Hexcel, Cytec financial reports point to ongoing recovery

Increased orders for composites-intensive commercial aircraft indicate that the aerospace market is rebounding.

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Carbon fiber and prepreg suppliers Cytec Industries Inc. (Woodland Park, N.J., USA) and Hexcel Corp. (Stamford, Conn., USA) each issued second-quarter financial statements that indicate a recovery led in part by strong growth in the commercial aerospace market segment.

Hexcel CEO David Berges commented: "We are pleased with the recent sales trends, which are in line with our June 2 revised outlook. Commercial aerospace sales were up 18 percent in constant currency over the prior year but still well below the peak second quarter of 2008, with particular strength from new aircraft programs. Space & Defense sales continue steady and strong, as they were up nearly 8 percent in constant currency as rotorcraft sales offset the F-22 decline. Wind energy sales recovered after a significant customer-led inventory correction during the first quarter; up over $20 million compared to the first quarter and just higher than the run rate of the last three quarters of 2009.

"As we summarized in our June outlook release, we expect continued double-digit sales growth through the rest of this year. Each of our key new large commercial aircraft programs grew both sequentially and year-over-year this quarter. This secular penetration of composites, layered on top of recent announcements of increased aircraft build rates and our success in the growing rotorcraft business give us confidence that this pace of growth could continue for the foreseeable future."

Cytec Industries Inc. announced net earnings for the second quarter 2010 of $61.8 million or $1.24 per diluted share on net sales of $874 million. Shane Fleming, chairman, president and CEO, commented, “I’m extremely pleased to announce that our results for the second quarter mark a record earnings performance for Cytec. This outstanding result was partially driven by year-over-year sales growth across all of our business segments due to a much improved economic environment. The company’s best prior performance was the second quarter 2008, and we have exceeded that level with 13 percent lower sales. We were able to deliver stronger earnings at lower sales levels due to the benefits of our 2009 cost reduction actions, improved product mix from the sales of new products and pruning of low margin products as well as our ability to recover the raw material escalations during the quarter.

"Engineered Materials sales were up sharply versus the prior year quarter as program ramp-ups are starting to occur in the large commercial transport sector, reinforcing our belief that we are moving past the trough of the aerospace cycle. On a consolidated level, sales increased across all regions versus the prior year period, especially in North America where we experienced greater than a 40 percent increase in sales. Finally, we continue to maintain and improve upon our working capital gains from 2009 which is reflected in our strong cash generation.”