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Solvay first quarter 2021 results
Strong start to the year with double-digit growth in Cash and EBITDA and record EBITDA margins
May 5, 2021 at 7 a.m. CEST
- Net Sales in the first quarter of 2021 were up 1.9% organically driven by strong demand in automotive, with organic sales in Specialty Polymers up 10% year-on-year, exceptional performance in Coatis up 55%, and recovery in the mining industry driving Technology Solutions sales up 15%, whereas sales in Composites were 37% lower.
- Net Sales grew 8.6% organically year on year excluding Composites and Oil & Gas, which still face challenges yet have shown sequential improvement versus the fourth quarter.
- Structural cost savings of €80 million achieved in Q1, up 78% versus Q4 2020.
- Underlying EBITDA in Q1 2020 was up 10.3% organically yoy, and 7% higher than Q1 2019 on comparable FX & scope basis despite 3% lower sales, reflecting the impacts of significant cost reduction measures taken in the last 2 years. The underlying EBITDA margin increased yoy to a new record at 24.6% driven mainly by strong volume recovery in most markets and cost reductions measures, despite the adverse impacts such as increasing raw material and logistic prices as well as supply chain disruptions due to US storms and the Suez Canal blockage. This is 1.6 and 2.4 percentage points higher than Q1 2020 and Q1 2019, respectively.
- Underlying Net Profit was €240 million in Q1 2021, up 1.8% compared to Q1 2020.
- Free Cash Flow in Q1 2021 amounted to €282 million, up 40% of Q1 2020, reflecting continued working capital discipline even as activity levels increased, as well as the benefit of deleveraging debt and pensions. Total voluntary pension contributions of €0.8 billion since Q4 2019 generate an improvement of more than €100 million per annum.
- Progress on portfolio simplification, with the closure of 5 business line divestments in the first quarter and the last one occurring in Q2 2021.
- Reinvesting in Solvay One Planet, including a decision to invest further in energy transition at our Rheinberg Soda Ash plant with a complete phase out of coal. This action not only enables the site to be the lowest Soda Ash CO2 emitter globally (irrespective of the production process being natural or synthetic), but also creates significant economic value.
| Underlying, (in € million) ||Q1 2021||Q1 2020||% yoy||% organic|
|FCF to shareholders from continuing operations||282||202||+39.8%||-|
|FCF conversion ratio (LTM)||54.8%||40.4%||+14.4pp||-|
“First quarter results reflect the continued economic recovery visible across many of our markets. I am pleased to see that our disciplined structural actions taken last year to lower the company’s cost base have enabled strong quality of earnings. We have also maintained our sharp focus on cash management, delivering eight consecutive quarters of positive free cash flow generation. Looking ahead, we are investing in our growth platforms, our front line, and in innovation that will support sustainable top line growth across the mid-term.”
Full year underlying EBITDA is estimated between €2.0 and €2.2 billion, and Free Cash Flow is estimated around €650 million, up from the prior estimate between €600 and €650 million.
This press release may contain forward-looking information. Forward-looking statements describe expectations, plans, strategies, goals, future events or intentions. The achievement of forward-looking statements contained in this press release is subject to risks and uncertainties relating to a number of factors, including general economic factors, interest rate and foreign currency exchange rate fluctuations, changing market conditions, product competition, the nature of product development, impact of acquisitions and divestitures, restructurings, products withdrawals, regulatory approval processes, all-in scenario of R&I projects and other unusual items. Consequently, actual results or future events may differ materially from those expressed or implied by such forward-looking statements. Should known or unknown risks or uncertainties materialize, or should our assumptions prove inaccurate, actual results could vary materially from those anticipated. The Company undertakes no obligation to publicly update or revise any forward-looking statements.
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