Belgian chemical giant Solvay has posted excellent financial results for the third quarter of this year. According to the Belgian newspaper De Standaard, the company has managed to successfully pass increased costs onto the consumer, raising prices by 30%.
At the company press conference to announce the quarterly results, Solvay CEO Ilham Kadri appeared buoyant. While other major chemical companies risk collapse under the weight of rapidly rising gas and raw material costs, Solvay has increased profits and overcome the mounting costs.
In the third quarter, Solvay increased sales by 40.3% to €3.6 billion. Subtracting the cost of acquisitions and the impact of fluctuating exchange rates, the company’s sales still increased by an impressive 29.5%.
This increase is boosted by higher prices, as their volume of sales have remained mostly unchanged. By raising its prices by nearly a third, the company’s cash flow leapt by 40% to €917 million.
Ultimately, Solvay’s customers have little choice but to accept the increased prices. “Solvay has price clauses in the contracts with its customers, so that it can quickly pass on the increased energy and raw material costs. It also started early to adjust those contrast,” Degroof Petercam analyst Frank Claassen told De Standaard.
Solvay’s market positioning has allowed the company to make significant profits from valuable chemicals. Solvay produces products for goods in high demand, such as polymers used for batteries in electric cars, Claaseen noted. While Solvay does not have an exclusive monopoly on these goods, it still largely dominates the European market.
According to results published at the shareholders’ meeting, Solvay’s “materials” division has proven one of the most profitable, with a 48% increase in turnover from last year. This part of the company manufactures goods such as heat-resistant materials for batteries and raw materials for the aviation and smartphone industries.
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The company’s chemical division also recorded a 44% increase in turnover, with net profit up a staggering 86%, posting €509 million in net profit.
Despite these record results, the share price of Solvay has still slumped significantly on the stock market. Solvay is down 2%, which the CEO has blamed on a slowdown on orders from some European customers.
Despite this, the record results have prompted the Belgian company to launch fresh investments in the US. In the US state of Georgia, it will invest $850 million in a new factory to produce polyvinylidene fluoride (PVDF), which is commonly used in batteries for electric cars.
