Thursday, Jul 28, 2011

--Operating profit expected to rise this year, for both plastics and chemicals

--Net profit more than doubled in second quarter, on higher sales and lower costs

--Says it wants to be involved in Saudi hydrogen peroxide plant program

(Adds joint venture creation starting in fourth paragraph.)

By Alessandro Torello

Of DOW JONES NEWSWIRES

BRUSSELS (Dow Jones)--Belgian chemicals and plastics company Solvay SA (SOLB.BT) Thursday said it expects operating profit to rise this year in both chemicals and plastics as higher sales and lower costs meant net profit more than doubled in the second quarter.

The company also said it wants to be involved in a deal between Saudi Arabian Oil Co. and Dow Chemical Co. (DOW) to build a hydrogen peroxide plant in Saudi Arabia.

Solvay said it is keeping an eye on the economic situation and energy and ethylene costs, but based on current market conditions it expects a better operating result from both its units this year.

It confirmed that net profit in the second quarter rose to EUR111 million, from EUR44 million in the same period last year. Its closely-watched recurring earnings before interest, taxes, depreciation and amortization, or Rebitda, rose 12% to EUR304 million.

In a separate statement, Solvay said it is working to create a joint venture with Sadara Chemical Company --the planned joint venture between Saudi Arabian Oil Co. and Dow Chemical Co. (DOW)-- to build a hydrogen peroxide plant in Saudi Arabia, which would be operational at the end of 2015.

Saudi Aramco and Dow on Monday outlined plans to build one of the world's largest chemicals plants in the Gulf kingdom and float the $20 billion joint venture ahead of its planned start-up in 2015. The partners will spend around $12 billion building the plant, located at Jubail on Saudi Arabia's Persian Gulf coast, producing high-margin chemicals and plastics for fast-growing Asian and Middle East markets, with another $8 billion earmarked for third-party investors and contingencies.

Solvay has been focusing on expanding its businesses in the most promising global markets like Asia, as it refocuses its activities after the sale of its pharma unit and the ongoing acquisition of French peer Rhodia SA (RHA.FR).

-By Alessandro Torello, Dow Jones Newswires; +32 2 741 14 88; alessandro.torello@dowjones.com

(END) Dow Jones Newswires

28-07-11 0658GMT