Solvay SA, the chemicals and plastics maker that bought Rhodia SA, forecast earnings will rise 45 percent in five years, led by growing demand for specialty polymers, surfactants, rare earths and silica.
Earnings before interest, taxes, depreciation and amortization will increase to 3 billion euros ($4 billion) in 2016 from 2.07 billion euros last year, the Brussels-based company said today in a statement. The forecast, which includes 400 million euros of planned cost cuts by 2014, excludes potential acquisitions or divestments. Last year’s Ebitda figure is adjusted to assume a full year of ownership of Rhodia, a purchase completed for 4.5 billion euros in September.
Solvay plans to expand its most profitable businesses by adding capacity and with acquisitions, forecasting annual growth of at least 10 percent for specialty polymers, consumer chemicals and advanced materials. The priority for the remaining divisions, which include soda ash, hydrogen peroxide, vinyls and cellulose acetate fiber, is cash generation and an improvement in strategic position, it said.
“The execution of our strategy will be mainly driven by operational excellence and growth based on innovation, capacity expansion in fast-growing regions and value adding bolt-on acquisitions,” Jean-Pierre Clamadieu, who becomes Solvay chief executive officer on May 11, said in the statement. “Our ambition is to build a strong leader participating in the reshaping of the global chemical industry.”
Solvay also said first-quarter trading conditions were “significantly” better than in the prior three-month period, adding more strength to comments it first made on Feb. 16 after reporting fourth-quarter Ebitda fell 23 percent.