Earnings Release • May 7, 2012
Earnings Release
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1st quar ter 2012 result sin terim s tatemen t
regulated information May 7, 2012 6:00 pm Brussels time
FORENOTE: All references to year-on-year evolution must be understood on a pro forma basis for 2011, as if the acquisition of Rhodia had become effective from the 1st of January 2011. On a pro forma basis Solvay 2011 historical figures have been restated in order to have harmonized accounting policies among the two former Groups, policies that are to be used by the new Solvay going forward. Pro forma results exclude impacts from i) purchase price allocation entries; ii) non-recurring acquisition costs related to the Rhodia transaction and iii) financial revenues on cash deposits and investments.
Significant recovery in activity levels compared to previous quarter. REBITDA at EUR 523 million, a 47% increase versus the 4th quarter of 2011, (9)% down versus 1st quarter 2011
Our first quarter's performance continued to prove the global resilience of Solvay's portfolio. The Group benefited from a notable recovery across businesses and geographies compared to the weak level of activity suffered at the end of past year. In the current macro-economic context where visibility is still limited, the Group will continue to operate a strict financial discipline with a strong focus on cash and priority given to businesses identified as "growth engines".
Strength in business growth engines should continue whilst in its most cycle-sensitive businesses the Group foresees challenging market conditions globally to remain through the year. Solvay is confident in the success of the ongoing integration and of the numerous operational excellence initiatives that represent important competitive advantages going forward. The first important cost efficiencies should be attained already in the current year. In this context, Solvay expects to achieve a full-year REBITDA similar to the strong 2011 pro forma level.
| Key data (in million EUR ) |
Adjusted1 1Q 2012 |
Pro Forma 2 1Q 2011 |
YoY evolution (%) |
IFRS 1Q 2012 |
IFRS 1Q 2011 |
|---|---|---|---|---|---|
| Net Sales3 | 3,239 | 3,144 | 3 | 3,239 | 1,664 |
| REBITDA4 | 523 | 574 | -9 | 523 | 285 |
| REBIT | 352 | 411 | -14 | 317 | 197 |
| Non-recurring items | -69 | 16 | n.a. | -114 | -15 |
| EBIT | 283 | 427 | -34 | 203 | 182 |
| Net financial expenses | -78 | -79 | - 1 |
-78 | -40 |
| Result before taxes | 204 | 345 | -41 | 124 | 141 |
| Income taxes | -80 | -91 | -12 | -60 | -43 |
| Net result from continuining operations | 123 | 254 | -52 | 63 | 98 |
| Net result from discontinued operations5 | 1 | 1 | n.a. | 1 | 1 |
| Net income | 125 | 255 | -51 | 65 | 99 |
| Non controlling interests | -9 | -15 | n.a. | -9 | -13 |
| Net income, Group share | 116 | 240 | -52 | 56 | 86 |
| Free cash flow6 | 52 | 87 | -40 | 52 | -45 |
Adjusted performance indicators exclude Purchase Price Allocation (PPA) non-cash accounting impacts related to the Rhodia acquisition.
Pro forma figures shown in the income statement (a) as if the acquisition had become effective from 1st of January 2011, (b) harmonizing accounting principles and (c) eliminating the Purchase Price Allocation (PPA) impacts.
Net sales comprise the 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.
REBITDA: operating results before depreciation and amortization, non-recurring items, financial charges and income taxes.
Compared with pro forma 1st quarter 2011
Net sales REBITDA Adj. net income EUR 3,239 million EUR 523 million EUR 125 million + 3% -9%
| Key data (in million EUR ) |
1Q 2012 | Pro forma1 1Q 2011 |
YoY evolution in % |
|---|---|---|---|
| Net sales | 3,239 | 3,144 | 3% |
| Plastics | 951 | 953 | 0% |
| Chemicals | 736 | 711 | 4% |
| Rhodia | 1,552 | 1,480 | 5% |
| REBITDA | 523 | 574 | -9% |
| Plastics | 137 | 167 | -18% |
| Chemicals | 154 | 138 | 12% |
| Rhodia | 261 | 298 | -12% |
| New Business Development2 | -9 | -10 | -12% |
| Corporate and Business Support2 | -20 | -20 | 2% |
Pro forma figures shown in the income statement (a) as if the acquisition had become effective from 1st of January 2011, (b) harmonizing accounting principles and (c) eliminating the Purchase Price Allocation (PPA) impacts.
Part of the corporate costs of Rhodia Sector were booked as Corporate and Business or New Business Development costs in pro forma 1Q 2011.
Net sales amounted to EUR 3,239 million, up by 3%. The improvement was resulting from both the Chemicals and the Rhodia Sector. Selling price increases of 4%, combined with a small positive scope and foreign exchange impacts were partly compensated by (3) % lower volumes.
REBITDA amounted to EUR 523 million, down by (9)% compared with the very demanding comparable of last year in the Plastics Sector and in the Rhodia Sector. On a sequential basis REBITDA jumped 47% from EUR 355 million reflecting a significant improvement in activity levels, primarily at our most cycle-sensitive businesses. Volume Price Forex Scope Total
The Group's vision is to build a strong leader participating in the reshaping of the global chemical industry. The execution of its strategy will be mainly driven by operational excellence and growth based on innovation, capacity expansion in fast-growing regions and value accretive bolt-on acquisitions. The Group's strong fundamentals combined with its ongoing major transformation should allow to generate – at constant scope – a recurring EBITDA of EUR 3 billion in 2016
| Key data (in million EUR ) |
1Q 2012 | Pro forma1 1Q 2011 |
YoY evolution in % |
|---|---|---|---|
| Net sales | 951 | 953 | 0% |
| Specialty Polymers | 322 | 315 | 2% |
| Vinyls | 629 | 638 | -1% |
| Vinyls Europe | 353 | 381 | -7% |
| Vinyls Asia | 94 | 66 | 43% |
| Vinyls South America | 139 | 144 | -4% |
| Plastics Integration | 43 | 46 | -8% |
| REBITDA | 137 | 167 | -18% |
| Specialty Polymers | 93 | 98 | -5% |
| Vinyls | 44 | 68 | -35% |
Net sales of Specialty Polymers increased by 2% compared to the very high level reached in the 1st quarter of 2011. On a year-on-year basis, price increases of 5% were offset by a volume decrease of (5)%, while forex impacts were positive by 2%. Volume was impacted by the technical problems at the Spinetta plant (fluor polymers) following severe winter conditions in February. All end-markets remained very strong, except for the construction and semi-conductor sectors that were flat.
REBITDA amounted to EUR 93 million, down by 5 % compared to last year. The profitability of this activity remained excellent with a margin of 29 % despite the production incidence at Spinetta, the impact of which is estimated at EUR (10) million. The performance of these activities is expected to remain strong going forward due to sound demand dynamics, the implementation of a structured program to increase the yield of the plants and the start-up of the announced new capacities.
Net sales of Vinyls amounted to EUR 629 million, 21% up sequentially and a small decrease (1)% versus the 1st quarter of 2011. Total volume increased by 12% quarter-inquarter, and dropped by (5)% year-on-year. In Europe, the demand for PVC improved compared to the last quarter of 2011, supported by restocking along the whole value chain in an environment of rising prices. However, the European construction sector remains weak. The demand level was good in South America and excellent in Thailand. The production unit of Vinythai runs at full capacity.
REBITDA amounted to EUR 44 million, down from the strong 1st quarter of 2011 (EUR 68 million) but up compared to the 4th quarter of last year (EUR (9) million). In Europe, the operating result continued to suffer from margin pressure. The rising costs of ethylene and electricity erased most of the effect of higher sales prices. The important efforts to reduce costs which started in the second half of last year were continued. In South America, pressure from international competition impacted severely the result of Solvay Indupa through margin squeeze while domestic demand itself remained sound. In Thailand, the performance of Vinythai was very satisfactory. It reported a marked increase in results and margin yoy in a context of strong domestic and regional demand.
Solvay announced the sale of its 50% stake in Pipelife to Wienerberger, one of the world's leading suppliers of plastic pipe systems.
Solvay will receive EUR 172 million in cash for the shares, including a special dividend of EUR 10 million. The deal represents an Enterprise Value of about EUR 257 million for its 50% stake.
Closing is expected in the second quarter of 2012, after the usual antitrust authorizations.
| Key data (in million EUR ) |
1Q 2012 | Pro forma1 1Q 2011 |
YoY evolution in % |
|---|---|---|---|
| Net sales | 736 | 711 | 4% |
| Essential Chemicals | 580 | 565 | 3% |
| EMEA2 | 376 | 360 | 5% |
| North America | 125 | 122 | 2% |
| South America | 32 | 33 | -4% |
| Asia Pacific | 48 | 52 | -8% |
| Special Chemicals | 156 | 145 | 7% |
| REBITDA | 154 | 138 | 12% |
| Essential Chemicals | 142 | 114 | 25% |
| Special Chemicals | 12 | 23 | -48% |
Adjusted for harmonization of Solvay's and Rhodia's accounting rules.
Europe, Middle-East and Africa
Net sales of Essential Chemical amounted to EUR 580 million, up by 3% compared to the 1st quarter of 2011.
• The demand for soda ash remained at a good level in the first three months of 2012. The strong performance of the container glass sector offset the slowdown of the flat glass sector, the latter explained by the sluggish developments of the European construction sector. In the USA, we continued to export an important part of our production to Asia and Latin America. Demand in China somewhat weakened. Bicarbonate sales remained at a high level. Net sales of soda ash and its derived specialties also benefited from the price increases, both in Europe and in the USA.
• In caustic soda the demand remained satisfactory in the 1st quarter while supply was constrained due to technical problems encountered by a number of PVC producers. The sales prices were again on the rise in the first quarter, which put them at a level well above last year.
• Activities in epicholorohydrin progressively recovered in the beginning of 2012. The gradual increases in volumes compared to the 4th quarter of 2011 did not result in a significant improvement of the operating performance due to the rising cost of propylene.
• In hydrogen peroxide net sales were similar to those of the 1st quarter 2011. Volumes remained sustained by a good demand from pulp and paper though this industry is slowing down in Europe [but grows elsewhere]. The other end markets such as the mining industry and environmental applications continued to perform well. In percarbonate, sales were weak. Sales prices of hydrogen peroxide rose at the start of 2012, both in Europe and in the United States.
REBITDA amounted to EUR 142 million, up by 25% compared to the 1st quarter 2011 (EUR 114 million). The higher selling prices in an environment of globally sustained demand and the favorable sales mix, coupled with stabilizing energy costs accounted for the increased operating performance with margin up to 24% versus 20% last year.
Net sales amounted to EUR 156 million. Despite some improvement compared to the 4th quarter of 2011, notably in Electronics, sales volumes remain poor and were (9) % below those of the comparable period last year.
REBITDA amounted to EUR 12 million, compared to EUR 1 million in the 4th quarter of 2011 and EUR 23 million in the 1st quarter of 2011. The activity in fluorinated chemicals remained globally weak since mid last year although is improving gradually. The operating results improved sequentially thanks to a progressive recovery in volumes for the electronics division. Still, operating results were impacted by increased costs in raw materials and negative performance from the Life science division.
Vinythai, a Thai affiliate of Solvay, successfully commissioned its world-class biosourced Epichlorohydrin plant with a capacity of 100,000 metric tons per year and based on Solvay's innovative Epicerol® technology in Map Ta Phut, Thailand. The Epicerol® technology is based on the transformation of glycerin obtained as byproduct from processing vegetable oils into biofuel.
Epichlorohydrin is an essential feedstock for the production of epoxy resins, increasingly used in applications such as corrosion protection coatings as well in the electronics, automotive and aerospace industry.
| Key data (in million EUR ) |
1Q 2012 | Pro forma1 1Q 2011 |
YoY evolution in % |
|---|---|---|---|
| Net sales2 | 1,554 | 1,480 | 5% |
| Consumer Chemicals | 598 | 566 | 6% |
| Advanced Materials | 238 | 184 | 29% |
| Polyamide Materials | 458 | 442 | 4% |
| Acetow & Eco Services | 219 | 207 | 6% |
| Energy Services | 40 | 52 | -23% |
| Corporate & Others | 1 | 29 | -97% |
| REBITDA | 261 | 298 | -12% |
| Consumer Chemicals | 105 | 92 | 14% |
| Advanced Materials | 49 | 54 | -9% |
| Polyamide Materials | 38 | 68 | -44% |
| Acetow & Eco Services | 54 | 46 | 17% |
| Energy Services | 33 | 44 | -25% |
| Corporate & Others | -18 | -6 | 200% |
Pro forma figures shown in the income statement (a) as if the acquisition had become effective from 1st of January 2011, (b) harmonizing accounting principles and (c) eliminating the Purchase Price Allocation (PPA) impacts.
Total net sales of 1,554 includes EUR 2 million intercompany sales that are excluded in the Group consolidated sales.
Consumer Chemicals reported net sales of EUR 598 million, up by 6% compared to last year, and continued to enjoy growth across segments.
Novecare continued its strong performance driven by its innovative solutions for shale Oil & Gas exploitation and the Agro market. Its industrial segment progressively recovered while the Home & Personal care segment was impacted by unfavourable volumes from Feixiang plant downtime. Coatis sales were down due to lower volumes (8)% against a strong phenol activity comparative base last year. Aroma Performance continues implementing its strategic Food Safety repositioning.
REBITDA amounted to EUR 105 million, up by 14% compared to 1st quarter 2011 mainly driven by Novecare which enjoyed good volumes and pricing power while Aroma was impacted by less favorable conditions and Coatis suffered from the 1st quarter 2011 exceptionally high reference. REBITDA margin improved to 18% compared to 16% last year.
In the 2nd quarter 2012, Consumer Chemicals should continue to report good performance through Guar dynamics.
Net sales amounted to EUR 238 million, up by 29% yearon-year. Advanced Materials continued to benefit from a product portfolio well-suited to global market sustainable mega trends and an unmatched competitive positioning.
Within the cluster, Silica experienced continued good tyre demand and price increases remained strong (7% yoy). Rare Earth Systems benefited from strong prices while volumes were down due to the exceptional high level of demand in Electronics in the 1st quarter of 2011. Demand in Catalysis remained steady.
REBITDA amounted to EUR 49 million, down by (8)% compared to 1st quarter 2011. Net pricing power mainly driven by Catalysis was more than offset by lower volumes in Electronics. REBITDA margin reached 21%, and is as anticipated, lower than the 29% margin achieved under last year's exceptional pricing conditions.
Rare Earth Systems has a unique and optimized competitive sourcing which combines presence in China and technological-edge recycling know-how.
Factors influencing net sales (% of 1Q 11 net sales)
Rhodia and Tantalus Rare Earths AG announced the signing of a Letter of Intent ("LOI") relating to their technical cooperation for the development of an optimal process for generating rare earth concentrates from the large near surface Tantalus rare earth project in Madagascar and the exclusive supply of these rare earth products to Rhodia.
The Tantalus project is emerging as one of the largest clay hosted rare earth resources outside of China, with 130Mt of rare earth oxide ("REO") bearing clays already identified from a small portion of the project area on the Ampasindava Peninsula in north-western Madagascar. Analysis of the Tantalus material has shown that approximately 20% of the REO's are in the valuable «heavy» category.
The LOI will be followed by a definitive Technical Cooperation Agreement and Offtake Agreement for up to 15,000 tonnes per annum of rare earth products from Tantalus.
Net sales of EUR 458 million were up by 4% compared to the 1st quarter of 2011. Total volume remained low but similar to prior year which was impacted by a force majeur. Prices increased by 2% in a context of increased raw material prices. Volume recovered by 10% compared to the low 4th quarter 2011. Polyamide & Intermediates suffered from generalized depressed textile demand. Fibras activity recovered progressively. Engineering Plastics volumes were ramping up progressively but still (5)% below prior year. By end markets, the sustained good demand dynamics from the car industry were more than offset by the electrical and construction markets.
REBITDA decreased to EUR 38 million compared to EUR 68 million last year but improved sequentially (EUR 14 million in 4th quarter 2011). Margin erosion is the main factor behind the lower performance compared to the same period last year.
Acetow & Eco Services reported net sales of EUR 219 million, a 6% increase compared to the 1st quarter of 2011. This was primarily due to price increases across the two segments, globally amounting to 9%, whereas overall volume was down by (6)% due to lower sales for Acetow (high stocks at some customers at year-end).
Eco Services reported normal activity levels corresponding to the usual low seasonality.
REBITDA amounted to EUR 54 million, up by 17% compared to last year driven by strong pricing power in both segments offsetting the short fall in Acetow volumes.
Energy Services reportedREBITDA of EUR 33 million compared to EUR 44 million in the 1st quarter of 2011. A good level of CER sales, in line with FY production/sales expectations of 14mT realized. However, volumes were lower than last year (approx. 21%) because 1st quarter 2011 had benefitted from a faster certification process.
Despite unfavorable CO2 market pricing conditions, the year on year effective prices shortfall was limited by the hedging policy.
Factors influencing net sales (% of 1Q 11 net sales)
| 1st quarter | ||||||
|---|---|---|---|---|---|---|
| Million EUR (except for per-share figures in EUR ) |
IFRS | Adjusted1 | Pro forma2 |
|||
| 2012 | 2011 | 2012 | 2011 | |||
| Sales | 3,337 | 1,670 | 3,337 | 3,258 | ||
| Other non-core revenues | 98 | 6 | 98 | 114 | ||
| Net sales | 3,239 | 1,664 | 3,239 | 3,144 | ||
| Cost of goods sold | -2,669 | -1,322 | -2,669 | -2,521 | ||
| Gross margin | 668 | 348 | 668 | 737 | ||
| Commercial and administrative costs | -277 | -120 | -277 | -272 | ||
| Research and development costs | -64 | -32 | -64 | -51 | ||
| Other operating gains and losses | -40 | -9 | -5 | -16 | ||
| Earnings from associates and joint ventures accounted for using the equity method |
29 | 10 | 29 | 13 | ||
| REBITDA | 523 | 285 | 523 | 574 | ||
| REBIT | 317 | 197 | 352 | 411 | ||
| Non-recurring items | -114 | -15 | -69 | 16 | ||
| EBIT | 203 | 182 | 283 | 427 | ||
| Cost of borrowings | -51 | -35 | -51 | -52 | ||
| Interest on lendings and short-term deposits | 6 | 9 | 6 | 9 | ||
| Other gains and losses on net indebtedness | 0 | -2 | 0 | -7 | ||
| Cost of discounting provisions | -34 | -12 | -34 | -31 | ||
| Income/loss from available-for-sale investments | 0 | 0 | 0 | 0 | ||
| Result before taxes | 124 | 141 | 204 | 345 | ||
| Income taxes | -60 | -43 | -80 | -91 | ||
| Result from continuing operations | 63 | 98 | 123 | 254 | ||
| Result from discontinued operations | 1 | 1 | 1 | 1 | ||
| Net income | 65 | 99 | 125 | 255 | ||
| Non-controlling interests | -9 | -13 | -9 | -15 | ||
| Net income Solvay share | 56 | 86 | 116 | 240 | ||
| Basic earnings per share from continuing operations | 0.67 | 1.05 | 1.40 | 2.95 | ||
| Basic earnings per share from discontinued operations | 0.02 | 0.01 | 0.02 | 0.01 | ||
| Basic earnings per share | 0.68 | 1.06 | 1.42 | 2.96 | ||
| Diluted earnings per share from continuing operations | 0.67 | 1.05 | 1.40 | 2.94 | ||
| Diluted earnings per share from discontinued operations | 0.02 | 0.01 | 0.02 | 0.01 | ||
| Diluted earnings per share | 0.68 | 1.06 | 1.41 | 2.95 |
Adjusted figures exclude Purchase Price Allocation (PPA) non-cash accounting impacts related to the Rhodia acquisition.
The 1st quarter 2011 figures were restated to show the income statement (a) as if the acquisition of Rhodia had become effective from 1st of January 2011, (b) harmonizing the accounting principles and (c) eliminating the Purchase Price Allocation (PPA) impacts.
The table hereafter reconciles the 1Q 2012 IFRS results (which include PPA impacts) with the 1Q 2012. Adjusted results (which exclude PPA impacts).
| Key data (in million EUR ) |
IFRS 1Q 2012 | PPA impacts | Adjusted 1Q 2012 |
|---|---|---|---|
| Net Sales | 3,239 | 3,239 | |
| REBITDA | 523 | 523 | |
| REBIT | 317 | -35 | 352 |
| Non-recurring items | -114 | -45 | -69 |
| EBIT | 203 | -80 | 283 |
| Net financial expenses | -78 | -78 | |
| Result before taxes | 124 | -80 | 204 |
| Income taxes | -60 | 20 | -80 |
| Net result from continuining operations | 63 | -60 | 123 |
| Net result from discontinued operations | 1 | 1 | |
| Net income | 65 | -60 | 125 |
| Non controlling interests | -9 | -9 | |
| Net income, Group share | 56 | -60 | 116 |
Non-recurring items amounted to EUR (114) million under IFRS, which included a EUR (45) million non-cash PPA impact related to the step-up of Rhodia inventory. On an Adjusted basis, non-recurring items totalled EUR (69) million. They primarily included a EUR (23) million charge related to the reevaluation of financial liabilities linked to share options held by Rhodia employees prior to the acquisition, and EUR (20) million related to restructuring actions in the framework of the integration and Horizon deployments.
Financial charges amounted to EUR (78) million both on an Adjusted and IFRS basis. The cost of borrowings amounted to EUR (51) million. Gross financial debt (EUR 4,226 million) is for 73.6% covered at a fixed average rate of 5.58% with a duration of 4.72 year. Interest on cash deposits and investments amounted to EUR 6 million. The cost of discounting provisions amounted to EUR (34) million.
Income taxes amounted to EUR (60) million in the IFRS accounts. On an Adjusted basis, income taxes totaled EUR (80) million. The EUR (20) million difference between IFRS and Adjusted figures reflects the tax impact of PPA adjustments. The first quarter 2012 included non-periodic items with related tax charges of EUR (24) million. Excluding these items, the effective tax rate would have been 31% on an adjusted basis. The carry forward tax losses of Solvay SA did not generate deferred tax assets.
Adjusted Net income amounted to EUR 125 million. On a IFRS basis, Net Income amounted to EUR 65 million, the difference explained by the after-tax global PPA impact.
Adjusted net income, Group share amounted to EUR 116 million, resulting in EUR 1.42 Adjusted basic earnings per share.
| 1st quarter | |||
|---|---|---|---|
| Million EUR | 2012 | 2011 | |
| Net income | 65 | 99 | |
| Gains and losses on available-for-sale financial assets | 9 | 6 | |
| Gains and losses on hedging instruments in a cash flow hedge | 15 | 1 | |
| Actuarial gains and losses on defined benefit pension plans | -63 | -12 | |
| Currency translation differences | -82 | -153 | |
| Share of other comprehensive income of associates and joint ventures accounted for using the equity method |
20 | -11 | |
| Income tax relating to components of other comprehensive income | -7 | 4 | |
| Other comprehensive income, net of related tax effects | -108 | -165 | |
| Comprehensive income attributed to | -43 | -66 | |
| Owners of the parent | -54 | -60 | |
| Non-controlling interests | 11 | -6 |
| Million EUR | March 31, 2012 | December 31, 2011 |
|---|---|---|
| Non-current assets | 12,074 | 12,064 |
| Intangible assets | 1,658 | 1,705 |
| Goodwill | 2,598 | 2,599 |
| Tangible assets | 5,565 | 5,652 |
| Available-for-sale investments | 92 | 80 |
| Investments in joint ventures and associates – equity me thod |
749 | 704 |
| Other investments | 122 | 125 |
| Deferred tax assets | 841 | 780 |
| Loans and other non-current assets | 450 | 420 |
| Current assets | 7,440 | 7,373 |
| Inventories | 1,512 | 1,578 |
| Trade receivables | 2,528 | 2,311 |
| Income tax receivables | 43 | 43 |
| Dividends receivable | 1 | 0 |
| Other current receivables - Financial instruments | 647 | 464 |
| Other current receivables – Other | 857 | 938 |
| Cash and cash equivalents | 1,752 | 1,943 |
| Assets held for sale | 101 | 95 |
| TOTAL ASSE TS |
19,514 | 19,437 |
| Total equity | 6,711 | 6,653 |
| Share capital | 1,271 | 1,271 |
| Reserves | 4,933 | 4,885 |
| Non-controlling interests | 508 | 497 |
| Non-current liabilities | 8,318 | 8,179 |
| Long-term provisions: employees benefits | 2,639 | 2,595 |
| Other long-term provisions | 1,314 | 1,325 |
| Deferred tax liabilities | 784 | 710 |
| Long-term financial debt | 3,383 | 3,374 |
| Other non-current liabilities | 198 | 174 |
| Current liabilities | 4,486 | 4,605 |
| Short-term provisions: employees benefits | 49 | 39 |
| Other short-term provisions | 242 | 230 |
| Short-term financial debt | 843 | 794 |
| Trade liabilities | 2,295 | 2,232 |
| Income tax payable | 84 | 51 |
| Dividends payable | 14 | 100 |
| Other current liabilities | 958 | 1,159 |
| TOTAL EQUI TY & LIA BILITIES |
19,514 | 19,437 |
Equity attributable to equity holders of the parent
| Fair value | differences | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Million EUR | Share capital | Issue premiums | Retained earnings | Treasury shares | translation diff. Currency |
Available for sale investments |
Cash flow hedges | Defined benefit pension plans |
Total | Non-controlling interests |
Total equity |
| Balance – 31/12/2010 | 1,271 | 18 | 5,791 | -301 | -374 | 11 | 4 | -131 | 6,289 | 419 | 6,708 |
| Net profit for the period | 247 | 247 | 50 | 296 | |||||||
| Income and expenses directly allocated to equity |
42 | -8 | 8 | -86 | -44 | -10 | -54 | ||||
| Comprehensive income | 0 | 0 | 247 | 0 | 42 | -8 | 8 | -86 | 202 | 40 | 242 |
| Cost of stock options | 9 | 9 | 9 | ||||||||
| Dividends | -250 | -250 | -14 | -263 | |||||||
| Acquisition/sale of trea sury shares |
10 | 10 | 10 | ||||||||
| Issure of share capital | 0 | 0 | |||||||||
| Increase (decrease) through changes in ownership interests in subsidiaries that do not result in loss of control |
-100 | -100 | 52 | -48 | |||||||
| Other | -4 | -4 | 0 | -4 | |||||||
| Balance – 31/12/2011 | 1,271 | 18 | 5,693 | -292 | -332 | 3 | 12 | -217 | 6,156 | 497 | 6,653 |
| Net profit for the period | 56 | 56 | 9 | 65 | |||||||
| Income and expenses directly allocated to equity |
-64 | 8 | 13 | -67 | -110 | 2 | -108 | ||||
| Comprehensive income | 0 | 0 | 56 | 0 | -64 | 8 | 13 | -67 | -54 | 11 | -43 |
| Cost of stock options | 2 | 2 | 2 | ||||||||
| Dividends | 0 | 0 | 0 | 0 | |||||||
| Acquisition/sale of trea sury shares |
100 | 100 | 100 | ||||||||
| Issure of share capital | 0 | 0 | |||||||||
| Increase (decrease) through changes in ownership interests in subsidiaries that do not result in loss of control |
-0 | -0 | 0 | 0 | |||||||
| Other | 0 | 0 | 0 | 0 | |||||||
| Balance – 31/03/2012 | 1,271 | 18 | 5,751 | -192 | -396 | 11 | 24 | -284 | 6,203 | 508 | 6,711 |
| Million EUR | 1st quarter | |||
|---|---|---|---|---|
| 2011 | ||||
| EBIT | 204 | 181 | ||
| Depreciation, amortization and impairments | 206 | 90 | ||
| Changes in working capital | -220 | -246 | ||
| Changes in provisions | -1 | -6 | ||
| Dividends received from associates and joint ventures accounted for using the equity method | 6 | 20 | ||
| Income taxes paid | -20 | -12 | ||
| Others | 17 | -19 | ||
| Cash flow from operating activities | 192 | 8 | ||
| Acquisition (-) of subsidiaries | 0 | |||
| Acquisition (-) of investments - Other | -7 | -95 | ||
| Sale (+) of subsidiaries | 0 | 0 | ||
| Sale (+) of investments - Others | 3 | 0 | ||
| Acquisition (-) of tangible and intangible assets | -144 | -52 | ||
| Sale (+) of tangible and intangible assets | 8 | 3 | ||
| Income from available-for-sale investments | 0 | |||
| Changes in non-current financial assets | -4 | -5 | ||
| Other | 0 | 0 | ||
| Cash flow from investing activities | -144 | -148 | ||
| Capital increase (+) / redemption (-) | 0 | 0 | ||
| Acquisition (-) / sale (+) of treasury shares | 100 | 0 | ||
| Changes in borrowings | 59 | -20 | ||
| Changes in other current financial assets | -179 | 1,008 | ||
| Cost of borrowings | -59 | -29 | ||
| Interest on lendings and short-term deposits | 6 | 0 | ||
| Other1 | -68 | 0 | ||
| Dividends paid | -90 | -99 | ||
| Cash flow from financing activities | -231 | 860 | ||
| Net change in cash and cash equivalents | -183 | 720 | ||
| Currency translation differences | -9 | 25 | ||
| Opening cash balance | 1,943 | 1,954 | ||
| Closing cash balance | 1,752 | 2,664 | ||
| Free Cash Flow2 from continuing operations |
-45 | -43 | ||
| Free Cash Flow2 from discontinued operations |
97 | -2 |
including change in loans to Solvac EUR (24) million and M&A adjustment for Pharma EUR (47) million.
Cash flow from operating activities + cash flow from investing activities, excluding acquisitions and sales of subsidiaries and other investments, + dividends from associates and JVs.
| 1st quarter | ||||
|---|---|---|---|---|
| Million EUR | 2012 | 2011 | ||
| Cash flow from operating activities | 97 | -2 | ||
| Cash flow from investing activities | 0 | 0 | ||
| Cash flow from financing activities | 0 | 0 | ||
| Net change in cash and cash equivalents | 97 | -2 |
Cash flow from operating activities was EUR 134 million compared to EUR (12) million last year. Besides an EBIT of EUR 204 million it consisted of
Cash flow from investing activities was EUR (144) million and capital expenditures amounted to EUR (144) million.
Free Cash Flow was EUR 52 million, and included cash flow from discontinued operations for EUR 97 million linked to postclosing adjustments subsequent to the sale of the pharmaceutical activities.
| Million EUR | 1st quarter | |||
|---|---|---|---|---|
| 2012 | 2011 | |||
| Net sales | 3,239 | 1,664 | ||
| Plastics | ||||
| Net sales | 1,022 | 1,023 | ||
| Inter-segments sales | -71 | -69 | ||
| External sales | 951 | 954 | ||
| Chemcials | ||||
| Net sales | 762 | 737 | ||
| Inter-segments sales | -26 | -27 | ||
| External sales | 736 | 710 | ||
| Rhodia | ||||
| Net sales | 1,554 | |||
| Inter-segments sales | -2 | |||
| External sales | 1,552 | |||
| REBITDA | 523 | 285 | ||
| Plastics | 137 | 166 | ||
| Chemicals | 154 | 138 | ||
| Rhodia | 261 | |||
| New Business Development | -9 | -7 | ||
| Corporate and business support | -20 | -12 | ||
| REBIT | 317 | 197 | ||
| Plastics | 89 | 116 | ||
| Chemicals | 114 | 101 | ||
| Rhodia | 145 | |||
| New Business Development | -9 | -7 | ||
| Corporate and business support | -23 | -13 | ||
| EBIT | 203 | 182 | ||
| Plastics | 84 | 111 | ||
| Chemicals | 111 | 94 | ||
| Rhodia | 64 | |||
| New Business Development | -9 | -7 | ||
| Corporate and business support | -46 | -16 |
The consolidated financial statements were prepared in conformity with IFRS standards as currently adopted in the European Union. The same accounting policies have been implemented as for the latest annual financial statements. The primary variations in scope between the first quarter of 2011 and 2012 were due to:
• Treatment of the Pipelife stake in Solvay's accounts until its effective disposal: Pipelife stake is accounted for as an "investment held for sale" as of December 31st, 2011, following the decision to sell the 50% stake in Pipelife to Wienerberger. In compliance with IAS-28 & IFRS-5 rules concerning assets held for sale, the assets are valued at the lowest of its net book value (equity value prevailing as of the date of classification as "assets held for sale") or its fair value net of related disposal costs. As a consequence, equity earnings of Pipelife are no longer reported in the Group's Profit & Loss account. The Pipelife participation is therefore accounted for in Solvay's accounts at its equity value as of Dec 31st, 2011, which is lower than its fair value net of related disposal costs
This results report contains regulated information and is established in compliance with IAS 34. A risk analysis is included in the annual report, which is available on www.solvay.com.
| Closing | Average | ||||||
|---|---|---|---|---|---|---|---|
| 1 Euro | 3 months 2012 |
3 months 2011 |
2011 | 3 months 2012 |
3 months 2011 |
2011 | |
| Pound Sterling | GBP | 0.834 | 0.884 | 0.835 | 0.835 | 0.854 | 0.868 |
| American Dollar | USD | 1.336 | 1.421 | 1.294 | 1.311 | 1.368 | 1.392 |
| Argentine Peso | ARS | 5.846 | 5.761 | 5.577 | 5.696 | 5.498 | 5.754 |
| Brazilian Real | BRL | 2.432 | 2.306 | 2.416 | 2.317 | 2.280 | 2.327 |
| Thai Baht | THB | 41.180 | 42.98 | 40.991 | 40.630 | 41.77 | 42.430 |
| Japanese Yen | JPY | 109.560 | 117.61 | 100.200 | 103.990 | 112.57 | 110.960 |
Solvay acquired Rhodia in September 2011.
The accounting treatment of Rhodia's acquisition is subject to Purchase Accounting (IFRS 3). More information about the accounting impacts of that acquisition on Solvay's consolidated accounts can be found in the press release on full year 2011 results.
Purchase Accounting must be completed within the 12 months following the acquisition date (September 7, 2011). Provisional accounting still prevails as:
| 3 months 2012 | 3 months 2011 | 2011 | |
|---|---|---|---|
| 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 ear nings per share |
81,534,755 | 81,028,332 | 81,223,941 |
| Average number of shares for IFRS calculation of dilu ted income per share |
81,817,338 | 81,294,014 | 81,546,384 |
Christian Jourquin, Chairman of the Executive Committee, and Bernard de Laguiche, Chief Financial Officer, declare that to the best of their knowledge:
The accounts for the first quarter 2012 are to be deemed unaudited.
Basic earnings per share excluding Purchase Price Allocation (PPA) non cash accounting impacts related to the Rhodia acquisition
Net income (Solvay share) excluding Purchase Price Allocation (PPA) non-cash accounting impacts related to the Rhodia acquisition
Net result excluding Purchase Price Allocation (PPA) non-cash accounting impacts related to the Rhodia acquisition
REBIT excluding Purchase Price Allocation (PPA) non-cash 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
Earnings before interest and taxes
Cash flow from operating activities + cash flow from investing activities, excluding acquisitions and sales of subsidiaries and other investments, + dividends from associates and joint ventures
International Financial Reporting Standards
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
Figures that represent (a) as if the acquisition had become effective from 1st of January 2011, (b) harmonizing accounting principles and (c) eliminating the Purchase Price Allocation (PPA) impacts.
Operating result, i.e. EBIT before non-recurring items
REBIT before depreciation and amortization
May 8, 2012: Annual Shareholders' Meeting (at 10:30 in Brussels)
May 15, 2012: Payment of the balance of the 2011 dividend (coupon no. 90). Trading ex-dividend as from May 10, 2012
July 27, 2012: Announcement of the 2nd quarter and of the six months 2012 results (at 07:30)
October 25, 2012: Announcement of the 3rd quarter and the nine months 2012 results and the interim dividend for 2012 (payable in January 2013, coupon no. 91) (at 07:30)
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Media Relations Tel: 32 2 264 15 30
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E-mail: [email protected]
Investor Relations Tel: 32 2 264 15 40
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E-mail: [email protected]
SOLVAY is an international chemical Group committed to sustainable development with a clear focus on innovation and operational excellence. It generates over 90% of its sales in markets where it is among the top three leaders. Solvay offers a broad range of products that contribute to improving the quality of life and the performance of its customers in markets such as consumer goods, construction, automotive, energy, water and environment, and electronics. The Group is headquartered in Brussels, employs about 29,000 people in 55 countries and generated EUR 12.7 billion in net sales in 2011. Solvay SA (SOLB.BE) is listed on NYSE Euronext in Brussels and Paris (Bloomberg: SOLB.BB - Reuters: SOLBt.BR).
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