Speciality Plastics and Consumer Chemicals Boost Solvay

Belgian chemicals and plastics maker Solvay reported a larger-than-expected core profit on Thursday, with record results from its consumer chemicals and speciality plastics.

The maker of PVC used for building and soda ash for glass said its third-quarter recurring core profit rose 4% to €554 million ($719 million). The average forecast in a Reuters poll of nine analysts was €515 million.

Solvay said that despite tough market conditions for PVC and a fragile economy, economies of scale and savings meant it expected to make a recurring core profit this year roughly the same as last year.

The company added a slowdown of some market segments and seasonal inventory management would impact the fourth quarter.

Solvay has suffered from a depressed construction sector buying less of its PVC for drainage pipes and window frames.

However, having bought French chemicals group Rhodia last year for €3.4 billion, it is set on course for strong growth in speciality chemicals and plastics.

It made record results in its speciality polymers division, due to strong demand for high performance materials in the oil and gas, water and healthcare sectors, and in its consumer chemicals division, which supplies ingredients for skin and hair care products.

Core chemicals such as soda ash, caustic soda and bleaching agent hydrogen peroxide also fared well, with core profit of the Essential Chemicals unit rising 28% due to higher volumes and prices.

Earlier on Thursday, German chemicals giant BASF stuck to its outlook for higher operating earnings this year, shored up by its oil and pesticides divisions, which are outweighing a decline in core chemicals.

Solvay agreed to sell its pharmaceutical activities to Abbott Laboratories in September 2009 for €4.5 billion with the aim of reinvesting in chemicals and plastics.