UK Markets open in 2 hrs 3 mins

Belgium's Solvay hikes 2022 profit forecast after first-quarter beat

  • Oops!
    Something went wrong.
    Please try again later.
·2-min read
FILE PHOTO: The logo of Belgian chemical group Solvay is seen at its headquarters in Brussels
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

(Reuters) - Solvay SA on Wednesday raised its full-year core profit forecast after the Belgian chemicals group reported higher-than-expected first-quarter earnings, helped by price increases and volume growth.

The group, which makes lithium derivatives for batteries, now expects its full-year underlying earnings before interest, tax, depreciation and amortization (EBITDA) to grow by mid- to high-single digits, after it had previously forecast mid-single digit percentage growth.

"The critical and differentiated solutions that we provide to our customers enabled us to increase prices and more than compensate for the sharp cost increases in raw materials and energy," Chief Executive Officer Ilham Kadri said in a statement.

Solvay, which in March suspended its businesses and investments in Russia, said revenue from Russian activities represented less than 1% of the group's sales last year, and that the suspension had little impact.

"We have certainly much more than compensated for that through the growth in our businesses," Chief Financial Officer Karim Hajjar told Reuters.

Asked whether the company was planning to sell all or part of its Russian businesses, Kadri said no decision had been made on that front.

Solvay, which estimates between 5% and 10% of its gas may originate indirectly from Russia, said it was looking at other options, such as switching to alternative fuels.

"We are negotiating gas containment plans with industrial partners. We are going ahead with some key projects like LNG (liquid natural gas) pipeline contracting," Kadri said in a phone interview.

Solvay announced in March that it would separate into two independent public companies in 2023, one focused on chemicals and the other on specialty materials and solutions.

"For now, the timeline is confirmed and we are making progress since the announcements we did," the CEO said, adding that the reaction from investors has been "very positive".

Solvay, whose products range from base chemicals such as soda ash to speciality polymers, reported first-quarter EBITDA up 22.1% from a year earlier to 712 million euros ($749.24 million), above a company-provided consensus of 605 million euros.

Net sales in the January to March quarter were up 28.8% at 3.06 billion euros, beating a company-provided consensus of 2.76 billion euros.

($1 = 0.9503 euros)

(Reporting by Federica Mileo in Gdansk; editing by Bill Berkrot)

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting