Solvay profit falls less than expected with Sept improvement

BRUSSELS, Nov 5 (Reuters) - Belgium’s Solvay reported a smaller profit decline than expected in the third quarter as cost savings partly offset reduced shipments of its specialty chemicals and plastics, with an improvement in September.

The chemical company’s third-quarter core profit fell 17.3% on a like-for-like basis to 473 million euros. The number was up from a weak second quarter and above the average forecast of 450 million euros in a company-compiled poll.

Solvay said it had achieved 90 million euros of cost savings from July to September, bringing the total for this year to 260 million euros, half of it structural, such as through more centralised programmes or improved manufacturing yields.

The company, whose products range from base chemicals such as soda ash to speciality polymers used in cars and planes, said on Thursday that demand was low in July and August, but was better in September for tyres and electric vehicle batteries.

Demand also held up from the electronics, healthcare and food sectors.

However, Solvay said it faced challenges from civil aerospace, hit by a collapse of aviation due to COVID-19 restrictions, and from reduced oil and gas activity.

Solvay CEO Ilham Kadri said net sales were down 10% in September, making it the best month since the start of the COVID-19 crisis.

“October is trending the same as September,” she said.

Solvay said it expected core profit (EBITDA) this year to be 1.89 billion to 1.97 billion euros from 2.32 billion euros in 2019. The average broker estimate in Refinitiv data is 1.90 billion euros.

Solvay said its forecast assumed no deterioration due to a second wave of COVID-19.

The company also said 2020 free cash flow would be about 900 million euros, a 50% improvement from 2019, and maintained its interim dividend at 1.50 euros per share. (Reporting by Philip Blenkinsop)