SLVYY Solvay SA (PK)

   By Ed Frankl 
 

Shares in Solvay SA rose on Wednesday after it raised its full-year earnings outlook after first-quarter profit and sales beat expectations.

At 0800 GMT, shares climbed 5.6% to EUR94.50.

The Belgian chemicals company raised its 2022 expectations for underlying earnings before interest, taxes, depreciation and amortization, now estimating it to grow by mid-to-high single digits. Previously Solvay expected Ebitda to grow by mid-single digits from 2021's figure of 2.36 billion euros ($2.48 billion).

It kept its full-year outlook for free cash flow to exceed EUR650 million euros.

The guidance upgrade should mean 2022 consensus expectations moves up by around 5% to Ebitda of EUR2.55 billion, ING analysts say in a research note.

The outlook takes into account adverse impact from lockdowns in China as well as tougher comparisons in the second half of the year, ING adds. Solvay has about EUR1.3 billion in annual sales originating from its China operations.

The guidance raise is in contrast to German peer Covestro AG, which on Tuesday lowered its full-year expectations on supply issues related to the pandemic lockdown in Shanghai, alongside higher raw-material costs.

The Brussels-based company posted first-quarter net profit in the three months to the end of March of EUR369 million, up from EUR240 million in the same period last year.

Sales rose 29% to EUR3.06 billion, a new quarterly record, driven by prices that were 20% higher and volumes that rose by 6%.

That compares with expectations of EUR258 million for net profit and EUR2.76 billion for sales, according to analysts' estimates provided by the company.

Solvay's 1Q Ebitda of EUR712 million beat consensus by 18%, as price gains in the quarter more than offset EUR369 million of inflationary cost increases, Solvay said.

"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 Ilham Kadri said.

The company didn't update on provisions for its 50% stake in its Russian joint venture Rusvinyl. It had previously said it would suspend taking a dividend from Rusvinyl in light of the invasion of Ukraine.

Write to Ed Frankl at edward.frankl@dowjones.com

(END) Dow Jones Newswires

May 04, 2022 04:37 ET (08:37 GMT)

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