St. Louis, MO, July 30--Solutia Inc., maker of fibers and plastics, reported a second-quarter loss, citing severance and restructuring charges, high raw material costs, and industry overcapacity.
The company reported a net loss of $21 million, or 20 cents per share, compared with net income of $23 million, or 22 cents per share, a year earlier. Net sales rose four percent, to $611 million.
Solutia said results included about $7 million of after-tax charges, including $5 million for severance for about 280 workers, and $2 million for restructuring charges at its Flexsys and Astaris joint ventures.
Analysts polled by Thomson First Call on average forecast a loss ten cents per share.
The company said it has begun talks to refinance its $300 million revolving credit facility. It also said it sees a "modest decline" in feedstock and energy costs so far this quarter, though it is not clear if this will persist.
Integrated Nylon's net sales for the second quarter of 2003 increased $10 million compared to the second quarter of 2002 driven by improved sales prices, which more than offset volume declines. Price increases occurred principally in nylon intermediate chemicals.
In addition, carpet fibers recorded improvements in average selling prices following an April 1 price increase. Sales volumes were down considerably in the acrylic fiber business reflecting weakness in the U.S. textiles industry. Carpet volumes were down modestly in line with industry trends.
Integrated Nylon's segment profitability decreased $30 million over the prior year quarter. This was primarily due to higher raw material and energy costs of approximately $50 million and severance charges driven by cost reduction initiatives incurred in the quarter, partially offset by higher net sales.
For the first half of 2003, Integrated Nylon's net sales increased $67 million over the comparable prior year period because of higher average selling prices. Segment profitability declined by $48 million primarily because of higher raw material and energy costs of approximately $110 million and severance charges associated with cost reduction initiatives, partially offset by increased sales.
