Solvay Model update after positive 3Q warning and FY guidance upgrade

Solvay issued a positive 3Q profit warning by announcing c. 50% y/y EBITDA growth to c. € 900m which was respectively 27% and 18% above our and consensus forecasts. Even when taking into account some weakening in order levels into 4Q, Solvay raised FY22 organic adjusted EBITDA growth guidance from +14-18% to c 28%. We understood that organic excludes an estimated €20m negative scope effects and € 150m positive FX effects, so the new FY guidance implies about € 3.2bn EBITDA, which was well above our and consensus forecasts of respectively 2.84bn and € 2.87bn. We have upped our FY22 EBITDA forecasts by 12% to bring them in line with the new FY guidance. The record 3Q results and upgraded guidance demonstrate in our opinion the impressive pricing discipline progression which Solvay has achieved. We continue to believe Solvay is undervalued and expect the announced separation to create additional shareholder value. We maintain our Accumulate rating and € 120 target price.