Solutia Swings To Profit in First Quarter

St. Louis, MO, May 7, 2008-- Solutia Inc. reported net sales of $985 million for the first quarter, a 40 percent increase over net sales of $702 million for the same period in 2007.

Net income was $1.42 million for the first quarter compared to a loss of $8 million a year ago.

Operating income for the first quarter declined to $30 million from $37 million in the year-ago period. Gross profit for the quarter increased to $114 million from $103 million in the comparable period last year. The company said net sales for the first quarter ended March 31 rose to $985 million from $705 million in the prior year period.

About 29 percent of the sales increase was due to the consolidation of Flexsys sales beginning on May 1, 2007, following Solutia's acquisition of the remaining 50 percent share of its former joint venture. ExcludingFlexsys, sales increased 14 percent over the prior year.

Integrated Nylon net sales for the first quarter 2008 of $468 million increased $42 million or 10 percent compared to 2007.

After special charges, income was down $11 million from $15 million in the first quarter of 2007 to $4 million in the first quarter of 2008. The drop-off, the company said, was the result of a higher percentage of the company's pre-tax earnings from foreign jurisdictions subject to income tax, higher interest costs and increased depreciation and amortization expense.

"Despite softness in U.S. automotive and housing markets, our first quarter results reflect strong volume gains across most businesses which demonstrates the improved geographic and end use diversity of the company's portfolio," said CEO Jeffry Quinn.

"While selling prices trailed raw material cost increases in the quarter, in particular in the integrated nylon segment, this was not unexpected given the increasing cost profile across the quarter. We are off to a solid start in 2008, and are focused on getting selling prices up over the coming quarters."