Solvay’s Earnings Call: Mixed Results Amid Market Challenges

Solvay Sa Adr ((SLVYY)) has held its Q3 earnings call. Read on for the main highlights of the call.

Solvay’s recent earnings call painted a mixed picture of the company’s current standing. While there were notable achievements in operational excellence and strategic initiatives such as CO2 emission rights optimization and rare earth expansion, these were overshadowed by challenges in the soda ash and Coatis businesses, culminating in an overall sales decline.

Operational Excellence and Digital Transformation

Solvay’s commitment to operational excellence is evident in its ambitious program aimed at generating EUR 350 million in cost savings by 2028. The company has already achieved EUR 110 million in savings in 2024 and is on track to exceed EUR 200 million by the end of 2025. These savings are primarily driven by digital transformation and condition-based monitoring, showcasing Solvay’s dedication to leveraging technology for efficiency.

CO2 Emission Rights Optimization

In a strategic move, Solvay generated EUR 40 million in EBITDA and a EUR 50 million cash gain by selling part of their CO2 emission rights inventory in Q3. This is not a one-off event and can be repeated depending on market conditions, indicating a potential recurring revenue stream for the company.

Rare Earth Expansion and Innovation

Solvay has made significant strides in its rare earth expansion, inaugurating a new production line for Nd-Pr oxide for permanent magnets in La Rochelle, France. The company plans to further expand its capacity for other rare earth elements like samarium, dysprosium, and terbium by 2026, positioning itself as a key player in the rare earth market.

Challenging Market Conditions for Soda Ash

The soda ash business is grappling with unsustainable pricing pressure due to overcapacity in China, which has led to reduced production in European export plants. This challenge underscores the volatile nature of the global soda ash market and its impact on Solvay’s operations.

Decline in Coatis Business

The Coatis business faced a significant 26% decline in sales, attributed to strong competition from Asian players and high tariffs on Brazilian imports to the U.S. This highlights the competitive pressures and geopolitical challenges affecting Solvay’s market position.

Overall Sales Decline

Solvay reported a 7% decline in underlying net sales in Q3 2025, reaching EUR 1.040 billion, with volumes down 4% year-on-year. This decline reflects the broader challenges faced by the company in maintaining its sales momentum amid a tough economic environment.

Forward-Looking Guidance

Despite a challenging macroeconomic environment, Solvay provided forward-looking guidance with expectations of full-year 2025 EBITDA between EUR 880 million and EUR 930 million. The company aims for free cash flow from continuing operations of around EUR 300 million, with CapEx capped at EUR 300 million to ensure dividend coverage. Solvay’s strategic EUR 40 million EBITDA gain from CO2 emission rights sales and a solid EBITDA margin of 22% demonstrate resilience amid market pressures.

In summary, Solvay’s earnings call reflects a company navigating through both achievements and challenges. While operational excellence and strategic initiatives offer promising prospects, market pressures in the soda ash and Coatis businesses present significant hurdles. The company’s forward-looking guidance provides a cautious yet optimistic outlook for the remainder of 2025.