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Solvay Q4 profit slips on weak European vinyl sales

February 17/2012

(Reuters) - Belgian chemicals and plastics maker Solvay said on Thursday that a poor performance at its vinyls division in Europe contributed to it missing profit expectations for the fourth quarter.

Solvay said sluggish conditions in Europe, where the sovereign debt crisis is starting to filter through to the real economy, made customers cautious about the amount of stock they held of vinyls, a plastic used in building and consumer goods, knocking 10 percent off quarterly sales of the product in the region.

Solvay's fourth-quarter recurring core profit fell 23 percent to 355 million euros (USD464 million), including results from French specialty chemicals group Rhodia for the first time. Analysts in a Reuters poll had on average expected 411 million euros.

The results pushed Solvay shares down as much as 5 percent in early trade, though they had recovered most of the losses to stand down 1.2 percent at 77.46 euros at 0842 GMT.

"Europe is still weak, and Europe is really key for their PVC business as well, so ... it shows the vulnerability of the portfolio," said a London-based analyst. "It will be challenging this year."

Dutch peer AkzoNobel NV also reported a fall in fourth-quarter figures on Thursday, hit by materials cost rises, and warned about the impact of a shaky global economic environment, while Belgian chemicals and plastics group Tessenderlo swung to a surprise loss on tough conditions in southern Europe.

Solvay said that while conditions in Europe were uncertain, it expected a gradual recovery globally.

Its buy-out of Rhodia last year lifted its exposure to faster growing markets such as China and Brazil to 40 percent, and allowed it to further tap into higher-margin specialty chemicals.

Author:Anna Larionova
Category:General News
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