Solvay FIRST LOOK: Better than expected 2Q, FY guidance range narrowed up
2Q underlying EBITDA declined by 17% organically to € 272m, which was 8% above our forecast and 4% above consensus. The FY24 underlying EBITDA guidance range was narrowed to the upper half of the previous range with our and consensus forecasts already within that upper half. After the recent spun off of Syensqo, Solvay is a base chemicals group with leading market and technology positions in the vast majority of its businesses. The company will be managed with a conservative financial approach, favouring dividends over aggressive growth and operating with a solid balance sheet (1.5x leverage). The stable to growing dividend flow implies a solid 7% dividend yield. Other valuation ratios also look attractive and prompt us to reiterate our BUY rating and € 40 target price.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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