US Solutia may beat auto, building slumps - CEO

30 October 2008 17:58  [Source: ICIS news]

HOUSTON (ICIS news)--US Solutia's geographic diversity and resilient end-markets could buffer it from twin downturns in the construction and automobile industries, the company's chief executive said on Thursday.

Solutia makes rubber chemicals as well as chemicals and films used in glass - all of which end up in buildings and automobiles.

Overall, 71% of the company's revenue is tied to the automotive and construction markets, CEO Jeffry Quinn said in a third-quarter earnings conference call.

However, about half of Solutia's auto-derived revenues come from after-market replacements and not from original-equipment manufacturers (OEM), Quinn said. In fact, only 5% of the company's revenue is exposed to the troubled OEM automobile market in the US.

Solutia's preponderance in the after-market should limit its exposure to new automobile production, he said.

Regarding its construction revenue, about 75% of that is tied to commercial construction, Quinn said.

Overall, the slowdown in commercial construction has not matched the slump in residential construction.

Regardless, the credit crisis is affecting Solutia's products that are tied to construction, Quinn said.

As such, 2008 should be the low point for US commercial construction, he said. Europe should follow in 2009.

Asian construction should match GDP growth, with emerging markets expanding at a faster pace, he said.

Asian automobile demand should also help Solutia's products tied to that market, Quinn said.

In other news, Solutia expands business to grow for its products connected to photovoltaic cells, as government policy continues to support the alternative energy source, he said.

Solutia produces polyvinyl butyral (PVB), and crucial material used in photovoltaic panels.

For more on Solutia visit ICIS company intelligence
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By: Al Greenwood
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