Solvay Shares Rise on Guidance Lift After 1Q Earnings Beat
May 04 2022 - 3:52AM
Dow Jones News
By Ed Frankl
Shares in Solvay SA rose on Wednesday after it raised its
full-year earnings outlook after first-quarter profit and sales
beat expectations.
At 0800 GMT, shares climbed 5.6% to EUR94.50.
The Belgian chemicals company raised its 2022 expectations for
underlying earnings before interest, taxes, depreciation and
amortization, now estimating it to grow by mid-to-high single
digits. Previously Solvay expected Ebitda to grow by mid-single
digits from 2021's figure of 2.36 billion euros ($2.48
billion).
It kept its full-year outlook for free cash flow to exceed
EUR650 million euros.
The guidance upgrade should mean 2022 consensus expectations
moves up by around 5% to Ebitda of EUR2.55 billion, ING analysts
say in a research note.
The outlook takes into account adverse impact from lockdowns in
China as well as tougher comparisons in the second half of the
year, ING adds. Solvay has about EUR1.3 billion in annual sales
originating from its China operations.
The guidance raise is in contrast to German peer Covestro AG,
which on Tuesday lowered its full-year expectations on supply
issues related to the pandemic lockdown in Shanghai, alongside
higher raw-material costs.
The Brussels-based company posted first-quarter net profit in
the three months to the end of March of EUR369 million, up from
EUR240 million in the same period last year.
Sales rose 29% to EUR3.06 billion, a new quarterly record,
driven by prices that were 20% higher and volumes that rose by
6%.
That compares with expectations of EUR258 million for net profit
and EUR2.76 billion for sales, according to analysts' estimates
provided by the company.
Solvay's 1Q Ebitda of EUR712 million beat consensus by 18%, as
price gains in the quarter more than offset EUR369 million of
inflationary cost increases, Solvay said.
"The critical and differentiated solutions that we provide to
our customers enabled us to increase prices and more than
compensate for the sharp cost increases in raw materials and
energy," Chief Executive Ilham Kadri said.
The company didn't update on provisions for its 50% stake in its
Russian joint venture Rusvinyl. It had previously said it would
suspend taking a dividend from Rusvinyl in light of the invasion of
Ukraine.
Write to Ed Frankl at edward.frankl@dowjones.com
(END) Dow Jones Newswires
May 04, 2022 04:37 ET (08:37 GMT)
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