Solvay Group: 3rd quarter 2012 Business Review

Brussels, 25 October 2012

Highlights

Continued earnings strength supported by the growth engines and highly resilient businesses, and strong cash flow generation

• Net sales up 1% to EUR 3,291 million yoy with volumes (4)%, stable prices and forex +5% 

• REBITDA at EUR 554 million +4% yoy 

• Record results in Consumer Chemicals (good demand and continued exceptional earnings contribution from its Indian native-guar JV) and in Specialty Polymers 

• Resilient growth performance in Essential Chemicals and Acetow & Eco Services while Advanced Materials'Rare Earths slowed down 

• Persisting difficult market conditions for Polyamide Materials and Vinyls 

• Confirmed pricing power Group-wise: In an inflationary context, selling price increases compensated rise in raw material and energy costs yoy, despite challenging business conditions at our cycle-sensitive businesses 

• Adj EBIT¹ at EUR 329 million compared to pro forma EUR 355 million last year, reflecting higher non-recurring items linked to the integration and cost efficiencies programs 

• Adjusted Net Income¹ (Group Share) of EUR 148 million 

• Free Cash Flow of EUR 346 million and improved Net Debt to EUR 1.5 billion versus EUR 1.8 billion in Q2'12 

• Interim dividend of EUR 0.90 net per share (EUR 1.20 gross per share) 

  
1. IFRS measures: EBIT 3^rd quarter 2012 at 298 million versus EUR 148 million in the last year quarter; Net Income  (Group Share) 3^rd quarter 2012 at 125 million versus EUR 73 million in the last year quarter.

Quote of the CEO

While differentiated market dynamics by business segments persisted in the 3rd quarter, the breadth and quality of the product portfolio allowed Solvay to post another set of good results. The earnings strength combined with an effective working capital management generated a strong free cash flow. With the capacity extensions for its growth engines, Solvay continues executing its strategic journey towards its growth ambition. The integration progresses very well, establishing a solid foundation for the Group to move forward.

Outlook

The fragile macroeconomic environment reduces visibility across markets and industries. The 4th quarter will reflect seasonal inventory management from customers and the slowdown of some market segments. The good momentum of the integration and the re-design of the Group's organisation strengthen our confidence in the delivery of synergies and savings as planned. In this framework, Solvay confirms its expectation to achieve a full year REBITDA similar to the strong 2011 pro forma level.

Footnote applicable to the entire document: All references to year-on-year (yoy) evolution must be understood on a pro forma basis for 2011, as if the acquisition of Rhodia had become effective from the 1st of January 2011. On a pro forma basis Solvay 2011 historical figures were restated in order to have harmonized accounting policies among the two former Groups, policies that are to be used by the new Solvay going forward. Pro forma results exclude impacts from i) purchase price allocation entries; ii) non-recurring acquisition costs related to the Rhodia transaction and iii) financial revenues on cash deposits and investments. Adjusted Profit & Loss indicators exclude Purchase Price Allocation (PPA) non-cash accounting impacts related to the Rhodia acquisition.

All period changes throughout this document are to be deemed on a year-on-year bases unless otherwise stated.

REBITDA: Operating result before depreciation and amortization, non-recurring items, financial charges and income taxes.

SOLVAY is an international chemical Group committed to sustainable development with a clear focus on innovation and operational excellence. It is realizing over 90% of its sales in markets where it is among the top 3 global leaders. Solvay offers a broad range of products that contribute to improving the quality of life and the performance of its customers in markets such as consumer goods, construction, automotive, energy, water and environment, and electronics. The Group is headquartered in Brussels, employs about 31,000 people in 55 countries and generated EUR 12.7 billion in net sales in 2011 (pro forma). Solvay S.A. (SOLB.BE) is listed on NYSE Euronext in Brussels and Paris (Bloomberg: SOLB.BB - Reuters: SOLBt.BR).

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