First half 2007 results
See also the attached PDF files :
- full press release (including also IFRS financial statements)
- 1st half 2007 key data
- 1st half 2007 results presentation
Solvay’s operating results of EUR 616 million for the 1st half of 2007, exceeding the excellent results for the 1st half of 2006
- Sales (EUR 4,808 million) stable (+1%)
- Operating results of EUR 616 million exceeding (+3%) the results for the 1st half of 2006 :
- Continued growth in Chemicals (+10%) and Plastics (+13%)
- Results in Pharmaceuticals down (-16%): impact of USD, effects of Pantoloc® and pressure on prices in France as expected; decrease of miscellaneous revenues in the 2nd quarter
- Net income of the Group (EUR 413 million) down 15%, due to a decrease of EUR 51 million of non-operating items1 and higher taxes compared to the 1st half of 2006
- Confirmation of outlook for operating results for 2007 comparable to the results for 2006 for the Group as for Pharmaceuticals
- Acceleration of geographic expansion in emerging markets
Sales reached EUR 4,808 million in the 1st half 2007 and were stable (+1%) compared to the 1st half of 2006. In the 2nd quarter of 2007, they were up 2% and amounted to EUR 2,436 million. At constant exchange rates, they would have increased by 4% (+4% in the 2nd quarter of 2007).
REBIT2 (EUR 616 million) was up 3% compared to the 1st half 2006 and reached EUR 291 million in the 2nd quarter (-4% compared to the 2nd quarter of 2006). After a 1st quarter comparable to that of last year, results from the Pharmaceuticals Sector were down in the 2nd quarter. The Chemicals and Plastics Sectors continued their strong growth. The operating margin (REBIT on sales) improved to 12.8% compared to 12.6% in the 1st half of 2006.
The net income of the Group amounted to EUR 413 million (-15%) compared to EUR 484 million in the 1st half of 2006. It reached EUR 195 million (-21%) in the 2nd quarter of 2007. In the 1st half of 2007 it included non-operating items with a negative balance of EUR 34 million, whereas in the 1st half of 2006 it included a positive balance of EUR 17 million. Also, tax charges (EUR 146 million) were higher than in the 1st half of 2006 (EUR 97 million), which had the benefit of tax credits.
Cash flow3 for the 1st half of 2007 amounted to EUR 664 million and REBITDA4 to EUR 850 million. The net debt to equity ratio reached 35% at the end of the 1st half of 2007, compared to 38% at the end of the 1st half of 2006.
The operating results of the Pharmaceuticals sector (EUR 205 million) were down by 16% in the 1st half of 2007. After a stable 1st quarter, results for the 2nd quarter 2007 were down by 32% compared to the 2nd quarter of 2006; the latter included the gain on sales of non strategic drugs and a compensation, for a total amount of EUR 21 million. Results continued to be affected by the unfavorable impact of the USD (effect of -3% on sales), expiration of marketing rights to Pantoloc® (effect of -6%) and significant pressure on prices in the European pharmaceuticals market, especially in France (effect of -2%). These were partially offset by an increase in sales of other products and the “Inspire” savings plan (EUR 300 million by 2010) which is continuing as planned. Expenses in Research & Development, high in the 2nd quarter (17.9%), reached 16% of sales in the 1st half of 2007, in line with the estimate for the year.
For 2007, prospects for the Pharmaceuticals Sector remain in line with those presented in the 1st quarter of 2007 (see page 9).
The Chemicals Sector continued its growth due to the persistence of a continued favorable global balance between supply and demand. Sales (EUR 1,528 million) were comparable (+1%) to those of the 1st half of 2006 (+2% in the 2nd quarter). Results (REBIT of EUR 189 million) recorded a growth of 10% in the 1st half (+14% in the 2nd quarter). The “Minerals” and “Oxygen” clusters as well as the “Electrochemistry” (caustic soda) activities continued to record excellent results, while the fluor chemical commodities remained under heavy pressure
The Plastics Sector again showed improvement due to the excellent performance of all of its activities. Specialty Polymers made steady progress and the “Vinyls” cluster showed strong growth. Sales (EUR 2,029 million) increased by 6% (+5% in the 2nd quarter). Results (REBIT of EUR 245 million) increased by 13% (+11% in the 2nd quarter) despite the unfavorable effect of the USD and JPY exchange rate.
| “Overall for 2007, we confirm our confidence that we can achieve the excellent operating results of last year. Obviously, we remain attentive to the evolution of global macroeconomic conditions, energy costs and the EUR/USD exchange rate.” |
SOLVAY Group – Summary Financial Information 5
|
Million EUR |
1st half 2006 |
1st half 2007 |
1st half 2007/ |
2nd quarter 2006 |
2nd quarter 2007 |
2nd quarter 2007/ |
|
Sales |
4,744 |
4,808 |
+1% |
2,388 |
2,436 |
+2% |
|
REBIT |
597 |
616 |
+3% |
304 |
291 |
-4% |
|
REBIT/Sales |
12.6% |
12.8% |
|
12.7% |
11.9% |
|
|
Non-recurring items |
-86 |
-34 |
-61% |
2 |
-25 |
ns |
|
EBIT |
511 |
582 |
+14% |
306 |
265 |
-13% |
|
Charges on net indebtedness |
-44 |
-38 |
-14% |
-23 |
-19 |
-15% |
|
Income from investments |
12 |
14 |
+22% |
12 |
14 |
+22% |
| Earnings before taxes |
478 |
559 |
+17% |
295 |
261 |
-12% |
|
Income taxes |
-97 |
-146 |
+51% |
-49 |
-66 |
+35% |
|
Discontinued operations |
103 |
0 |
ns |
0 |
0 |
ns |
|
Net income of the Group |
484 |
413 |
-15% |
246 |
195 |
-21% |
|
Net income (Solvay share) |
468 |
392 |
-16% |
236 |
183 |
-23% |
|
Total depreciation |
265 |
251 |
-5% |
146 |
128 |
-13% |
|
REBITDA |
826 |
850 |
+3% |
420 |
410 |
-2% |
|
Cash flow |
749 |
664 |
-11% |
392 |
322 |
-18% |
|
(per share, in EUR) |
||||||
|
Earnings per share6 |
5.66 |
4.74 |
-16% |
2.86 |
2.22 |
-23% |
|
Net debt to equity |
38% |
35% |
– |
– |
– |
– |
Notes on Solvay Group summary financial information
Non-recurring items amounted to EUR -34 million in the 1st half of 2007 compared to EUR -86 million in the 1st half of 2006. They represent, on balance, mainly in the Pharmaceuticals Sector, restructuring costs (EUR 25 million) of the “INSPIRE7 “ project by 2010 and a reversal of provisions no longer needed (EUR 10 million).
Charges on net indebtedness amounted to EUR 38 million. At the end of June 2007, about 84% 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 146 million in the 1st half of 2007, or a rate of 26% (compared to 20% in the 1st half of 2006, which had the benefit of tax credits in Germany and Spain and a non-taxable capital gain on the sale of 49.6% of S.A. Financière Keyenveld in the 2nd quarter).
In the 1st half of 2007, there were no results from discontinued operations, whereas that item amounted to EUR 103 million net of taxes in 2006 following the sale in March of industrial foils to Renolit.
Net income of the Group amounted to EUR 413 million compared to EUR 484 million in the 1st half of 2006. Net earnings per share in the 1st half of 2007 amounted to 4.74 EUR (2.22 EUR in the 2nd quarter of 2007) compared to 5.66 EUR for the same period in 2006 (2.86 EUR in the 2nd quarter of 2006).
Cash flow amounted to EUR 664 million, and REBITDA to EUR 850 million. Depreciation was down by EUR 14 million compared to the 1st half of 2006, which included non-recurring depreciation linked to the reorganization of barium and strontium activities.
Total equity amounted to EUR 4,711 million at the end of June 2007, up by EUR 255 million compared to the end of 2006. Net debt of the Group at the end of June 2007 (EUR 1,662 million) was up by EUR 405 million compared to that of December 31, 2006 and is comparable to that of the 1st half of 2006. The net debt to equity ratio was 35% at the end of the 1st half of 2007, compared to 38% at the end of the 1st half 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%.
RESULTS BY SECTOR 8
|
Million EUR |
1st half 2006 |
1st half 2007 |
1st half 2007/ |
2nd quarter 2006 |
2nd quarter 2007 |
2nd quarter 2007/ |
|
GROUP SALES |
4,744 |
4,808 |
+1% |
2,388 |
2,436 |
+2% |
|
Pharmaceuticals |
1,320 |
1,251 |
-5% |
648 |
627 |
-3% |
|
Chemicals |
1,509 |
1,528 |
+1% |
757 |
773 |
+2% |
|
Plastics |
1,916 |
2,029 |
+6% |
983 |
1,037 |
+5% |
|
“Corporate et Support activities”9 |
– |
– |
– |
– |
– |
– |
|
GROUP REBIT |
597 |
616 |
+3% |
304 |
291 |
-4% |
|
Pharmaceuticals |
243 |
205 |
-16% |
120 |
81 |
-32% |
|
Chemicals |
172 |
189 |
+10% |
84 |
96 |
+14% |
|
Plastics |
217 |
245 |
+13% |
113 |
126 |
+11% |
|
“Corporate et Support activities”9 |
-35 |
-23 |
-34% |
-13 |
-11 |
-13% |
|
GROUP REBITDA |
826 |
850 |
+3% |
420 |
410 |
-2% |
|
Pharmaceuticals |
294 |
256 |
-13% |
146 |
106 |
-27% |
|
Chemicals |
254 |
269 |
+6% |
125 |
137 |
+9% |
|
Plastics |
308 |
342 |
+11% |
159 |
175 |
+10% |
|
“Corporate et Support activities”9 |
-29 |
-17 |
-42% |
-10 |
-8 |
-19% |
1 Non-recurring items and results from discontinued operations
2 Operating results, i.e. EBIT before non-recurring items
3 Net income plus total depreciation.
4 REBITDA : REBIT, before recurring depreciation and amortization.
5 Financial statements 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 82,664,534 shares in the 1st half of 2006 and 82,723,341 shares in the 1st half of 2007.
7 See also comments page 8.
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.