Solvay Beat Expectations in 4Q as Higher Pricing Overcame Rising Inflationary Costs -- Update

   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 [e-mail]

(END) Dow Jones Newswires

February 23, 2022 03:08 ET (08:08 GMT)

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