Belgium's Solvay warns of Middle East impact, shares hit 6-week low
Solvay Faces Financial Pressure Amid Middle East Conflict
By Olivier Cherfan
May 7 (Reuters) - Belgian chemicals group Solvay said on Thursday it expected the fallout from the Iran war to weigh on the second quarter and was assessing how the temporary shutdown of a Saudi Arabia-based peroxide joint venture would impact the quarter.
Market Reaction and Financial Performance
Shares in the company, which makes a range of chemicals from soda ash used in glass and detergents to peroxides used in electronics, plunged nearly 11% to their lowest in six weeks following the comments. Solvay had earlier reported a 12.4% fall in first-quarter core profit.
Passing on Costs to Customers
It said it was passing higher energy and transport costs on to customers, joining peers in the sector seeking to cushion the hit from the Middle East conflict.
Impact on the European Chemicals Sector
EUROPE'S CHEMICALS SECTOR IS FEELING THE PINCH
While not directly exposed to oil prices, Solvay said it expected its other commodity exposure - including power and transport costs - to have a negative impact in the April-June quarter, before gradually normalising by the end of the year.
Broader Industry Effects
The comments reflect the growing effect of the conflict on industries elsewhere, with Europe's chemicals firms feeling the pinch due to higher bills for energy and freight in light of oil and gas production outages.
CEO's Perspective
"We're thinking about it every day," Solvay CEO Philippe Kehren said on Thursday. "If it will ... last for a very long time I think the whole world will have to reassess the situation."
Operational Challenges and Outlook
Solvay said it was reviewing how the temporary shutdown of the peroxides joint venture with Sadara Chemical, itself a joint venture between Saudi Aramco and Dow, would affect second-quarter business after production was halted in March.
Joint Venture Status
Kehren said the site, which has a capacity of more than 300,000 metric tons a year, was expected to restart in the next few months.
Stock Market and Sector Peers
Shares in Solvay fell as much as 10.7%.
German peer Lanxess' shares also plunged after it reported muted results, warning of a prolonged weak market.
Financial Results and Outlook
Solvay, which makes less than 5% of its sales in the Middle East and kept its outlook for 2026, said first-quarter core profit fell to 219 million euros ($257 million), broadly in line with Vara Research's consensus of 220 million euros.
($1 = 0.8509 euros)
(Reporting by Olivier Cherfan in Gdansk; Editing by Christoph Steitz, Louise Heavens and Emelia Sithole-Matarise)
