Solutia aims to lift stock with dividend, strong forecast

Solutia aims to lift stock with dividend, strong forecast

Stock Market Predictions

(Global Markets) - Solutia Inc (SOA.N) declared its first dividend since emerging from bankruptcy in 2008 and laid out an aggressive earnings forecast for 2012, as executives try to revive the specialty chemical maker's sagging stock price.

The company - which makes a key chemical used to make tires, as well as parts for Apple's (AAPL.O) iPad - has seen its stock drop 34 percent so far this year, despite a string of strong earnings announcements and aggressive debt reduction.

"There's a fundamental disconnect between the financial performance of our company ... and the value that the public financial marketplace is putting on that success," Solutia Chief Executive Jeffry Quinn told Global Markets. "When you see that disconnect, it gets frustrating."

The company said on Thursday it will pay a quarterly dividend of 3.75 cents in March to shareholders of record as on February 15.

The dividend, Quinn said, was designed to show Wall Street "the confidence and strength we see in our businesses."

Quinn told Global Markets earlier this year he was considering such a dividend.

Solutia forecast 2012 adjusted earnings of $2.00 to $2.30 a share, above the $2.00 it expects for 2011. Analysts expect $2.24 a share in earnings for 2012, according to Thomson Global Markets I/B/E/S.

St. Louis-based Solutia expects 2012 revenue of $2.12 billion to $2.27 billion, while analysts, on average, expect $2.23 billion.

EUROPE

St. Louis-based Solutia is taking a "very conservative view" of European GDP in its 2012 estimates, Quinn said.

While he does see bumpy times ahead for that continent, "We've done well even with a soft European economy."

Part of Solutia's strength is its vast product line. The company sells insoluble sulfur to tire manufacturers. That material binds rubber together and is essential for tire production.

Solutia also sells film layers for electronic devices and glass. It recently launched a film product that will significantly block infrared solar heat in automobile windows.

While the company is spending heavily to expand into China, it was "a little disappointed" by its July 2010 purchase of Vistasolar, a German maker of protective coatings solar equipment, for $294 million, Quinn said.

"The market moved to China so rapidly," Quinn said. "The first 6 months was great. But 2011 was a little bit of a disappointment for that business because of a loss of share.

"But I think long-term we'll be very please with that acquisition."

Solutia shares closed at $15.28 on Thursday, up 2.6 percent for the day.

(Reporting by Ernest Scheyder in New York and Vaishnavi Bala in Bangalore; Editing by Sreejiraj Eluvangal, Gary Hill)