Chemicals and pharmaceutical company Solvay SA on 19 February 2009 warned of continuing problems in its markets, after posting an 83% decline in 4Q net profit and a heavy write-down for its stake in t…
Chemicals and pharmaceutical company Solvay SA on 19 February 2009 warned of continuing problems in its markets, after posting an 83% decline in 4Q net profit and a heavy write-down for its stake in troubled financial services group Fortis NV. “The macro-economic and financial uncertainties limit the visibility in 2009. Market conditions remain difficult at the beginning of the year”, the company said. Solvay chief executive Christian Jourquin said the company is preparing for the global economic downturn to last more than two years, saying it is “our duty to prepare for the worst”. Net profit in the 4Q slumped to EUR 29 million from EUR 171 million a year earlier, well below the EUR 59.5 million expected in a poll of five analysts. Revenue fell 4% to EUR 2.27 billion. Solvay had to write down EUR 51 million in the quarter for its holding in Belgian financial services company Fortis, whose shares have fallen 92% in the last 12 months. Solvay, which makes a wide range of products, including car fuel tanks, soda ash for the manufacture of glass, and flu vaccines, is highly exposed to the downturn in the automotive and building sectors, two of the hardest-hit industries in the economic downturn. Recurring EBIT, a parameter which excludes extraordinary items and is closely watched by analysts, fell by 53% to EUR 125 million in the 4Q. The company“s plastics and chemicals units were particularly hit in 2008 by increasing energy and raw material prices, while demand fell sharply in the last quarter of the year, Solvay said. Recurring EBIT for chemicals fell 54% to EUR 31 million in the quarter.