BELGIQUE, March 26, 2004 (PRIMEZONE) -- Solvay Group (Other OTC:SVYSF) (Other OTC:SVYSY) announces earnings:
Resilient 2003 results (EUR 430 million)
- Despite a very strong EUR and a weak economic environment, the Solvay Group ends 2003 with a net income decrease of only 13% compared to record 2002 results
- 2003 dividend maintained (EUR 1.80 per share)
Final results
The Solvay group confirmed its preliminary consolidated results announced on February 13, 2004 and finished 2003 with results of EUR 430 million, or a decline limited to 13% from the record level of 2002 (EUR 494 million). Results from the parent company SOLVAY S.A amounted to EUR 212 million in 2003, compared to EUR 220 million in 2002.
Perspectives
As indicated on February 13, 2004, the year 2003 was characterized by an uncertain and difficult economic environment which generated stocking and destocking as well as oil prices volatility. In 2004, the lack of visible growth in Europe and the risk of a persistently very strong EUR are factors that must be taken into account, especially during the 1st quarter. The significant contribution of Pharmaceuticals and pecialties, combined with all efforts to increase competitiveness, and the continuing improvement of the product portfolio, should allow the Solvay group to face these pressures on an annual basis. In this context, the Group is accelerating a series of restructuring and cost-reduction measures.
Balance Sheet
Shareholders' equity amounted to EUR 3,532 million at the end of 2003, down EUR 32 million compared to the end of 2002, mainly due to the impact of exchange-rate fluctuations. Cash flow generation and rigorous screening of capital investments have permitted the Group, despite difficult conditions, to improve its already very healthy financial situation. The Group's net indebtedness was thus reduced by EUR 198 million and amounted to EUR 1,120 million.The net debt to equity ratio at the end of 2003 amounted to 32%, down from 37% in 2002.
Investment, Research and Development
2003 capital expenditures amounted to EUR 555 million, as a result of a selective policy. R&D expenses were EUR 404 million. This includes EUR 284 million for the Pharmaceuticals Sector, up 6% from 2002. The 2004 capital investment and R&D budgets are EUR 620 million and EUR 411 million respectively. In 2004, the Pharmaceuticals Sector research effort should represent 68% of the Group's R&D expenses.
Dividend
The Board of Directors decided to propose to the General Shareholders' meeting on June 3, 2004 payment of a net dividend of EUR 1.80 per share, stable compared to the 2002 dividend. Considering the prepayment of the dividend paid on January 15, 2004 (EUR 0.70 net per share), the balance (which is EUR 1.10 net per share) will be paid on June 10, 2004 (coupon no. 74). This evolution is consistent with the Group's dividend policy which consists of increasing the dividend whenever possible and if possible, not decreasing it. For over more than 20 years, the Group has never decreased the dividend.
Performance per share
In EUR/share 2002 2003 2003/2002
Var.%
Cash flow per share (1) 12.26 9.91 -19%
Earnings per share (1) 5.59 4.78 -15%
Net dividend 1.80 1.80 -
Gross dividend 2.40 2.40 -
(1) Calculated on the basis of the weighted average number of shares
outstanding during the quarter, after deducting shares purchased
by Solvay to cover stock options; this amounted to 83,059,168
shares in 2002 and 82,748,169 shares in 2003.
SUMMARY CONSOLIDATED FINAL RESULTS
Millions of EUR 2002 2003 2003/2002
D%
Sales 7,919 7,557 -5%
REBIT (2) 844 673 -20%
EBIT 757 662 -13%
Charges on net indebtedness -88 -85 -3%
Income taxes -151 -114 -25%
Equity earnings -39 -48 26%
Income from investments 15 15 n.s.
Net income of the Group 494 430 -13%
Net income (Solvay share) 464 396 -15%
Depreciation and amortization 554 429 -23%
Recurring Depreciation & Amortization 440 429 -3%
Cash flow (3) 1,048 859 -18%
(2) REBIT: Recurring Earnings Before Interests and Taxes, results of
ongoing operations.
(3) Cash flow is the sum of Group net income and depreciation and
amortization.
RECURRING RESULTS BY SEGMENT
The weakening of the US dollar greatly affected results in the Pharmaceuticals sector (-8% in EUR, +2% at constant exchange rates). Its 2003 sales, in EUR, dropped 2% compared to 2002, whereas they would have been up 6% at constant exchange rates. Note however the significant growth in American sales (+15% in USD), and intensification of R&D efforts (+6% compared to 2002) which represents about 16% of sales. As for the Chemicals sector, maintaining market shares and volumes in the context of a very weak US dollar, led to a drop in results of 25%. Impacted by a significant decline in vinyls in Europe, the Plastics sector saw a large drop in results. Vinyls recovered at the end of the year, and the primary specialty polymers markets are recovering In the Processing sector, results were also down, but the fourth quarter was better than that of last year.
Millions of EUR 2002 2003 2003/2002
Var%
Group Sales 7,919 7,557 -5%
Pharmaceuticals 1,863 1,832 -2%
Chemicals 2,636 2,508 -5%
Plastics 1,937 1,802 -7%
Processing 1,479 1,413 -5%
Unallocated items 0 0 n.s.
Discontinuing operations 4 2 -25%
Group REBIT 844 673 -20%
Pharmaceuticals 263 243 -8%
Chemicals 259 195 -25%
Plastics 247 155 -37%
Processing 80 70 -12%
Unallocated items -50 -41 -18%
Discontinuing operations 45 50 11%
SUMMARY CONSOLIDATED BALANCE SHEET
Millions of EUR December 31, December 31,
2002 2003
Non-current assets 4,025 3,859
Current assets 1,309 1,132
Net deferred tax assets
& current income taxes 378 385
Net working capital 1,128 1,177
TOTAL 6,840 6,553
Shareholders' equity 3,564 3,532
Provisions 1,880 1,823
Dividends 78 78
Net indebtedness 1,318 1,120
TOTAL 6,840 6,553
Net debt to equity ratio 37% 32%
FINAL RESULTS OF THE PARENT COMPANY SOLVAY S.A.
Millions of EUR 2002 2003
Net income of the period 220 212
Transfers to tax-free reserves - -9
Income to be distributed 220 203
With the agreement of the Banking, Finance and Insurance Commission, the 2003 statements were recorded and presented in IFRS (International Financial Reporting Standards). The 2002 books were restated in IFRS. Also, Deloitte & Touche certified the annual consolidated statements as of December 31, 2003 as well as those of the parent company Solvay S.A. without reservation and confirmed that the accounting information shown in this press release does not call for any comments on its part and concurs with the annual consolidated accounts.
Key dates for financial communications in 2004:
The 2003 annual report will be published on the Internet at the beginning of April 2004.
- April 29, 2004: 3-month results 2004
- July 30, 2004: 6-month results 2004
- October 29, 2004: 9-month results 2004
IFRS FULL FINANCIAL STATEMENTS
(Statements audited by Deloitte & Touche)
Consolidated income statement
in millions of EUR 2002 2003
Sales 7,919 7,557
Cost of goods sold -5,240 -5,101
Gross margin 2,679 2,456
Commercial and administrative costs -1,412 -1,359
Research and development costs -399 -404
Other operating gains & losses -69 -42
Other financial gains & losses 45 22
REBIT 844 673
Non-recurring items -87 -11
EBIT 757 662
Charges on net indebtedness -88 -85
Income taxes -151 -114
Equity earnings -39 -48
Income from investments 15 15
Net income of the Group 494 430
Minority interests -30 -34
Net income (Solvay share) 464 396
Net earnings per share 5.59 4.78
Diluted net earnings per share (1) 5.58 4.78
(1) calculated based on the number of shares diluted by the stock
options issued
Consolidated statement of sources of funds
in millions of EUR 2002 2003
Cash flow from operating activities 848 870
EBIT 757 662
Depreciation and amortization 554 429
Changes in working capital -245 -103
Changes in provisions -45 -7
Income taxes paid -85 -102
Other non-cash items -88 -9
Cash flow from investing activities -510 -369
Acquisition/sale of investments 13 -67
Acquisition/sale of assets -376 -494
Income from investments 15 15
Changes in financial receivables -221 179
Effect of changes in method of consolidation 59 -2
Cash flow from financing activities -489 291
Increase/Decrease of capital 9 0
Acquisition/sale of own shares -9 -18
Changes in borrowings -182 629
Charges on net indebtedness -88 -85
Dividends -219 -235
Net change in cash and cash equivalents -151 792
Currency translation differences -41 -25
Opening cash balance 631 439
Ending cash balance 439 1,206
Consolidated balance sheet
in millions of EUR At the end At the end
of 2002 of 2003
ASSETS
Non-current assets 5,919 5,502
Intangible assets 265 245
Consolidation differences 180 155
Tangible assets 3,580 3,459
Investments - equity accounting 322 312
Other investments 471 531
Deferred tax assets 585 511
Financial receivables
and other non-current assets 516 289
Current assets 3,545 4,185
Inventories 1,086 1,059
Trade receivables 1,494 1,390
Income tax receivables 141 154
Other receivables 385 376
Cash and cash equivalents 439 1,206
TOTAL ASSETS 9,464 9,687
EQUITY AND LIABILITIES
Total Shareholders' equity 3,564 3,532
Capital and reserves 2,686 2,666
Minority interests 878 866
Non-current liabilities 3,346 3,869
Long-term provisions 1,823 1,759
Deferred tax liabilities 275 162
Long-term financial debt 1,192 1,912
Other non-current liabilities 56 36
Current liabilities 2,554 2,286
Short-term provisions 57 64
Short-term financial debt 565 414
Trade liabilities 1,141 1,009
Income tax payable 73 118
Other current liabilities 718 681
TOTAL EQUITY
AND LIABILITIES 9,464 9,687
Statement of changes in shareholders' equity
in millions of EUR Capital Issue Reserves
Book value at the end of premiums
the previous period (12/31/2002) 1,269 14 1,692
Income for the period 396
Distribution -199
Changes in exchange rates
Acquisition/sale of own shares
Net gains and losses not
shown in the Income Statement
Increase in capital
Other
Book value at the end of the
previous period (12/31/2003) 1,269 14 1,889
in millions of EUR Own Exchange Direct
charges to
shareholders'
Book value at the end of shares differences equity
the previous period (12/31/2002) -101 -211 23
Income for the period
Distribution
Changes in exchange rates -211
Acquisition/sale of own shares -18
Net gains and losses not
shown in the Income Statement 12
Increase in capital
Other
Book value at the end of the
previous period (12/31/2003) -119 -422 35
in millions of EUR Shareholders' Third Total
Book value at the end of equity Party equity
the previous period (12/31/2002) 2,686 878 3,564
Income for the period 396 34 430
Distribution -199 -36 -235
Changes in exchange rates -211 -10 -221
Acquisition/sale of own shares -18 -18
Net gains and losses not
shown in the Income Statement 12 12
Increase in capital 0 0
Other 0 0
Book value at the end of the
previous period (12/31/2003) 2,666 866 3,532
Results by segment
This table indicates sales without elimination of sales between
sectors as well as the results by sector including non-recurring
elements (EBIT).
Millions of EUR 2002 2003 2003/2002
Var.%
Group Sales 8,514 8,101 -5%
Pharmaceuticals 1,863 1,832 -2%
Chemicals 2,851 2,739 -4%
Plastics 2,309 2,105 -9%
Processing 1,487 1,423 -4%
Unallocated items - - -
Discontinuing operations 4 2 -50%
Group EBIT 757 662 -13%
Pharmaceuticals 222 226 2%
Chemicals 241 204 -15%
Plastics 251 150 -40%
Processing 50 67 34%
Unallocated items -52 -41 -21%
Discontinuing operations 45 56 24%