Solvay raises cash flow target as cost cuts bear fruit
May 5 (Reuters) – Solvay said on Wednesday it expects free cash flow to reach the upper end of its 2021 guidance range after the Belgian chemicals group beat first-quarter earnings expectations, helped by cost cuts and strong automotive sales.
The company, whose products range from base chemicals such as soda ash to speciality polymers used in cars and planes, now expects free cash flow this year of 650 million euros ($781 million), narrowing its previous guidance of 600-650 million.
Solvay raised its cost cuts target last February to 500 million euros by 2024, from 350 million euros, and said it planned to cut 500 jobs by 2022. That followed a reduction of 570 positions last year in the United States and in Britain as part of its restructuring.
The company, which makes lithium derivatives for batteries, said automotive sales were up an underlying 19%, boosted by an 80% jump in hybrid and electric vehicle batteries, and offsetting continued weakness in civil aerospace due to COVID-19 lockdowns and restrictions.
First-quarter earnings before interest, tax, depreciation and amortization (EBITDA) rose 10.3% like-for-like from a year earlier to 583 million euros, above a company-provided consensus of 535 million euros.
Sales in January-March were up an underlying 1.9% at 2.37 billion euros, above a company-provided consensus of 2.32 billion euros.
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