Solvay SA's 1st Quarter 2009 Results

BRUSSELS, BELGIUM--(Marketwire - May 12, 2009) -

REGULATED INFORMATION

Good resilience of operating result (EUR 142 million) in the first quarter, up from the fourth quarter of 2008 (EUR 125 million).

Due to the global crisis, a decrease compared to the high result of the first quarter of 2008 (EUR 300 million)

- Sales (EUR 1,985 million) down by 16% compared to the first quarter of 2008. Evolution by Sector is contrasted.

- Operating result (EUR 142 million):

-- Pharmaceuticals (EUR 91 million): comparable to the result in the first quarter of 2008, aside from miscellaneous income (EUR 41 million in the first quarter of 2008)

-- Chemicals (EUR 56 million) and Plastics (EUR 3 million): up from the fourth quarter of 2008, despite the persistence of the very severe global economic crisis

- Net income of Group (EUR 98 million), down from the net result of EUR 220 million in the first quarter of 2008; strong increase compared to the fourth quarter of 2008 (EUR 23 million)

- Solid financial structure:

-- Net debt to equity ratio: 37%

-- No significant maturity dates for debt reimbursement before 2014

Group sales (EUR 1,985 million) were lower than the first quarter of 2008 (- 16%). Evolution by Sector is contrasted: Pharmaceuticals -3%, Chemicals - 5%, Plastics -34%. The level of activity in the first quarter of 2009 remained weak in Chemicals and Plastics, in the context of the crisis that has gravely affected the world economy since last year.

Group operating result (REBIT1; EUR 142 million) were down by 53% compared to the good result of the first quarter of 2008. However, it is up compared to the last quarter of 2008 in the Chemicals and Plastics sectors. Aside from the miscellaneous income in the first quarter of 2008 (EUR 41 million from the sale of a non-strategic product and collection of a milestone payment linked to Luvox® CR), the operating result for the Pharmaceuticals Sector would be similar to last year. Commercial and administrative costs are down by 3% (EUR 10 million). The operating margin (REBIT on sales) of the Group was 7.2% in the first quarter of 2009 compared to 12.6% in the first quarter of 2008.

The net income of the Group (EUR 98 million) decreased by 55% compared to the first quarter of 2008; it was strongly up compared to the fourth quarter of 2008 (EUR 23 million).

REBITDA2 was EUR 262 million, down 36% compared to the high level of the first quarter of 2008.

The net debt to equity ratio reached 37% at the end of March 2009 compared to 33% at the end of March 2008, reflecting the Group's policy of rigorous balance sheet management. It should be noted that the first significant maturity date for debt reimbursement will not occur until 2014.

Sales from the Pharmaceuticals Sector (EUR 632 million) were down 3% compared to the first quarter of 2008, despite sustained growth of certain drugs (in particular Androgel® and Creon®). Aside from the impact of Marinol® (EUR -23 million) which became generic in June 2008, it should be recalled that, following the approval of TrilipixTM by the FDA in the United States, revenues of EUR 39 million were recorded in December 2008 on sales to supply the distribution network for this drug. Due to this, revenues from the fenofibrate franchise in the first quarter did not totally reflect the sales from the period. Operating result (EUR 91 million) was down by 33% compared to the first quarter of 2008. The latter included results from the sale of a non-strategic product and collection of a milestone payment linked to Luvox® CR received from Jazz Pharmaceuticals, together totaling EUR 41 million. If not for these items, operating result in the first quarter of 2009 would be comparable to last year. Investments in R&D (EUR 111 million) were slightly lower than in the first quarter of 2008 (EUR 117 million).

Sales in the Chemicals Sector (EUR 723 million) were down by 5%, due to the drop in demand, compared to the steady level of the first quarter of 2008. Operating result (EUR 56 million) was down by 33% compared to the first quarter of last year, but it improved compared to the prior quarter (EUR 31 million). In fact, it benefited from the positive effect of sales price hikes over the past months, especially for soda ash, caustic soda and, to a lesser extent, hydrogen peroxide, as well as containment of the production, commercial and administrative fixed costs. Sales (EUR 629 million) from the Plastics Sector were down by 34% compared to the first quarter of 2008, in a very deteriorated global economic context, and following a particularly harsh winter. The impact of the crisis was very significant for the primary markets of the Sector, that is, automobile, construction, electronics and electricity. It should be recalled that the crisis was amplified by significant inventory reductions. Aside from this drop in volumes, PVC also suffered from a significant drop in its prices, which is not the case for Specialty Polymers. The operating result for the first quarter of 2009 (EUR 3 million) was down compared to the high level of the first quarter of last year (EUR 90 million). However it improved compared to the last quarter of 2008 (EUR -26 million).

The measures taken to continuously reinforce the competitiveness of Plastics (including strict control of costs) and the first effects of the drop in costs of some raw materials mitigated the impact on operating result. Also, maintaining certain productions at reduced rates weighed on the result but avoided a surplus of inventory.

Thanks to the strong competitive positions of its industrial activities, the Group is well equipped to continue to cope with the global crisis. The Pharmaceuticals Sector will achieve in 2009 a higher operating result than last year. Market conditions remain difficult for Chemicals and Plastics and visibility is limited. Full year operating result of the Group will be lower than last year.

SOLVAY Group - Summary Financial Information

+-------------------------+------------+------------+------------------+
|Million EUR              |1st quarter |1st quarter |1st quarter 2009/ |
+-------------------------+------------+------------+------------------+
|(except for per-share    |       2008 |       2009 | 1st quarter 2008 |
|figures in EUR)          |            |            |                  |
+-------------------------+------------+------------+------------------+
|Sales                    |      2,374 |      1,985 |             -16% |
+-------------------------+------------+------------+------------------+
|REBIT                    |        300 |        142 |             -53% |
+-------------------------+------------+------------+------------------+
|REBIT/Sales              |      12.6% |       7.2% |                  |
+-------------------------+------------+------------+------------------+
|Non-recurring items      |          9 |         -3 |                  |
+-------------------------+------------+------------+------------------+
|EBIT3                    |        308 |        139 |             -55% |
+-------------------------+------------+------------+------------------+
|Charges on net           |        -30 |        -27 |             -10% |
|indebtedness             |            |            |                  |
+-------------------------+------------+------------+------------------+
|Income from investments  |          0 |          0 |                  |
+-------------------------+------------+------------+------------------+
|Earnings before taxes    |        279 |        112 |             -60% |
+-------------------------+------------+------------+------------------+
|Income taxes             |        -59 |        -14 |             -76% |
+-------------------------+------------+------------+------------------+
|Net income of the Group  |        220 |         98 |             -55% |
+-------------------------+------------+------------+------------------+
|Net income (Solvay share)|        208 |         91 |             -56% |
+-------------------------+------------+------------+------------------+
|Total depreciation       |        113 |        130 |              15% |
+-------------------------+------------+------------+------------------+
|REBITDA                  |        411 |        262 |             -36% |
+-------------------------+------------+------------+------------------+
|Cash flow                |        332 |        228 |             -31% |
+-------------------------+------------+------------+------------------+
|(per share, in EUR)      |            |            |                  |
+-------------------------+------------+------------+------------------+
|Earnings per share4      |       2.49 |       1.11 |             -55% |
+-------------------------+------------+------------+------------------+
|Net debt to equity ratio |        33% |        37% |                  |
+-------------------------+------------+------------+------------------+

Notes on Solvay Group summary financial information

Non-recurring items amounted to EUR -3 million in the first quarter of 2009 compared to EUR 9 million in the first quarter of 2008. They included a restructuring charge of EUR 10 million for depreciation of assets in the Organics cluster as well as income of EUR 9 million related to sale of remaining shares in Sofina.

Charges on net indebtedness amounted to EUR -27 million at the end of March 2009. Financial debt was covered up to 99% at an average fixed rate of 5.1% for 7.1 years; the first significant debt maturity will not occur until 2014.

Income taxes amounted to EUR -14 million. The effective tax rate at the end of March 2009 was 13%, due primarily to certain tax deductions.

Net income of the Group (EUR 98 million) was down by 55% compared to the first quarter of 2008. Interest from third parties amounted to EUR 7 million. Net earnings per share amounted to 1.11 EUR (compared to 2.49 EUR in the first quarter of 2008).

REBITDA amounted to EUR 262 million (-36%). Depreciation (EUR 130 million) was slightly higher than in the first quarter of 2008 (EUR 113 million).

Equity amounted to EUR 4,917 million at the end of March 2009, up by EUR 172 million compared to the end of 2008 (EUR 4,745 million).

The Group set as a major priority the maintenance of a solid financial situation, in particular in the current economic context. At the end of March 2009, the net debt to equity ratio was 37% (compared to 33% at the end of March 2008). Net debt amounted to EUR 1,833 million compared to EUR 1,597 million at the end of 2008, following important investments in 2008 (EUR 1,320 million), including two acquisitions (Alexandria Sodium Carbonate Company and Innogenetics nv) for a total amount of around EUR 300 million. Working capital at the end of March 2009 (EUR 1,337 million) was down by EUR 273 million compared to the end of March 2008, reflecting especially the continued dynamic management of the Group in this area.

On February 18, 2009 the Board of Directors decided to propose to the General Shareholders Meeting on that day the payment of a gross dividend of 2.9333 EUR (2.20 EUR net) per share, identical to the dividend of 2007. Based on the closing rate at the end of the quarter (52.75 EUR), this represents a gross dividend yield of 5.6% and a net yield of

4.2%. It should be recalled that the Group's dividend policy consists of increasing it anytime possible, and avoiding, if possible, decreasing it. For 27 years, the dividend has gradually increased and has never been reduced.

RESULTS BY SEGMENT5

+-----------------+-----------------+-----------------+-------------------+
|                 |                 |                 |1st quarter 2009 / |
+-----------------+-----------------+-----------------+-------------------+
|Million EUR      |1st quarter 2008 |1st quarter 2009 |  1st quarter 2008 |
+-----------------+-----------------+-----------------+-------------------+
|                 |           2,374 |           1,985 |              -16% |
+-----------------+-----------------+-----------------+-------------------+
|GROUP SALES6     |                 |                 |                   |
+-----------------+-----------------+-----------------+-------------------+
|Pharmaceuticals  |             653 |             632 |               -3% |
+-----------------+-----------------+-----------------+-------------------+
|Chemicals        |             763 |             723 |               -5% |
+-----------------+-----------------+-----------------+-------------------+
|Plastics         |             959 |             629 |              -34% |
+-----------------+-----------------+-----------------+-------------------+
|Corporate and    |                 |                 |                   |
+-----------------+-----------------+-----------------+-------------------+
|Business Support |               0 |               0 |                   |
+-----------------+-----------------+-----------------+-------------------+
|REBIT            |                 |                 |                   |
+-----------------+-----------------+-----------------+-------------------+
|GROUP            |             300 |             142 |              -53% |
+-----------------+-----------------+-----------------+-------------------+
|Pharmaceuticals  |             136 |              91 |              -33% |
+-----------------+-----------------+-----------------+-------------------+
|Chemicals        |              83 |              56 |              -33% |
+-----------------+-----------------+-----------------+-------------------+
|Plastics         |              90 |               3 |              -96% |
+-----------------+-----------------+-----------------+-------------------+
|Corporate and    |                 |                 |                   |
+-----------------+-----------------+-----------------+-------------------+
|Business Support |              -9 |              -8 |               -9% |
+-----------------+-----------------+-----------------+-------------------+
|REBITDA          |                 |                 |                   |
+-----------------+-----------------+-----------------+-------------------+
|GROUP            |             411 |             262 |              -36% |
+-----------------+-----------------+-----------------+-------------------+
|Pharmaceuticals  |             160 |             119 |              -26% |
+-----------------+-----------------+-----------------+-------------------+
|Chemicals        |             122 |              97 |              -21% |
+-----------------+-----------------+-----------------+-------------------+
|Plastics         |             136 |              52 |              -61% |
+-----------------+-----------------+-----------------+-------------------+
|Corporate and    |                 |                 |                   |
+-----------------+-----------------+-----------------+-------------------+
|Business Support |              -7 |              -6 |              -10% |
+-----------------+-----------------+-----------------+-------------------+
+-----------------+-----------------+-----------------+-------------------+

1 REBIT: measure of operating performance (this is not an IFRS concept as such)

2 REBITDA: REBIT, before recurring depreciation.

3 EBIT: results before financial charges and taxes.

4 Calculated on the basis of the weighted average of the number of shares in the period, after deduction of own shares purchased to cover the stock option programs, or a total of 82,916,656 shares for three months 2008 and 82,135,264 shares for the first three months of 2009.

The full press release is available on http://www.solvay-investors.com/

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