June 24, 2020 / 7:51 AM / 19 days ago

Solvay set for 1.5 billion euro impairment as sales sink

FILE PHOTO: The logo of Belgian chemical group Solvay is seen at its headquarters in Brussels, Belgium, July 29, 2015. REUTERS/Francois Lenoir/File Photo

BRUSSELS (Reuters) - Belgian chemicals group Solvay (SOLB.BR) is likely to take an impairment charge of 1.5 billion euros (£1.3 billion) as sales were set to fall by around 20% in the second quarter due to the impact of the COVID-19 pandemic, it said on Wednesday.

The company said challenges had increased in the April-June period from the first three months of 2020, with sales down 20% across April and May and a similar demand trend seen for June.

Solvay, whose products range from base chemicals such as soda ash to specialty polymers, said its businesses related to oil and gas, automotive and aerospace were the hardest hit, with revenues down by about 40%.

Businesses related to construction and mining were off some 20%, but healthcare, agri-food, home and personal care and electronics markets had resisted well.

Solvay shares were down 3.4% in early trading, making them one of the weakest performers on the FTSEurofirst 300 index .FTEU3 of leading European shares. The index itself was down 0.6%.

Some 80% of the non-cash impairment would be related to goodwill from Solvay’s $5.5 billion purchase in 2015 of Cytec, a U.S. specialist in aerospace materials and mining chemicals.

Solvay said it would conclude its analysis and provide additional details with its first-half results on July 29.

Reporting by Philip Blenkinsop; Editing by Jan Harvey

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