Solvay posts solid net profit for 4Q 2005

Belgian chemical and pharma firm Solvay SA posted 4Q 2005 net income of EUR 131 million, up from EUR 126 million for the year-ago final quarter.
Fourth quarter sales rose to EUR 2.3 billion, up from …

Belgian chemical and pharma firm Solvay SA posted 4Q 2005 net income of EUR 131 million, up from EUR 126 million for the year-ago final quarter. Fourth quarter sales rose to EUR 2.3 billion, up from EUR 1.9 billion the year before. A Dow Jones survey of four analysts predicted sales would be EUR 2.2 billion and 4Q net profit would be EUR 126 million. The company“s core chemicals division produced strong results. It benefited from high prices for its key soda ash, caustic soda and hydrogen peroxide products. Fourth quarter sales reached EUR 708 million, up 13% from EUR 628 million. Like-for-like earnings before tax and interest increased 15% to EUR 53 million, up from EUR 46 million. At the plastics division, rising raw material costs squeezed margins while pharmaceuticals, the company“s hope for the future, demonstrated impressive growth. The company said it began 2006 “in favorable conditions despite the increases in energy costs.” At a recent analyst meeting, Solvay officials said the company was well placed to absorb high energy prices. “Management believes Solvay is so well integrated in terms of energy requirements that it suffers only a relatively small increase in energy costs while competitors suffer greater increases,” Credit Suisse First Boston wrote in a note after the meeting. “Solvay“s relative insulation to energy costs come from its wide-scale network of co-generation plants”. Overall, the company“s full year net rose EUR 816 million in 2005, up 51% from 2004“s EUR 541 million. EBIT was up 23% to EUR 912 million. Solvay is proposing a 5.3% increase in its net dividend to EUR 2 a share. It cited “favorable markets” which “allowed the confirmation of price increases” for its strong chemical results. Family-controlled Solvay was founded in 1863 to exploit Ernest Solvay“s revolutionary ammonia-soda process and the company remains dominated by its chemical and plastics business.