In line with fourth quarter trends, Solvay anticipates supportive market conditions to continue in most key markets, though growth is likely to be moderated by conditions in automotive, electronics and oil & gas. In this context Solvay remains focused on further developing its growth platforms.

Underlying EBITDA

Solvay currently expects 2019 EBITDA to grow modestly and to be back-ended compared to €2,330 million pro forma in 2018[1].

  • Except for discontinued operations, business scope effects are expected to be small in 2019;
  • One-time gains in 2018 consisted mainly of €23 million synergies on Cytec post-retirement benefits, booked in Q2 2018 (mostly in Advanced Materials);
  • Organic growth in the first quarter is expected broadly flat, relative to the strong 2018 performance of €558 million pro forma[1].

Free cash flow

Solvay will continue to focus on cost discipline and on deleveraging the balance sheet with continued solid operational free cash flow delivery :

  • Capex discipline maintained, close to depreciation;
  • Cash-out for provisions are expected temporarily higher than the €400 million run rate, with higher restructuring cash-out as the simplification plan unfolds. Provisions cash-out includes continued deleveraging of pension liabilities;
  • Tax cash-out expected to increase, linked to phasing;
  • Cash financial expenses expected largely flat;
  • Working capital needs will depend on demand conditions at year end 2019, compared to a softer market conditions at year end 2018.

Forex sensitivities

Solvay is mostly exposed to the U.S. dollar, with the main sensitivities per US$/€0.10 change:

  • EBITDA sensitivity of about €(120) million based on the average rate in 2018 of US$/€1.18, with some 2/3 on conversion and 1/3 on transaction (excluding hedging);
  • Net debt sensitivity of about €120 million based on the rate at the end of 2018 of US$/€1.15.

[1] The 2018 EBITDA figures used as a comparison basis are the pro forma figures, following the implementation of IFRS 16. Growth is expressed as organic growth, i.e. excluding scope and forex conversion effects.