Good 2018 Outlook Start for European Materials Producers
According to two different press releases by SOLVAY and BASF, both companies are expecting good markets in 2018. Yo2u will read part of PRs and then linked to main sources.
SOLVAY 2018 Outlook
At constant scope and relative to average 2017 forex levels, Solvay expects full year underlying EBITDA to grow 5% to 7% organically.
Advanced Materials to grow by double-digits, driven by broad-based demand expansion in its key end-markets, including aerospace, automotive, electronics, batteries and healthcare, and supported by operational excellence;
Advanced Formulations to grow at a high single-digit, driven by increased demand in mining, and some further improvement in oil and gas, and positive net pricing;
Performance Chemicals profitability to decrease around €(50) million, as current higher energy prices are expected to weigh on soda ash margins, partly offset by excellence and growth in peroxides.
Notwithstanding underlying organic EBITDA growth of 5 to 7%, 2018 begins with forex headwinds. Assuming current rates prevail for the full year, reported underlying EBITDA will also be impacted both by forex conversion impacts of around €(125) million, and scope effects of small realized divestments of some €(30) million.
Including above-mentioned scope and forex elements, free cash flow from continuing operations is expected to exceed the 2017 level of €782 million. The optimized debt structure will lead to a reduction of net cash financing payments by more than €100 million.
CEO quote, Jean-Pierre Clamadieu
“2017 marks another successful year: 8% volume growth was complemented by continued progress on sustainable value delivery. Combined with our outlook for this year, we expect to meet or exceed the three-year objectives set in 2016. Now that Solvay has transformed into an advanced materials and specialty chemicals company, our main priority today is to align the organization, enhancing efficiency and customer focus and contributing to more organic volume growth.”
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Following a successful 2017 business year, BASF has had a good start to the year 2018. “Last year, we achieved significant growth and were able to further increase our profitability. Moreover, we laid important groundwork for the future development of our company – in terms of both people and strategy,” said Dr. Kurt Bock, Chairman of the Board of Executive Directors of BASF SE, at the presentation of the 2017 Annual Report in Ludwigshafen.
In the fourth quarter of 2017, BASF Group posted sales of €16.1 billion, which represents growth of 8% compared with the same quarter of 2016. Prices rose by 9%. BASF’s sales volumes increased by 4%; this was driven by all segments with the exception of Oil & Gas. By contrast, negative currency effects were significantly higher and reduced sales by 5%. Income from operations (EBIT) before special items in the fourth quarter was €1.9 billion, up by 58% from the same period of the prior year. The significantly higher earnings in the Chemicals, Agricultural Solutions and Oil & Gas segments as well as in Other compensated for lower earnings in the Functional Materials & Solutions and Performance Products segments.
Economic activity picked up in many countries worldwide in 2017. “We took advantage of this upturn and markedly increased our full-year 2017 sales and earnings compared with the previous year,” said Bock. Thanks to good demand, BASF sold greater volumes in all divisions and considerably increased its profitability. Higher prices, especially in the Chemicals segment, also contributed to this. Overall, BASF’s sales grew by 12% to €64.5 billion. One contributing factor was the Chemetall business acquired at the end of 2016, which offers tailor-made solutions for metals surface treatment.
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