Solvay Looks Towards Lower 2023 Earnings, But US Boost Could Lead to Bigger Rewards in the Future
Solvay Looks Towards Lower 2023 Earnings, But US Boost Could Lead to Bigger Rewards in the Future

Solvay Looks Towards Lower 2023 Earnings, But US Boost Could Lead to Bigger Rewards in the Future

  • 24-Feb-2023 11:37 AM
  • Journalist: Shiba Teramoto

Europe: Belgian chemicals giant Solvay has predicted lower profits this year as weaker demand from the coatings, chemicals and consumer sectors results in decreased earnings. Despite reporting record profits for 2022, the company's shares tumbled more than 3% Thursday.

Despite the gloomy outlook, the company celebrated the large investments and incentives for a more sustainable future outlined in the United States Inflation Reduction Act as an exciting long-term opportunity.

"Building that infrastructure is a big win and a big opportunity for Solvay and we love it because we are leaders in providing those sustainable solutions," Chief Executive Officer Ilham Kadri stated.

The U.S. Inflation Reduction Act has sparked concerns throughout Europe, which worries that the subsidies it grants could give America an upper hand in international competition.

Belgian Prime Minister Alexander De Croo recently revealed that the United States had urged some Belgian companies to invest more heavily in the US. However, Finance Minister Vincent Kadri clarified that this was not extended to Solvay - one of Belgium's largest chemical producers.

The group is splitting into two listed companies, one focused on chemicals like soda ash, Peroxides, and Silica, while the other company is focused on materials like Polymers. According to Kadri, this process is estimated to be completed by December 2023.

Solvay expects its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to decrease by 3-9% in 2023. The decline is attributed to the destocking of inventory, as well as the cyclical nature of its business operations.

Solvay's shares were 3.1% lower at 0955 GMT, lagging the Stoxx Europe 600 Chemicals index which held steady. Its underlying Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) for the year rose to a record 3.29 billion Euros ($3.49 billion), bolstered by higher prices and surpassing the company's own forecast of 3.25 billion Euros.

Fourth-quarter Earnings before Interest, Tax, Depreciation, and Amortization (EBITDA) soared 28.6% to 736 million euros, surpassing the consensus of 703 million euros. The Brussels-based company has decided to raise its dividend by 0.20 euro to 4.05 euros per share; this increase is subject to shareholder approval.

Related News

Evonik Launches New Facility for AEROSIL® Easy-to-Disperse Silicas in Rheinfelden
  • 28-Jun-2024 5:06 PM
  • Journalist: Rene Swann
Argyle Completes Acquisition of Three Silica Projects in Quebec, Canada
  • 26-Jun-2024 2:38 PM
  • Journalist: Rene Swann
Evonik Initiates Production of High-Quality Colloidal Silica in Michigan Plant
  • 12-Jun-2024 2:48 PM
  • Journalist: Motoki Sasaki
Manitoba Government Gives Approval to Silica Mining Venture Along Lake Winnipeg
  • 16-Feb-2024 12:38 PM
  • Journalist: Li Hua