Cytec Examines “Options” For Coatings Resins
Oct25

Cytec Examines “Options” For Coatings Resins

Cytec Industries CEO Shane Fleming dropped an “O” bomb on Cytec's coatings resins business during a conference call last week. “We are committed to maximizing value creation in this segment and will take the decisions necessary to do so,” he said. “We are currently reviewing all options for this business and we will provide a further update on our plans no later than our earnings guidance on our fourth quarter conference call.” “Reviewing options” always indicates that a company is entertaining the idea of selling a business. However, it doesn’t always mean that the company will end up selling the business. They often keep parts of the business and sell off and/or close other bits of it. The coatings resins business generated operating earnings of $68.2 million on $1.4 billion in sales last year. It makes resins for powder, radiation curable, and liquid coatings. It is Cytec’s largest segment by a mile, representing 52% of its 2010 revenues. Its profit margins, at just under 5%, are also the company’s thinnest, with Cytec earning a total operating profit margin of about 10%. During the conference call, Fleming said he expects the company to make $57 million to $60 million in operating income on about $1.6 billion in sales. Fleming did keep the door open to making the business work within Cytec, primarily through favoring specialty resins over more commoditized products. “We’ve got a portion of our coatings resins product line right now that’s just now meeting our return on capital,” he said. “That is out first goal. It’s to get the business to a point where it’s doing that.” For example, in the conference call, Cytec also disclosed it is closing a powder coatings resins plant in Suzano, Brazil, and took a $9 million charge in the third quarter for this shutdown. But Fleming said that separating the good parts from the bad parts might not be so easy. “You can identify the product areas where you’re covering the cost of capital and generating reasonable earnings,” he said. “But the pragmatic question is, can you pull those apart and operate them separately given the level of entanglement with the asset base?” Sounds like Cytec might punt that problem to the next owner. Cytec’s coatings resins business is a bit of a hot potato. It was originally part of Hoechst under the name Vianova Resins. Hoechst sold the business to Morgan Grenfell Development Capital in 1998 for $545 million. Solutia bought the business a year later for about $617 million. In early 2003, Solutia sold the business to Belgium’s UCB for $500 million. It had earned $22 million for Solutia on...

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Profile: Alfredo M. Ayala Jr., Disney Imagineer
Mar30

Profile: Alfredo M. Ayala Jr., Disney Imagineer

Posted on behalf of Carmen Drahl Alfredo M. Ayala Jr. majored in chemistry in college, but these days he dabbles in a very special kind of alchemy. He's been with Walt Disney Imagineering Research and Development for over 15 years, where his job is to create new illusions and experiences for Disney park guests. And as he explained Sunday at the ACS national meeting in Anaheim, it was organic chemistry that got his foot in the door. Ayala said he fell in love with science as a boy when he saw "Antimatter", an animated look at the atomic world by Carlos Gutierrez, a UCLA film major turned chemistry major and organic chemistry professor. As it so happened, Gutierrez became Ayala's mentor when the young Ayala came to Cal State L.A., through Gutierrez's program for engaging junior high and high school students interested in biomedical sciences. At Cal State L.A., Ayala followed his interests in chemistry and in computers, taking engineering coursework in addition to chemistry. He was an undergraduate researcher in Gutierrez's organic chemistry lab when he applied for an internship with the Disney company. Disney asked its prospective interns to write a paragraph about why they wanted the gig. But instead of just gushing about how cool it would be to work with the company, Ayala took a different tack. He knew Imagineers were looking to reformulate the skin material for the Pirates of the Caribbean attraction, which at the time contained chromium, a non-chlorine scavenger, as a heat stabilizer. By not having a chlorine scavenger, hydrochloric acid was being produced in reactions with water, which in turn corroded parts that would need to be replaced periodically. Ayala sent Disney three proposals for alternative skin formulas, based on some chemistry he had done forming precursors to analogs of 18-crown-6 ethers in the Gutierrez group. In this 1995 Tet. Lett. paper the group begins with some tin-containing acetals and forms two different crown ether precursors depending on whether they add 1,2-dibromoethane or 2-chloroethanol. “Note we were scavenging chlorine and bromine- this is how I got the idea,” Ayala says. His ingenuity on the application paid off in the form of an interview. "That was what got me in," he says. He's been with Disney ever since. "You'd be surprised how much chemistry goes on at Disney," Ayala says. Building one Disney attraction takes experts in 140 disciplines, from mechanical engineering to art. And chemistry challenges are everywhere at the parks, Ayala says. Research in materials science for skin and other applications is an active area. "The skin formulation I worked on as an intern is obsolete," he says. An...

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