full press release (including also IFRS financial statements)
Q1/07 key data
Q1/07 results presentation
Further growth in operating results for the Solvay Group :
+11% in the first quarter of 2007
Sales (EUR 2,372 million) stable (+1%)
Operating results (REBIT1 of EUR 325 million) up 11% compared to the excellent results of the first quarter of 2006 : Pharmaceuticals stable; improvement in Chemicals (+6%) and strong growth in Plastics (+15%) ;
Net income of the Group (EUR 218 million) down 8%, reflecting a net decrease of EUR 23 million in non-operating items2 compared to the first quarter of 2006
Sales reached EUR 2.4 billion in the 1st quarter of 2007 (+1%). At constant exchange rates, they would have increased by 3%.
REBIT improved 11% compared to the 1st quarter of 2006 and reached EUR 325 million. The operating margin (REBIT on sales) was 13.7% compared to 12.4% in the 1st quarter of 2006.
The net income of the Group amounted to EUR 218 million (compared to EUR 238 million in the 1st quarter of 2006). It reflects the improvement in operating performance and includes a negative balance of EUR 8 million in non-operating items for the 1st quarter of 2007, while the 1st quarter of 2006 included a net positive balance of EUR 15 million.
Cash flow3 for the 1st quarter of 2007 amounted to EUR 342 million and REBITDA4 to EUR 440 million. The net debt to equity ratio reached 33% at the end of the 1st quarter of 2007, compared to 37% at the end of the 1st quarter of 2006 and 28% at the end of 2006.
Pharmaceuticals Sector sales (EUR 625 million, -7%) reflected the unfavorable impact of the expiration of marketing rights for Pantoloc® (-7%) as well as the effect of the USD/EUR exchange rate on American sales (-3%), partially offset by an increase in sales from other products. Operating results (EUR 124 million) were stable compared to the 1st quarter of 2006. Research & Development costs dropped temporarily to 14.6% of sales for the 1st quarter of 2007 compared to the 1st quarter of 2006 figure of 16.1%, which is in line with our full year estimate. Thus, the operating margin for the Pharmaceuticals Sector was particularly high (19.8%) in the 1st quarter of 2007. The implementation of the plan to improve costs by EUR 300 million by 2010 continued as announced.
Chemicals Sector sales (EUR 755 million) were comparable to those of the 1st quarter of 2006; REBIT (EUR 93 million) increased 6%. This performance was due to the persistence of a continued favorable global balance between supply and demand, characterized by stable volumes and prices trending upward, at a time when energy costs remained at very high levels. Results from the “Minerals” and “Oxygen” clusters increased. The “electrochemistry and fluorinated products” activities were down, mainly in fluor chemical commodities.
Plastics Sector sales (EUR 992 million) and results (REBIT of EUR 120 million) improved by 6% and 15% respectively from the 1st quarter of 2006. These results were due to continued growth of Specialty Polymers and strong growth in “Vinyls” cluster.
“2007 began with a generally favorable business climate. Our strategy of sustainable and profitable growth as well as enrichment of the portfolio of activities and continued efforts to improve competitiveness are positioning us favorably. Overall for 2007, we are confident that we can achieve the excellent operating results of last year. Obviously, we remain attentive to the evolution of worldwide macroeconomic conditions, energy costs and the EUR/USD exchange rate.”
Notes on Solvay Group summary financial information
Non-recurring items amounted to EUR -8 million in the 1st quarter of 2007 compared to EUR -88 million in the 1st quarter of 2006. They represent, on balance, mainly in the Pharmaceuticals Sector, restructuring costs (EUR 13 million) of the “INSPIRE”7 project and a reversal of provisions no longer needed (EUR 10 million).
Charges on net indebtedness amounted to EUR 19 million. At the end of March 2007, about 90% of the financial debt was covered at a fixed rate of 5.5% with a duration of more than 8 years.
Income taxes amounted to EUR 79 million in the 1st quarter of 2007, or a rate of 27%, comparable to the 1st quarter of 2006.
In the 1st quarter of 2007, there were no results from discontinued operations , whereas that item amounted to EUR 103 million in 2006 following the sale in March of industrial foils to Renolit.
Net income of the Group amounted to EUR 218 million compared to EUR 238 million in the 1st quarter of 2006. Net earnings per share in the 1st quarter of 2007 amounted to 2.53 EUR, compared to 2.80 EUR for the same period in 2006.
Cash flow amounted to EUR 342 million, and REBITDA to EUR 440 million; depreciation was comparable to that for the 1st quarter of 2006.
Total equity amounted to EUR 4,672 million at the end of March 2007, up EUR 216 million compared to the end of 2006. Net debt of the Group at the end of March 2007 (EUR1,561 million) was up EUR 303 million from December 31, 2006 and was comparable to that of the 1st quarter of 2006. The net debt to equity ratio was 33% at the end of the 1st quarter of 2007, compared to 37% at the end of the 1st quarter of 2006 and 28% at the end of 2006. This situation reflects the Group’s policy of having a sound financial situation, in line with the objective of not persistently exceeding a net debt to equity ratio of 45%.
1 Operating results, i.e. EBIT before non-recurring items
2 Non-recurring items and results from discontinued operations
3 Net income plus total depreciation
4 REBITDA : REBIT, before recurring depreciation and amortization.
5 Books with limited review by Deloitte
6 Calculated on the basis of the weighted average of the number of shares outstanding after deducting shares purchased to cover stock options, or a total of 82,696,000 shares in the 1st quarter of 2006 and 82,787,815 shares in 1st quarter of 2007.
7 See also comments on page 8 of the press release
8 Results by sector include results from the three sectors of the Group as well as the “Corporate and Business Support.“
9 Non-allocated items, after more direct allocations starting 2007.
