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Solvay Net More Than Doubles as Prices Counter Energy Costs
Solvay SA (SOLB), the chemicals and plastics maker buying Rhodia SA (RHA), said second-quarter profit more than doubled, led by price increases for PVC and soda ash as growth in demand for specialty polymers slowed.
Net income climbed to 111 million euros ($159 million), or 1.36 euros a share, from 44 million euros, or 60 cents, a year earlier, the Brussels-based company said today in a statement. Earnings before interest, tax and special items increased 27 percent to 219 million euros, beating the 203.4 million-euro average of eight analyst estimates compiled by Bloomberg. Sales rose 11 percent to 1.72 billion euros.
Rhodia joined Solvay today in saying that price increases countered higher raw-material and energy costs and were the biggest driver of earnings in the quarter as growth in demand for products including consumer chemicals and engineered plastics slowed. Solvay agreed in April to buy Rhodia in a transaction valued at 6.6 billion euros including debt and pension liabilities and is waiting for European Union antitrust approval to complete the deal.
“Business climate seems still supportive for the third quarter,” Bernard Hanssens, an analyst at Bank Degroof SA in Brussels, wrote in an investor note. “Rhodia also enjoys good business conditions and solid pricing power.”
Solvay advanced 0.2 percent to 108.70 euros by 9:30 a.m. local time in Brussels trading, valuing the world’s largest soda-ash maker at 9.2 billion euros. The shares have climbed 36 percent since the start of the year, the best performance among the 23 companies in the Stoxx 600 Chemicals Index.
Solvay reported its cash and short-term investments, less financial debt, fell by 163 million euros in the quarter to 2.53 billion euros at the end of June. Rhodia said net debt was little changed at 1.09 billion euros.
The French specialty chemicals maker reiterated its profit forecast, saying it will generate at least 1 billion euros of cash from operations before one-time items and changes in working capital this year.
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