Syensqo's low sales volume is not surprising beursduivel.be

(EBMFN) Syensqo saw sales volumes and profitability decline in 2023. This emerged on Tuesday from figures for the company separate from Solvay.

“Over the past two years, we have significantly outperformed our markets and our peer group. While we currently expect only a moderate recovery in demand in many of our markets through 2024, I have never been more confident in the structural growth drivers that will drive our business,” said the President. Executive Ilham Qadri said in a statement on Tuesday: “The activities are in the long term and in our teams to achieve our ambitions.”

Syensqo achieved annual sales of 6.8 billion euros, a decrease of 13.4 percent compared to 2022. The analyst consensus was for sales of 6.86 billion euros.

Organically, turnover decreased by 10 percent. Volumes fell 11 percent and prices rose 1 percent.

Trading volumes were impacted by the challenging macroeconomic environment and customer inventory reductions, partially offset by strong growth in composites.

Underlying EBITDA was €1.6 billion, in line with the company's own expectations. The consensus expected 1.62 billion euros. This resulted in a profit margin of 23.7 percent, an increase of 10 basis points year-on-year.

Syensqo's underlying net profit was €752 million. That was €974 million in 2022.

According to Syensqo, the “strong” operating cash flow of 1.3 billion euros allows an acceleration of investments in growth.

At the end of the year, net debt amounted to €1.6 billion, equivalent to a debt ratio of 1.0.

As previously announced, Syensqo wants a dividend of €1.62 per share, which corresponds to a payout ratio of 23 percent.

Prospects

For 2024, Syensqo expects demand trends to continue until the end of 2023, with flat volumes.

According to Syensqo, core EBITDA will rise by approximately 20 percent in the first quarter compared to the fourth quarter of 2023. This is due to customers stopping disposing of inventory in a number of end markets since the beginning of this year.

For the full year, EBITDA is estimated at €1.4 billion to €1.55 billion. This minimum bandwidth is in line with current market dynamics.

The analyst consensus assumes EBITDA of €1.57 billion, on turnover of €6.95 billion.

Furthermore, Syensqo expects to invest between 600 and 650 million euros this year. Free cash flow will be between €400 million and €500 million, compared to €448 million in 2023. This estimate excludes the previously announced $180 million PFAS payment to the New Jersey Department of Environmental Protection, which is expected to be made in the second quarter of 2024. Done.

In the medium term, i.e. between 2024 and 2028, Syensqo aims for revenue growth of 5 to 7 percent and an EBITDA margin of about 25 percent in 2028.

Update: To add analyst revenue forecasts for 2024.

Source: ABM Financial News

ABM Financial News is a resource for stock market news, video and data, both for real-time trading platforms and trading rooms and for online and offline media publications. The information in this article is not intended to provide professional investment advice or a recommendation to make particular investments.