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Ahead Of The Bell: Cytec Downgraded On 1Q Loss

The Associated Press

NEW YORK (AP) — Specialty chemical maker Cytec Industries Inc., which posted a first-quarter loss and cut its dividend late Thursday, faces a number of upcoming challenges said one analyst as he downgraded the company's rating.

Credit Suisse analyst John McNulty said he expects end-market demand weakness to cut away at Cytec's profits. He lowered his 2009 earnings estimate for Cytec to $1.21 per share from $2.24 per share. For 2010, he reduced his forecast to $2.30 per share from $3.53 per share.

McNulty said that over the next year the company will face other headwinds, including the pending aerospace downturn and Cytec's profit-challenged surface specialty division.

These challenges, along with Cytec's recent dismal news, prompted McNulty to downgrade the company's stock to "Neutral" from "Outperform."

Jefferies & Co. analyst Laurence Alexander warned that company is also up against volatile raw material prices and operating issues in its engineered materials division.

Cytec, on Thursday after the markets closed, posted a first-quarter loss of $100,000 and flat earnings per share for the quarter, compared with a net profit of $49.1 million, or $1.01 per share, for the same quarter of the prior year.

Cytec announced various restructuring efforts in January, including cutting 600 positions, which the company says will reduce costs in the second and third quarters. Cytec said Thursday that it will take other steps to maintain its liquidity in light of the recession, including a more than 12 percent reduction of its global work force when combined with cuts announced in January.

Additionally, the company lowered its quarterly dividend by 90 percent, from 11.25 cents per share to 1.25 cents per share.

Shares Cytec plunged $3.54, or 19.4 percent, to $14.70 in premarket trading.