Solvay With impressive pricing power towards separation
We upped our FY23 underlying EBITDA forecast by 5% after the recent 15% beat on 1Q results and taking into account the upgraded FY guidance calling now for a -5% +2% FY underlying EBITDA range, which we translate into c 3.0-3.2bn. 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. We believe the upcoming separation, planned for December, will be an important catalyst to unlock shareholder value. 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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