MOSCOW (MRC) -- Solvay announced that it is withdrawing its full year 2020 guidance issued in February due to heightened uncertainty and prolonged duration of events caused by the COVID-19 global pandemic, according to Kemicalinfo.
The company has reduced its capital expenditure plans for the year by over EUR250 million (USD273 million).
"During these challenging times, we are mobilized and we are taking decisive action on matters that are within our control, especially protecting our people, meeting customer needs, and prioritizing cash generation and cost reduction," said Ilham Kadri, chief executive officer.
"We are deleveraging pension liabilities and are reducing our capital expenditure by over EUR250 million in 2020. Our balance sheet strength - with liquidity reserves of around EUR4 billion comprised of cash and undrawn credit facilities - and our focus on cash-flow generation gives me confidence that Solvay is able to navigate this period effectively," continued Ms. Kadri.
Further, Solvay confirmed its dividend recommendation, highlighting the strength of its cash flow generation, balance sheet, and liquidity.
The company confirms that it will maintain its total dividend recommendation of EUR3.75 gross per share, on the back of the strong 2019 results announced on 26 February 2020. This leads to a final gross dividend of EUR2.25 per share payable on May 20, 2020, which follows the interim dividend payment in January 2020 of EUR1.50 per share.
Solvay also announced plans to establish a Solvay solidarity fund to support Solvay employees and dependents who may experience hardship related to COVID-19.
As MRC reported earlier, in response to urgent needs by medical professionals for protective equipment to combat COVID-19, Solvay is supplying high-performance, medical-grade transparent film to Boeing for its production of face shields. Boeing approached Solvay due to its experience in the use of advanced composite and adhesive materials on multiple commercial and defense programs.
We remind that earlier this year, DOMO Chemicals completed its acquisition of Solvay’s Performance Polyamides Business in Europe. This Business includes Engineering Plastics operations in France and Poland; High Performance Fibers in France; Polymer and Intermediates operations in France, Spain and Poland. The Business comprises Production, Sales, Technical Support, R&D and Innovation services in France, Spain, Poland, Germany and Italy that currently have a combined headcount of approximately 1,100 employees. The agreement also involves a joint venture between BASF and DOMO in France for the production of Adipic Acid.
And on January 31, 2020, BASF, the world's petrochemical major, closed the acquisition of Solvay's polyamide (PA 6.6) business. The transaction broadens BASF's polyamide capabilities with innovative and well-known products such as Technyl. This will allow BASF to support its customers with even better engineering plastics solutions, e.g., for autonomous driving and e-mobility. The transaction also enhances the company's access to growth markets in Asia as well as in North and South America.
We also remind that BASF restarted its No. 1 steam cracker on September 30, 2019, following a maintenance turnaorund. The plant was shut for maintenance in mid-August, 2019. Located at Ludwigshafen in Germany, the No. 1 cracker has an ethylene production capacity of 235,000 mt/year and a propylene production capacity of 125,000 mt/year.
Ethylene and propylene are feedstocks for producing PE and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.