Solvay 2020 first half results: Record cash generation and cost reductions help to weather the storm
July 29 2020 - 1:00AM
Solvay 2020 first half results: Record cash generation and cost
reductions help to weather the storm
July 29, 2020 at 7 a.m
Solvay 2020 first half
results
Record cash generation and cost
reductions help to weather the storm
Highlights
- Strong Free Cash Flow to shareholders from
continuing operations of €435 million in the first half, up
significantly versus €33 million in the first half 2019, with Q2
contributing €233 million. The increase was predominantly
driven by disciplined working capital management.
- Net Sales of €4,649 million in the first half
were down 11% versus first half 2019, with headwinds from aero,
auto, oil & gas, and construction markets impacting volumes
since April. More resilient markets, including healthcare,
agro/food, home and personal care and electronics helped to offset
some of the challenged markets. Net sales in Q2 were down 18%
to €2,175 million as result of the lower volumes.
- Acceleration of cost savings measures in the
first half 2020 yielded a total gross savings of €170 million, as
the organization acted swiftly to align production to the lower
demand levels.
- Underlying EBITDA in the first half of 2020 of
€1,008 million was down 15.6% versus first half 2019. Second
quarter underlying EBITDA of €439 million was down 29.5% versus Q2
2019 level, driven by the reduction in volumes while pricing
remained positive.
- EBITDA margin was 21.7% for the first half
2020, despite a significant reduction in demand, illustrating the
decisive cost actions and sustained pricing. EBITDA margin for Q2
was 20.2%.
- Underlying Net Profit in the first half 2020
was €345 million and in Q2 was €109 million.
- As indicated on June 24, 2020, a non-cash
impairment totaling €1.46 billion was taken in the second
quarter, mostly related to the goodwill of the Composites
business.
Q2 2020 |
Q2 2019 |
%yoy |
% organic |
Underlying, (in € million) |
H1 2020 |
H1 2019 |
%yoy |
% organic |
2,175 |
2,654 |
-18.0% |
-17.1% |
Net sales |
4,649 |
5,225 |
-11.0% |
-10.8% |
439 |
624 |
-29.5% |
-28.5% |
EBITDA |
1,008 |
1,195 |
-15.6% |
-15.3% |
20.2% |
23.5% |
-3.3pp |
- |
EBITDA margin |
21.7% |
22.9% |
-1.2pp |
- |
233 |
123 |
+89.8% |
- |
FCF to shareholders from continuing
operations |
435 |
33 |
n.m. |
- |
49.1% |
28.2% |
+20.9pp |
- |
FCF conversion ratio (LTM) |
- |
- |
- |
- |
CEO Quote
“I am very proud of how Solvay employees are
weathering the storm by staying safe and managing what is within
our control exceptionally well,” explained CEO Ilham Kadri. “Our
steadfast focus on customers, cost and cash resulted in strong
delivery of €170 million in cost reduction and record free cash
flow generation of €435 million in the first half of 2020. Our
leadership positions in major markets and the breadth of our
technologies and innovation enabled us to capture new business
while protecting margins. We will continue to adapt to the
challenges in the months ahead as we resume selective investments
for the return to growth in 2021.”
Outlook for 2020
In the context of continued macro uncertainty
and limited visibility, Solvay expects market dynamics to remain
challenging in Q3 before improving in Q4. Against that backdrop,
the focus on cost will continue with an expectation of delivering
around €300 million of savings in full year 2020 and free cash flow
generation similar to 2019.
Register to the webcast scheduled at 14:00 CEST
here
Link to financial report
- 2020Q2_Financialreport_EN_final
- 2020Q2-press release-EN
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