Solvay: Significant Deterioration in Margins
Solvay group sales (EUR 4,731 million) in the 1st half of 2008 were down by 2 % compared to the 1st half of 2007. Demand for
their products remained good overall but the unfavorable exchange rate weighed on the evolution in sales. Group operating results (REBIT: EUR 548 million) posted a drop of 11 % compared to the high level of the 1st half of 2007. The net income of the Group (EUR 351 million) dropped by 15% compared to the 1st half of 2007, taking into account the drop in operating results and a temporary increase in charges on net indebtedness in the 1st quarter of 2008.
The Chemicals and Plastics activities in the 1st half of 2008 underwent continued increase in energy, coal, coke and ethylene prices. This translated into a significant pressure on margins, especially in the Chemicals Sector and the European vinyls activities. In this context, Solvay is announcing price increases from 10 % to 50 % for its primary chemicals and plastics products.
Sales (EUR 1,954 million) in the Plastics Sector dropped by 4 %, taking into account the scope change linked to sale of Solvay Engineered Polymers in February 2008. Demand remained generally good, both for the Vinyls cluster and the Specialty Polymers, but the weak US dollar had a negative effect on evolution of sales. REBIT (EUR 187 million) was down by 24 % compared to the high level in the 1st half of 2007. Results from the 2nd quarter of 2008 improved compared to the 1st quarter of 2008.
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