Solvay warns of non-cash impairment of €1.5 billion

Solvay warns of non-cash impairment of €1.5 billion

THE WHAT? Solvay has released a trading update for the second quarter of the current financial year, warning that ‘market headwinds increased sharply’ over the three-month period, leading to a 20 percent drop in group sales across April and May versus 2019 levels.

THE DETAILS The Brussels-based ingredients supplier is therefore carrying out an impairment review and expects a non-cash impairment estimated at around €1.5 billion. Approximately 80 percent is associated with good will resulting from the Cytec acquisition, and the balance is related to various tangible and intangible assets.

“We continue to act decisively to mitigate the effects of COVID-19 and we remain unrelenting in our focus on free cash flow generation, cost reduction, and serving out customers,” Ilham Kadri, CEO said in a statement. “We are accelerating delivery of our G.R.O.W. strategic programs to deliver superior growth through our leadership positions and innovation.”

THE WHY? While the Belgian chemicals company reported that its home & personal care unit has resisted well, its businesses related to oil and gas, automotive and aerospace have been significantly impacted by the GVC.