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Solutia foresees high profits in Q4 despite weak global economy

03
Nov '08
Solutia Inc reported a 29% increase in net sales and a 48% increase in Adjusted EBITDA from continuing operations for the third quarter of 2008, as compared to the same period in 2007.

Solutia had consolidated net income of $24 million from continuing operations for the third quarter 2008 compared to a net loss of $134 million for the same period in 2007. Solutia's results were impacted by certain events affecting comparability (detailed below) totaling an after-tax loss $159 million in 2007.

After consideration of these special items in 2007, income was down $1 million from $25 million in the third quarter of 2007 to $24 million in the third quarter of 2008. This was primarily due to increased depreciation and amortization expense in the third quarter of 2008 as a result of increased asset values through the application of fresh-start accounting and higher non-cash stock compensation expense.

For the quarter, Solutia posted earnings per share from continuing operations of $.32. Consolidated EBITDA for the third quarter increased to $108 million from $65 million in 2007.

"Solutia delivered strong sales and EBITDA growth during the third quarter," said Jeffry N. Quinn, chairman, president and chief executive officer of Solutia Inc. "This performance is driven by our global leadership positions, geographic and end-market diversification, and our favorable cost positions across our entire portfolio of specialty materials businesses."

Saflex Segment - Saflex's third quarter 2008 net sales were $221 million, up $48 million or 28% from the same period of 2007. EBITDA increased $8 million to $35 million for the third quarter of 2008 compared to the prior year period. The 30% increase is primarily due to improved volumes in Europe and Asia in comparison to the prior year.

CPFilms Segment - CPFilms' third quarter 2008 net sales were $63 million, up $4 million or 7% from the same period in 2007. EBITDA increased $1 million to $15 million for the third quarter of 2008, compared to the prior year period. This 7% increase was primarily driven by strong international volume growth.

Technical Specialties Segment - Technical Specialties' net sales for third quarter 2008 of $294 million increased by $80 million compared to 2007. EBITDA increased $30 million to $74 million during the third quarter 2008 compared to the prior year period.

Excluding events effecting comparability, Adjusted EBITDA increased $28 million, primarily due to stronger revenues and improved product mix versus the prior year.

Discontinued Operations - Integrated Nylon Segment
As stated previously, effective with the third quart1er, Solutia reported results from its Nylon segment as discontinued operations. Net income from discontinued operations decreased $54 million in comparison to the third quarter 2007. The third quarter of 2007 benefited from a one time $22 million customer contracttermination. In addition, the current quarter results were negatively impacted by $18 million from the effect of Hurricane Ike.


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