Solvay Beat Expectations in 4Q as Higher Pricing Overcame Rising Inflationary Costs -- Update
23 February 2022 - 07:23PM
Dow Jones News
By Ed Frankl
Solvay SA said Wednesday that its fourth-quarter earnings and
revenue rose, beating expectations after it put in place higher
pricing to keep up with rising energy, raw-material and
supply-chain costs.
The Belgian chemicals company said net profit in the three
months to the end of December was 250 million euros ($283 million),
compared with EUR96 million in the same period in 2020.
Solvay posted revenue of EUR2.70 billion, up 22% on year, as
increased volumes reflected growing momentum in key markets
including the automotive and electronics sectors, the company
said.
Those results beat expectations of net profit of EUR176 million
and sales of EUR2.52 billion, according to consensus compiled by
the company.
The Brussels-based company said that it took an impact of EUR465
million from energy, raw-material and supply-chain cost inflation
in 2021, including EUR260 million in the fourth quarter alone, but
that it was largely offset by an acceleration of price
increases.
"This year we faced new challenges and we overcame rising raw
material and energy costs and supply chain disruptions," Chief
Executive Ilham Kadri said.
"We emerged stronger on all fronts, from pricing power to
profitability, from cash generation to returns," Ms. Kadri
added.
Solvay said it would propose a dividend of EUR3.85 a share to
shareholders, up from EUR3.75 last year.
It delivered return on capital employed of 11.4% in 2021,
achieving a company objective three years early that hoped to
exceed 11% in returns by 2024.
Free cash flow in the quarter, however, ticked down to EUR149
million from EUR155 million a year earlier. Underlying net
financial debt decreased by EUR249 million in 2021 to EUR3.95
billion, the company said.
The company's materials business was helped by record full-year
sales in its specialty polymers division, driven by the recovery in
automotive, electric-vehicle-battery and electronic markets.
Solvay said last year that it aimed to increase its materials
business sales to the auto market from around EUR800 million in
2021 to more than EUR2.5 billion by 2030.
Separately, Solvay also said it planned to cut 20% of carbon
emissions at its largest soda-ash plant in Europe.
Plans for Solvay's plant in Devnya, Bulgaria, will include
investing in a co-combustion boiler to begin operating in November,
moving the company toward its environmental aims of carbon neutral
before 2050.
The company didn't provide an update on continuing plans to
carve out its high-polluting soda-ash business.
In new 2022 guidance, the company said full-year earnings before
interest, taxes, depreciation and amortization would grow
organically by mid-single digits in the year, and free cash flow
would exceed EUR650 million.
Write to Ed Frankl at edward.frankl@dowjones.com
(END) Dow Jones Newswires
February 23, 2022 03:08 ET (08:08 GMT)
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