Chemical group Solvay Q2 sales down 4%

Q2 Highlights

-   Group net sales down (4) % YoY at € 3,062 m, with volumes (1)%, prices (2)% and forex (1)%

-   REBITDA at € 487 m, down (14) % YoY against last year's demanding comparables

Consumer Chemicals at € 92 m, (40)% YoY, no longer benefiting from last year's exceptional peak guar prices, and suffering from strong temporary destocking in derivatized guar (€ (60)m combined impact); (19)% QoQ

Advanced Materials at € 160 m, (7)% YoY, but up 3% QoQ, with continued strength at Specialty Polymers and Silica but lower performance at Rare Earths

Performance Chemicals at € 180 m, (4)% YoY, but marked QoQ improvement of 16%, both evolutions driven primarily by Essential Chemicals

Functional Polymers at € 79 m, (9)% YoY, due to margin erosion and large maintenance turnaround at Polyamide; 10% QoQ

-   All remaining 3.5 mt CER hedged for 2013 sold

-   Important non-recurring items of € (97) m, mainly restructuring charges for integration and Soda Ash

-   EBIT at € 223 m against € 474 m in Q2'12 (IFRS EBIT at € 173 m vs € 441 m in Q2'12)

-   Net income Group share at € 148 m against € 239 m in Q2'12; IFRS Net income Group share at € 109 m vs € 217 m in Q2'12; EPS at € 1.79 against € 2.88 last year

-   Free Cash Flow € 71 m; Net Debt € 1,572 m, up € 259 m from Q1'13 level

Quote of the CEO

Solvay continued to face challenging trading conditions during the second quarter. Moreover, temporary destock­ing in the derivatized guar business and decisions by some of our customers to delay investments, have weighed on several of our "growth engines" businesses.

In this context, the Group has forged ahead with its efficiency programs to improve its competitive position, particularly in its soda ash and polyamide activities. We are making good progress in the planned creation of our chlorovinyls joint venture with Ineos and, pending anti-trust clear­ance, we aim at closing the deal by the end of this year. These developments will significantly contribute to the reshaping of our portfolio and represent a major step towards our 2016 goals.

Outlook

While we see some weak signs of improvement, this has yet to be confirmed in our order book. In a more chal­lenging economic context, Solvay is confident in its ability to generate a REBITDA in 2013 comparable to last year's, excluding the impacts of the exceptional pricing of guar and the sale of carbon credits (combined totaling € 190 m in 2012). Our relentless execution of the operational excellence programs and accelerated transforma­tion of the company will put us on a strong footing for when demand recovers.

All references to 2012 P&L data are to be deemed restated for the new business organization effective as from January 1st 2013, the reporting of Solvay Indupa as discontinued operations and for the application of IAS 19 revised.

All P&L indicators referred to this document are to be deemed adjusted, unless otherwise stated as IFRS accounts. Adjusted indicators exclude non-cash PPA accounting impacts related to the Rhodia acquisition.

As an international chemical group, SOLVAY assists industries in finding and implementing ever more responsible and value-creating solutions. The Group is firmly committed to sustainable development and focused on innovation and operational excellence. Solvay serves diversified markets, generating 90% of its turnover in activities where it is one of the top three worldwide.

Solvay