BRUSSELS, BELGIUM--(Marketwire - October 28, 2010) -
Press release
EMBARGO: Brussels, October 28, 2010 at 7:30 AM
REGULATED INFORMATION
- Sales (EUR 5,461 million): at constant scope 1 , up by 22% compared to
the end of September 2009, in the context of a more sustained global
activity; up by 21% in the third quarter
- Operating result 2 (EUR 478 million 3)
- Overall, the operating result benefited from efforts to control costs
- Chemicals (EUR 230 million): up by 18% compared to the end of September
2009 thanks toimprovement in sales volumes across all activities
- Plastics (EUR 261 million): clearly improved compared to the first nine
months of 2009 (EUR 56 million) especially thanks to significant increase
in sales volumes in Specialty Polymers
- Net income of Group (EUR 1,807 million) up compared to the end of
September 2009 thanks to the capital gains realized on the sale of the
pharmaceuticals activities and on the sale of Inergy Automotive Systems; in
the third quarter, impairment on industrial assets, primarily in soda ash
in Europe, with an impact on net income of the Group of EUR -197 million.
- Interim dividend of 0.90 EUR net per share (1.20 EUR gross per share)
Group sales at the end of September 2010 amounted to EUR 5,461 million. At
constant scope 1 , they were up by 22%. Sales from the Chemicals Sector
(EUR 2,226 million) improved by 8% compared to the end of September 2009.
Sales volumes, significantly up (+14%), compensated for the lower sales
prices (-10%). Sales from the Plastics Sector (EUR 2,923 million) were
clearly improved (+36% at constant scope 1 compared to nine months of
2009), especially thanks to significant increase in sales volumes in
Specialty Polymers, up by 42% compared to last year.
Recurring Group operating result (REBIT 2-4 ) from the first nine months of
2010 amounted to EUR 478 million. REBIT from continuing operations was
clearly improved compared to last year, both on a cumulative basis (EUR 447
million at the end of September 2010, that is +98% at constant scope 1 )
and on a quarterly basis (EUR 149 million in the third quarter 2010, that
is +60% at constant scope 1 ).
The Group's operating margin (REBIT on sales), excluding the
pharmaceuticals activities, was 8.7% at the end of September 2010 compared
to 5.2% at the end of September 2009; it reached 8.8% in the third quarter
of 2010.
The net income of the Group (EUR 1,807 million) was up compared to the end
of September 2009 thanks to the capital gain realized on the sale of the
pharmaceuticals activities (EUR 1.7 billion net of taxes). Net income of
the third quarter of 2010 (EUR 18 million) was impacted, on the one hand,
positively by the capital gain realized on the sale of Inergy Automotive
Systems (EUR 130 million after taxes) and, on the other hand, negatively by
impairments - non cash - on industrial assets (impact after taxes of EUR -
197 million). These impairments involve almost exclusively the soda ash
activity in Europe confronted with the ongoing weakness in some of its
markets, especially flat glass used by construction. Industrial measures
have been taken: capital expenditures have been drastically reduced and
will remain at a low level as long as end markets remain sluggish. Our
commercial policy will be revisited and if insufficient, new industrial
measure will be considered.
REBITDA 2-5 of the Group amounted to EUR 798 million. Excluding
pharmaceuticals activities, it was up by 50% compared to the end of
September 2009.
On October 27, 2010, the Board of Directors decided on payment, for the
current year, of an interim dividend of 0.90 EUR net per share (1.20 EUR
gross per share), which corresponds, as usual, to 40% (rounded) of the
total dividend of last year.
Following the sale of the pharmaceuticals activities on February 15, 2010
and of its 50% stake in Inergy Automotive Systems on September 8, 2010 and
in anticipation of reinvestment of these funds in industrial activities,
the Solvay Group is in a net cash surplus situation (EUR 2,881 million, or
42% of equity).
Chemicals Sector sales at the end of September 2010 (EUR 2,226 million)
improved by 8% compared to last year. Sales volumes, up significantly
(+14%), compensated for the lower sales prices (-10%) - especially in soda
ash. In the third quarter of 2010, sales (EUR 782 million) improved by 19%.
At the end of September 2010, the operating result (EUR 230 million) was up
by 18% compared to last year (EUR 195 million); in the third quarter, it
amounted to EUR 83 million compared to EUR 62 million from last year. This
increase involves all of the Chemicals activities with the exception of
soda ash. This is explained, on the one hand, by the significant increase
in sales volumes and, on the other hand, by energy expenses that were under
control. These expenses, however, are expected to increase in the fourth
quarter.
Plastics Sector sales were clearly up compared to last year; at constant
scope 6 , they improved by 36% on a cumulative basis (EUR 2,923 million at
the end of September 2010) and by 23% on a quarterly basis (EUR 918 million
in the third quarter of 2010). This can be explained by the sharp increase
in sales volumes in Specialty Polymers. Although all regions of the world
were involved, this improvement was particularly notable in Asia. In
Vinyls, improvement in sales was confirmed in the third quarter. SolVin was
able to benefit from the slight recovery in demand in a context of supply
that was temporarily more limited. Operating result from the Plastics
Sector (EUR 261 million at the end of September 2010 and EUR 88 million in
the third quarter of 2010) was clearly improved compared to last year (EUR
56 million at the end of September 2009 and EUR 42 million in the third
quarter of 2009). This improvement was observed in both Vinyls and
Specialty Polymers, although it was the latter that showed the highest
growth in results.
The purchase by Plastic Omnium of Solvay's stake in Inergy Automotive
Systems closed on September 8, 2010. The capital gain realized by Solvay on
this sale amounted to EUR 130 million after taxes.
The Group's operating result benefits from the improvements in
competitiveness and in sales volumes. Solvay expects a higher REBIT in
Chemicals compared to last year. Taking into account the significantly
stronger demand for specialty polymers experienced in the first nine
months, Solvay will realize a sharply improved REBIT in Plastics compared
to the low level of last year. This year, the priority continues to go to
the optimal reinvestment after the disposal of the pharmaceuticals
activities.
SOLVAY Group - Summary Financial Information
+-------------------------+--------------+--------------+-----------------+
|Million EUR (except for |9 months 2009 |9 months 2010 |9 months 2010/ 9 |
|per-share figures in EUR)| | |months 2009 |
+-------------------------+--------------+--------------+-----------------+
|Sales | 6,286 | 5,461 |-13% |
+-------------------------+--------------+--------------+-----------------+
|REBIT | 641 | 478 |-25% |
+-------------------------+--------------+--------------+-----------------+
|REBIT - continuing | 222 | 447 |102% |
|operations | | | |
+-------------------------+--------------+--------------+-----------------+
|REBIT - discontinued | 419 | 31 |ns |
|operations | | | |
+-------------------------+--------------+--------------+-----------------+
|REBIT/Sales | 10.2% | 8.8% |ns |
+-------------------------+--------------+--------------+-----------------+
|Non-recurring items | -64 | -239 |ns |
+-------------------------+--------------+--------------+-----------------+
|EBIT7 | 577 | 239 |-59% |
+-------------------------+--------------+--------------+-----------------+
|Charges on net | -167 | -139 |-16% |
|indebtedness | | | |
+-------------------------+--------------+--------------+-----------------+
|Income on investments | -3 | -1 |-60% |
+-------------------------+--------------+--------------+-----------------+
|Capital gain Pharma | 0 | 1,703 |ns |
+-------------------------+--------------+--------------+-----------------+
|Earnings before taxes | 407 | 1,802 |ns |
+-------------------------+--------------+--------------+-----------------+
|Income taxes | -53 | 4 |ns |
+-------------------------+--------------+--------------+-----------------+
|Net income of the Group | 354 | 1,807 |ns |
+-------------------------+--------------+--------------+-----------------+
|Net income (Solvay share)| 328 | 1,779 |ns |
+-------------------------+--------------+--------------+-----------------+
|Total depreciation | 395 | 613 |55% |
+-------------------------+--------------+--------------+-----------------+
|REBITDA | 1,011 | 798 |-21% |
+-------------------------+--------------+--------------+-----------------+
|Cash flow | 749 | 2,420 |ns |
+-------------------------+--------------+--------------+-----------------+
|Results per share8 | 3.99 | 21.85 |ns |
+-------------------------+--------------+--------------+-----------------+
|Net debt to equity ratio | 36% | -42% | |
+-------------------------+--------------+--------------+-----------------+
+-------------------------+-----------------+-----------------+
|Million EUR (except for |3rd quarter 2009 |3rd quarter 2010 |
|per-share figures in EUR)| | |
+-------------------------+-----------------+-----------------+
|Sales | 2,235 | 1,700 |
+-------------------------+-----------------+-----------------+
|REBIT | 302 | 149 |
+-------------------------+-----------------+-----------------+
|REBIT - continuing | 95 | 149 |
|operations | | |
+-------------------------+-----------------+-----------------+
|REBIT - discontinued | 206 | 0 |
|operations | | |
+-------------------------+-----------------+-----------------+
|REBIT/Sales | 13.5% | 8.8% |
+-------------------------+-----------------+-----------------+
|Non-recurring items | -30 | -123 |
+-------------------------+-----------------+-----------------+
|EBIT7 | 272 | 26 |
+-------------------------+-----------------+-----------------+
|Charges on net | -63 | -48 |
|indebtedness | | |
+-------------------------+-----------------+-----------------+
|Income on investments | 0 | -2 |
+-------------------------+-----------------+-----------------+
|Capital gain Pharma | 0 | 8 |
+-------------------------+-----------------+-----------------+
|Earnings before taxes | 209 | -15 |
+-------------------------+-----------------+-----------------+
|Income taxes | -36 | 33 |
+-------------------------+-----------------+-----------------+
|Net income of the Group | 173 | 18 |
+-------------------------+-----------------+-----------------+
|Net income (Solvay share)| 160 | 11 |
+-------------------------+-----------------+-----------------+
|Total depreciation | 133 | 355 |
+-------------------------+-----------------+-----------------+
|REBITDA | 426 | 249 |
+-------------------------+-----------------+-----------------+
|Cash flow | 306 | 373 |
+-------------------------+-----------------+-----------------+
|Results per share8 | 1.95 | 0.13 |
+-------------------------+-----------------+-----------------+
|Net debt to equity ratio | | |
+-------------------------+-----------------+-----------------+
+-------------------------+--------------------+
|Million EUR (except for |3rd quarter 2010/ |
|per-share figures in EUR)|3rd quarter 2009 |
+-------------------------+--------------------+
|Sales |-24% |
+-------------------------+--------------------+
|REBIT |-51% |
+-------------------------+--------------------+
|REBIT - continuing |57% |
|operations | |
+-------------------------+--------------------+
|REBIT - discontinued |-100% |
|operations | |
+-------------------------+--------------------+
|REBIT/Sales |ns |
+-------------------------+--------------------+
|Non-recurring items |ns |
+-------------------------+--------------------+
|EBIT7 |-90% |
+-------------------------+--------------------+
|Charges on net |-23% |
|indebtedness | |
+-------------------------+--------------------+
|Income on investments |ns |
+-------------------------+--------------------+
|Capital gain Pharma |ns |
+-------------------------+--------------------+
|Earnings before taxes |ns |
+-------------------------+--------------------+
|Income taxes |ns |
+-------------------------+--------------------+
|Net income of the Group |-90% |
+-------------------------+--------------------+
|Net income (Solvay share)|ns |
+-------------------------+--------------------+
|Total depreciation |167% |
+-------------------------+--------------------+
|REBITDA |-42% |
+-------------------------+--------------------+
|Cash flow |22% |
+-------------------------+--------------------+
|Results per share8 |ns |
+-------------------------+--------------------+
|Net debt to equity ratio | |
+-------------------------+--------------------+
Notes on Solvay Group summary financial information
Non-recurring items amounted to EUR -239 million at the end of September
2010. They include impairments on industrial assets posted in the third
quarter of EUR -261 million (before taxes), primarily in soda ash in Europe
due to the persistent weakness of some markets in this line of business,
the capital gain of EUR 139 million (before taxes) on the sale of Inergy
Automotive Systems, an asset write-off of EUR 20 million related to the
closed hydrogen peroxide unit at Bitterfeld, other restructuring charges on
fluorinated products in Germany and in Italy for EUR 20 million and an
environmental provision of EUR 19 million for remediation and containment
works in Spinetta (Italy).
Charges on net indebtedness amounted to EUR -139 million at the end of
September 2010 compared to EUR -167 million at the end of September 2009.
Charges on borrowing amounted to EUR -108 million. Gross financial debt is
at 82% covered at an average fixed rate of 5.1% with a duration of 5.4
years; the first significant maturity for debt reimbursement will not occur
until 2014. Interest on cash deposits and investments amounted to EUR 16
million. It should be recalled that the proceeds from the sale of the
pharmaceuticals activities have been invested in short duration government
bonds and highest rated treasury instruments since February 15, 2010.
Annual cash yield at the end of September 2010 was 0.4%.
The capital gain realized on the sale of the pharmaceuticals activities
amounted to EUR 1.7 billion net of taxes.
Income taxes at the end of September 2010 amounted to EUR +4 million
compared to EUR -53 million last year. The tax amount posted in the third
quarter of 2010 (EUR +33 million) is explained by a deferred tax asset of
EUR 64 million on impairments - non cash - of industrial assets (non-
recurring charge of EUR 261 million before taxes). Aside from this
exceptional item and not considering the capital gains realized on the sale
of the pharmaceuticals activities and on the sale of Inergy Automotive
Systems, the effective tax rate would be 24%.
The net income of the Group (EUR 1,807 million) was improved compared to
the end of September 2009 thanks to the capital gain realized on the sale
of the pharmaceuticals activities (EUR 1.7 billion net of taxes). The "non-
controlling interests" amounted to EUR 27 million. The net result per share
amounted to 21.85 EUR (compared to 3.99 EUR at the end of September 2009).
Our conservative policy on capital expenditures in the wake of a fragile
recovery and weak end markets for soda ash in Europe and USA has allowed us
to generate free cash flow from continuing operations - thus excluding any
return on the reinvestment of the proceeds from the sale of the
pharmaceutical sector - of EUR 160 million at the end of September 2010. It
includes an amount of EUR -206 million related to the substitution of a
previously issued guarantee by a prepayment in the first quarter of 2010,
of fines imposed in 2006 by the European Commission concerning peroxygen
antitrust cases (still in appeal), as well as the proceeds from the sale of
our 50% stake in Inergy Automotive Systems (EUR 268 million). It should be
noted that the Group continues its efforts regarding the rigorous
management of working capital. Industrial working capital of continuing
operations amounted to EUR 1,179 million at the end of September 2010,
slightly up (EUR 77 million) compared to the end of September 2009 in a
clearly improved sales context (+21%).
RESULTS BY SEGMENT 9
+-------------------------+--------------+--------------+-----------------+
|Million EUR |9 months 2009 |9 months 2010 |9 months 2010 / 9|
| | | |months 2009 |
+-------------------------+--------------+--------------+-----------------+
|GROUP SALES10 | 6,286 | 5,461 |-13% |
+-------------------------+--------------+--------------+-----------------+
|Chemicals | 2,064 | 2,226 |8% |
+-------------------------+--------------+--------------+-----------------+
|Plastics | 2,180 | 2,923 |34% |
+-------------------------+--------------+--------------+-----------------+
|Sales - continuing | 4,243 | 5,149 |21% |
|operations | | | |
+-------------------------+--------------+--------------+-----------------+
|Pharmaceuticals | 2,043 | 312 |ns |
|Discontinued Operations | | | |
+-------------------------+--------------+--------------+-----------------+
|REBIT GROUP | 641 | 478 |-25% |
+-------------------------+--------------+--------------+-----------------+
|Chemicals | 195 | 230 |18% |
+-------------------------+--------------+--------------+-----------------+
|Plastics | 56 | 261 |ns |
+-------------------------+--------------+--------------+-----------------+
|Corporate and Business | -12 | -24 |100% |
|Support | | | |
+-------------------------+--------------+--------------+-----------------+
|New Business Development | -17 | -19 |13% |
+-------------------------+--------------+--------------+-----------------+
|REBIT -continuing | 222 | 447 |+102% |
|operations | | | |
+-------------------------+--------------+--------------+-----------------+
|Pharmaceuticals | 419 | 31 |ns |
|Discontinued Operations | | | |
+-------------------------+--------------+--------------+-----------------+
|REBITDA GROUP | 1,011 | 798 |-21% |
+-------------------------+--------------+--------------+-----------------+
|Chemicals | 320 | 373 |16% |
+-------------------------+--------------+--------------+-----------------+
|Plastics | 213 | 432 |103% |
+-------------------------+--------------+--------------+-----------------+
|Corporate and Business | -6 | -19 |ns |
|Support | | | |
+-------------------------+--------------+--------------+-----------------+
|New Business Development | -17 | -19 |15% |
+-------------------------+--------------+--------------+-----------------+
|REBITDA - continuing | 510 | 767 |50% |
|operations | | | |
+-------------------------+--------------+--------------+-----------------+
|Pharmaceuticals - | 501 | 31 |ns |
|Discontinued Operations | | | |
+-------------------------+--------------+--------------+-----------------+
+-------------------------+-----------------+-----------------+
|Million EUR |3rd quarter 2009 |3rd quarter 2010 |
| | | |
+-------------------------+-----------------+-----------------+
|GROUP SALES10 | 2,235 | 1,700 |
+-------------------------+-----------------+-----------------+
|Chemicals | 658 | 782 |
+-------------------------+-----------------+-----------------+
|Plastics | 827 | 918 |
+-------------------------+-----------------+-----------------+
|Sales - continuing | 1,484 | 1,700 |
|operations | | |
+-------------------------+-----------------+-----------------+
|Pharmaceuticals - | 751 | 0 |
|Discontinued Operations | | |
+-------------------------+-----------------+-----------------+
|REBIT GROUP | 302 | 149 |
+-------------------------+-----------------+-----------------+
|Chemicals | 62 | 83 |
+-------------------------+-----------------+-----------------+
|Plastics | 42 | 88 |
+-------------------------+-----------------+-----------------+
|Corporate and Business | -3 | -15 |
|Support | | |
+-------------------------+-----------------+-----------------+
|New Business Development | -6 | -7 |
+-------------------------+-----------------+-----------------+
|REBIT - continuing | 95 | 149 |
|operations | | |
+-------------------------+-----------------+-----------------+
|Pharmaceuticals | 206 | 0 |
|Discontinued Operations | | |
+-------------------------+-----------------+-----------------+
|REBITDA GROUP | 426 | 249 |
+-------------------------+-----------------+-----------------+
|Chemicals | 105 | 128 |
+-------------------------+-----------------+-----------------+
|Plastics | 94 | 141 |
+-------------------------+-----------------+-----------------+
|Corporate and Business | -1 | -13 |
|Support | | |
+-------------------------+-----------------+-----------------+
|New Business Development | -6 | -7 |
+-------------------------+-----------------+-----------------+
|REBITDA - continuing | 192 | 249 |
|operations | | |
+-------------------------+-----------------+-----------------+
|Pharmaceuticals - | 233 | 0 |
|Discontinued Operations | | |
+-------------------------+-----------------+-----------------+
+-------------------------+--------------------+
|Million EUR |3rd quarter 2010/ |
| |3rd quarter2009 |
+-------------------------+--------------------+
|GROUP SALES10 |-24% |
+-------------------------+--------------------+
|Chemicals |19% |
+-------------------------+--------------------+
|Plastics |11% |
+-------------------------+--------------------+
|Sales - continuing |15% |
|operations | |
+-------------------------+--------------------+
|Pharmaceuticals - |ns |
|Discontinued Operations | |
+-------------------------+--------------------+
|REBIT GROUP |-51% |
+-------------------------+--------------------+
|Chemicals |33% |
+-------------------------+--------------------+
|Plastics |112% |
+-------------------------+--------------------+
|Corporate and Business |ns |
|Support | |
+-------------------------+--------------------+
|New Business Development |16% |
+-------------------------+--------------------+
|REBIT – continuing |57% |
|operations | |
+-------------------------+--------------------+
|Pharmaceuticals – |ns |
|Discontinued Operations | |
+-------------------------+--------------------+
|REBITDA GROUP |-42% |
+-------------------------+--------------------+
|Chemicals |22% |
+-------------------------+--------------------+
|Plastics |50% |
+-------------------------+--------------------+
|Corporate and Business |ns |
|Support | |
+-------------------------+--------------------+
|New Business Development |18% |
+-------------------------+--------------------+
|REBITDA – continuing |29% |
|operations | |
+-------------------------+--------------------+
|Pharmaceuticals – |ns |
|Discontinued Operations | |
+-------------------------+--------------------+
It should be noted that the "New Business Development" (NBD) segment in
2009 showed a REBIT of EUR -25 million, constituted for the most part of
research costs. Included in 2009 in the "Corporate and Business Support"
segment, it has been part of specific reporting since January 1, 2010.
The R&D budget for NBD in 2010 amounted to about EUR 30 million.
1 The primary variations in perimeter between nine months of 2009 and nine
months of 2010 are shown on page 15 of the press release.
2 The cost of discounting provisions (EUR 49 million as of September 30,
2009 and EUR 40 million on September 30, 2010) was transferred to financing
rather than operating charges in line with IAS19, considering the financial
nature of this item.
3 Includes the operating result of the 5 segments of the Group (Chemicals,
Plastics, New Business Development, Corporate and Business Support and
Pharmaceuticals (up to February 15, 2010)).
4 REBIT : measure of operating performance (this is not an IFRS concept as
such)
5 REBITDA : REBIT, before recurring depreciation and amorization
6 The primary variations in the perimeter between nine months 2009 and nine
months 2010 are shown on the page 15 of this press release.
7 EBIT : results before financial charges and taxes
8 Calculated on the basis of the weighted average of the number of shares
in the period, after deduction of treasury shares and own shares purchased
to cover the stock option program, or a total of 82,136,569 shares for nine
months 2009 and 81,431,355 shares for nine months 2010
9 Results by segment include results from the five segments of the Group
(until February 15, 2010 for Pharma).
10 These are sales after elimination of inter-company sales.
The full press release is available on http://www.solvay-investors.com/
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