Solvay FIRST LOOK: 3Q underl. EBITDA supported by sale of CO2 emission rights
3Q underlying EBITDA was 12% better than our forecast and 14% above consensus but was supported by the sale of CO2 emission rights. Excluding this impact, 3Q underlying EBITDA would have been 8% below our forecast and 5% below consensus. Whilst future sales of CO2 emission rights are a possibility, this will mainly depend on future soda ash production levels in Europe and the overall competitive pressures within the soda ash market. Solvay reiterated the FY25 underlying EBITDA guidance of € 880-930m. Solvay also maintained FCF guidance of c. € 300m which however still means that almost all FCF is absorbed to pay the high and committed dividend of € 2.43 per share. We maintain our Accumulate rating on the attractive valuation and dividend yield.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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