Solutia expects to post 12% YOY decline in net sales

28-Jan-09

Solutia Inc. is expecting to post 2008 adjusted EBITDA from continuing operations within the previously announced full year estimate range of US$385 mln to US$395 mln. For the Q4 - 2008, Solutia expects to report net sales from continuing operations of approximately US$430 mln, a decline of approximately 12% over the prior year period, due largely to decreased volumes. This softness in demand was present across all geographic regions including Asia, which had been a source of steady growth prior to the fourth quarter. Approximately 70% of Solutia's sales from continuing operations come from markets outside the United States. Solutia will issue financial results for the fourth quarter of 2008 on Tuesday, February 17, 2009, after the market closes. Due to the rapid deterioration in the macro-economic environment during the fourth quarter, discontinued operations expects to report a loss of approximately US$590 mln to US$600 mln for Q4 - 2008, inclusive of non-cash charges of approximately US$490 mln to US$500 mln. These non-cash charges are primarily related to an impairment charge to adjust the book value of Nylon to the estimated fair value as of the end of the year, as well as fixed asset write-offs and severance charges for the previously announced downsizing within the Nylon division. At the end of the fourth quarter, Solutia had liquidity of approximately US$225 mln. Due to aggressive reductions in working capital initiated in the fourth quarter, the borrowing base under the Company's US$450 mln asset based revolving loan has fallen below the facility size. Pro-forma for the reduction in borrowing base, liquidity at year-end was approximately US$150 mln.