St. Louis, MO, Oct. 24--Solutia reported a third-quarter loss, due to higher energy costs, an extended maintenance shutdown at a Texas plant and a range of charges.
The St. Louis based company posted a net loss of $178 million, or $1.70 per share, compared with break-even results a year earlier. Net sales rose to $578 million from $574 million.
Solutia said the third-quarter net loss reflected charges of $156 million, or $1.49 per share, including $5 million related to the change in accounting related to the lease of the company's headquarters.
"In the past few months, we settled the Alabama PCB litigation and we completed the refinancing of our credit facility. Notwithstanding these accomplishments, there is still much to be done to improve the overall operational and financial health of the company," said John Hunter, chairman and chief executive officer. "We continue to take cost containment actions and we continue to focus on the significant financial issues ahead of us including addressing debt maturities, reducing our leverage, managing the continuing drain from legacy liabilities and satisfying our pension funding obligations. We will continue to explore all alternatives to properly address these issues," Hunter said.
In the company’s Integrated Nylon sector net sales for the third quarter of 2003 decreased $3 million compared to the third quarter of 2002 because of volume declines in acrylic fibers, partially offset by higher average selling prices.
Price increases occurred principally in nylon intermediate chemicals. In addition, carpet fibers recorded modest improvements in average selling prices and volumes.
Acrylic fiber sales volumes were down considerably reflecting weakness in the U.S. textiles industry which prompted the previously announced downsizing of this business.
Integrated Nylon's segment profitability decreased $16 million over the prior year quarter. This was primarily due to higher raw material and energy costs of approximately $18 million and the extended down time at the acrylonitrile facility at the Alvin, TX plant, offset by cost containment activities completed in the current year.
For the first nine months of 2003, Integrated Nylon's net sales increased $64 million over the comparable prior year period because of higher average selling prices, partially offset by sales volume declines principally in acrylic fiber.
Segment profitability declined by $64 million primarily because of approximately $125 million of higher raw material and energy costs and severance charges associated with cost reduction initiatives, partially offset by increased sales.
While some broad indicators have shown recent evidence of a domestic economic recovery, the firm has not experienced the recovery and remains guarded as to its timing and pace.
Given the recent rise in energy costs, sluggish demand and weak consumer confidence, Solutia does not expect a meaningful improvement in operating results for the fourth quarter 2003 or first quarter 2004. Accordingly, and consistent with the terms of its new credit facility, no dividends will be paid in the calendar year 2003.
