Earnings Release • May 13, 2013
Earnings Release
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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 regulated Information May 13, 2013 06:00 PM CET
Non-binding letter of intent signed with Ineos for the combination of our respective European Chlorovinyls activities into a 50/50 JV
Europe's economic slowdown weighed on demand and trading conditions impacting all of our activities in the region. Our businesses in North America and Asia performed well, but remained subdued in Latin America. Meanwhile, our growth engines continued to deliver. Furthermore, we made significant headway in strengthening our foundations, while our efficiency programs remained on track. The planned chlorovinyls joint venture with Ineos will be a major step in the reshaping of our portfolio and one that will substantially enhance our business profile.
For the moment, we do not observe any significant improvement in the macroeconomic and business environment compared to the preceding months. Even if this challenging context were to persist throughout the year, Solvay is confident in its ability to improve its REBITDA in 2013 compared 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). Moreover, Solvay remains committed to its ambition for 2016 while speeding up its transformation through value-creation initiatives.
| Key data (in million EUR) | Q1 2013 | Q1 2012 | % | IFRS Q1 2013 |
IFRS Q1 2012 |
|---|---|---|---|---|---|
| Net Sales | 3,010 | 3,100 | (3)% | 3,010 | 3,100 |
| REBITDA | 454 | 518 | (12)% | 454 | 473 |
| REBIT | 290 | 355 | (18)% | 257 | 275 |
| Non-recurring | (40) | (68) | (42)% | (40) | (68) |
| EBIT | 250 | 287 | (13)% | 217 | 207 |
| Net financial expenses | (85) | (79) | 6% | (85) | (79) |
| Result before taxes | 166 | 207 | (20)% | 132 | 127 |
| Income taxes | (64) | (83) | (22)% | (53) | (63) |
| Net result from continuing operations | 102 | 124 | (19)% | 79 | 64 |
| Net result from discontinued operations | (1) | (6) | (78)% | (1) | (6) |
| Net income | 101 | 119 | (16)% | 78 | 59 |
| Non controlling interest | (16) | (9) | 79% | (16) | (9) |
| Net income, Groupe share | 86 | 110 | (22)% | 63 | 50 |
| Free cash flow | (17) | 52 | n.m | (17) | 52 |
In the first quarter of 2013, Group net sales amounted to € 3,010 m, down (3)% year-on-year. Net sales grew 1% in Consumer Chemicals as well as in Performance Chemicals but fell (9)% in Advanced Materials and (2)% in Functional Polymers. The (2)% drop in Group volumes was primarily due to challenging market conditions in Europe for Polyamide and Essential Chemicals, persistent sluggish Electronics global demand in Rare Earth Systems and, as anticipated, lower CER volumes in its phase-down. Prices at Group level were stable year-onyear, whilst foreign exchange evolutions were globally unsupportive.
REBITDA amounted to € 454 m in the quarter, down (12)% compared to last year but improving by 6% compared to the preceding fourth quarter. Our growth engines Consumer Chemicals +10% and Advanced Materials +3% performed well but their growth was insufficient to make up for the decline in Performance Chemicals (17)% and Functional Polymers (14)%. As expected, the lower sales of carbon credits, an activity which is being phased-out, weighed on the Group's performance overall. However, in a challenging trading environment, higher selling prices more than offset a rise in raw materials and energy costs year-on-year, resulting in a positive net price effect of € 10 m.
Per segment, Consumer Chemicals posted strong operating results thanks to good dynamics at Novecare and the strategic repositioning of Aroma. In Advanced Materials the sustained positive momentum in Specialty Polymers, Silica and Special Chemicals compensated for the price decline in Rare Earths. Performance Chemicals suffered from sluggish demand in Europe and aggressive price in the export market for Soda Ash, lower margins in Emerging Biochemicals and temporary technical issues at Eco Services customers, contrasting with strong results at Acetow. Functional Polymers continued to be penalized by weak demand and tough trading conditions.
The Group's REBITDA margin on net sales came in at 15.1% against 16.7% last year.
Non recurring Items amounted to € 40 m. They mainly consisted of € (16) m charges related to the integration and efficiency programs across segments (eg. Polyamide) as well as actions related to loss making businesses in Life Science currently under disposal. Other costs namely related to provisions for environmental issues and litigations totalled € (14) m.
EBIT amounted to € 250 m, down (13)% from last year, with amortization and depreciation charges of € (164) m. On an IFRS basis, EBIT was at € 217 m. The difference between IFRS and adjusted figures reflects the PPA depreciation impact of € (33) m.
Net Financial Expenses amounted to € (85) m versus € (79) m in the same quarter of last year. Borrowing costs were at € (46) m, in line with last year. Interest income decreased to € 4 m from € 6 m last year, due to lower interest rates. Q1 2013 included € (4) m losses related to the impact of exchange rates on the US\$ 400 m Rhodia High Yield bond.
The cost of discounting provisions stood stable at € (39) m. Discounting costs included the impact of IAS 19 revised of € (5) m in Q1 2013 versus € (6) m in restated Q1 2012 figures.
Income Taxes amounted to € (64) m and € (53) on an IFRS basis. The difference between IFRS and adjusted figures reflects the tax impact of PPA adjustments. Effective tax rate resulted in 39% and was impacted by losses booked in legal entities with no tax credit. For the full year, the effective tax rate is estimated at around 30%.
Result from discontinued operations related to Solvay Indupa's and Pharma and amounted to € (1) m in Q1 2013 versus € (6) m in Q1 2012.
Net Income amounted to € 101 m versus € 119 m the prior year's equivalent quarter. Net income (Group Share) came in at € 86 m and basic earnings per share at €1.03. On an IFRS basis, Net income (Group share) amounted to € 63 m.
| Key data (in million EUR) | Q1 2013 | Q1 2012 | YoY evolution in % |
|---|---|---|---|
| Net sales | 3,010 | 3,100 | (3)% |
| Consumer Chemicals | 609 | 603 | 1% |
| Advanced Materials | 639 | 702 | (9)% |
| Performance Chemicals | 764 | 755 | 1% |
| Functional Polymers | 981 | 998 | (2)% |
| Corporate and Energy | 17 | 41 | n.m |
| REBITDA | 454 | 518 | (12)% |
| Consumer Chemicals | 113 | 102 | 10% |
| Advanced Materials | 156 | 151 | 3% |
| Performance Chemicals | 155 | 188 | (17)% |
| Functional Polymers | 72 | 84 | (14)% |
| Corporate and Energy | (41) | (7) | n.m |
Consumer Chemicals serves the consumer products markets. Its growing product offering is directed at societal megatrends: demographic growth, the increasing purchasing power of emerging markets, the appearance of new modes of consumption, and a demand for safer, more sustainable products and renewable materials-based solutions.
Advanced Materials offers ultra high-performance applications for aerospace, high-speed trains, health, low-energy tires, automotive emission control, smartphones and hybrid vehicle batteries.
Functional Polymers brings together the chlorovinyls chain and the polyamide activities to serve mainly the construction, infrastructure, automotive and electrical/electronics markets.
Performance Chemicals operates in mature and resilient markets, where success is based on economies of scale, competitiveness and quality of service.
Corporate and Business Services includes the Energy Services GBU and Corporate Functions such as Business Services and the Research & Innovation Center. Energy Services' mission is optimize energy consumption and reduce emissions.
Solvay and INEOS announced in May plans to create a polyvinyl chloride (PVC) producer ranking among the top three worldwide, in a move that would accelerate Solvay's transformation and significantly reshape its business profile. Both companies signed a Letter of Intent to join their European chlorovinyls activities in a proposed 50-50 joint venture that would build on the strengths of combining their skills, assets and geographical footprint to enhance competitiveness. The joint venture, an ambitious and value-creating industrial project, would have pro-forma net sales of € 4.3 bn and REBITDA of € 257 m, based on 2012 figures, with 5,650 employees in 9 countries. The terms of the agreement include an upfront cash payment of € 250 m to Solvay and an exit mechanism under which INEOS in several years time would acquire Solvay's 50 percent joint venture stake and become its sole owner. The proposed transaction is subject to the signing of legally-binding agreements and to customary closing conditions.
Following the recent capacity expansion of guar derivatives in the United States, Novecare announced plans to build a specialty surfactant plant in Germany as well as an alkoxylation facility in Singapore. The facility in Germany, based at an industrial park in Genthin, close to Berlin, will develop and produce surfactant solutions for Solvay's home & personal care and industrial customers serving Central and Eastern Europe. The unit should be operational by the first quarter of 2014 and create about 30 jobs. The large-scale alkoxylation facility in Singapore should by 2015 start producing key monomers to serve downstream surfactant development and manufacturing. The facility will be connected to Shell's new High Purity Ethylene Oxide (HPEO) unit located in the world-class, integrated petrochemical hub of Jurong Island.
Silica will invest € 75 m to build a new 85,000 ton per year Highly Dispersible Silica (HDS) plant in Włocławek, in central Poland. The new plant, expected to be completed in the third quarter of 2014, will offer logistical benefits to customers in Eastern Europe and Russia. Among other HDS products, the new plant will produce Zeosil® Premium, the latest generation of highly dispersible silica, which tire makers use to produce energy-saving tires. Combined with a capacity expansion at its site in Qingdao (China), these two investments will increase Solvay's global highly dispersible silica annual production capacity by 30% to nearly 500,000 tonnes.
Consumer Chemicals Advanced Materials Performance Chemicals Functional Polymers
Key data (in million EUR) Q1 2013 Q1 2012 YoY evolution in % Net sales 609 603 1% Novecare 398 392 2% Coatis 122 125 (2)% Aroma Performance 89 87 2% REBITDA 113 102 10% EBIT 91 79 14% EBIT IFRS 81 69 17%
During the first quarter of 2013, Consumer Chemicals continued to report solid performance with net sales of € 609 m, up 1% versus last year. Novecare sales rose 2% with good performance in most businesses. The growth dynamics across most segments compensated for the temporary slowdown in the derivatized guar activities in the Oil & Gas market resulting from some destocking in the value chain. Sunshield Chemicals, which Solvay acquired last year, is well integrated and already contributing to results.
Coatis reported net sales of € 122 m, down (2)% from last year. Higher prices and higher exports insufficiently offset lower phenol volumes amid weak industrial demand in Brazil.
Net sales of Aroma rose 2% to reach € 89 m in the first quarter. Its successful repositioning in higher value-added markets in the food industry, led to gain market shares.
REBITDA rose 10% to € 113 m against exceptional native guar price conditions enjoyed last year. Novecare benefited from growth across most of its business with good volumes and pricing power, even though it reported a lower contribution in Oil&Gas guar derivatives and in native guar from its JV Hichem.
Coatis operating results improved with positive pricing power and cost control fully compensating for lower phenol demand.
Aroma continued to exhibit better product mix as a result of food repositioning.
| Key data (in million EUR) |
Q1 2013 | Q1 2012 | YoY evolution in % |
|---|---|---|---|
| Net sales | 639 | 702 | (9)% |
| Specialty Polymers | 312 | 323 | (3)% |
| Silica | 104 | 101 | 3% |
| Rare Earth Systems | 82 | 133 | (38)% |
| Special Chemicals | 139 | 145 | (4)% |
| REBITDA | 156 | 151 | 3% |
| EBIT | 107 | 110 | (2)% |
| EBIT IFRS | 98 | 72 | 36% |
Net sales amounted to € 639 m, down (9)% from last year. Overall, volumes and prices declined by (4)%. All business units suffered from lower volumes except Silica. The overall drop in prices is exclusively due to continued pressure in Rare Earth prices.
Specialty Polymers net sales were down (3)%. Although demand grew in most markets, the growth was more than offset by the temporary slowdown in the Energy markets, namely Oil & Gas and Photovoltaic.
Silica's net sales were up 3%, with increased volumes and prices. The growth dynamics in most of the regions and the niche position in the energy efficient tire more than compensated for the difficult market conditions in the European Auto market.
Rare Earth Systems net sales amounted to € 82 m versus € 133 m last year. The good volume resilience in Catalysis did not offset the maintained sluggish demand in Electronics and the continuous drop in prices.
Special Chemicals reported net sales of € 139 m, down (4)%. The Semi-Con and Electronics markets were resilient whilst the Refrigerants performance remained poor. Sales decline also reflected portfolio management actions.
REBITDA improvements were reported by Specialty Polymers, Silica and Special Chemicals driven by favorable pricing power.
Specialty Polymers continued its growth, both sequentially and year-on-year, reflecting pricing.
Silica reported strong performance with operating results growing double digit despite a negative impact of Venezuelan Bolivar devaluation. On the contrary, Rare Earth Systems performance was severely penalized from sustained poor volumes in Electronics and strong decline in prices, (8)% compared to last year, not fully offset by reduction in raw material costs.
Special Chemicals profitability improved as a consequence of the disposal of the loss-making businesses in Life Science and pricing power.
31%
| Key data (in million EUR) |
Q1 2013 | Q1 2012 | YoY evolution in % |
|---|---|---|---|
| Net sales | 764 | 755 | 1% |
| Essential Chemicals | 420 | 436 | (4)% |
| Acetow | 163 | 143 | 14% |
| Eco-Services | 67 | 76 | (11)% |
| Emerging Biochemicals | 114 | 100 | 14% |
| REBITDA | 155 | 188 | (17)% |
| EBIT | 103 | 142 | (27)% |
| EBIT IFRS | 99 | 138 | (28)% |
During Q1 2013, Performance Chemicals reported net sales of € 764 m, up 1% versus Q1 2012 with positive volume growth of 2%. Net Sales of Essential Chemicals amounted to € 420 m, down (4)%. Sales volumes in Soda Ash declined by (3)% overall with the satisfactory demand in North and Latin America more than offset by the (8)% volumes drop occurred in Europe, particularly in the domain of Flat Glass addressing the depressed Construction and Automotive markets in the region.
The export market suffered from the difficult conditions in Asia, which brought regional competitors into other markets resulting in aggressive prices and margin erosion. Selling prices increased in Latin America and stood stable in Europe and North America. Bicarbonate activity showed a sustained level with stable volumes and price increases. Demand remained satisfactory in Hydrogen Peroxide in Asia and NAFTA, which compensated for lower volumes in Europe as a result from the slowdown of the pulp and paper industry.
Net sales of Acetow amounted to € 163 m, up 14% versus last year, resulting from both volume and selling price increases.
Eco Services net sales were down (11)% at € 67 m, impacted by lower volumes due to customer turnarounds.
Emerging Biochemicals reported net sales of € 114 m, up 14%.
The demand in Epichlorohydrin progressively recovered whilst the domestic vinyls business was impacted by temporary North East Asian competition, resulting in spreads reduction and price pressure.
REBITDA of Performance Chemicals amounted to € 155 m, down (17)% versus last year. In Essential Chemicals, the good performance of soda ash in the US partially offset the depressed demand in Europe. Pricing power remained positive thanks to price increases and better product mix.
Acetow reported a good performance driven by continuous growing demand and strong pricing power.
Eco Services contribution slowdown with a temporary drop in volumes and despite positive pricing power
Emerging Biochemicals operating performance was impacted by lower volumes and reduced margins in vinyls. Demand in Epichlorohydrin started showing a progressive recovery
| Key data (in million EUR) |
Q1 2013 | Q1 2012 | YoY evolution in % |
|---|---|---|---|
| Net sales | 981 | 998 | (2)% |
| Polyamide | 413 | 455 | (9)% |
| Chlorovinyls | 568 | 543 | 4% |
| REBITDA | 72 | 84 | (14)% |
| EBIT | 23 | 34 | (34)% |
| EBIT IFRS | 18 | 27 | (33)% |
Net sales amounted to € 981 m, down (2)% versus last year with volume down (1)% and stable prices. Polyamide reported net sales of € 413 m, down (9)%, compared to last year. Overall market conditions remained challenging, with lower volumes and strong price pressure from competitors. Chlorovinyls reported net sales of € 568 m, up 4% year-on-year. Despite the continued deterioration of the European PVC market, down (11)% compared to last year, Solvay volume overall increased thanks to exports.
REBITDA amounted to € 72 m, down (14)% year-on-year. Difficult market conditions and lower demand impacted negatively the operating performance while capacity utilization was helped by sustained manufacturing ahead of scheduled turnarounds. In Chlorovinyls, the profitability were practically flat whereby higher operating leverage was compensated by unfavorable product mix.
| Key data (in million EUR) |
Q1 2013 | Q1 2012 | YoY evolution in % |
|---|---|---|---|
| Net sales | 17 | 41 | n.m |
| Energy Services | 17 | 40 | (59)% |
| CBS and NBD | 1 | 1 | 0% |
| REBITDA | (41) | (7) | n.m |
| EBIT | (75) | (79) | 6% |
| EBIT IFRS | (80) | (101) | (21)% |
REBITDA amounted to € (41) m versus € (7) m last year. This evolution is primarily explained by Solvay Energy Services which as expected registered lower volumes of CER in its phase-down. During the first quarter 2013, 1 m tons of CER were sold against 3.5 m tons at the same period last year.
For the full year 2013, 4.5 m tons of CER are in the pipeline relative to 2012 industrial efforts and are already hedged at an average price of € 13.2 per ton that compared with 14 m tons sold in 2012 at an average price of € 11.1 per ton.
| 1st Quarter | |||||
|---|---|---|---|---|---|
| Million EUR (except for per -share figures in EUR) |
IFRS | Adjus ted2 |
|||
| 2013 | 2012 | 2013 | 2012 | ||
| Sales | 3,155 | 3,198 | 3,155 | 3,198 | |
| Other non-core revenues | 145 | 98 | 145 | 98 | |
| Net sales | 3,010 | 3,100 | 3,010 | 3,100 | |
| Cost of goods sold | (2,503) | (2,579) | (2,503) | (2,534) | |
| Gross margin | 652 | 619 | 652 | 664 | |
| Commercial and administrative costs | (327) | (272) | (327) | (272) | |
| Research and development costs | (57) | (63) | (57) | (63) | |
| Other operating gains and losses | (34) | (38) | (1) | (2) | |
| Earnings from associates and joint ventures accounted for | |||||
| using the equity method | 23 | 29 | 23 | 29 | |
| REBITDA | 454 | 473 | 454 | 518 | |
| Depreciation and Amortization (recurring) | (198) | (197) | (164) | (162) | |
| REBIT | 257 | 275 | 290 | 355 | |
| Non-recurring items | (40) | (68) | (40) | (68) | |
| EBIT | 217 | 207 | 250 | 287 | |
| Cost of borrowings | (46) | (45) | (46) | (45) | |
| Interest on lendings and short-term deposits | 4 | 6 | 4 | 6 | |
| Other gains and losses on net indebtedness | (4) | (0) | (4) | (0) | |
| Cost of discounting provisions | (39) | (39) | (39) | (39) | |
| Income/loss from available-for-sale investments | - | (0) | - | (0) | |
| Result before taxes | 132 | 127 | 166 | 207 | |
| Income taxes | (53) | (63) | (64) | (83) | |
| Result from continuing operations | 79 | 64 | 102 | 124 | |
| Result from discontinued operations | (1) | (6) | (1) | (6) | |
| Net income | 78 | 59 | 101 | 119 | |
| Non-controlling interests | (16) | (9) | (16) | (9) | |
| Net income Solvay share | 63 | 50 | 86 | 110 | |
| Basic EPS from continuing operations | 0.77 | 0.66 | 1.05 | 1.42 | |
| Basic EPS from discontinued operations | (0.02) | (0.05) | (0.02) | (0.07) | |
| Basic EPS | 0.75 | 0.61 | 1.03 | 1.35 | |
| Diluted EPS from continuing operations | 0.77 | 0.66 | 1.04 | 1.41 | |
| Diluted EPS from discontinued operations | (0.02) | (0.05) | (0.02) | (0.07) | |
| Diluted EPS | 0.74 | 0.61 | 1.02 | 1.34 |
1 Including the effects of the adoption of IAS-19 revised as of January 1, 2012 - see note 2
2 Exclude non cash PPA accounting impacts related to the Rhodia acquisition
The table hereafter reconciles the Q1 2013 IFRS results (which include PPA impacts) with the Q1 2013 Adjusted results (which exclude PPA impacts).
| Key data (in million EUR) | IFRS Q1 2013 | PPA impacts |
Adjusted Q1 2013 |
|---|---|---|---|
| Net Sales | 3,010 | 3,010 | |
| REBITDA | 454 | 454 | |
| REBIT | 257 | 33 | 290 |
| Non-recurring items | (40) | (40) | |
| EBIT | 217 | 33 | 250 |
| Net financial expenses | (85) | (85) | |
| Result before taxes | 132 | 33 | 166 |
| Income taxes | (53) | (10) | (64) |
| Net result from continuing operations | 79 | 23 | 102 |
| Net result from discontinued operations | (1) | (1) | |
| Net income | 78 | 23 | 101 |
| Non controlling interests | (16) | (16) | |
| Net income, Group share | 63 | 23 | 86 |
| Million EUR | Q1 | |
|---|---|---|
| 2013 | 2012 | |
| Net income | 78 | 59 |
| Gains and losses on available-for-sale financial assets | 7 | 9 |
| Gains and losses on hedging instruments in a cash flow hedge | (25) | 15 |
| Actuarial gains and losses on defined benefit pension plans | (6) | (63) |
| Currency translation differences | 128 | (82) |
| Share of other comprehensive income of associates and joint ventures ac counted for using the equity method |
19 | 20 |
| Income tax relating to components of other comprehensive income | (11) | (7) |
| Other comprehensive income, net of related tax effects | 111 | (108) |
| Comprehensive income attributed to | 189 | (49) |
| Owners of the parent | 158 | (60) |
| Non-controlling interests | 32 | 11 |
| Million EUR | March 31, 2013 | De cember 31, 2012 |
|---|---|---|
| Non-current assets | 11,763 | 11,602 |
| Intangible assets | 1,439 | 1,462 |
| Goodwill | 2,719 | 2,717 |
| Tangible assets | 5,434 | 5,393 |
| Available-for-sale investments | 75 | 66 |
| Investments in joint ventures and associates | ||
| equity method | 914 | 869 |
| Other investments | 122 | 123 |
| Deferred tax assets | 587 | 548 |
| Loans and other non-current assets | 473 | 424 |
| Current assets | 6,866 | 6,728 |
| Inventories | 1,553 | 1,422 |
| Trade receivables | 1,849 | 1,657 |
| Income tax receivables | 33 | 13 |
| Dividends receivable | 1 | 0 |
| Other current receivables - Financial instruments | 839 | 758 |
| Other current receivables – Other | 561 | 685 |
| Cash and cash equivalents | 1,564 | 1,768 |
| Assets held for sale | 467 | 425 |
| TOTAL ASSETS |
18,629 | 18,330 |
| Total equity | 6,793 | 6,574 |
| Share capital | 1,271 | 1,271 |
| Reserves | 5,049 | 4,859 |
| Non-controlling interests | 474 | 444 |
| Non-current liabilities | 8,298 | 8,226 |
| Long-term provisions: employee benefits | 2,990 | 2,987 |
| Other long-term provisions | 1,205 | 1,214 |
| Deferred tax liabilities | 555 | 489 |
| Long-term financial debt | 3,325 | 3,321 |
| Other non-current liabilities | 223 | 216 |
| Current liabilities | 3,538 | 3,530 |
| Short-term provisions: employee benefits | 59 | 63 |
| Other short-term provisions | 264 | 243 |
| Short-term financial debt | 391 | 331 |
| Trade liabilities | 1,650 | 1,617 |
| Income tax payable | 66 | 69 |
| Dividends payable | 11 | 103 |
| Other current liabilities | 713 | 768 |
| Liabilities linked to assets held for sale | 383 | 337 |
| TOTAL EQUITY & LIABILITIES |
18,629 | 18,330 |
Equity attributable to equity holders of the parent
| Revaluation reserve (fair value) |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| EUR Million | capital re Sha |
ums ue remi Iss p |
Retained rnings ea |
ury s re Treas sha |
ranslation erences Currency diff t |
ments Available r-sale invest fo |
Cash flow hedges |
pension Defined benefit |
Total | rolling erests Non cont int |
uity Total eq |
| Balance at 31/12/2012 | 1,271 | 18 | 6,038 | (160) | (453) | 17 | 15 | (593) | 6,152 | 444 | 6,596 |
| IAS19 Revised | (40) | 18 | (22) | (1) | (23) | ||||||
| Balance at 31/12/2012 after IAS19 Revised |
1,271 | 18 | 5,998 | (160) | (453) | 17 | 15 | (575) | 6,130 | 443 | 6,574 |
| Net profit for the period | 63 | 63 | 16 | 78 | |||||||
| Items of OCI | 131 | 7 | (23) | (19) | 95 | 16 | 111 | ||||
| Comprehensive income | 0 | 0 | 63 | 0 | 131 | 7 | (23) | (19) | 158 | 32 | 189 |
| Cost of stock options | 2 | 2 | 2 | ||||||||
| Dividends | 0 | (1) | (1) | ||||||||
| Acquisitions/sale of treasury shares |
30 | 30 | 30 | ||||||||
| Balance at 31/03/2013 | 1,271 | 18 | 6,063 | (131) | (323) | 24 | (9) | (594) | 6,320 | 474 | 6,793 |
| UES | ||
|---|---|---|
| Million EUR | MARCH 2013 |
MARCH 2012 |
| EBIT from continuing operations | 217 | 207 |
| EBIT from discontinued operations | 8 | (3) |
| EBIT | 225 | 204 |
| Depreciation, amortization and impairments | 199 | 206 |
| Changes in working capital | (173) | (220) |
| Changes in provisions | (51) | (34) |
| Dividends received from associates and joint ventures accounted for using equity me | ||
| thod | 5 | 6 |
| Income taxes paid | (61) | (20) |
| Equity earnings (-) | (23) | (29) |
| Others | 16 | 79 |
| Cash flow from operating activities | 136 | 192 |
| Acquisition (-) of subsidiaries | 0 | 0 |
| Acquisition (-) of investments - Other | (16) | (7) |
| Sale (+) of subsidiaries | 0 | 0 |
| Sale (+) of investments - Other | 5 | 3 |
| Acquisition (-) of tangible and intangible assets | (156) | (144) |
| Sale (+) of tangible and intangible assets | 15 | 8 |
| Income from available-for-sale investments | 0 | 0 |
| Changes in non-current financial assets | (13) | (4) |
| Cash flow from investing activities | (166) | (144) |
| Capital increase (+) / redemption (-) | 0 | 0 |
| Acquisition (-) / sale (+) of treasury shares | 30 | 100 |
| Changes in borrowings | 52 | 59 |
| Changes in other current financial assets | (80) | (179) |
| Cost of borrowings | (51) | (59) |
| Interest on lendings and term deposits | 4 | 6 |
| Other | (27) | (68) |
| Dividends paid | (104) | (90) |
| Cash flow from financing activities | (177) | (231) |
| Net change in cash and cash equivalents | (206) | (183) |
| Currency translation differences | 14 | (9) |
| Opening cash balance | 1,778 | 1,943 |
| Ending cash balance | 1,586 | 1,752 |
| FREE CA SH FLOW |
||
| From continuing operations | (161) | (42) |
| From discontinued operations | 144 | 94 |
| Total free cash flow | (17) | 52 |
| Q1 | |||
|---|---|---|---|
| Million EUR | 2013 | 2012 | |
| Cash flow from operating activities | 150 | 98 | |
| Cash flow from investing activities | (7) | (4) | |
| Cash flow from financing activities | 2 | (45) | |
| Net change in cash and cash equivalents | 146 | 49 |
Cash flow from operating activities was € 136 m compared to € 192 m last year. Besides an EBIT of € 225 m, it consisted of:
Cash flow from investing activities was € (166) m and capital expenditures amounted to € (156) m including € (6) m from discontinued operations
Free Cash Flow was € (17) m, and included cash flow from discontinued operations for € 144 m linked to postclosing adjustments subsequent to the sale of the pharmaceutical activities and Solvay Indupa
Solvay is a public limited liability company governed by Belgian law and quoted on NYSE Euronext Brussels and NYSE Euronext Paris.
These condensed consolidated financial statements were authorized for issue by the Board of Directors on May 13, 2013.
The following unusual items had an impact on the condensed consolidated financial statements for the three months ended March 31, 2013:
Solvay prepares its condensed consolidated financial statements on a quarterly basis, in accordance with IAS 34 Interim financial reporting. They do not include all the information required for the preparation of the annual financial statements and should be read in conjunction with the consolidated financial statements for the year ended December 31, 2012.
The condensed consolidated financial statements for the three months ended March 31, 2013 were prepared using the same accounting policies as those adopted for the preparation of the consolidated financial statements for the year ended December 31, 2012, except for the adoption of IAS-19 revised.
On 16 June 2011, the IASB published a revised IAS-19 Employee Benefits, applicable for annual periods beginning on or after 1 January 2013. Solvay applies the IAS-19 revised for the first time in the condensed consolidated financial statements as of March 31, 2013.
The comparative financial statements have been restated to include the effects of IAS-19 revised as of January 1, 2012. The effects of this restatement are as follows:
On the consolidated statement of financial position ended December 31, 2012:
The impact of the IAS 19 revision on the measurement of the related provisions is limited to the inclusion of the taxes on contributions.
On the consolidated income statement for the three months ended March 31, 2012, net result was negatively impacted for € 6 m. This is mainly due to the replacement of the interest cost on the defined benefit obligation and the expected return on plan assets with a net interest cost based on the net defined benefit liability and the discount rate.
Effective January 1, 2013, Solvay is organized into five Operating Segments.
Consumer Chemicals serves the consumer products markets. Its growing product offering is directed at societal megatrends: demographic growth, the increasing purchasing power of emerging markets, the appearance of new modes of consumption, and a demand for safer, more sustainable products and renewable materials-based solutions.
Advanced Materials offers ultra high-performance applications for aerospace, high-speed trains, health, low-energy tires, automotive emission control, smartphones and hybrid vehicle batteries.
Performance Chemicals operates in mature and resilient markets, where success is based on economies of scale, competitiveness and quality of service
Functional Polymers brings together the chlorovinyls chain and the polyamide activities to serve mainly the construction, infrastructure, automotive and electrical/electronics markets.
Corporate & Business Services includes the Energy Services GBU and Corporate Functions such as Business Services and the Research & Innovation Center. Energy Services' mission is optimize energy consumption and reduce emissions.
Under the current segment reporting, there are changes in the allocation criteria of formerly non-allocated elements and other structure costs between the corporate functions and operating segments.
On 13 February 2013 the Board of Director of Solvay SA decided to grant two long-term incentive plans for part of its key executives:
The details of the stock options plan are as follows:
| Stock option plan | |
|---|---|
| Number of stock options | 405,716 |
| Grant date | March 25, 2013 |
| Acquisition date | January 1, 2017 |
| Vesting period | Between March 25, 2013 and December 31, 2016 |
| Exercice price | 111,01 € |
| Exercice period | Between January 1, 2017 and March 24, 2021 |
This plan is accounted for as an equity-settled share-based plan. As of March 31, 2013, the impact on the income statement is immaterial.
The details of the Performance Share Units plan are as follows:
| 1st half of PSUs granted | 2nd half of PSUs granted | ||
|---|---|---|---|
| Number of PSU | 217,206 | ||
| Grant date | March 25, 2013 | ||
| Acquisition date | December 31, 2015 | ||
| Vesting period | Between March 25, 2013 and December 31, 2015 | ||
| Performance conditions | % of PSUs granted depending upon the level of REBITDA at closing Financial Year 2015 |
% of PSUs granted depending upon the level of CFROI at closing Financial Year 2015 |
|
| Validation of perfor mance conditions |
By the Board of Directors, subject to confirmation by Solvay statutory auditors |
The Performance Share Units is qualified as a cash-settled share-based plan. As of March 31, 2013, the impact on the income statement and statement of financial position is immaterial.
Compared to December 31, 2012, there are no changes in valuation techniques.
For all financial instruments not measured at fair value in Solvay balance sheet, the fair value of those financial instruments is not significantly different from the ones as published in the note 34.1 of the consolidated financial statements for the year ended December 31, 2012.
For all financial instruments measured at fair value in Solvay balance sheet, the fair value of those instruments as of March 31, 2013 is not significantly different from the ones as published in the note 34.3 "Financial instruments measured at fair value in the consolidated statement of financial position" of the consolidated financial statements for the year ended December 31, 2012.
During the three months ended March 31, 2013, there were neither reclassifications between fair value levels, nor significant changes in the fair value of financial assets and liabilities measured at level 3.
During January 1, 2013 and March 31, 2013, 490.960 stock options were exercised.
| 3 months 2013 | 3 months 2012 | 2012 | |
|---|---|---|---|
| Number of shares issued at the end of the period | 84,701,133 | 84,701,133 | 84,701,133 |
| Average number of shares for IFRS calculation of earnings per share |
83,323,158 | 81,534,755 | 82,304,773 |
| Average number of shares for IFRS calculation of diluted income per share |
84,098,867 | 81,817,338 | 82,695,868 |
On April 8, 2013, the third wave of the Rhodia integration plan was announced to the European Workers Council. The corresponding restructuring provision will be booked in the June 30, 2013 financial statements.
On May 7, 2013, Solvay and Ineos signed a non-binding letter of intent for the combination of our respective European Chlorovinyls activites into a 50/50 JV.
Adjusted performance indicators exclude non-cash Purchase Price Allocation (PPA) accounting impacts related to the Rhodia acquisition.
Adjusted net income (Solvay share) divided by the weighted average number of shares, after deducting own shares purchased to cover stock option programs
Net income (Solvay share) excluding non-cash Purchase Price Allocation (PPA) accounting impacts related to the Rhodia acquisition
Net result excluding non-cash Purchase Price Allocation (PPA) accounting impacts related to the Rhodia acquisition
REBIT excluding non-cash Purchase Price Allocation (PPA) accounting impacts related to the Rhodia acquisition
Net income (Solvay's share) divided by the weighted average number of shares, after deducting own shares purchased to cover stock option programs
Cash flow from operating activities (including dividends from associates and joint ventures)+ cash flow from investing activities (excluding acquisitions and sales of subsidiaries and other investments).
International Financial Reporting Standards
Net financial expenses comprises cost of borrowings minus accrued interests on lendings and short-term deposits, plus other gains (losses) on net indebtedness and costs of discounting provisions (namely, related to Post-employment benefits and HSE liabilities)
Sales of goods and value added services corresponding to Solvay's know-how and core business. Net sales exclude other revenues primarily comprising commodity and utility trading transactions and other revenue deemed as incidental by the Group
Operating result, i.e. EBIT before non-recurring items
REBIT before depreciation and amortization
May 21, 2013: Payment of the balance of the 2012 dividend (coupon no. 92). Trading ex-dividend as from May 16, 2013 July 31, 2013: Announcement of the 2nd quarter and of the six months 2013 results (at 07:30 am)
October 25, 2013: Announcement of the 3rd quarter and the nine months 2013 results and the interim dividend for 2013 (payable in January 2014, coupon no. 93) (at 07:30)
November 6, 2013: Capital Markets Day
Maria Alcón-Hidalgo Investor Relations +32 2 264 1984 E-mail: [email protected]
Edward Mackay Investor Relations +32 2 264 3687 E-mail: [email protected]
Lamia Narcisse Media Relations +33 1 53 56 59 62 E-mail: [email protected]
Caroline Jacobs Media Relations +32 2 264 1530 E-mail: [email protected]
Solvay S.A. Rue de Ransbeek, 310 1120 Bruxelles Belgique T: +32 2 264 2111 F: +32 2 264 3061
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. The Group is headquartered in Brussels, employs about 29,000 people in 55 countries and generated 12.4 billion euros in net sales in 2012. Solvay SA SOLB.BE) is listed on NYSE Euronext in Brussels and Paris (Bloomberg: SOLB.BB - Reuters: SOLBt.BR).
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