Solvay Profit Rise Helped by Fracking, Cheaper Raw Materials
BRUSSELS, Nov 13 (Reuters) – Belgian chemicals and plastics Solvay reported a 9.5 percent rise in third-quarter core profit on Thursday, helped by increased demand for fracking fluids from the U.S. oil and gas sector and a decline in the cost of raw materials.
Chief Executive Jean-Pierre Clamadieu said Solvay expected year-on-year growth to continue in the fourth quarter, although the final months were normally weaker as businesses closed for Christmas and sought to cut inventories by the year end.
"We are looking very carefully at the macroeconomic environment but we don't see today a significant risk to this guidance," he told a news conference. "With our market exposure we don't see any significant changes going into Q4, only the usual seasonality."
He added he also did not expect an overall negative impact from lower oil prices, which was of course positive for much of the company's operations.
"There could be theoretically some impact on our oil-related activities in North America... but first we don't see an impact as we speak and we think the impact overall will be limited," he said, adding he did not see a major slowdown of fracking activity.
Core profit, REBITDA (recurring earnings before interest, tax, depreciation and amortisation), was 458 million euros ($570.2 million), slightly above the average forecast in a Reuters poll of analysts was 452 million euros.
Solvay repeated its forecast that core profit (REBITDA) would rise by a high single-digit percentage in 2014 from a restated 1.61 billion euros in 2013.
The restatement takes into account the sale of Solvay's U.S. based sulphuric acid production unit Eco Services to private equity group CCMP Capital.
The company also announced an unchanged gross interim dividend of 1.33 euros per share.
Solvay also responded to news on Wednesday that Brazil's antitrust watchdog Cade had the proposed sale of Latin American PVC unit Solvay Indupa to Brazil's Braskem.
"Our determination to find a solution is intact. There are a couple of solutions on the table, but we will have to relaunch a full process," Chief Executive Jean-Pierre Clamadieu.
He also added he was confident of completing the sale of its European PVC operations within the coming months. (1 US dollar = 0.8033 euro)
(Reporting By Philip Blenkinsop)
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