Solvay reports positive first half 2022 results

Solvay (Brussel, Belgium and Alpharetta, Ga., U.S.) has announced its results for the first half of 2022, raising its full-year guidance following strong performance driven by higher volumes and prices.

“I am proud of how our businesses have continued to perform in a strong demand environment in the second quarter, again setting new records for the company,” Solvay CEO, Ilham Kadri, says. “I wish to thank our global teams for their unwavering commitment and resilience. Demand for our high-value technologies was evident in the volume uplift in the quarter as we continue to offer solutions that support our customers needs. The pricing initiatives helped to offset the significant rise in costs and enabled us to sustain EBITDA margins, and we are grateful to our customers who value our technologies and services. Going forward, our business leaders will continue investing in our key growth areas while navigating the uncertain macroeconomic environment.”

Net sales in Q2 2022 were up +32.6% organically versus Q2 2021, the company says, driven by +26% in price actions (€690 million) and +6% from volumes (€164 million). Growth was driven by strong demand across all key markets, including automotive, aerospace, consumer and electronics industries. Sales were up considerably in the Materials (+38%), Chemicals (+27%) and Solutions (+33%) segments versus Q2 2021. First half 2022 net sales were 29.5% higher organically than first half 2021.

Moreover, the record underlying EBITDA of €864 million in Q2 2022 was up +35% organically year on year, reflecting volume growth and higher pricing. All three segments contributed to the growth, with Solutions up +58%, Materials up +45% and Chemicals up +18% organically. First half 2022 EBITDA is +28% higher than first half 2021.

Additional highlights include:

• The underlying EBITDA margin of 24.8% is +0.3pp higher than Q2 2021 and +1.5 pp higher than Q1 2022, mainly as a result of the strong pricing actions necessary to offset inflationary headwinds.
• Underlying net profit was €462 million in Q2 2022, around +67% higher than the result achieved in Q2 2021.
• Free cash flow was €257 million in Q2 2022, reflecting the strong performance, capex for growth projects and the working capital increase linked to higher sales. First half 2022 FCF of €473 million was around +13% higher than in H1 2021.
• An all time record ROCE at 13.7%, +2.3 pp above the end of 2021.
• Continued strengthening of the balance sheet with underlying net debt at €4 billion, reaching a historic low leverage of 1.5x. Provisions decreased by €374 million, reaching a new low of €2.2 billion due largely to higher discount rates.
• Building on its Solvay One Planet sustainability roadmap, Solvay announced its plan to reduce scope 3 greenhouse gas emissions by -24% by 2030 (against a 2018 baseline; incorporating 90% of the group total scope 3 GHG emissions). This complements its previous commitment to align its scope 1 and 2 trajectory with the Paris Agreement.

	Second Quarter				First Half
Underlying (in € million)	2022	2021	% yoy	% organic	2022	2021	% yoy	% organic
Net sales	3,477	2,456	+41.5%	+32.6%	6,532	4,829	+35.3%	+29.5%
EBITDA	864	602	+43.4%	+34.9%	1,576	1,185	+32.9%	+27.7%
EBITDA margin	24.8%	24.5%	+0.3pp	-	24.1%	24.5%	-0.4pp
FCF	257	135	n.m.		473	417	+13.3%
FCF conversion ratio (LTM)	34.5%	46.1%	-11.6pp		34.5%	46.1%	-11.6pp
ROCE (LTM)	13.7%	9.5%	+4.2pp		13.7%	9.5%	+4.2pp

According to Solvay’s 2022 outlook, its full year underlying EBITDA estimate is increased from the previously shared guidance of mid-to-high single-digit growth to a range of 14% to 18% organic growth for the full year 2022. The free cash flow estimate has increased from €650 million previously to around €750 million, overcoming significant increases in working capital. The estimates reflect modest declines in demand consistent with the generally negative economic outlook and do not assume significant discontinuities related to the supply of natural gas, particularly in Europe.