Belgium's Syensqo on track for worst day ever after top end forecast cut
Annual EBITDA seen in 1.4 bln to 1.475 bln euros range
Q2 EBITDA 378 mln euros vs. 383 mln euros consensus
Updates share move, adds Syensqo and JPM comments
By Alban Kacher and Leo Marchandon
Aug 1 (Reuters) -Syensqo's SYENS.BR shares fell 6% on Thursday after the company lowered the top end of its annual core profit and free cash flow forecast, as it does not expect a broader demand recovery in the final six months of the year.
"The high end (of EBITDA guidance) was factoring in recovery in demand in the second-half of the year. Now with the first six months behind us and landing in line with expectations, we do not see this recovery," the company said in a call.
The Belgian speciality chemicals firm now expects underlying earnings before interest, taxes, depreciation, and amortization (EBITDA) between 1.4 billion euros and 1.475 billion euros ($1.52 billion-$1.60 billion) in 2024, compared with its earlier expectation of 1.4 billion euros to 1.55 billion euros.
It also lowered the free cash flow guidance to 400 million euros-to-450 million euros from 400 million euros and 500 million euros earlier.
"Overall, expectations were low and stock looks very cheap, but somewhat bigger earnings cut than expected for 2H24 might result in underperformance of the shares today," J.P. Morgan said in a note.
Syensqo, which was spun off from Belgian chemicals group Solvay SOLB.BR last year, reiterated its capital expenditure for the year.
The Belgian company expects to return to year-on-year volume growth in the second half with increases across all units, particularly in Novecare.
However, it sees slow recovery in agriculture, industrial, automotive and medical destocking.
Its underlying EBITDA came in at 378 million euros for the second quarter, slightly below analysts' expectations of 383 million euros, according to a company-compiled consensus.
Core profit declined 17% at the materials business, which accounts for 71% of the group's total.
The group's net debt increased by 20% between the end of 2023 and the closing of the second quarter, primarily due to a 167 million euros settlement of claims linked to water pollution in New Jersey.
Chemicals companies have been under pressure for more than a year, forced to reduce inventories on lower demand from industrial clients as energy prices soared.
Syensqo's shares are down 19% this year and on track for their worst day ever, if losses hold.
($1 = 0.9238 euros)
Reporting by Alban Kacher and Leo Marchandon; Editing by Subhranshu Sahu and Mrigank Dhaniwala
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