May 7, 2019 / 7:55 AM / 3 months ago

UPDATE 1-Belgian chemicals group Solvay cuts earnings forecast as economy worsens

(Adds analyst comment, share price)

May 7 (Reuters) - Belgian chemicals group Solvay lowered its forecast for underlying earnings this year due to a decline in demand from the automotive, electronics and oil and gas industries, as it reported flat first-quarter organic sales.

Shares in the company fell 6.5 percent in early trading.

The company reported first-quarter underlying earnings before interest, taxes, depreciation and amortization (EBITDA) came at 571 million euros ($640 million), a 0.6 percent decline on the year, due to weaker sales and rising costs.

Specialty Polymers saw volumes fall by about 10 percent in the quarter as spending by smartphone makers and semiconductor manufacturers fell, Solvay said.

Weak demand from automotive customers hit volumes at its Special Chemicals division, with demand for diesel remaining low.

Volumes at its Novecare surfactants and polymers fell due to lower activity in the shale oil and gas market in North America since September, the company added.

The company said economic conditions worsened since February and it expected that to continue into the second quarter of 2019.

The company sees now underlying EBITDA for 2019 to be flat to down 2 percent, down from a earlier forecast to grow “modestly”.

The guidance cut was obviously negative news’, said KBC Securities, which downgraded the stock to “accumulate” from “buy”.

$1 = 0.8921 euros Reporting by Michal Aleksandrowicz in Gdynia Editing by Tomasz Janowski and Louise Heavens

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