Corona M&A, Corporate and Financial News

Solvay Hit by Corona Crisis

Solvay first half year 2020 results.


  • Strong Free Cash Flow to shareholders from continuing operations of €435 million in the first half, up significantly versus €33 million in the first half 2019, with Q2 contributing €233 million. The increase was predominantly driven by disciplined working capital management.
  • Net Sales of €4,649 million in the first half were down 11% versus first half 2019, with headwinds from aero, auto, oil & gas, and construction markets impacting volumes since April. More resilient markets, including healthcare, agro/food, home and personal care and electronics helped to offset some of the challenged markets. Net sales in Q2 were down 18% to €2,175 million as result of the lower volumes.
  • Acceleration of cost savings measures in the first half 2020 yielded a total gross savings of €170 million, as the organization acted swiftly to align production to the lower demand levels.
  • Underlying EBITDA in the first half of 2020 of €1,008 million was down 15.6% versus first half 2019. Second quarter underlying EBITDA of €439 million was down 29.5% versus Q2 2019 level, driven by the reduction in volumes while pricing remained positive.
  • EBITDA margin was 21.7% for the first half 2020, despite a significant reduction in demand, illustrating the decisive cost actions and sustained pricing. EBITDA margin for Q2 was 20.2%.
  • Underlying Net Profit in the first half 2020 was €345 million and in Q2 was €109 million.
  • As indicated on June 24, 2020, a non-cash impairment totaling €1.46 billion was taken in the second quarter, mostly related to the goodwill of the Composites business.

Outlook for 2020

In the context of continued macro uncertainty and limited visibility, Solvay expects market dynamics to remain challenging in Q3 before improving in Q4.

Against that backdrop, the focus on cost will continue with an expectation of delivering around €300 million of savings in full year 2020 and free cash flow generation similar to 2019.

Group performance

Net sales were down 11.0% in the first half due to lower demand which began in the second quarter.

Sales were down 18.0% in the second quarter including modest changes in scope and forex, or down 17.1% organically due to lower volumes mainly related to demand declines in oil and gas, aerospace, auto and construction sectors, partly offset by growth in healthcare, home and personal care, and agro/food. Pricing was modestly higher across the group.

Underlying EBITDA declined 15.6% in the first half and EBITDA margin remained relatively resilient at 21.7% thanks to the acceleration and delivery of cost measures.

The underlying EBITDA was down 29.5% or 28.5% organically in Q2 as a result of the lower sales volumes.

Fixed cost reduction and price offset half of the volume decline thanks to swift actions taken amid the challenging economic backdrop.

Free cash flow to shareholders from continuing operations totalled a record €435 million in the first half of 2020 versus €33 million in the first half 2019, a strong indication of the priority to generate and preserve cash in the context of a challenging environment.

Previously, a €65 million one-off tax deduction was booked in Q1 associated with the use of the proceeds of the polyamide divestment.

In the second quarter, free cash flow to Solvay shareholders from continuing operations rose strongly again to reach €233 million versus €123 million in Q2 2019.

The strong performance reflected continued discipline in working capital management, reduced cash taxes & pension cash costs and to a lesser extent reduced capital expenditures.

Underlying net financial debt was stable compared to the end of March 2020 at €(4.7) billion at the end of June 2020, and decreased significantly by €757 million versus year end 2019, mainly due to the closing of the polyamide sale in Q1 2020.

Provisions are down by €370 million in the first half to €(3.3) billion as a result of €460 million voluntary pension contributions made in the first quarter of 2020 partially offset by remeasurements related to the reduction in discount rates.