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Solutia experiences significant decline in volumes during Q4
19 Feb '09
5 min read
"The sharp downturn in the global markets in the fourth quarter led to a dramatic reduction in demand," said Jeffry N. Quinn, chairman, president and chief executive officer of Solutia Inc.
"We believe this weaker demand environment will continue well into 2009 and we have implemented a comprehensive plan that will position us to generate positive cash flow in these challenging times while at the same time preserving our long-term strategy.
We have taken immediate actions to aggressively reduce costs, working capital and capital expenditures in response to the sharp decline in our markets. Certain of these actions benefitted our fourth quarter results, and allowed us to generate higher adjusted EBITDA than the prior year, despite lower volumes."
Fourth Quarter 2008 Segment Data:
Saflex Segment:
Saflex's fourth quarter 2008 net sales were $188 million, down $8 million or 4% from the same period of 2007. EBITDA decreased $4 million to $23 million for the fourth quarter of 2008 compared to the prior year period.
EBITDA for this business was adversely affected by restructuring charges of $10 million in 2008 related to the closure of the Trenton, Michigan, plastic interlayer manufacturing line, and charges of $2 million in 2007 associated with severance and retraining costs.
After consideration of these charges in both periods, Adjusted EBITDA increased to $33 million for the fourth quarter of 2008 compared to $29 million in the prior year period, primarily due to improved selling prices and lower manufacturing and SG&A costs which more than offset higher raw material costs and production and sales volume declines in comparison to the prior year period.
CPFilms Segment:
CPFilms' fourth quarter 2008 net sales were $40 million, down $10 million or 20% from the same period in 2007. EBITDA decreased $9 million to a loss of $1 million for the fourth quarter of 2008, compared to the prior year period. After consideration of a $3 million non-cash charge associated with the write- down of certain intangible assets, Adjusted EBITDA decreased by $6 million to $2 million, primarily driven by lower volumes.
Technical Specialties Segment:
Technical Specialties' net sales for fourth quarter 2008 of $194 million decreased by $43 million or 18% compared to prior year period. EBITDA increased $5 million to $27 million during the fourth quarter 2008 compared to the prior year period.
EBITDA for this business was adversely affected in 2008 by restructuring and other charges of $16 million primarily related to the closure of the Ruabon, Wales, facility and, in 2007, $25 million associated with the impairment of certain rubber chemicals fixed assets.
After consideration of these charges in both periods, Adjusted EBITDA decreased $4 million from $46 million in 2007 to $42 million in 2008 primarily due to lower volumes and higher raw material costs, partially offset by improved selling prices.
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"We believe this weaker demand environment will continue well into 2009 and we have implemented a comprehensive plan that will position us to generate positive cash flow in these challenging times while at the same time preserving our long-term strategy.
We have taken immediate actions to aggressively reduce costs, working capital and capital expenditures in response to the sharp decline in our markets. Certain of these actions benefitted our fourth quarter results, and allowed us to generate higher adjusted EBITDA than the prior year, despite lower volumes."
Fourth Quarter 2008 Segment Data:
Saflex Segment:
Saflex's fourth quarter 2008 net sales were $188 million, down $8 million or 4% from the same period of 2007. EBITDA decreased $4 million to $23 million for the fourth quarter of 2008 compared to the prior year period.
EBITDA for this business was adversely affected by restructuring charges of $10 million in 2008 related to the closure of the Trenton, Michigan, plastic interlayer manufacturing line, and charges of $2 million in 2007 associated with severance and retraining costs.
After consideration of these charges in both periods, Adjusted EBITDA increased to $33 million for the fourth quarter of 2008 compared to $29 million in the prior year period, primarily due to improved selling prices and lower manufacturing and SG&A costs which more than offset higher raw material costs and production and sales volume declines in comparison to the prior year period.
CPFilms Segment:
CPFilms' fourth quarter 2008 net sales were $40 million, down $10 million or 20% from the same period in 2007. EBITDA decreased $9 million to a loss of $1 million for the fourth quarter of 2008, compared to the prior year period. After consideration of a $3 million non-cash charge associated with the write- down of certain intangible assets, Adjusted EBITDA decreased by $6 million to $2 million, primarily driven by lower volumes.
Technical Specialties Segment:
Technical Specialties' net sales for fourth quarter 2008 of $194 million decreased by $43 million or 18% compared to prior year period. EBITDA increased $5 million to $27 million during the fourth quarter 2008 compared to the prior year period.
EBITDA for this business was adversely affected in 2008 by restructuring and other charges of $16 million primarily related to the closure of the Ruabon, Wales, facility and, in 2007, $25 million associated with the impairment of certain rubber chemicals fixed assets.
After consideration of these charges in both periods, Adjusted EBITDA decreased $4 million from $46 million in 2007 to $42 million in 2008 primarily due to lower volumes and higher raw material costs, partially offset by improved selling prices.
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Solutia Inc
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