Solvay provides trading update and announces non-cash impairment
June 24 2020 - 1:30AM
Solvay provides trading update and announces non-cash impairment
Brussels, June 24, 2020 – Solvay today provides a
trading update for the second quarter, highlighting resilience amid
the COVID-19 global pandemic.
As indicated in early May and following the
strong performance in the first quarter, market headwinds increased
sharply in the second quarter. Businesses related to oil and gas,
automotive, and aerospace were the most significantly impacted,
with revenues down about 40%, whereas businesses related to
construction and mining were down about 20%. Other key markets such
as healthcare, agro/food, home & personal care and electronics
resisted well and helped to offset some of the challenged markets.
Against that backdrop, Group sales were down 20% in aggregate
across April and May versus 2019 levels, reflecting the resilience
of Solvay’s diversified portfolio. Similar demand trends are
expected to continue during the month of June. Decisive actions on
structural and temporary cost reduction programs and the focus on
cash generation help to ease some of the effects and position the
Group for strong growth when markets rebound. Given the
deterioration in short and mid term economic performance due to
COVID-19, an impairment review is underway and likely to lead to a
non-cash impairment estimated around €1.5bn*.
Approximately 80% is associated with the goodwill resulting from
the Cytec acquisition, and the balance is related to various
tangible & intangible assets. The fundamental
long-term attractiveness of the Composite Materials and Technology
Solutions businesses remain unaffected, driven by demand for
lightweighting, electrification, and resource efficiency. The
conclusion of the impairment analysis and additional details will
be provided with the publication of Solvay’s first half results on
29 July 2020.
“We continue to act decisively to mitigate the
effects of COVID-19 and we remain unrelenting in our focus on free
cash flow generation, cost reduction, and serving our customers”
said Ilham Kadri, Chief Executive Officer. “We are accelerating
delivery of our G.R.O.W. strategic programs to deliver superior
growth through our leadership positions and innovation.”
* Final impairments will depend inter alia on
exchange rates and discount rates prevailing at 30 June 2020
- Press release in pdf format
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