2016 First Quarter Earnings Highlights

Performance driven by sustained pricing power and excellence programs

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Solvay was pleased to present a good set of results for Q1 2016. The Group achieved solid pricing power for the ninth successive quarter, leading to a record EBITDA margin of 21%. This performance was underpinned by excellence programs and transactional foreign exchange gains. Cash generation was also improved thanks to a strong focus on working capital and selective capex allocation.


Q1 2016 underlying [1] results

[1] The underlying data compares to pro forma 2015, as if Cytec acquisition had taken place on January 1, 2015. 

Net sales

The total of Solvay sales amounted to €2.9 billion (down 6% versus 2015), with average prices down (2)%, this is mainly linked to low raw material costs in a deflationary environment. 

Volumes were stable overall, with growth in Advanced Materials and Functional Polymers offset by a drop in other segments. Indeed, Advanced Formulations’ sales volumes declined as a result of persisting oil & gas headwinds, while Performance Chemicals businesses were globally flat.


Solvay ‘s operating earnings before taxes, depreciation and amortization charges improved by 2%, going from €592 million to €602 million. Pricing power, fixed cost reductions and excellence programs - that are looking to use our assets in a more effective and efficient manner– as well as positive foreign exchange impacts, all combined contributed to this success. 

Excellence actions across businesses more than compensated for inflation, while quick delivery of Cytec integration synergies of around €10 million were already captured in the first quarter. Overall, the resulting margin at 21% stood at record levels, placing Solvay in the top quartile among its European chemicals peer group.  

Solvay also announced supplementary measures intended to enhance competitiveness going forward, such as the soda ash production suspension in Alexandria, Egypt. 

EBITDA by Operating Segment


adv-matEBITDA grew 1.4% from €263 million to €267 million, and reported a stronger margin at 25%. Solvay Advance Materials was able to demonstrate the growth thanks to positive developments in multiple segments such as Healthcare, Consumer Goods and Clean Mobility offsetting the ongoing inventory adjustments in smart devices,. In the domain of Clean Mobility, worthy to notice the good dynamics in diesel catalysts and Lithium-ion batteries, the latter especially for hybrid electric vehicles in China. Advanced Materials faced reduced volumes in the Industrial Composites business linked to industrial issues and phasing in certain end-markets. In the Aerospace Composites business, there is a transition period from older legacy aircrafts such as Boeing 747-8, 777 and Airbus 320 towards newer planes with higher composites. Growth in these newer programs is expected to improve in the second half of the year. 

adv-formEBIDTA fell 10% to €122 million (versus €135 million in the prior year quarter), mainly due to the volume drop linked to the sustained downturn in oil & gas activity. However, margin remained stable at 18%, supported by operational excellence measures taken to enhance competitiveness across segments. 

performance chemEBITDA increased 7% to €199 million and its margin jumped to 28% (300 basis point higher than last year) due to cost efficiency measures, mostly in Soda Ash, and the recovery in Acetate cable businesses and the contribution of our new bicarbonate plant in Thailand that is ramping up.

functional-polymersEBITDA increased more than 50% driven by positive net pricing and good demand for polymers in Europe, especially for automotive applications. There was also a solid contribution from the RusVinyl Joint Venture, as capacity utilization was maximized. 

Net Income

The net Income (Solvay share) decreased by 5% due to the reduced scope of discontinued operations, following the transfer of our European chlorovinyls assets to Inovyn Joint Venture in July 2015.

Free Cash Flow

Solvay is strongly focused on improving  cash generation, while also striving to limit volatility of its free cash flow generation through the year. In the first quarter, the Group indeed substantially improved its cash generation, which at €9 million compared to net free cash outflows of  € (358) million in the prior year, mainly due to:
  • a significant reduction of seasonal working capital needs: all Solvay businesses are actively involved in this working capital discipline, enabling to avoid big swings
  • a reduction of capital intensity: over the past 2 years Solvay has undergone important investments, and now it’s the time to harvest.
The focus on cash generation remains top in the agenda going forward and the Group is confident to meet its target of at least €650 million by year end.

Evolution of the portfolio upgrade

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The integration of Cytec is moving very quickly and the top priority is still to ensure its full success and the delivery of synergies. We are on track with delivering increased synergy targets (over €100 million targeted cost synergies to be reached by 2018). Businesses are integrated into the Solvay portfolio and teams are working together to define additional revenue synergies.

Key announcements in the Advanced Materials segment

  • Boeing extended its supply contract for Solvay high-performance, structural composite and adhesive materials,
  • Solvay obtained qualification from Airbus for its PPSU foams used on the A350 interiors,
  • BMW selected Solvay’s new thermoset system to manufacture the composite hood for its new M4 GTS passenger car, and
  • At the world’s largest composite fair in Paris, Solvay and Renault Trucks won the 2016 “JEC Innovation Award for Structural Parts in Automotive” using a thermoplastic composite material to build a front structural module of a truck, called the firewall.

Portfolio optimization on track

Solvay reached another milestone in its portfolio transformation and a first step in deleveraging its balance sheet with the announcement of its early exist of the INOVYN joint venture. Upon exit, which is foreseen in the second half of 2016, Solvay will receive a price payment of €335 million.

The divestment of its Indupa PVC business in Latin America has been announced in the meantime. This divestment is part of Solvay’s strategic portfolio management. It will reduce the Group’s exposure to the economic cycle and to energy-intensive businesses, allowing Solvay to achieve higher growth, higher returns and lower capital intensity.


Based on the first quarter results and the current macro-economic environment, Solvay reaffirms its expectation of “high single digit” EBITDA growth in 2016 compared to the pro-forma 2015. This growth is expected to be back-ended loaded. Free cash flow is expected to exceed €650 million, more than 30% higher than in 2015.