Solvay hit by weak construction markets

Solvay, the world“s leading maker of soda ash, booked a EUR 197 million (USD 272 million) impairment charge after tax on industrial assets due to weak construction markets, causing its third-quarter …

Solvay, the world“s leading maker of soda ash, booked a EUR 197 million (USD 272 million) impairment charge after tax on industrial assets due to weak construction markets, causing its third-quarter profit to miss estimates. The Belgian chemicals and plastics maker said the impairments were almost entirely related to its soda ash operations in Europe where demand remains weak, particularly with regards to flat glass used in the construction industry. Industrial measures have been taken: capital expenditures have been drastically reduced and will remain at a low level as long as end markets remain sluggish, Solvay said at the end of October. Our commercial policy will be revisited and if insufficient, new industrial measure will be considered. Third-quarter net profit for the group was EUR 18 million, well below the average estimate of EUR 69.3 million, as the impairment offset a capital gain of EUR 130 million from the sale of a stake in Inergy Automotive Systems. Solvay“s third-quarter recurring earnings before interest and tax (REBIT) of EUR 149 million also missed the average forecast of EUR 158 million. The company, however, still raised its full-year outlook. In the year-earlier period Solvay had comparable REBIT of EUR 95 million, excluding its now divested drugs unit. Solvay expects a higher REBIT in chemicals compared to last year, Solvay said in a statement, which had previously expected operating profit at its chemicals unit to be in line with 2009. Taking into account the significantly stronger demand for speciality polymers experienced in the first nine months, Solvay will realize a sharply improved REBIT in plastics compared to the low level of last year, it said.