Solutia announces improved second-quarter earnings outlook

US chemical, fibre and polymer manufacturer Solutia, Inc. raised its second-quarter guidance due to improved global business conditions, but Moody“s Investors Service further downgraded the company“…

US chemical, fibre and polymer manufacturer Solutia, Inc. raised its second-quarter guidance due to improved global business conditions, but Moody“s Investors Service further downgraded the company“s already junk-grade long-term debt rating. In a press release in mid-June, Solutia said it expected second quarter earnings of 20 cents a share, about 10 cents higher than previous guidance, reflecting steady sequential improvement in sales volumes as inventories remained low and customer demand has strengthened in many of its businesses. In addition, the cost savings from Solutia“s US 100 million cost reduction programme and the strengthening euro are boosting its bottom line, the company said. The improved earnings guidance includes a loss of 5 cents a share due to a power outage from a lightning strike at the Chocolate Bayou facility in April, as well as higher-than-expected energy and raw materials costs. A Thomson Financial/First Call survey of nine analysts produced a mean earnings estimate of 12 cents a share for the second quarter. In April, Solutia predicted second quarter earnings comparable to the first quarter, when it posted operating earnings of US$ 11 million, or 10 cents a share, on sales of US$ 654 million. In the second quarter ended June 30, 2001, the company – formerly the specialty chemicals business of Monsanto Co. – earned US$ 13 million, or 12 cents a diluted share, on sales of US$ 737 million.