Solvay reported that net sales in the third quarter of 2023 were down by 20.3% organically versus a record Q3 2022 as expected due to 15% lower volumes (€-512 million) in a weaker macro environment and 5% lower prices (€-188 million) in a context of lower raw material costs and energy prices.

On a sequential basis, net sales were down 11% versus Q2. The volume reduction was broad based across regions and businesses. Meanwhile, structural cost savings for the first nine months of 2023 amounted to €63 million, bringing the total savings since 2019 to €530 million.

Underlying EBITDA of €702 million in Q3 2023 was down by -18.5% organically compared to a record Q3 2022 driven by lower volumes, partly offset by €36 million in positive net pricing and €41 million in lower fixed costs. Nine months EBITDA at €2,331 million is only down -1% organically versus 2022, a clear indication that strong historic pricing and cost discipline momentum is being maintained.

The underlying EBITDA margin of 25.6% in Q3 2023 was sustained relative to Q3 2022 despite lower volumes, while nine months EBITDA margin of 25.9% is +1.3pp higher, mainly as a result of positive net pricing and cost discipline.

Underlying Net Profit was €340 million in Q3 2023 compared to €509 million in Q3 2022.

Free Cash Flow of €346 million in Q3 2023 resulted in a nine-month 2023 total of €1,027 million and a FCF conversion ratio of 39.4%. ROCE was 15.2%, broadly in line with Q3 2022.

Continued strengthening of the balance sheet with underlying net debt at €2.8 billion, which translated to a historic low leverage of 0.9x.

Ilham Kadri, CEO, Solvay said: “This quarter marks the last reporting period for 160 year-old Solvay as it exists today, as we prepare to separate into two respected industry leaders. I’m so proud of what our teams have accomplished again this quarter, with positive net pricing and additional cost savings leading to higher EBITDA margins and cash generation in the context of a weak demand environment. It’s clear that we are truly a stronger company today on all fronts. With our new leadership and board teams now in place and the highest level of people engagement in the past 5 years at 76%, we are well equipped to embark on a new journey filled with untapped opportunities, enhanced focus, and an exciting future for all.”

2023 Outlook

Given the current volume momentum, we reconfirm our full year guidance, at the lower end of the prior EBITDA guidance range.