Solvay Q2 Operating Profit Jumps; Upbeat On Plastics

Belgium's Solvay, seeking acquisitions, rode rising plastics volumes to a 143% jump in quarterly operating profit from its plastics and chemicals units and said it expected plastics to remain strong.

Second-quarter recurring earnings before interest and tax (REBIT) from Solvay's chemicals and plastics units was €194 million, beating the average estimate of €143 million from a Reuters poll.

Solvay, which produces PVC plastic used in construction and soda ash for glass, had restated REBIT from the two units of €80 million in the same period last year. Quarter-on-quarter REBIT rose 54%.

"The chemicals sector should realize a recurring operating result in line with that of last year, notwithstanding the price decreases," the company said in a statement. "In plastics, the volume growth should support sharp REBIT expansion."

Solvay, which sold its drugs unit to its U.S. partner Abbott in September for €4.5 billion, reiterated its priority this year is to reinvest the cash, but gave no further hint on its acquisition plans.

Group REBIT was €183 million, a rise of 1% over last year, which included results from its drugs unit.

European chemicals companies have benefited from improved volumes as customers stock up again after the recession, while cost cuts have also helped to improved margins.

Germany's BASF, the world's largest chemicals maker by sales, also saw improved volumes as it reported quarterly operating profit above estimates.