UPDATE 1-Belgium's Solvay sees 2021 results hit from higher input, freight costs
* Earnings to face 150 mln-200 mln euro hit in 2021
* Cash flow for 2021 set at upper end of earlier guidance
* Quarterly results beat expectations (Adds background, CFO quote)
May 5 (Reuters) – Belgian chemicals group Solvay said on Wednesday it expected rising raw material and logistics costs to hit results this year after oil prices rebounded and a container shortage pushed up freight rates.
The company, whose products range from base chemicals such as soda ash to speciality polymers used in cars and planes, expects higher costs to dent earnings by 150 million euros to 200 million euros ($179.81 million-$239.74 million).
Storms in the U.S. and disruption at the Suez Canal after a ship blocked the waterway for six days in March added to global container shortages that have driven up rates.
“You start from a relatively low base in 2020 and you see inflation on all the basic commodities, related to hydrocarbons and others,” Chief Finance Officer Karim Hajjar told a conference call.
The group narrowed its free cash flow target for this year to 650 million euros, at the upper end of its previous guidance of 600 million to 650 million euros, helped by its restructuring plans.
Solvay raised its cost cuts target in February to 500 million euros by 2024, from 350 million euros, and said it planned to cut 500 jobs by 2022. That followed a reduction of 570 positions last year in the United States and Britain.
It said it completed five out six planned unit sales in the first quarter and expected to finalise the last one in the second quarter. The six units represent 300 million euros in annual sales.
Sales in January-March were up an underlying 1.9% at 2.37 billion euros, above a company-provided consensus of 2.32 billion euros.
The company, which makes lithium derivatives for batteries, said automotive sales were up an underlying 19%, boosted by an 80% jump in hybrid and electric vehicle batteries. This helped offset weakness in civil aerospace due to COVID-19 restrictions.
First-quarter earnings before interest, tax, depreciation and amortization (EBITDA) rose 10.3% like-for-like from a year earlier to 583 million euros, above a company-provided consensus of 535 million euros.
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