Solvay 2019 4th Quarter & Full Years Results
February 26 2020 - 1:00AM
Solvay 2019 4th Quarter & Full Years Results
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PROFIT
Underlying[1] EBITDA (FY: €2,322m -0.4%; -2.8%
organic[2])
- Underlying EBITDA was stable over the year, in line with
expectations. Positive forex impact offset a modest decrease on an
organic[2] basis.
- Double digit volume growth in Composite Materials, higher
pricing in Performance Chemicals and strong focus on cost
discipline helped mitigate demand headwinds in the automotive,
electronics and oil & gas markets throughout the year.
- Underlying EBITDA margin maintained at 23% for 2019, reflecting
the resilience of Solvay's businesses in a challenging market
environment.
- Advanced Materials (FY: €1,143m -9,3% organic[2])
- Strong demand for composites from aerospace customers
contributed to delivery of a record performance in 2019, despite an
anticipated slowdown in the fourth quarter due to reduced 737MAX
build rates.
- Specialty Polymers significantly impacted by market headwinds,
particularly in automotive and electronics; despite headwinds,
maintained leading position across all key markets.
- Advanced Formulations (FY: €490m -12% organic[2])
- Resilient performance in coatings, agro, personal care, flavors
and fragrances offset by softer mining environment and increasingly
challenging conditions in the oil & gas market.
- Cost measures partly mitigated the impact of lower
volumes.
- Performance Chemicals (FY: €852m +10% organic[2])
- In a supportive market environment, higher prices were achieved
in soda ash and peroxide leading to a strong full year
performance.
Underlying EPS[3] from continuing
operations (FY: €8.02 -4.7%)
- Underlying EPS [3] from continuing operations reflects the
lower EBITDA, higher depreciation and tax rate, partly offset by
lower financial charges following debt optimization measures.
CASH
FCF to Solvay shareholders[4] from continuing
operations (FY: €606m +€40m; FY: total €801m +€76m)
- Strong free cash flow, driven by the Company’s renewed focus on
cash and disciplined working capital management.
- Record total cash generation led to operational deleveraging of
net financial debt of €414 million, and provisions of €157
million.
FCF conversion[4] (FY: 27.8% +1.8pp)
- The free cash flow conversion [4] improvement reflects higher
than forecast cash generation.
RETURNS
ROCE (FY: 8.1% -0.1pp)
- Stable returns largely reflect sustained investments for future
growth.
FY dividend (€3.75 recommended)
- Stable total dividend recommended of €3.75 gross per share.
This leads to a final gross dividend of €2.25 payable on May 20,
2020, following the payment of the interim gross dividend of €1.50
per share in January 2020.
OUTLOOK
2020 full year outlook
Solvay expects organic underlying EBITDA growth [2] between 0%
and -3% on a year over year basis, free cash flow conversion of 28%
and ROCE to be stable around 8%.
CEO Ilham Kadri commented:
“We delivered record total free cash flow and cash conversion in
2019, allowing us to deleverage substantially. Our focus on
customers and costs amid the challenging market backdrop enabled us
to achieve stable EBITDA. As we look ahead, we are taking
additional efficiency measures to further align our structure to
our G.R.O.W. strategy and confront continuing headwinds. Today, we
also released our Solvay ONE Planet sustainability goals, which,
together with our new Purpose, will enable us to create long-term
value for our shareholders in line with our G.R.O.W. strategy.”
All comparisons are made year on year with 2018 pro forma
figures, as if IFRS 16 had already been implemented in 2018, unless
stated otherwise.
[1] Underlying figures 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 to generate a measure that
avoids distortion and facilitates the appreciation of performance
and comparability of results over time.[2] Organic growth excludes
forex conversion and scope effects, as well as the effect from the
implementation of IFRS 16 in 2016. Reported growth compares to the
published 2018 pro forma figures, adjusted for the implementation
of IFRS 16.[3] Underlying earnings per share, basic calculation.[4]
Free cash flow to Solvay shareholders is the free cash flow after
payment of net interests, coupons of perpetual hybrid bonds and
dividends to non-controlling interests. This represents the cash
flow available to Solvay shareholders, to pay their dividend and/or
to reduce the net financial debt. The free cash flow conversion
ratio is calculated as the ratio between the free cash flow to
Solvay shareholders (before netting of dividends paid to
non-controlling interest) and underlying EBITDA.
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