07 May 2009 00:06 [Source: ICIS news]
HOUSTON (ICIS news)--Solutia posted a first-quarter net loss of $159m (€119m), as lower sales dragged down earnings, the US specialty chemicals producer said on Wednesday.
During the same time last year, Solutia reported a net income of $1.42bn, a performance derived mostly from a $1.43bn reorganisation benefit.
Solutia attempted to factor out such one-time benefits by reporting adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA).
Solutia reported an adjusted EBITDA of $56m for the first quarter, down from $95m reported for the same time last year. The company attributed the year-over-year decline, in part, to a drop in sales.
First-quarter net sales were $339m, down from $517m reported for the same time last year, the company said.
“Demand in the first quarter was negatively impacted by the difficult macro-economic conditions affecting the global markets,” CEO Jeffry Quinn said. “While we expect continued softness in demand throughout 2009, we do expect modest volume improvement in comparison to our first quarter levels.”
Solutia’s nylon segment, which produces acrylonitrile (ACN), was sold to an affiliate of New York-based private equity group SK Capital Partners for $50m last month. That transaction is expected to close in the second quarter.
“The nylon sale will complete Solutia’s transformation into a pure-play performance materials and specialty chemicals company,” Quinn said.
In response to the economic climate, Solutia said it reduced its net debt by $50m to $1.31bn.
“We are focused on preserving and enhancing our liquidity position in light of the current economic environment,” said CFO James Sullivan.
Going forward, the company said inventory destocking would likely conclude, but the soft demand environment should continue. However, some seasonal growth is still expected, Solutia said.
($1 = €0.75)
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