Solvay's Q4 performance mixed, cautious outlook for 2026

Investing.com – Solvay Group (EBR:SOLB) announced its fourth-quarter adjusted EBITDA of €169 million on Tuesday, beating analyst expectations by 6%, but falling short of market consensus by 1%.

The Belgian chemical company’s guidance for fiscal year 2026 is below market expectations, with free cash flow expected to be less than its targeted dividend payout.

For the fourth quarter ending December 31, revenue totaled €995 million, below analyst estimates of €1.04 billion and market consensus of €1.02 billion. Organic sales declined 9.6% year-over-year, with a 5.6% volume decrease and a 3.7% price decline.

Adjusted EBITDA margin narrowed by 560 basis points compared to the same period last year. Organic EBITDA decreased by 29.8%, driven by an 18% volume decline and a 1% net price increase.

The Basic Chemicals segment outperformed expectations, with adjusted EBITDA of €160 million in the fourth quarter, exceeding estimates by 9%. Sales in this segment reached €635 million, down 8.5% organically.

Within Basic Chemicals, soda ash and derivatives sales totaled €406 million, down 12.9% organically, due to ongoing price pressure in the shipping market despite stability in the domestic market.

Peroxides sales reached €229 million, up 0.5% organically, with stable commercial market volumes and growth in electronic-grade products for the semiconductor industry.

The Performance Chemicals segment underperformed, with adjusted EBITDA of €50 million, 8% below expectations. Sales in this segment totaled €359 million, down 11.6% organically.

Coatis sales declined 32.4% organically to €97 million, due to US tariffs and intense price competition in Asia creating a challenging market environment.

Silica sales fell 8.1% organically to €116 million, driven by tire volume declines. Specialty chemicals sales grew organically by 6.9% to €147 million, supported by increased rare earths sales in electronics and medical applications.

For 2026, Solvay expects basic EBITDA to be between €770 million and €850 million, below analyst estimates of €799 million and market consensus of €824 million.

The company projects at least €200 million in free cash flow, below market expectations of €252 million and also below its dividend payout target. Capital expenditures are expected to reach up to €300 million.

The company anticipates approximately €300 million in structural cost savings by the end of 2026. The FY2026 EBITDA guidance assumes a negative foreign exchange impact of €20 million (based on €1.20/USD exchange rate) and an additional €40 million in transformation costs.

In Q4, shareholder free cash flow reached €137 million, up from €41 million in the same period last year, benefiting from improved working capital. Net financial debt stood at €1.6 billion, with a net debt-to-EBITDA ratio of 1.8x.

The company announced a full-year gross dividend of €2.43 per share, in line with analyst expectations.

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