Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Solvay SA (SLVYY, Financial) reported a 4% organic year-on-year sales increase in Q3, driven by higher volumes across most markets.
- The company achieved further structural cost savings from both variable and fixed costs, contributing to stable EBITDA performance.
- Solvay SA (SLVYY) delivered strong free cash flow in Q3, supporting essential investments and shareholder returns.
- The company inaugurated a significant sustainability project at its Green River plant, reducing greenhouse gas emissions by 8%.
- Solvay SA (SLVYY) secured a new licensing agreement in China for its peroxide business, expected to contribute positively to Q4 financials.
Negative Points
- The tragic incident at the Torrelavega site in Spain highlighted ongoing safety challenges within the company.
- Despite sales growth, the company did not experience any structural market recovery, maintaining a cautious outlook for Q4.
- EBITDA margin decreased by 3.2 percentage points year-on-year, reflecting pricing pressures, particularly in soda ash.
- The company faces uncertainty in the soda ash market, with no immediate recovery expected and potential volatility in seaborne markets.
- Solvay SA (SLVYY) anticipates increased corporate costs in 2025 and 2026 due to transitional service agreements and ERP rollout expenses.
Q & A Highlights
Q: Can you clarify the new guidance regarding peroxide and corporate costs? Is this a new development or was it included in the previous guidance?
A: The peroxide license was expected but not secured, so it's new to the market but was integrated into our range. Regarding corporate costs, we realized it was difficult for analysts to distinguish between structural and non-structural savings, so we provided a clearer guidance. The savings are both structural and non-structural, and we are trending towards the high end of our guidance due to these savings.
Q: Can you provide details on your CO2 allowances in Europe and how you plan to manage them until 2030?
A: We receive free allowances for the majority of our emissions until 2030. To address the gap not covered by free allowances, we are focusing on energy transition projects and financial hedges. We are well covered until 2026 with these measures.
Q: What is your outlook for the soda ash market over the next six months, considering changes in China's buying patterns?
A: We expect demand to remain stable without recovery or deterioration. Our order book visibility is short-term, and we don't foresee significant changes in capacity. The fundamentals of the soda ash market remain strong, and we are prepared to manage any volatility.
Q: Can you explain the volume leverage in your EBITDA bridge and the one-off costs incurred in Q2?
A: The progression of EBITDA from sales is influenced by product mix, with lower margin products recovering in H2. The EUR45 million one-off cost in Q2 is mainly linked to restructuring at our salon site.
Q: Could you update us on the cost savings program and targets for the coming years?
A: We confirm our target of EUR300 million savings by 2028, with EUR150 million by the end of 2025. We are accelerating delivery this year, mainly through modernization and digitalization of our plants, and a simplified organization.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
