Welcome to Solvay's second quarter 2022 results webcast. Solvay team the floor is yours.
Good afternoon, ladies and gentlemen, and welcome to our second quarter 2022 earnings call. This is Jodi Allen. I'm the Head of Investor Relations, and I'm joined today by our CEO, Ilham Kadri, and our CFO, Karim Hajjar. Today's call is being recorded and will be made available for replay on the investor relations section of our website later today. I would like to remind all participants that the presentation includes forward-looking statements, which are subject to risks and uncertainties. You may refer to the slides related to today's broadcast, which are available on our website. With that, I'll turn the call over to Ilham.
Hello everyone. I'll begin my remarks as always, with the health and safety overview. Compared to the second quarter of 2021, the reportable injury and illness rates are down across the group, and we continue working hard to raise the bar towards a zero-incident goal. Regarding COVID-19, there is an upward trend of infections, mostly in Europe, but it's important to note that this has not had an impact on our operations and no future interruption is foreseen. Moving on now to our second quarter 2022 results on slide three. You've heard me saying before that the strong performance we delivered in the quarter on sales, EBITDA, and cash flow are a testament to the continuing efforts of our outstanding team. I do not take this for granted, and I'm very proud of their results.
Our businesses continue to perform strongly, overcoming volatility in an environment of unprecedented inflationary pressures from energy and raw material costs, along with supply chain and logistics constraints. Net sales in the quarter were up 33% organically versus the previous-year quarter. The clear driver was capturing persistent 26% growth in prices. We have detailed this on slide four. In quarter two, EUR 690 million of price improvements offset EUR 414 million of inflationary costs. Looking back 12 months, we have delivered in total EUR 1.6 billion of price actions, overcoming EUR 1.2 billion in variable costs in the same period. This is remarkable, and again, I want to thank our frontline organization for taking these necessary actions. Capturing a proportional share of the value of our products bring to the market is not automatic.
Our value selling frontline training has paid off and our sales teams know that we sell the value proposition and invoice the products. This has enabled us to mitigate the rising costs and preserved our EBITDA margin of 24.8% in the quarter. While price was an important part of the delivery in quarter two, I wish to acknowledge and thank our customers as we work very hard to meet their needs. By doing so, I'm particularly proud to report that we also delivered volume growth. In turbulent times, our customers appreciate our ability to supply them locally and keep our assets running safely, sustainably, and productively to consistently serve their needs. Underlying demand trends in our key end markets enabled us to grow volumes by 6% in quarter two.
It's worth noting that sales grew by 35% and 29% respectively, relative to quarter two last year for the businesses that will form SpecialtyCo and EssentialCo in the future. The strong demand momentum from Q1 continued in quarter two in several key markets. For example, automotive grew 44%, electronics grew 47%, agro and feed grew 57%, and healthcare grew 28%, to name a few. Our best-in-class portfolio enabled us to capture this growth and in fact, grow our sales above market growth rate in each of the served markets. From a geographic view, we reported sales growth in all regions. China, in particular, was a positive surprise. If you recall, we had forecasted a negative impact of about EUR 50 million in sales related to the lockdown in Shanghai.
However, I am thrilled and pleased to share that the recovery occurred much quicker than expected, and our teams in China achieved a new quarterly record with sales up 36% on an organic basis relative to quarter two last year. EBITDA of EUR 864 million was up 35% on a comparable scope and foreign exchange basis. With all three segments contributing to the earnings growth. Free cash flow was EUR 257 million in the second quarter. This is the 13th consecutive quarter of positive free cash flow. This reflects our strong performance despite an increase in working capital and higher CapEx for our growth projects. Now, I'm extremely proud to report an all-time record high ROCE, return on capital employed at 13.7%, 230 basis points above year-end 2021, and significantly above the 8% level in 2019.
We've done this both by raising the bar operationally, optimizing our industrial footprint, upgrading the quality of our portfolio of businesses, pruning those businesses that couldn't be improved further, and prioritizing and focusing on higher-end specialties growth as we deliver the value propositions our solutions bring to our customers. Turning now to our ambitious ESG goals, as shown on slide five. Starting with our climate initiatives, which are to reduce greenhouse gas emissions by 30% between 2018 and 2030, and to reach carbon neutrality before 2040 in all businesses and before 2050 in soda ash. This remains on track at this point of time.
However, at this moment, we are faced with unprecedented environments related to natural gas risk and therefore, as part of our business continuity planning, we're exploring the voluntary use of coal or fossil fuel, only if absolutely necessary to keep our plants and our customers' plants in operation. I will take you through these contingency plans later in the call. In the meantime, very pleased we have made great progress integrating Scope 3 emissions into our targets. I remind you that Scope 3 considers emissions generated all along the value chain. Recognizing this potential, we are committed to set a 2023 target for our reductions in Scope 3 emissions by joining the Science Based Targets initiative and have set the ambition to reduce Scope 3 emissions by 24% by 2030.
To achieve the Scope 3 targets, we will set up and we are setting up our work in close collaboration with our suppliers and customers. For example, we have launched procurement initiatives for strategic suppliers as climate commitments will become a criterion of choice at Solvay for future supplier relationship. We are developing partnerships with our customers as well to eco-design new products to reduce emissions from cradle to end of life. With these commitments, Solvay is taking an important step towards net zero emissions and continuing our fight against global warming. We have also made great progress on our journey of bringing more sustainable technologies to the markets we serve. In June, we announced our voluntary commitment to phase out our use of fluorosurfactants.
We are very proud of our technology teams who innovated a new polymerization process that doesn't require the use of fluorosurfactants while keeping the unique properties required by our customers, who continue to offer more sustainable value propositions. As you know, one year ago, in July 2021, we successfully eliminated fluorosurfactants from our site in New Jersey, and recently, we have also committed to phase out this technology from the remaining site in Spinetta, Italy, with the target completion by 2026. I will now take the opportunity to share a few customer highlights in the quarter. We are honored to have received several customer awards in the recent weeks, which we find particularly meaningful given the hard work and commitment of our teams to focus on our customers, especially in these challenging times. First, I'll highlight Boeing. As you know, a top aerospace customer.
As you can imagine, they have over 30,000 suppliers, and we were one of the nine who were acknowledged with the Supplier of the Year award. Also, in the aerospace markets, Lockheed Martin, a top defense customer, recognized our Composite Materials business with an Elite Supplier award for 100% on-time deliveries and zero quality defects throughout 2021. It means a lot to us. These come at such pivotal time for us as the industry is beginning its recovery, and we are honored and energized by the recognition. Congratulations to all of our Composite Materials team members. We are truly living our vision. Our Special Chem businesses has also received a Best Partner Award from Samsung in recognition of their great performance through difficult supply environments.
Finally, the last but not the least, the Coatis business received the Best Supplier of the Year award from Brazil's Oxiteno. The criteria included service, delivery, quality, and sustainable practices. I'd also like to acknowledge some new business wins in the quarter. Technology Solutions just won a new mine contract in Peru. In addition to this, the mining team is making great progress with its digital platform, which they call SmartFloat. In fact, SmartFloat is an expert system developed by Solvay to accurately dose the selected reagents required in a copper flotation operation. This can be done without any human intervention, therefore remotely. We are making chemistry dynamic with real-time adjustments to a number of operating parameters, enabling our customers to significantly increase metal extraction yield and improve their operational efficiency.
The automotive team in Specialty Polymers has won a brand-new application using long fiber thermoplastic material, and it demonstrates how our new innovative materials are being adopted in new electrified drive trains by high-profile OEMs like BMW. Last, but certainly not the least, again, our Coatis business has signed a long-term contract to supply adipic acid for a term of eight and a half years, quadrupling the volume of the product compared to previous contracts. Finally, we continue to invest in growth and in capacity to fuel our growth in our core markets. Recently, we announced our plans to invest in a new greenfield site in Arizona, in the United States of America, close to our key customers, to supply electronic-grade hydrogen peroxide to the growing U.S. semiconductor manufacturing industry.
The facility will treat hydrogen peroxide into an ultra-high purity grade to clean silicon wafers that are needed to manufacture semiconductors, essential components, as you know, of electronic devices. Now, Karim will take us through the group segments and financial performance in more detail. Karim?
Thanks, Ilham Kadri. I'll do that with pleasure. Good morning. Good afternoon, everybody. As usual, I'm gonna go straight to our business review, and of course, we'll refer to figures on an organic basis. By which I mean constant scope, constant currency, unless of course, I highlight it otherwise. Sales in the Materials segment increased 38%, driven by strong demand for Specialty Polymers and Composite Materials, and together that led to record second quarter sales and earnings. Sales in Specialty Polymers reached new records, increasing 43% compared to Q2 last year, and up 21% against the first quarter of this year. Pricing accounted for around 70% of the total net sales increase. Volume growth made up the remaining 25%.
We saw continued strong demand in markets such as automotive, including EV batteries of course, and electronics, which includes smart devices and in healthcare applications. The automotive market continues to be fertile ground for innovation, with our sales into electrification and light-weighting applications growing really strongly. You'll be pleased to note also that we reached an important milestone in mid-May when our new PVDF capacity came online in China, which doubled production capacities and positions us really well to meet the growing demand in electric and hybrid vehicles. This is timely, 'cause as we know, sales volumes for batteries are up around 50%, which is a clear sign that the new technologies are driving substitution in auto with electric vehicles. The most recent market forecast for 2022 from LMC indicates growth of around 6% in light-duty vehicle production on a global basis.
This is happening beyond the auto market. For example, a turn to electronics. We see strong growth, as we see semiconductor investments and expanding 5G infrastructures. Last but not least, momentum in healthcare is also strong in many areas, be it biomaterials, medical devices, pharmaceutical packaging, to name but a few. Turning to Composite Materials, sales in that business grew 24% year-on-year, with strong sales growth to our civil aerospace customers. Clearly, the recovery in air passenger traffic is prompting an increase in build rates for single-aisle aircrafts. We also see an increase in the business jet market, recovering faster than we expected, frankly. That's good. On the other hand, sales to the defense industry were down in the quarter as supply chain issues slowed production rates at some key customers.
Wrapping up Materials, segment EBITDA increased 45% compared with the second quarter of last year, and they increased 32% sequentially against the first quarter of this year. Good to note that EBITDA margins increased to 32.5% in Q2. Turning to Chemicals on slide eight. Second quarter sales grew or rose 27%, driven mainly by price increases, which were necessary, really important to offset rising inflationary costs. Demand was strong across the segment, but we did experience various force majeure and production outages, and these led to modest 1% decline in volumes. Had this not happened, we would have seen a modest increase in volumes. Now these outages impacted both soda ash and peroxides and actually cost us around EUR 20 million in profits in the quarter.
Rest assured, these issues have all been fully resolved. We look forward, we're obviously more confident. Our soda ash and derivative sales increased 35% thanks to the continued demand strength on tight supply and price increases to offset the significant rise in energy costs. Volume growth was constrained, as I explained, by asset outages due to the force majeure issues at sites in Europe and in the U.S. Conflict in Ukraine and the consequential embargo on certain imports has prompted us to secure alternative sources of supply, especially solid fuels, for example anthracite, which are used for energy generation, and coal, by the way, which are used for energy generation and in the production process of our European sites.
Switching sources of anthracite or even coal implies different specifications, be it size, impurities, energy content, and this in turn requires modifications in our industrial processes and it impacts asset utilization. Our engineers have been working really hard to adapt and to make sure we continue to optimize and underpin business continuity in these situations. We're getting there, which is really good. Our bicarbonate sales also increased, driven by growth in flue gas treatment for industrial plants and in treating maritime transportation emissions as well as healthcare applications. In Q2, we're also pleased to start up one of the largest sodium bicarbonate plants in the world in Devnya, Bulgaria, and we are very well placed to meet growing demand. Peroxides sales up 10%, driven mainly by pricing, but also by volume growth in North and South America due to strong demand.
Q2 saw the business face some headwinds from an operational outage at our HPPO site in Antwerp and reduced demand at a major pulp and paper customer in Europe who experienced a strike which has since been resolved by them. Silica sales grew 42.6%. Price and volume increases contributed to that, driven by increased demand for high performance silica in electric vehicle tires. Sales volume growth was higher than tire industry production rates. Coatis continued to benefit from strong momentum with sales up 17%, higher volumes and prices on strong demand in solvents and in phenol compensated for higher energy prices and logistics costs. Fair to say as well that global logistics and supply chain issues we've experienced have actually favored local producers such as our Coatis business as customers seek to secure their supplies.
The Chemical segment, EBITDA, was up 18% thanks to high prices across all businesses. The Chemical segment delivered an EBITDA margin of 28.2%. Now it's down 2.2% against Q2 last year, and that's largely because of the outages I referred to. Turning to solutions segment on slide nine, you can see that sales in the quarter were up 33%, driven by strong demand across all businesses. Sales in our Novecare business increased 25% year-over-year, almost entirely due to pricing and strong demand in agro, in coatings, as well as the home and personal care markets. Growth in agro was driven by demand for green solvents. Sales to coatings and HPC, home and personal care, was also strong as demand for sustainable solutions continues to grow in these markets.
Clearly, as you know, we've been upgrading our innovation, our product offering to our customers in this regard. For those of you who attended our consumer market webinar, you will recall that I have dramatically improved the quality and the performance of this business in the last three years. We did this through a number of decisive actions, including shifting our product mix towards more specialty solutions, investing in innovation, commercial programs that focus on the most strategic growth-oriented customers, and also pruning our product portfolio of our less strategic business lines, cost reductions, and the results speak for themselves. Turning to Oil and Gas Solutions, sales grew 43%, continuing the strong momentum from the first quarter of the year. The strong sales performance was driven by price increases and by some market share gains in the sector.
Special Chem sales increased 37% thanks to strength in electronics, although it was partially offset by weakness in automotive catalysts due to softer demand there. Technology Solutions sales increased 34% organically compared to the second quarter last year. That reflects sustained demand in mining and in polymer additives. Pricing measures were able to more than offset cost increase. Turning to our Aroma Performance business, it delivered record sales in the quarter. 43% growth compared to Q2 last year. Demand was particularly strong in the food and beverage sector and sustained in flavors and fragrance markets as well. Pricing was able to more than offset cost inflation due to that strong demand. Second quarter EBITDA in the Solutions segment rose 58%. I've never seen numbers like this, frankly. 58%, and it extended the trend of the first quarter of the year.
EBITDA margin in the segment was up 3.8%, taking it to 22%. Which frankly is outstanding, 'cause as I said, if you look back to three years, we were in the 17% range two years ago. This performance really reflects our team's focus, their determination on meeting our customers' needs, especially for high value products, as well as the benefit of structural cost reductions and the simplification that we've been delivering and that we're sustaining. Before I move on to structural cost reductions for the group, I will say a few words on the EBITDA contribution of our corporate and business services activities, which was a - EUR 84 million in Q2.
The EUR 38 million increase in the quarter was due to the acceleration of investments in digital transformation together with important investments in our growth platforms, as well as in cybersecurity and a modest loss from our activities in our energy business in France. A remuneration supplement that we announced on the 12th of July this year to come to the assistance of many, many of our employees globally. Moving on to slide 10. Structural savings for the quarter came in at EUR 22 million in the quarter. As we did in Q1, brings the total for the year at EUR 44 million, and actually the cumulative to just over EUR 430 million since 2020.
As we look forward, and perhaps I'm stating the obvious, I can confirm that we will deliver the targeted EUR 500 million in structural sustainable cost reductions well ahead of our 2024 commitment. Slide 11 details for you the results of the price action, the volume development, clearly showing how we're more than offsetting the 16% of fixed cost increases that is propelling our EBITDA performance forward, which is up 32.6% year-on-year. Let's talk about cash. On slide 12, you can see, and the figures speak for themselves. Free cash flow reached EUR 257 million. The strong EBITDA growth nearly offset the high working capital. Clearly, as you can see everywhere, working capital is ballooning. It's increasing because of price and cost inflation, and due to higher high-value inventories.
Indeed, if you take a look back to June 2021, you will see that our working capital has increased by EUR 578 million in the space of 12 months. Our focus, our discipline that's been embedded really deep in the organization in the last couple of years, is helping us to deliver what I would suggest is a class leading working capital to sales ratio of 12.6%. I said the same thing last year in June. In fact, I looked back at my notes and then it was 13.7%. The teams are raising the bar. 12.6% against 13.7%, and that is what's really helping us to deliver strong cash flow. At the same time, we are investing.
Our CapEx increased to EUR 180 million for the quarter as we continue to invest for our future growth and to make sure we support the energy transition and our decarbonization. Finally, and most importantly, free cash flow conversion has stood at 35.4%, and we've been over 30% for more than two years. Remember, we said we'd get to over 30% by 2024. This is history. We're there and we've been there for quite a while now. That'll be all for me. With that, I'll hand you back to Ilham Kadri.
Thank you, Karim. I'd like to take now a moment to address something that is on all of our mind and the potential natural gas shortages that Europe may face in the near future. Just to put Solvay's exposure into context, I refer you to the map of our sites in Europe on slide 13. Solvay consumes natural gas at 32 of our 45 sites in the region to power our production processes, to power cogeneration station that produce electricity for our own plants and for the grids, and to a small extent, as a raw material. Our top 10 sites consume 90% of that gas. Turning to slide 14, our teams are diligently working on contingency plans to ensure business continuity. In fact, every European site in Solvay has developed contingency plans to mitigate such challenges to the maximum extent possible.
With these plans underway, we are confident that we can ensure continuity in our operations with up to 30% gas curtailment. For example, several sites are switching to alternative fuels such as LNG, coal, or diesel fuel, and we're adapting our burners to use these alternative fuels. Other sites are using mobile diesel boilers that can complement steam production in the sites. We are also negotiating with authorities to secure gas supply to our cogeneration plants as they supply the national grids and are critical to balance the national electricity system. In essence, our measures are about conservation, substitution, and smart planning. We are also designing and prioritizing production that is considered critical for our customers and the communities.
We can leverage our global assets outside of Europe, in the Americas and in the Asia Pacific region to compensate for reduced volume in Europe in order to ensure continuous supply. Our global footprint is a critical value proposition that is truly appreciated by our customers and partners these days. Not that many of us need convincing, but recent developments provide more motivation to stay true to our carbon neutrality roadmap, ensuring that we further de-risk our businesses and do more to look after our planet. In fact, some of our most energy-intensive plants are already converting to biomass, as you all know. We've identified potential measures at each of our sites across Europe to implement and to manage our risk. Take, for example, our site in Rheinberg, Germany.
You may remember the story, but it's particularly relevant now as we face this potential gas situation in Germany, and we are well underway switching to biomass or wood chips as part of our Solvay One Planet sustainability roadmap. Other examples of sites that are making the switch include our site in Devnya, Bulgaria, and refuse-derived fuel or RDF at Dombasle-sur-Meurthe in France. These projects will continue or even accelerated while we also take additional measures to manage through the potential short-term impact re-related to the Russian supply. Of course, all of these proactive measures are those that are within our own control, and this obviously doesn't consider the indirect impacts associated with our suppliers or our customers' abilities to operate. I will now say a few words about our outlook for the remainder of the year.
Our teams have consistently demonstrated our ability to manage through many challenging periods and difficult market environments. The current volatility in energy prices, risk of natural gas curtailments, high inflation rates around the globe on top of an already challenging supply chain, increases the uncertainty of the market environment in the second half and specifically in quarter four. News flow, be it from the IMF or other independent authoritative bodies, point to storm clouds ahead for us all. It's important to brace ourselves to be prepared. As you would expect from us, we continue to stay focused on what is in our control. Manufacturing quality products, innovating for the future, investing in growth and sustainability, and most importantly, staying close, very close to our customers. You know, we are changing the game and we are winning.
To date, the underlying demand environment in the third quarter remains healthy based on our current order book. The positive demand trends are expected to continue, driven by auto, aero, electronics, agro, mining, and healthcare. Yes, we cannot ignore all the uncertainties in the macro environment as we look to quarter four. Taking all of this into consideration and based on our strong performance of the first half, we are upgrading our 2022 full year EBITDA estimates to grow on an organic basis in a range between 14% and 18%. The range reflects on the low side, a scenario where we begin to feel the effects of a market slowdown in quarter four. On the high side, a scenario where business remains robust with limited new risks or macro developments and normal year-end seasonality.
Please note our guidance doesn't include any major additional headwinds associated with further curtailment of natural gas supplies in Europe. As I said before, we are confident in our contingency plans, but this only supports our own production. It doesn't include the indirect effects of our suppliers or our customers' operations, and this could be significant in such a scenario. As a result of the improved performance, we are also increasing our cash guidance. We continue to invest in growth with capacity expansion and decarbonization projects in the course of the year. CapEx is expected to be around EUR 850 million-EUR 900 million, so 15%-20% more than in 2021. Half of that increase represents inflationary effects.
Taking these factors into consideration as well as the strong performance in the first half, we increase our full year free cash flow estimate from EUR 650 million to EUR 750 million. Now, on the separation project that we announced in March, the project management office is up and running. All indicators are green, and we are on track. Project teams are fully mobilized and progressing on critical matters, such as defining distinct operating models for SpecialtyCo and for EssentialCo and critical work such as defining how we will disentangle and realign many of our 300+ legal entities in a way that preserves value. We are also very careful in making sure that we engage our senior leaders without diluting their focus on our customers and on maintaining the delivery momentum.
Lastly, I would like to remind you all of our series of webinars that we have presented to analysts and investors on various topics. These will continue in the second half, and our investor relations team will share those details with you once available. We have accomplished much already in the first half of this year, but there is much more to do. I remain confident in our people. They continue every day to demonstrate our ability to manage through significant challenges. On top of this, our improved portfolio, coupled with our sustainability roadmap and strong balance sheet, keep us well positioned to progress on our transformation journey, which will unlock value for our customers, for our shareholders, and for our employees. With that, Karim and I are happy to take your questions.
We will now move to Q&A.
Thank you very much. Ladies and gentlemen, we will now begin our Q&A session. If you wish to ask a question, please dial zero one on your telephone keypad, and you will enter a queue. After you are announced, you can ask your question. Once again, please dial zero one on your telephone keypad. The first question comes from Chetan Udeshi from JP Morgan. Please go ahead.
Yeah, hi. Thanks for letting me ask a couple of questions. First one was you know, Ilham and Karim, you talked, both of you talked a lot about record margin, record EBITDA. Frankly, for us, when we hear the word record, our alarm bells start to ring, in terms of what's gonna come next. So I'm just curious in terms of how do you guys think about sustainability of all the numbers that we see you print, today, especially on the Materials side. I think the related question, if you can provide any sort of color is, how much of the Materials pricing is driven by PVDF, if you can break that out.
The second question is, just to clarify, did you say that, based on your contingency planning, you can ensure business continuity for your plans or for your plants in Europe, even with 30% cut to gas supply? Thanks.
Yeah. Hi, Chetan, and thank you for your questions. I think there was pricing the PVDF Specialty Polymer and the Curtailment, right? One, two, three. Pricing. Chetan and all, when we talk, when we say record, it's clinical, right? It's comparing to the past, and it's just a record, right? On the pricing, great question. I think the stickiness is an important question. Remember, Chetan, we were a lagger in pricing for a long time, and I told you we were going to fix that in the first semester in 2021, and you have seen us do just that. We invested in H2. I'm not sure if it's visible to you, and we retrained our almost 800, you know, sales force in the front line in H2 2021 on value pricing.
We coach supervisors, we change incentive, we stop selling products. Rather, we start selling value proposition and invoicing products. This is what has been implemented, not knowing, frankly, that we are gonna face one of the most inflationary environments I've ever seen in my career, you know, as starting from March this year. Now at high level, 50%-60% of the portfolio, probably Chetan, is supply-demand driven and could be seen as, you know, semi-commoditized, you know, type of dynamics, where pricing elasticity is important. By the way, we are leaders, and the supply is tight. The good news is that, again, we are leaders in our market. Secondly, we have some degree of cost protection pricing mechanism. You know, we have revised our formula second half last year, like in soda ash.
We baked the energy cost, again, without knowing that we are gonna face, you know, an energy inflationary environment, which is helping us. The supply is tight. The customers request reinvestments, including in soda ash, for example. The rest of the portfolio is more specialty, where value pricing is key. This is based on a strong value proposition, combining high-quality specs, innovative products with IP and differentiation solution that customers can win with it. Number three is a lower total cost of ownership. Much of which comes from our specialty business. Yeah, one is value proposition. Our relationship with customers are becoming more strategic. We put, you know, the top 20 now strategic customers have a senior key accounts manager sponsored by one executive leadership team, including myself. Three is our global presence.
Security of supply more than ever today is as important, even sometimes more important than pricing. Continuously bringing innovative products and reinvestments. I mean, you've seen us accelerating our reinvestments in beautiful organic, you know, businesses organically is important to our customers. Second question was about Specialty Polymers, right? And PVDF. Well, listen, sales in Specialty Polymers reaching new records 42% compared to the second quarter of last year and 20% sequentially versus quarter one. Pricing accounted for around 75% of the total net sales increase. The volume growth made up, you know, around 25%, right? You know, this is not a story of just one quarter, Chetan.
Last year, if I give you a number, quarter one 2021 was 18%, quarter two was 57%, quarter three was 46%, quarter four 12%, this year 30% and 55%. It's not an anecdote. You know, we have been growing at double-digit rate since quarter one 2021. I think we've told. This is in auto, and the numbers I gave you, by the way. It's not an anecdote. We've told you that automotive and the webinar in auto has been clarifying and sharing with you the equity story. We use a variety of high performing polymers in auto. This is not only PVDF.
PVDF, you know, it's probably less than 20% of the Specialty Polymers, you know, sales, but we have PPA, PPS, PEEK, which go, by the way, under the hood application, for electrification, reducing the vehicle weight. Specialty Polymers supplies other markets, from electronics to consumers and food packaging to healthcare. It's truly a broad-based growth across our entire material portfolio. Last one is gas. Yes, you heard it right, up to 30% we can run our operations. Obviously there are some plants like Rheinberg, and this is the good story. I remind all that we have, you know, switched one boiler already to wood chips in Rheinberg, to wood chips, you know, non-renewable, reusable. Today it's helping us, right, to be able to run this plant up to 50%, right, of gas cuts.
Yeah, each plant is not one size fits all. Each plant has its own plan. We shared with you our plan B, and indeed, we are preparing, as I told you, with different measure to, you know, run without disruption. Obviously, if the situation becomes dramatic, we shall see. So far so good, and our teams has worked relentlessly, right, to really secure and continue to work on preparing plan Bs for each site. Back to you.
Operator, I think we're ready for the next question.
Thank you. The next question comes from Jaideep Pandya from On Field Research. Please go ahead.
Thanks and congrats on a very strong result. First question really is around the Chemicals business. Could you just explain to us, like, how is the pricing for soda ash and peroxides being set these days, given you guys hedge a lot of your, you know, key ingredients such as coal, natural gas, electricity, and you've been doing that historically, and you've incorporated energy surcharges. Because when I look at this year, you've had about EUR 100 million growth for EBITDA in the first half versus last year, although volumes have been relatively flattish. What is the story in Chemicals this year? That's my first question.
The second question, sort of sorry to ask this again, but goes back to Chetan's question on PVDF, and I appreciate this is a portfolio of polymers, but PVDF prices have started sort of come off in China, and there are new technologies coming from players like Tinci. So, you know, how confident are you that PVDF is gonna be used in the same form as it is today in the outer years, in 2025, 2026, and the content of PVDF in a battery is not gonna go down given the prices have gone to such astronomical levels? Thanks a lot.
Yeah. Thank you, Jaideep, and thank you for your words. Well, listen, in Chemicals, the only reason you've seen the volume slightly down is because of the first measures, as Karim mentioned, and this is behind us, right? And only slightly down. The markets in soda ash, as you referred to, remains extremely tight at this time on top of the inflationary environment. Remember what I called you in quarter three last year, right? That we reopened for the first time in our history the annual contract, right? Because inflation indeed started already last year, right? I mean, it just aggravated in quarter one this year. The first time in our history we reopened the annual contract with our customers, and when energy prices were starting to rise.
Since then what we have done, we have included energy clauses, surcharges on coal, on anthracite, natural gas, and have been systematically embedded, which made our life, I must say, a bit easier as from March this year. Our contract remains still negotiated annually, but the surcharges come on the top of the existing contract in order to manage the volatility. You can think of the surcharges as temporary, because when energy costs decrease, so will they. Our surcharge, to give you an idea, Jaideep, they are calculated each month, then invoiced quarterly, right? Silica, I mean, you didn't talk about this, but we have solid volumes there thanks to...
For example, we have more silica in EV, by the way, tires. You know that the EV vehicles and hybrids, they need more, they need, you know, better tires, so they need more silica and better rolling resistance. So that's something which we see and we are there increasing our market share. You came back to the question of PVDF, right? And additional. Well, listen, we talked about it during our webinar, right? Where we explained to you that our technology is also differentiated. What matters is the availability of high quality products for batteries that are approved and specified. Qualification time can be long and complex. I remind you that we have a suspension technology which is very different from the emulsion technology.
Not that one day probably there will be more suspension capacity, but it's very unique. It's high-end batteries as compared to the emulsion. It goes to the high-end batteries with you know longer autonomy with better performance, right? The volumes you see in our fraction of the nominal global PVDF capacity that explain better the supply shortage. The price hike has been driven primarily by you know one raw material. You may know about it, R-142b's dramatic price increase. Those people who are also upstream you know converted right and have access to you know such upstream integrated products are gonna win. You know that's something we look at. There was another question on hedging, right?
Yeah.
Do you want to take the hedging question, Karim?
Yeah, sure. Jaideep Pandya, look, I mean, fundamentally, I'm not gonna get into the specifics on Chemicals and the impact of hedging. As you'll appreciate, this is commercially sensitive for us. What I can confirm is the following, and you probably know it, but we have been consistently prudent in hedging forward our energy exposures, including obviously gas and CO2, et cetera. That has not changed, and we will continue to do that. What I will say is that that gives us a benefit in the context of a rising energy cost environment, clearly. Without telling you what that number is, I can tell you that the positive pricing power, margin expansion you're seeing would have happened even without the hedging across the Solvay Group.
That's an important point to make because we appreciate hedging, but we don't want in any way our frontline teams, our commercial teams, to lower the bar because of hedging. We need to be cost competitive, price competitive day in, day out, even without hedging. We're seeing the results of that. Thanks.
Thank you.
Operator, please.
The next question. Thank you. The next question comes from Wim Hoste from KBC Securities. Please go ahead.
Yes, good afternoon. A couple of questions from my side as well. Maybe first, if I can come back to the full year guidance and if you look what you did in the first half in terms of EBITDA, then look what the guidance implies for the second half. There's at least EUR 400 million reduction of EBITDA in the second half versus the first half, which it seems really a lot, also based on your commentary that Q3 started off nicely. Can I get some additional clarification on how you compose that guidance and what kind of also market growth or demand growth or demand slowdown you incorporate for Q4 when you put this guidance out? That's the first question.
Then, second one would be on the outlook specifically for composites, both defense and civil. You mentioned some decline in defense in Q2, as a result, among others, of supply chain disruptions.
Mm-hmm.
Et cetera. How do you see that situation evolving into the second half of the year? Those are my questions.
Thank you, Wim. On the guidance, our current visibility shows really healthy demand based on our quarter three order books, right? You know, since COVID, we implemented a centralized bottom-up order book in the company. We are taking advantage of that. Similar market trends continue, as I mentioned or Karim mentioned in the prepared remarks, and they show good demand in auto, civil aero, electronics, healthcare, and agro, right? However, as you are reading or listening to our peers, you know, visibility later in the year, especially in quarter four, remains uncertain. You have likely heard the again revised IMF global forecast.
Given the macro environments and this energy volatility, it's difficult to accurately forecast the impact on our business, hence our updated guidance range, right? Which reflect the strong, you know, first semester performance together with this uncertainty in quarter four. All in all, quarter three, similar market trends continue. Quarter four, the low end of the guidance assume a decline in demand beginning in quarter four, indicating a modest decline in, you know, second semester EBITDA versus the second semester of last year. Quarter four, the high end of our guidance assume only normal seasonal declines, not yet indicative of any recession and growth up to 7% in the second, you know, semester if you do the math. There was another question. What was?
On aero.
On composites. Well, listen, composites, you know, it has been, you know, very, you know, a good quarter for composites. We've seen an increase in single-aisle. So that's, and you know, we have a bottleneck there due actually to shortages in raw material. And we are gonna continue, you know, pushing that. On defense, the volume decline is mainly due to raw material shortages, so including from our supply chain. So nothing to worry about. I think our bottleneck, without sharing with you a number, it's really in the order book. So as much as we can produce, we can ship and bill. So composites is not yet in rebound mode.
It's been recovering, but you know, it's very steady and very, you know, supportive to what we've seen in the past quarters. Anything else? Did I miss something?
No.
Yeah. Okay. Back to you.
Thank you very much. There are no further questions. I give back the floor to the speakers.
Thank you, everyone, for your participation in today's call. As always, our investor relations team is here if you have any follow-up questions. With that, have a great day.
Thank you.
Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.