Belgium-based chemical major Solvay reported a sharp decline in its third-quarter 2026 earnings as the Middle East conflict disrupted operations and continued weakness in the soda ash market weighed on its financial performance.

 

The company’s underlying EBITDA fell 26.6% organically year-on-year to €173 million in Q3 2026, compared with €232 million in the corresponding quarter last year. The EBITDA margin contracted to 16.8% from 22.2% a year earlier.

 

Underlying net sales declined 3.3% organically to €1,031 million, against €1,044 million in Q3 2025. Underlying net profit from continuing operations dropped to €35 million from €90 million in the year-ago quarter.

 

Solvay attributed the earnings decline primarily to the impact of the Middle East conflict, particularly the temporary shutdown of its Peroxides plant at the Sadara complex in Jubail, Saudi Arabia. The company also cited the continued weakness in the soda ash market.

 

The conflict had an estimated negative EBITDA impact of €25 million in Q3 2026, following a €20 million impact in Q2. The suspension of peroxide operations at Jubail alone accounted for nearly €15 million of the quarterly impact.

 

Commenting on the results, Philippe Kehren, CEO of Solvay, said, “We continue to navigate a challenging economic environment. The conflict in the Middle East is having a significant impact on Solvay operations, with the temporary shutdown of our Peroxides plant in Jubail materially affecting the company’s short-term performance, as reflected in our updated guidance. 

 

"In this context, Solvay remains focused on executing its transformation, actively managing and strengthening its portfolio to position the company for long-term growth. With our long-term supply agreement with Viridis, we strengthen our position in rare earths separation and establish a new value chain down to the customers. This is a concrete step that will allow our plant in La Rochelle to unlock future growth opportunities.”

 

For the first nine months of 2026, Solvay recorded underlying net sales of €3.059 billion, down 6.4% from €3.267 billion in the same period last year.

 

Underlying EBITDA declined 18.6% organically to €579 million from €712 million, while the EBITDA margin fell to 18.9% from 21.8%.

 

Free cash flow for the nine-month period stood at €70 million, compared with €214 million in the corresponding period of 2025. Capital expenditure reached €203 million.

 

Underlying net debt stood at €1.8 billion at the end of September 2026, translating into a leverage ratio of 2.4x.

 

Despite the earnings pressure, Solvay continued to make progress on its cost-reduction programme. Structural cost savings amounted to another €25 million in Q3, taking cumulative savings since the programme began to €283 million. The company remains on track to achieve its €300 million savings target by the end of 2026.

 

Solvay reiterated its revised 2026 financial guidance, announced on October 19, forecasting underlying EBITDA of €720-740 million.

 

Free cash flow from continuing operations to Solvay shareholders is expected to range between €120 million and €150 million, net of approximately €90 million in transformation expenses.

 

Capital expenditure is projected to remain below €300 million, including €15-20 million in strategic investments announced in July to expand rare earth separation capacity at the company's La Rochelle facility in France.

 

The company said the outlook excludes any potential revenue or recovery measures from Sadara for the remainder of 2026.

 

Solvay operates its Jubail facilities through a joint venture with Sadara, which is majority-owned by Saudi Aramco. The company is exploring available mechanisms to mitigate the financial impact of the temporary shutdown, including contractual provisions designed to recover lost profitability.

 

While operational challenges continue to weigh on its near-term performance, Solvay is advancing its strategic transformation, with rare earths emerging as a key growth priority.

 

The company has signed a long-term supply agreement with Viridis, securing strategic rare earth feedstock starting in 2028. The agreement is expected to strengthen supply chain resilience and support the integration of Solvay's rare earths operations.

 

Meanwhile, discussions with global investment fund OneIM are progressing. Under the proposed arrangement, Solvay could contribute its rare earths activities to a newly established joint venture while retaining a significant minority ownership stake.

 

The Solvay business perimeter under consideration generates approximately €80 million in annual underlying EBITDA. However, the discussions remain ongoing, and no definitive agreement has been reached.

 

The planned strategic investments at La Rochelle, coupled with the proposed partnerships, are expected to strengthen Solvay's position in rare earth separation and create opportunities to expand its presence across the value chain.

 

Despite the decline in earnings and cash flow, Solvay's Board of Directors approved an interim dividend of €0.97 gross per share, unchanged from last year. The dividend will be paid on January 20, 2027.

 

The latest results underline the challenges facing Solvay as geopolitical disruptions and weak market conditions weigh on its traditional chemical businesses. At the same time, its cost-saving programme, rare earths investments and portfolio realignment remain central to its efforts to restore performance and position the company for long-term growth.