Solvay FIRST LOOK: Solid 1Q23 with 15% EBITDA beat, FY guidance upped
Solvay reported 18% EBITDA growth which was a 15% beat to our and consensus forecasts, with FY underlying EBITDA organic growth upped from a -3% to -9% range to a -5% to +2% range, which is at midpoint about 4% above our forecast and 7% above consensus. We believe the separation will be an important catalyst to unlock shareholder value. Under the helm of CEO Ilham Kadri, Solvay has made a significant step up in performance, with ROCE's increasing by almost 5pp in 2022 alone to 16%. Beyond the heavy capex year 2023, we forecast annual FCF on group level at over € 1bn in the coming years. The strengthened balance sheet and solid FCF generation should allow both EssentialCo and SpecialtyCo to start with a strong balance sheet and sizeable firepower for actively pursuing growth opportunities.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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