Early in the year, global urea prices fell to multi - year lows below $260 a ton, and China continued a torrid pace of urea exports. Although Solvay SA (XBRU:SOLB, Financial) reported admirable second quarter earnings and margin improvement, the stock dropped based on weak results in the company’s Novecare business line. Three of Solvay’s four main business lines executed well for the quarter with increased sales and volumes, yet all focus surrounded Novecare. The contraction in the U.S. oil and gas industry supply chain dampened Novecare’s sales. Demand diminished for stimulation, drilling and cementing activities. In a case of inopportune timing, Solvay announced just prior to the earnings release that it had recently built a state-of-the-art oil and gas lab in Singapore intended to internationalize Novecare’s business.
From Bernard Horn (Trades, Portfolio)'s third quarter 2015 shareholder letter.
