Solvay to take impairment
In a Q2 trading update, Solvay revealed that an impairment review is under way and likely to lead to a non-cash impairment of about €1.5 billion. This is the result of “the deterioration in short and mid term economic performance due to Covid-19,” the company said.
Around 80% of the impairment is associated with the goodwill resulting from the Cytec acquisition, the rest with various tangible and intangible assets. Solvay added that the “fundamental long-term attractiveness of the Composite Materials and Technology Solutions businesses remain unaffected, driven by demand for lightweighting, electrification and resource efficiency”.
After a strong Q1, “market headwinds increased sharply” in Q2. Businesses related to the oil and gas, automotive and aerospace sectors saw revenues down about 40%, while those related construction and mining were 20% down. Healthcare, agriculture, home and personal care and electronics were stronger. Group sales were down 20% in April and May from the same months in 2019. These trends continued into June.
“We continue to act decisively to mitigate the effects of Covid-19 and we remain unrelenting in our focus on free cash flow generation, cost reduction and serving our customers,” said CEO Ilham Kadri. “We are accelerating delivery of our GROW strategic programmes to deliver superior growth through our leadership positions and innovation.”