Solvay's Plastics business post 34% YOY decline in Q1 sales; operating result better than previous quarter

Solvay's Plastics business posted a 34% year-on-year decline in first quarter sales in 2009 to EUR 629 mln owing to customer destocking and downturn in automobile, construction and electronics sectors. The operating result for Q1 - 2009 (EUR 3 mln) was down compared to same period last year (EUR 90 mln) but saw improvement compared to the last quarter of 2008 (EUR -26 mln). The cost-reduction measures taken by the group in its Plastics business and the first effects of the drop in costs of some raw materials mitigated the impact on Q1 operating result. Overall, Solvay Group's Q1 net income (EUR 98 mln) decreased by 55% compared to same period last year. Sales from the Pharmaceuticals and Chemicals Sector contracted by 3% and 5% respectively compared to the first quarter of 2008. In Plastics, slowdown in demand for Specialty Polymers continued in the first quarter of 2009 (volumes down by 32% compared to the first quarter of 2008) from the previous quarter, amplified by increased inventory reduction by customers. On the other hand, market for photovoltaic cells and the oil and gas exploration markets (PVDF), polysulfones and also the pharmaceutical market (PVDC) fared relatively better. Results for Vinyls (PVC) also suffered a significant drop in its prices as well as volumes in the first three months of 2009. The situation of the PVC market in Europe remains very difficult, despite improved margins compared to the fourth quarter of 2008. In Mercosur, domestic demand for PVC contracted significantly in the first quarter. In Asia, sales volumes held steady, especially to China, since Chinese production of PVC with a base of acetylene is no longer competitive. Solvay indicated that its Plastics and Chemicals business will have 'limited visibility' for the remaining year while expects better operating result for Pharmaceuticals business.
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