Skip to main content

Solvay 2020 first half results: Record cash generation and cost reductions help to weather the storm

Written by Customer Service on . Posted in Public Companies.

July 29, 2020 at 7 a.mSolvay 2020 first half resultsRecord cash generation and cost reductions help to weather the stormHighlightsStrong 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.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 2020In 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 hereLink to financial report
Attachments2020Q2_Financialreport_EN_final2020Q2-press release-EN

Disclaimer & Cookie Notice

Welcome to GOLDEA services for Professionals

Before you continue, please confirm the following:

Professional advisers only

I am a professional adviser and would like to visit the GOLDEA CAPITAL for Professionals website.

Important Notice for Investors:

The services and products offered by Goldalea Capital Ltd. are intended exclusively for professional market participants as defined by applicable laws and regulations. This typically includes institutional investors, qualified investors, and high-net-worth individuals who have sufficient knowledge, experience, resources, and independence to assess the risks of trading on their own.

No Investment Advice:

The information, analyses, and market data provided are for general information purposes only and do not constitute individual investment advice. They should not be construed as a basis for investment decisions and do not take into account the specific investment objectives, financial situation, or individual needs of any recipient.

High Risks:

Trading in financial instruments is associated with significant risks and may result in the complete loss of the invested capital. Goldalea Capital Ltd. accepts no liability for losses incurred as a result of the use of the information provided or the execution of transactions.

Sole Responsibility:

The decision to invest or not to invest is solely the responsibility of the investor. Investors should obtain comprehensive information about the risks involved before making any investment decision and, if necessary, seek independent advice.

No Guarantees:

Goldalea Capital Ltd. makes no warranties or representations as to the accuracy, completeness, or timeliness of the information provided. Markets are subject to constant change, and past performance is not a reliable indicator of future results.

Regional Restrictions:

The services offered by Goldalea Capital Ltd. may not be available to all persons or in all countries. It is the responsibility of the investor to ensure that they are authorized to use the services offered.

Please note: This disclaimer is for general information purposes only and does not replace individual legal or tax advice.