Solvay Sa Act

Good afternoon, everyone, and welcome to Solvay's first quarter of 2026 earnings call. I'm Geoffrey Loutremont, Head of Investor Relations, and I'm joined today by our CEO, Philippe Quérin, and our CFO, Alexandre Blum. This call is being recorded and will be accessible for replay on the Investor Relations section of Solvay's website later today. We'd like to remind you that the presentation includes forward-looking statements that are subject to risk and uncertainties. And the slides presented in today's call are also available on our website. Let's get started. Philippe, over to you.

Thank you, Geoffroy, and hello, everyone. As you know, safety is at the core of our operations, and we continue to work hard on the different programs we have in place in the organization, and they are already delivering tangible results. A word also on our Solvay employees located in the Middle East. They are all safe and this is our top priority. We monitor the situation on a daily basis and we are ready to act swiftly to support them if necessary. Turning now to the results on slide six. Our first quarter shows the resilience of Solvay in a macro environment that continues to be challenging. Overall, the situation in the Middle East had a limited impact on our results this quarter, although there are several effects that we are actively mitigating. The most direct impact concerns our Saudi Arabian HPPO peroxides business, with production temporarily suspended since mid-March. We follow the situation very closely and we will be ready to start up again as soon as the situation clarifies. Then the conflict has a direct impact on our energy, raw materials and transportation costs. We are mitigating this with price increases, including the activation of pass-through closures in our energy intensive businesses. And I will come back to this later in the call. Finally, indirect effects may materialize from disruptions in the value chain and further pressure on demand in some end markets. This could be partially offset by improved market conditions for the Coati's business, which, by the way, also benefits from lower tariffs between Brazil and the US. Besides this, we haven't seen any major change in our main market dynamics. demand environment remained overall soft and we continue to see some price pressure for our sodash seaborn activities in southeast asia the coati's business remains down year on year but it is showing clear signs of improvement on a sequential basis alex over to you for the details of the q1 results thank you philippe and good morning good afternoon everyone

Our financial performance in Q1 highlighted again that most of our activities are resilient. And our free cash flow in the first quarter showed that the very strong performance of Q4 2025 was not realized at the expense of 2026. All of these allow us to continue executing our strategy and transformation while maintaining a healthy balance sheet. Let's now move to the detail, and as usual, I will comment on organic evolution, meaning at constant scope and currency, unless otherwise stated. Moving to slide eight. Underlying net sales in Q1 reached close to 1 billion euro, 9% lower compared to the first quarter of 2025. Overall volumes proved resilient, with only limited decline in certain product lines against a stronger comparative base. Pricing pressure was mainly concentrated again in the Sudash Seaborne market and in Coatis, both of which started to soften in Q2 last year. Forex remained a headwind as the start of the quarter, so weaker dollar against the euro. Now moving to EBITDA. Looking at the year-on-year comparison, there are two important elements to consider. On the one side, a positive impact from the CO2 emission right sales, and on the other side, the negative impact from distributed costs. We delivered an EBITDA of 219 million euros during the first quarter, down 10%. The EBITDA margin remained steady at a solid 21.9%. Volume and mix was positive, supported by the sales of CO2 emission right, which generated 38 million euros in January. Excluding this, volumes would have decreased by 17 million euros versus a strong comparison base in Q1 2025. Net pricing decline was limited to minus 13 million euros, with lower prices in some of our businesses being partly offset by reduction in variable cost. These were driven by cost-saving initiatives and effective energy management. On fixed cost, our ongoing cost initiatives at both plant and corporate levels are allowing us to absorb inflation. The negative impact shown in the bridge mainly reflects the temporary stranded cost linked to the exit from the TSA with ScienceCo. The expected negative year-on-year impact of the full 2026 is mostly concentrated in the first quarter. Moving on to segment review, I'll start with basic chemicals on slide 10. Sodash and derivative sales were down 7% year-on-year. Sudash volumes for the quarter were overall flat, up slightly in the seaboard market and marginally down in North America. In terms of production, we continue to shift some of the seaboard volume from European plants to our Green River site in North America. Combined with lower energy costs, this allowed us to reduce variable costs and partially offset the impact of lower sudash prices. Our bicarbonate business on the other hand continued to be very resilient with volumes only marginally lower in flue gas treatment application given a slower start of the year. Peroxide sales for the quarter decreased by 6% compared to Q1 2025. The electronic grade business once again delivered double digit growth in volumes driven by demand from the semiconductor industry. On the other hand, both volume and pricing were slightly down in the merchant market, as well as in our HPTO and intermediate businesses, compared to a high 2025 pace. The segment EBITDA was down 17%, reflecting primarily the impact of lower SEDASH pricing, especially in the seaborn market, but also a slight negative mix across two business units. Moving on to performance chemical on slide 11. Silica sales declined by 7%, reflecting a lower tire volume compared to a stronger Q1 of last year, which had benefited from some customer restocking. In Ducati's business, sales were down 16% compared to Q1 2025, which was the last quarter before the announcement of the US tariff on Brazil. Although still at a low level, business performance has improved sequentially each month so far this year. The improvement has been supported first by the reduction in US tariffs and by the reduced pressure from China following Middle East related supply disruption. Finally, in our special chem business, sales declined by 11%. This is mainly due to lower volume on electronic which also benefited from pre-buying and restocking in the first quarter of last year. Although they remain marginal, we have started seeing the first contribution from volumes for permanent magnet applications. The overall segment EBITDA was down 8% with lower net pricing in co-entities as the primary type. Before we move to the free cash flow, a quick word on corporate segment. as it delivered a positive contribution of 6 million for Q1 2026. As explained earlier, this is due to the 38 million gain from further optimization of our portfolio of European CO2 emission rights, which more than offset the higher temporary stranded cost. Turning now to the free cash flow on slide 12. I am pleased to highlight our resilient cash generation. Even with a particularly strong cash performance in 2025 in general and in Q4 in particular, we continue to deliver positive free cash flow quarter after quarter. Our capex spending remained very disciplined in Q1, with investment targeted mostly towards essential capex, covering HSNE, maintenance, and ongoing energy transition projects. Working capital saw a negative variation, broadly in line with the usual Q1 seasonality, despite a record low working capital position at year end. As we had announced, provisioned cash out is progressively reducing but is still above our normalized level due to the transformation restructuring project. This is mainly linked to the TSXC, to the Fluorine Business Footprint Optimization and to some remaining cash out from the Dombal Energy Transition Project. Moving on to the Net Debridge on slide 13. underlying net debt increased by a limited €0.1 billion in Q1, mainly from the interim dividend payment in January. Our leverage ratio remained very healthy at 2. As you know, maintaining a healthy balance sheet and preserving our investment grade rating is a cornerstone of Solvay's financial policy. In conclusion, our financial results prove that despite the pressure from the external factors, Solvay has the ability to continue generating solid free cash flow quarter after quarter. Philippe, back to you for an update on Solvay energy management in 2026.