Solvay FIRST LOOK: 3Q benefits from low corporate cost, guidance narrowed up
3Q uEBITDA was flat organically which was in line with our forecast and c. 4% above consensus, driven entirely by a big beat in the lumpy Corporate line whilst both Basic Chemicals and Performance Chemicals came in below expectations. Solvay now expects to come in at the high end of its FY uEBITDA decline range of -10-15%, supported by additional savings. An interim dividend of € 0.97 has been announced. Solvay is a base chemicals group with leading market and technology positions in the vast majority of its businesses. The company favours dividends over aggressive growth (6.4% dividend yield) and operates with a solid balance sheet (1.5x leverage). After the solid share price performance of the past few months, we lower our rating from BUY to Accumulate whilst maintaining our € 40 TP.Solvay is engaged in chemical and plastic businesses worldwide. Co. offers chemical products such as advanced materials, barium strontium, calcium chloride, caustic soda, chlorinated products, fluor, peroxygen products, polyglycerols, precipitated calcium carbonate, soda ash, and sodium bicarbonate. It also provides specialty polymers, such as Spire ultra polymers, Solviva biomaterials, and sulfone polymers. Co. structures its activities around five operating segments: Advanced Formulations, Advanced Materials, Performance Chemicals, Functional Polymers and Corporate & Business Services, each with its own specific business model and each comprised of Global Business Units (GBUs).
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