(Updates with net debt in third paragraph, comment from analyst in fourth, shares in fifth.)
Oct. 27 (Bloomberg) -- Solvay SA, the world’s largest soda- ash maker, said third-quarter earnings rose 13 percent as demand for its most profitable specialty polymers offset lower sales of vinyls in Europe and price declines for fluorinated chemicals.
Third-quarter earnings before interest, tax, depreciation, amortization and one-time costs rose to 264 million euros ($370 million) from 233 million euros a year earlier, the Brussels- based company said today in a statement. Analysts estimated earnings of 260.1 million euros, according to the average of eight estimates compiled by Bloomberg. Sales rose 5.3 percent to 1.63 billion euros, missing analyst estimates.
Solvay completed its 3.95 billion-euro purchase of Rhodia SA last month to gain leadership positions in rare earths, silica for car tires and materials used in consumer goods such as detergents. The acquisition left Solvay with net debt of 2.13 billion euros and additional pension liabilities. Rhodia’s earnings rose 16 percent in the quarter, led by surging prices for rare-earth elements which it expects to “normalize” after being “exceptionally high” over the past quarters.
“Results came in bang in line after forecasts came down 20 percent in the weeks prior to today,” Jan Hein de Vroe, an analyst at ING Groep NV in Amsterdam who recommends selling the shares, wrote in an investor note. “Rhodia was a tad below our forecast, but in our view extremely weak as carried fully by rare-earth pricing.”
Solvay gained as much as 5.3 percent in Brussels and traded 2.96 euros higher at 77.86 euros by 10:03 a.m. local time. The 23-company Stoxx 600 Chemicals Index rose 3.5 percent.
The soda-ash maker maintained its forecast for higher operating earnings in the chemicals and plastics divisions this year, saying it is “attentive” to the economic deterioration. Demand for PVC plastic in Europe, for fluorinated chemicals used in electronics and epichlorohydrin already started contracting in the past quarter.
--Editors: Andrew Clapham, Jones Hayden
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