February 26, 2020 / 9:27 AM / a month ago

UPDATE 1-Belgian chemicals maker Solvay expects subdued earnings due to virus, 737 MAX suspension

(Adds details from the statement, CEO comment)

Feb 26 (Reuters) - Belgian chemicals group Solvay said it expects uncertainty over the coronavirus outbreak, the 737 MAX production halt and a weaker economic outlook to keep its core earnings on the backfoot.

Solvay said sees its underlying earnings before interest, taxes, depreciation and amortization (EBITDA) to be 0% to down 3% this year and said its first quarter alone would be down in the high single digits.

The company said it expects to take a hit of about 25 million euros ($27.17 million) from the coronavirus impact in the first quarter, adding that it will update its outlook as the situation becomes clearer.

Solvay reported a 2019 EBITDA of 2.32 billion euros ($2.52 billion), in line with company-compiled consensus, while its free cash flow rose by 10% to 801 million euros.

Solvay, which supplies composite materials for Boeing 737 MAX plane, estimated a loss of between 30 to 40 million euros in 2020 due to the production halt, as it assumes 200 aircraft will be produced this year compared to 600 in 2019.

Solvay is still confident it can deliver mid-single digit percentage growth in annual underlying EBITDA from 2020 to 2024, its chief executive Ilham Kadri said during a conference call.

Solvay, which last year said its plans to reorganise into material, chemicals and solutions business units, also raised its mid-term cost reduction target to at least 350 million euros, compared with 300 million to 350 million euros previously.

Its shares were down 4.5% by 0927 GMT.

$1 = 0.9201 euros Reporting by Charles Regnier Editing by Shri Navaratnam and Louise Heavens

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