Solvay Chief Forecasts 2013 to Be ‘Difficult Year’ on Europe
Solvay SA (SOLB) Chief Executive Officer Jean-Pierre Clamadieu said 2013 is expected to be a “difficult” year for the Belgian chemicals maker amid a slowdown in European markets.
The start of the year has been more lackluster than in 2012, Clamadieu told reporters. Solvay shares, which dipped about 3 percent on the CEO’s comments, traded 1.3 percent higher at 114.2 euros as of 3:44 p.m. in Brussels.
“We’re going to suffer in Europe,” Clamadieu said at a press briefing in Paris. “We feel this is going to be a difficult year.”
While Solvay purchased cosmetic-ingredient maker Rhodia for about $8 billion in 2011, it remains exposed to commodity plastic PVC that has suffered during a slump in construction. BASF SE (BAS) is among the global chemical companies that have made cutbacks in operations and jobs to counter a slowdown in building projects. Europe may show some improvement in 12 months’ time, the Solvay chief said.
Clamadieu said the market for PVC, used in windows and piping, remains “very difficult.” Soda ash, used in glass manufacturing, is suffering in southern Europe and Solvay is considering a reduction in capacity there, according to the CEO, adding that further details will be announced by June.
Europe accounts for about 40 percent of Solvay’s annual revenue.
“The good news is that China is picking up rather strongly,” he said.
Solvay’s ambitions in mergers and acquisitions will probably be restricted to smaller deals, focused on bolstering consumer-chemical business Novecare and specialty polymers. Asia is a key hunting ground, and there may be opportunities in Latin America and North America because of lower energy costs.
“Don’t expect big news in 2013” in terms of transformative deals, the CEO.
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