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%