Solutia: sales up 14% in 2008

Solutia Inc. reported on 17 February 2009 a 14% increase in net sales and a 29% increase in Adjusted EBITDA from continuing operations for 2008, as compared to 2007 on a pro forma basis.
Net sales fo…

Solutia Inc. reported on 17 February 2009 a 14% increase in net sales and a 29% increase in Adjusted EBITDA from continuing operations for 2008, as compared to 2007 on a pro forma basis. Net sales for the full year 2008 were USD 2,110 million, an improvement of 14% over 2007 on a pro forma basis. Average selling prices increased 10%, and were positive across all business segments for the year. Volumes in total were basically flat, with Saflex reporting a gain of 3%, and CPFilms and Technical Specialties both down 2%. Adjusted EBITDA margins expanded to 19% in 2008 compared to 16% on a pro forma 2007 basis, resulting from improved selling prices which more than offset higher raw material costs. Solutia had consolidated net income from continuing operations of USD 1,238 million for 2008 compared to a loss of USD 256 million for 2007. After consideration of items in 2007 and 2008, income was up USD 14 million, from USD 70 million in 2007 to USD 84 million in 2008. Adjusted EBITDA increased to USD 392 million from USD 305 million over 2007, on a pro forma basis. “Our achievements in 2008 were just the beginning of building Solutia into a performance material and specialty chemical company that creates value for our shareholders”, said Jeffry N. Quinn, chairman, president and chief executive officer of Solutia Inc. “We have transformed our portfolio to be focused on specialty materials and chemicals, improved our balance sheet and delivered strong financial results, with a 29% adjusted EBITDA improvement over pro forma 2007. Notwithstanding these strong full-year results, we did experience a significant decline in volumes during the 4Q as a result of the broader downturn in the global markets”. Solutia reported a 13% fall in net sales and a 4% increase in Adjusted EBITDA from continuing operations for the 4Q 2008, as compared to the same period in 2007. Solutia had a consolidated loss from continuing operations of USD 17 million for the 4Q 2008 compared to a loss of USD 126 million for the same period in 2007. Consolidated EBITDA for the 4Q 2008 increased to USD 35 million from USD 34 million in 2007. Adjusted EBITDA increased to USD 72 million from USD 69 million. “The sharp downturn in the global markets in the 4Q led to a dramatic reduction in demand”, said Jeffry N. Quinn, chairman, president and chief executive officer of Solutia Inc. “We believe this weaker demand environment will continue well into 2009 and we have implemented a comprehensive plan that will position us to generate positive cash flow in these challenging times while at the same time preserving our long-term strategy. We have taken immediate actions to aggressively reduce costs, working capital and capital expenditures in response to the sharp decline in our markets. Certain of these actions benefitted our 4Q results, and allowed us to generate higher adjusted EBITDA than the prior year, despite lower volumes”. Saflex“s 4Q 2008 net sales were USD 188 million, down USD 8 million or 4% from the same period of 2007. EBITDA decreased USD 4 million to USD 23 million for the 4Q of 2008 compared to the prior year period. EBITDA for this business was adversely affected by restructuring charges of USD 10 million in 2008 related to the closure of the Trenton, Michigan, plastic interlayer manufacturing line, and charges of USD 2 million in 2007 associated with severance and retraining costs. After consideration of these charges in both periods, Adjusted EBITDA increased to USD 33 million for the 4Q of 2008 compared to USD 29 million in the prior year period, primarily due to improved selling prices and lower manufacturing and SG&A costs which more than offset higher raw material costs and production and sales volume declines in comparison to the prior year period. CPFilms“ 4Q 2008 net sales were USD 40 million, down USD 10 million or 20% from the same period in 2007. EBITDA decreased USD 9 million to a loss of USD 1 million for the 4Q of 2008, compared to the prior year period. After consideration of a USD 3 million non-cash charge associated with the write- down of certain intangible assets, Adjusted EBITDA decreased by USD 6 million to USD 2 million, primarily driven by lower volumes. The company expects 2009 to be a challenging year. The company has identified additional cost saving opportunities which will be implemented throughout 2009 to further mitigate the sales impact from the current economic environment. Based on these actions, and in spite of the lower expected volumes, the company expects to be able to experience modest margin expansion over 2008 actual results and is targeting Adjusted EBITDA for 2009 to be in the range of USD 325 million to USD 350 million. Further, the company expects to generate cash from operations less capital spending in 2009 in the range of USD 25 million to USD 75 million. “We are confident that our ongoing restructuring activities and focus on cash generation will position Solutia well when demand returns”, Mr. Quinn added.