Cytec slumps to $350.7m fourth quarter loss as surface specialties hit

30 January 2009 11:13  [Source: ICIS news]

Cytec leader Shane FlemingLONDON (ICIS news)--The downturn in key markets, customer de-stocking and a significant goodwill impairment charge in its surface specialties segment helped push Cytec to a $350.7m (€269.8m) loss in the fourth quarter, the company said on Friday.

During the fourth quarter of 2007, the company reported net profits of $47.6m. Sales in the quarter slumped 22.5% to $698.2m.

Excluding the goodwill impairment charge for the businesses that sell into industrial automotive and construction coatings markets and other special items earnings were $4.9m, or $0.10 per diluted share.

"We experienced a significant decline in sales of our chemical products caused by the unprecedented downturn in the automotive, construction and general industrial markets made worse by de-stocking actions taken by many of our customers at year-end,” said chairman, president and CEO, Shane Fleming.

"Sales volumes declined in all regions and most of our chemical plants ran at significantly lower operating rates than the prior year,” he added.

Fleming, who took charge at the specialty materials and chemicals maker on 1 January, has promised widespread restructuring at Cytec.

“We have initiated actions to aggressively reduce our costs including consolidation of manufacturing facilities, reduction of excess manufacturing capacity, working capital reduction and the migration to regional shared services among others and will continue these efforts in light of our outlook for a continuing decline in demand," he said in the company’s quarterly earnings statement.

Cytec’s surface specialties sales dropped 30% to $281.1m with volumes down 32%. The segment operating loss was $404.8m.

Performance chemicals sales fell 17% to $159.3m with volumes down 23% amid global demand weakness. Segment operating earnings were down 7% to $15.0m.

Engineered materials sales fell 8% to $163.7m and operating profits dropped 16% to $30.5m.

Building block chemical sales fell 27% to $94.1m as volumes dropped 34% on weak and use demand for acrylonitrile and melamine products across all regions, Cytec said. An operating loss of $6.4m was reported for the segment against a profit of $7.2m in the prior year’s fourth quarter.

Cytec does not foresee any improvement in the global economy through 2009, Fleming said.

"Given the high degree of uncertainty in the demand outlook in many of our markets, we will not be providing 2009 earnings guidance at this time,” he added.

($1 = €0.77)

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