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Introduction & Market Context
Solvay SA (EURONEXT:EBR:SOLB) presented its first quarter 2025 financial results on May 8, revealing a mixed performance across its business segments amid challenging market conditions. The Belgian chemicals company, led by CEO Philippe Kehren and CFO Alexandre Blum, reported declining sales and EBITDA figures while maintaining stable margins.
The company’s stock, which has been trading near €101.60, faces continued pressure as Solvay confirmed its 2025 outlook but specified it now expects results in the lower half of its previously announced guidance range. This presentation follows Solvay’s Q4 2024 results, which had already shown signs of macroeconomic headwinds affecting the chemical industry.
Quarterly Performance Highlights
Solvay reported Q1 2025 net sales of €1.1 billion, representing a 6% organic decline compared to the same period last year. Despite this top-line pressure, the company managed to maintain its profitability with underlying EBITDA of €250 million, also down 6% organically but with a slightly improved margin of 22.3% compared to 22.1% in Q1 2024.
As shown in the following overview of key financial metrics:
The company generated €42 million in free cash flow during the quarter, while maintaining a return on capital employed (ROCE) of 17%. Net debt stood at €1.7 billion, representing a leverage ratio of 1.7x EBITDA.
The sales decline was primarily driven by lower volumes, as illustrated in the net sales bridge below:
Volume and mix effects reduced sales by €75 million, while pricing remained resilient with a positive contribution of €7 million. Currency conversion had a negative impact of €14 million. The resulting Q1 2025 sales figure of €1,122 million represents a decline from €1,201 million in Q1 2024.
Detailed Financial Analysis
Solvay’s EBITDA performance reflects similar dynamics to its sales, with volume declines being the primary driver of the year-over-year reduction:
The EBITDA bridge shows that volume and mix effects reduced EBITDA by €15 million, while net pricing had a negative impact of €11 million. Fixed costs increased slightly by €2 million, but this was more than offset by other factors contributing €13 million positively. The company noted that the "other" category includes accrual adjustments related to Dombasle Energy in Q1 2024.
The most striking aspect of Solvay’s quarterly performance was the stark contrast between its two main business segments. The Basic Chemicals segment, which includes Soda Ash & Derivatives and Peroxides, saw significant pressure:
Basic Chemicals reported sales of €672 million, down 6% year-over-year, with EBITDA declining by 20% to €162 million. This was primarily driven by lower soda ash sales compared to a high base in Q1 2024, though the Peroxides business showed growth with sales up 5% year-over-year.
In contrast, the Performance Chemicals segment demonstrated remarkable resilience:
While Performance Chemicals sales declined by 7% to €450 million, the segment’s EBITDA grew by an impressive 18% to €94 million, resulting in an EBITDA margin of 21.0%. This segment includes Silica, Coatis, and Special Chemicals businesses, with varying performance across these units.
The company’s free cash flow generation of €42 million followed normal seasonal patterns:
Starting from the EBITDA of €250 million, capital expenditures of €70 million and working capital requirements of €46 million were the main cash outflows, along with provisions (€60 million), financing costs (€4 million), and taxes and other items (€28 million).
Solvay’s capital structure saw some changes during the quarter:
Net debt increased from €1,544 million at the end of December 2024 to €1,725 million by March 31, 2025. This increase was primarily due to dividend payments of €101 million and new debt/lease arrangements of €121 million, which includes €105 million for the launch of biomass boilers in Rheinberg. The company maintains a BBB- stable outlook from S&P.
Strategic Initiatives
Solvay continues to prioritize safety as a key operational focus. The company presented its safety performance metrics and action plan:
The data shows improvements in safety metrics, with the Reportable Injury Rate (RIR) at 0.27 in Q1 2025. The company has implemented a comprehensive action plan that includes a dedicated safety team, safety transformation initiatives, increased engagement of leaders, and support from external safety consultants.
Another strategic focus is the company’s investment in sustainable operations, as evidenced by the €105 million investment in biomass boilers in Rheinberg, which was highlighted in the capital structure slide.
Forward-Looking Statements
Solvay confirmed its outlook for 2025 but with an important qualification:
The company now expects its underlying EBITDA to be in the lower half of the previously announced range of €1.0 billion to €1.1 billion. Free cash flow is projected at approximately €300 million, with capital expenditures limited to around €300 million.
This guidance is consistent with what was provided in the Q4 2024 earnings call, though the specification of results being in the lower half of the range suggests continued caution about market conditions. The company noted that this outlook is dependent on current market conditions and currency exchange rates continuing to prevail.
Solvay’s Q1 2025 results reflect the ongoing challenges in the chemical industry, with pressure on volumes across multiple segments. However, the company’s ability to maintain margins and the strong performance of its Performance Chemicals segment demonstrate resilience in a difficult operating environment. Investors will be watching closely to see if the company can maintain this balance as it navigates through 2025.
Full presentation:
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