(News Bulletin 247) – The new company bringing together specialty chemicals activities, now separated from the Belgian chemist Solvay, is making progress for its first trading session. Its former parent company is located in Brussels and Paris.

Belgian and French investors have been introduced to a new company on the stock market since Monday, December 11. This is Syensqo, the specialty chemicals company resulting from the split with the Belgian giant Solvay.

This independence, decided in March 2022 by Solvay, was made official on Friday following a general meeting of the chemical group’s shareholders. The shareholders of the Belgian company approved 99.53% of this split into two companies: Solvay and Syensqo.

This separation “will unlock more value for our stakeholders. It will strengthen our strategic direction, bring new growth opportunities, allow us to allocate capital more efficiently and build an even stronger foundation for the future “, declared the chairman of the board of directors Nicolas Boël.

Growing activities

The new Syensqo company brings together Solvay’s specialty chemicals activities, with greater potential, particularly in batteries, green hydrogen, thermoplastic composites, renewable materials and biotechnologies. Syensqo’s solutions are used in areas such as housing, food, and consumer goods, planes, cars, batteries, electronic devices and even health.

Revealed in June, the meaning of the name Syensqo was constructed as follows: “Syens” refers to Solvay’s scientific heritage, and “Qo” refers to “company” or enterprise in French.

The businesses of this new entity generated approximately 7.9 billion euros in net turnover in 2022, or 60% of the 2022 turnover of the former Solvay, or 13.4 billion euros.

And the prospects bear witness to this dynamism. During an investor day, the company indicated in mid-November that it was targeting organic growth of 5% to 7% in its net sales over the period 2024-2028 for a current operating margin (Ebitda) expected around 25%. by 2028, compared to 23.6% to date.

Achieving these objectives should allow Syensqo to generate more than seven billion euros in cash between 2024 and 2028.

Quoted by Reuters, KBC analysts estimate that “Syensqo is among the world leaders in the majority of its activities”, and expect an average annual growth rate of underlying earnings before interest, taxes, depreciation and amortization (Ebitda). of 6.4% for Syensqo over the next five years.

KBC analysts also argue that this split could allow Solvay to rebound, while the “complex” and “somewhat inconsistent” portfolio of activities had damaged the value of the Belgian company’s shares.

To better promote a branch of activity or a subsidiary, a parent company can decide to separate from it and list it on the stock market. And this is the choice that was therefore favored by the chemist Solvay to better promote its growing specialty chemicals business.

“The new Solvay”

The new Solvay, deprived of its growing branch, is now refocused on its historical activities, namely basic chemicals such as soda ash, peroxides, silicas, etc.

By 2028, the company is targeting average annual organic growth in underlying Ebitda of around 5% and an increase in the underlying Ebitda margin of between 25 and 29%, compared to 23% currently. Solvay is also targeting gross savings of 300 million euros annually. The free cash flow conversion ratio is expected to exceed 35% and return on capital employed to reach 20%.

On the stock market, the two entities are experiencing diametrically opposed trajectories. Syensqo, now independent, is growing by 13% on Euronext Brussels and Euronext Paris. On the other hand, the action of the “new” Solvay dropped even more than 27% after being suspended from trading in the first exchanges Monday morning.