Solutia shares hit new lows on probe, economy fears
14 October 2002 18:34 [Source: ICIS news]
HOUSTON (CNI)--Shares of Solutia continued to decline Monday in the wake of several recent events including the announcement of an antitrust investigation, an analyst report lowering earnings projections and the settlement of a lawsuit with Fluor.
At midday, shares of the St Louis, Missouri-based nylon and fibres producer were down 4.8% at $4 after closing Friday at a new 52-week low of $4.20. Friday's close represented a 16% decline for that day from a close Thursday of $4.95.
Those figures compare with a 52-week high of $14.45.
Merrill Lynch (ML) cut its Solutia earnings projection Friday for this year to 60 cent/share from a previous projection of 75 cent/share citing an expected slowdown in auto films and carpet fibre sales.
In a brief report on Solutia, ML said it also is cutting next year's projection to $1/share from an earlier figure of $1.25 "in anticipation that Middle East conflicts could keep crude oil prices firm through the first half of 2003."
ML analysts said they expect Solutia's third quarter interest expense to rise by $12m (Euro12.1m) from the second quarter due to increased rates and fees after the company's July refinancing agreement. As a result, ML also lowered its third quarter earnings projection to 11 cent/share from a previous target of 20 cents.
Besides the antitrust investigation of Solutia's Flexsys rubber chemicals joint venture and the settlement with Fluor, Solutia also faces concerns about the progress of litigation of polychlorinated biphenyl (PCB) contamination of a former Monsanto plant in Alabama.
By: Gary Taylor
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