PARIS (Agefi-Dow Jones)–The chemical company Solvay on Wednesday raised its underlying gross operating surplus (EBITDA) target for 2022, after achieving record results and well above analysts’ expectations for the first trimester.
“I am pleased to report another set of record results, with strong performances in each of our segments,” Solvay CEO Ilham Kadri said in a statement.
Since the beginning of the year, Solvay has further increased its selling prices to counter inflationary pressures. In the first three months of 2022, the group’s turnover jumped by 28.8% in reported data and 26.1% in organic data, to reach a record level of 3.06 billion euros. Organic growth was supported by a 20% increase in prices and a 6% increase in volumes. Solvay had raised its prices by 7% in the third quarter of last year and by 12% in the following quarter.
In the first quarter, underlying EBITDA improved by 22.1% on a reported basis and by 20.1% on an organic basis, also setting a new record, at 712 million euros. “All three segments recorded double-digit Ebitda growth” and “price increases more than offset the 369 million euro increase in inflation-related costs,” Solvay said. The underlying Ebitda margin, however, fell by 1.3 percentage points in the first quarter, to stand at 23.3%, close to its 2021 level.
Underlying Ebitda exceeds expectations by 18%
These record quarterly results are well above the expectations of financial intermediaries. According to the consensus made by Vara Research, analysts forecast an underlying Ebitda of 605 million euros and a turnover of 2.76 billion euros in the first quarter. Solvay’s underlying EBITDA thus exceeded consensus estimates by 17.7% over the period.
This performance can also be explained by the structural cost savings achieved by Solvay. In the first quarter, they reached 22 million euros, to total 410 million euros since 2020, against a target set at 500 million euros by 2024.
On the strength of these results, the managers raised their underlying Ebitda forecast for 2022. “Underlying Ebitda for the year is now expected to increase, qualified as ‘mid-to-high single digit'”, has announced Solvay. Its financial director, Karim Hajjar, told the Agefi-Dow Jones agency that this English term corresponded to an expected organic growth of between 4% and 8%. Previously, the chemist anticipated organic growth for this indicator of between 3% and 6% this year.
In addition, Solvay still expects free cash flow above 650 million euros in 2022. This indicator decreased to 216 million euros in the first quarter, compared to a flow of 282 million euros a year earlier. , due to “higher working capital resulting from the strong growth in turnover”.
-Dimitri Delmond, Agefi-Dow Jones; +33 (0)1 41 27 47 31; [email protected] ed: VLV
SOLVAY FINANCIAL RELEASES:
http://www.solvay.com/fr/investors/news_and_results/results/index.html
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May 04, 2022 01:00 ET (05:00 GMT)