Solvay: Significantly Higher Operating Result
Solvay group sales for the first half of 2010 amounted to EUR 3,761 million. They were up by 25% compared to the first half of 2009, not including the Pharmaceuticals activities; compared to the first quarter, sales from the second quarter improved by 16%. Sales from the Chemicals Sector (EUR 1,444 million) were slightly up (+3%) compared to the first half of 2009, with the improvement in sales volumes (+16%) compensating for the lower sales prices (-16%).
Recurring Group operating result (REBIT) from the first half of 2010 amounted to EUR 329 million. Not including Pharmaceuticals activities, it significantly improved compared to last year (EUR 298 million in the first half of 2010 compared to EUR 126 million in the first half of 2009). In the second quarter (EUR 183 million), it was up by 193% compared to the second quarter of 2009 (EUR 63 million) and by 59% compared to the first quarter of 2010 (EUR 115 million).
Solvay’s Plastics Sector sales for the first six months of the year (EUR 2,005 million) were significantly higher (+48%) than those of last year. They continued to improve in the second quarter (EUR 1,088 millions, +19% compared to the first quarter of 2010). This can be explained by the sharp increase in sales volumes in the “specialties” cluster (Specialty Polymers and Inergy Automotive Systems), while prices remained globally stable. Although all regions of the world were involved, this improvement was particularly notable in Asia. In Vinyls and at Pipelife, the improvement in demand remains limited in the context of a stagnant European construction sector. The operating result for the Plastics Sector in the first half of 2010 (EUR 173 million) clearly improved compared to last year (EUR 14 million). That of the second quarter (EUR 114 million) is significantly higher than that of the first quarter 2010 (EUR 59 million). This improvement derived primarily from the “Specialties” cluster. The operating result for Vinyls improved compared to the low level of last year but it continued to be penalized by the low level of margins in Europe and Mercosur and by the absence of a resumption of demand in construction in Europe.
On July 28, 2010, Plastic Omnium and Solvay signed a binding agreement for purchase in the second half of 2010 by Plastic Omnium of Solvay’s stake in Inergy Automotive Systems. Solvay will receive for its shares EUR 270 million in cash. This represents an Enterprise Value of about EUR 330 million for the 50% stake of Solvay taking into account the assumption of debt and other liabilities for an adjusted value of about EUR 60 million. Consequently, the assets and liabilities of Inergy Automotive Sytems are transferred to “Assets held for sale” and “Liabilities linked to assets held for sale” in the balance sheet as of the end of June 2010.
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