, within the range of its initial guidance. Free cash flow from continuing operations is still expected above the 2017 level.
CEO Jean-Pierre Clamadieu: Volumes continued to increase throughout the nine-month period, resulting in 6% organic growth of sales and EBITDA. Advanced Formulations generated strong growth, Performance Chemicals proved resilient, and in Advanced Materials, robust growth in the aerospace and automotive markets compensated for the anticipated softness in smart devices toward the end of the period. While attentive to heightened macro-economic volatility, we expect EBITDA growth and free cash flow generation to range within our initial forecast.
[1] Excluding forex conversion and scope effects
[2] As in previous years, the interim dividend corresponds to 40% of the full year dividend of the prior year.
All comparisons are made with the equivalent period of the year before, except where mentioned explicitly otherwise.

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Solvay is an advanced materials and specialty chemicals company, committed to developing chemistry that addresses key societal challenges. Solvay innovates and partners with customers worldwide in many diverse end markets. Its products are used in planes, cars, batteries, smart and medical devices, as well as in mineral and oil and gas extraction, enhancing efficiency and sustainability. Its lightweighting materials promote cleaner mobility, its formulations optimize the use of resources and its performance chemicals improve air and water quality. Solvay is headquartered in Brussels with around 26,800 employees in 61 countries. Net sales were EUR10.1 billion in 2017, with 90% from activities where Solvay ranks among the world`s top 3 leaders, resulting in an EBITDA margin of 22%. Solvay SA (SOLB.BE) is listed on Euronext Brussels and Paris (Bloomberg: SOLB.BB - Reuters: SOLB.BR) and in the United States its shares (SOLVY) are traded through a level-1 ADR program.  

Financial figures take into account the planned divestment of Polyamides.

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