EBITDA

Solvay expects underlying EBITDA to grow by mid-single digit. Overall demand is anticipated to remain healthy and operational excellence momentum is expecting to continue, albeit in an environment of rising raw material prices.

  • Advanced Materials growth will be driven from its diversified end markets including aerospace, automotive, consumer & healthcare, and electronics.
  • Advanced Formulations growth is projected in several end markets including agro, coatings and mining, with improving conditions in oil & gas.
  • Performance Chemicals is expected to show stable to modest growth, with anticipated headwinds in the soda ash market offset by operational excellence and Solvay’s capacity increase in peroxides.
  • Functional Polymers is projected to be flat, retaining the growth achieved in 2016.
  • Corporate & Business Services are committed to excellence measures to offset inflation.

The EBITDA outlook is based on constant scope and foreign exchange rates(1)Solvay is exposed to foreign exchange fluctuations. The main currency exposure is to US dollar, Chinese yuan, Thai baht, Brazilian real, Russian ruble, Japanese yen and Korean won. EBITDA sensitivity to US dollar is about €120 m per US$ (0.10) change, of which some 60% on conversion and 40% on transaction. Net debt sensitivity to US dollar is approximately € (200) m per US$ (0.10) change..

Underlying depreciation & amortization charges are expected to be at around € (750) m and exclude PPA amortization charges of approximately € (290) m.

Financial charges & taxes

  • Underlying net financial charges expected at €(425) m, excluding the impact of foreign exchange fluctuations
    • Underlying net cost of borrowings at around € (230) m;
    • Coupons to be paid on the perpetual hybrid bonds of € (112) m;
    • Non cash recurring discounting costs are estimated at approximately € (80) m, of which some three quarters relates to pensions and one quarter to health, safety & environmental (HSE) provisions.
  • Underlying income tax rate is expected to remain at around 30%.

Cash flow

  • Free cash flow from continuing operations is expected to exceed €800 m in 2017, compared to €736 m in 2016, driven by higher EBITDA and reduced capital expenditures.
  • Capital expenditure from continued operations is expected to decrease further to around € (800) m.
  • The total pension cash outflow is projected at € (210) m.

(1) Solvay is exposed to foreign exchange fluctuations. The main currency exposure is to US dollar, Chinese yuan, Thai baht, Brazilian real, Russian ruble, Japanese yen and Korean won. EBITDA sensitivity to US dollar is about €120 m per US$ (0.10) change, of which some 60% on conversion and 40% on transaction. Net debt sensitivity to US dollar is approximately € (200) m per US$ (0.10) change.