SOLVAY GROUP FINANCIAL REPORT - FOURTH QUARTER & FULL YEAR 2016 - HIGHLIGHTS
February 24 2017 - 1:01AM
Brussels, February 24,
2017
-
16% EBITDA increase in the
fourth quarter with growth in all segments
-
Solid full-year performance
with 7.5% EBITDA increase,
leading to 21% record margin and free cash flow of
€ 876 million
-
Full-year
dividend(1) raised 4.5% to
€ 3.45 gross per share
Fourth quarter 2016
results(2)
-
Net sales totaled
€ 2.8 billion, up 1.6%, mainly due to the 3.9% increase
in volume, partially offset by the (2.2)% reduction of sales
prices.
-
Underlying EBITDA grew
16% to € 527 million. Volumes contributed 9.1%, across
the operating segments, supported by less pronounced seasonality.
Pricing power contributed 9.7%, benefiting from operational
excellence delivery. The EBITDA margin reached 19% in the quarter,
up 2.4 percentage points year on year.
-
Advanced
Materials rose 6.1% to € 259 million year on
year with good volume growth in automotive, industrial, consumer
goods and healthcare which more than offset lower volumes in smart
devices and aerospace;
-
Advanced
Formulations increased 5.6% to € 124 million
year on year with a pick-up in volume growth, as strong performance
in agro more than offset a drop in oil & gas, which improved
sequentially on the back of a higher rig count;
-
Performance
Chemicals were 17% higher at € 168 million year
on year as a result of solid volume growth, benefits from lower
energy costs and excellence initiatives across the segment;
-
Functional
Polymers grew 131% to € 51 million year on year,
primarily driven by robust polyamide performance;
-
Corporate & Business Services was at
€ (75) million, equal to the fourth quarter of
2015.
-
Profit attributable to Solvay
share, on an IFRS basis was € 245 million versus
€ 112 million in 2015. On an underlying basis it was
€ 183 million versus € 136 million in 2015,
reflecting a rise in operating profit with higher net financial
charges partially offset by lower income taxes.
-
Free cash flow was €
412 million, stable versus the fourth quarter of 2015.
-
Net debt on an IFRS
basis was € 4.4 billion. Underlying net debt(3) increased
slightly to € 6.6 billion from € 6.5 billion at
end-September.
(1) Recommended dividend pending General
Shareholders meeting.
(2) The underlying and IFRS data compare to unaudited pro forma
figures of the same period in 2015, as if the Cytec acquisition had
occurred on January 1, 2015.
(3) Underlying net debt includes the perpetual hybrid bonds,
accounted for as equity under IFRS.
Full year 2016 results(1)
-
Net sales fell (4.7)%
to € 10.9 billion, as lower sales prices in a
deflationary raw material price environment weighed (2.3)%. Foreign
exchange fluctuations dented sales by (1.5)%. Volumes were stable
overall.
-
Underlying EBITDA grew
7.5% to € 2,284 million, driven by pricing power of 5.9%
and fixed cost reduction benefits of 2.9%. Operational excellence
exceeded € 200 million, while completion of the Cytec
integration delivered € 70 million of synergies, well
ahead of the initial plan. There were no significant effects from
volume/mix changes. Foreign exchange fluctuations had a (1.9)%
conversion effect. The EBITDA margin reached a record 21%, a
notable increase from 19% in 2015.
-
Profit attributable to Solvay
share, on an IFRS basis was € 621 m vs € 406 million in 2015.
On an underlying basis it grew to € 846 million versus € 768
million in 2015.
-
Free cash flow was
€ 876 million, up € 384 million year on year.
Continuing operations accounted for € 736 million, an increase
of € 342 million, driven by higher EBITDA, reduced
capital expenditure and efficient working capital management.
-
CFROI increased to
6.3%, up 0.2 percentage point from 6.1% pro forma in 2015 on
non-restated basis.
-
Dividend increase
proposed of 4.5% to € 3.45 gross per share for 2016, of which
the balance is payable on May 16, 2017.
2017 Outlook(2)
Solvay remains well on track to achieve its
mid-term objectives. For 2017, Solvay expects underlying EBITDA to
grow by mid-single digit, mainly driven by Advanced Materials and
Advanced Formulations, and to generate more than
€ 800 million of free cash flow from continuing
operations.
Quote of the CEO,
Jean-Pierre Clamadieu
"Solvay
delivered solid full-year EBITDA growth supported by our
transformation and subsequent improvement of our customer profile.
Our pursuit of operational excellence, swift delivery of synergies
and continued pricing momentum have contributed strongly to our
performance. The upgrade of our portfolio has also enabled us to
significantly lower our greenhouse gas intensity. Overall, these
elements combine to enhance our sustainable value creation for both
customers and shareholders."
(1) The underlying and IFRS data compare to
unaudited pro forma figures of the same period in 2015, as if the
Cytec acquisition had occurred on January 1, 2015.
(2) A more detailed outlook may be found on page 8 of this
report.
Forenote
Following the announcements at the
end of 2016 of the intended divestments of the Acetow and Vinythai
businesses, these businesses are reclassified as discontinued
operations and as assets held for sale. For comparative purposes,
the 2015 income statement has been restated. These figures were
published on January 17.
The results of former Cytec are
consolidated in the Group's income and cash flow statements since
January 1, 2016. Comparative information for the fourth
quarter and full year 2015 is presented on an unaudited pro forma
basis as if the acquisition of Cytec had taken place on
January 1, 2015.
Besides IFRS accounts, Solvay also
presents underlying Income Statement performance indicators to
provide a more consistent and comparable indication of the Group's
financial performance. The underlying performance indicators adjust
IFRS figures for the non-cash Purchase Price Allocation (PPA)
accounting impacts related to acquisitions, for the coupons of
perpetual hybrid bonds, classified as equity under IFRS but treated
as debt in the underlying statements, and for other elements that
would distort the analysis of the Group's underlying performance.
The comments on the results made on
pages 2 to 9 are on an underlying basis, unless
otherwise stated.
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Solvay is a multi-specialty
chemical company, committed to developing chemistry that addresses
key societal challenges. Solvay innovates and partners with
customers in diverse global end markets. Its products and solutions
are used in planes, cars, smart and medical devices, batteries, in
mineral and oil extraction, among many other applications promoting
sustainability. Its lightweighting materials enhance cleaner
mobility, its formulations optimize the use of resources and its
performance chemicals improve air and water quality. Solvay is
headquartered in Brussels with around 27,000 employees in 58
countries. Pro forma net sales were € 10.9 billion in
2016, with 90% from activities where Solvay ranks among the world's
top 3 leaders. Solvay SA (SOLB.BE) is listed on Euronext
Brussels and Paris (Bloomberg: SOLB.BB -
Reuters: SOLB.BR) and in the United States its shares (SOLVY)
are traded through a level-1 ADR program.
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