UPDATE 2-Solvay targets sales rise from projects by 2012
(Adds repeat of 2010 pharmaceutical target)
BRUSSELS, Oct 1 (Reuters) - Belgium's Solvay (SOLB.BR) believes a variety of new chemicals and plastics projects will boost annual sales by more than 1.15 billion euros ($1.62 billion) by 2012, its executives told analysts on Wednesday.
The company, which also has a pharmaceuticals division, said in investor day presentations that chemical sales should increase by at least 350 million euros and vinyls and specialty polymers should add more than 800 million euros.
Group sales in 2007 totalled 9.57 billion euros.
Solvay also repeated its view that pharmaceutical revenue should rise to 3.2 billion euros in 2010, with a recurring operating profit margin of 20 percent. Last year, divisional sales were 2.59 billion euros and the margin 17.6 percent.
Chemicals projects include the expansion of a Bulgarian soda ash plant, the acquisition of an Egyptian soda ash maker, hydrogen peroxide plants in Belgium and Thailand and a epichlorohydrin plant, also in Thailand.
Solvay is the world's leading producer of soda ash, used to make glass, bleaching agent hydrogen peroxide and sodium bicarbonate, commonly called baking soda.
In plastics, the boost would come from vinyls projects in Russia, Asia and Mercosur and expansion in Belgium; and capacity increases, new plants in China and India along with acquisitions for speciality polymers.
Solvay is the world's third-biggest maker of polyvinyl chloride (PVC), heavily used in construction.
Chief Executive Christian Jourquin began the presentations with a summary of the company and the business environment, saying chemicals markets remained tight.
However, in soda ash, Solvay had faced higher energy and input prices, which it had been unable to pass on to consumers. Jourquin defended Solvay's decision not to renegotiate fixed annual contracts.
"When you have consumers buying from you 500 and 600 thousand tonnes, if you do something like that, I can tell you you do it once in your life. After that you're dead," he said.
"Maybe some people have done it and have got an advantage for some time. I wish them all the best in the negotiations for the future," he continued.
For caustic soda, the market was strong and Solvay had been able to pass on price hikes in the third quarter. Volumes had also grown for hydrogen peroxide with some price increases possible in the second half of the year.
For plastics, speciality polymers had experienced sustained growth, while growth was good for vinyls in Mercosur and Asia, although Solvay would feel the impact of the turnaround of a major cracker in Brazil in the third quarter. Continued...
