Cytec Industries makes products that help companies do everything from lift off to drill down. The global company produces chemicals from which it makes engineered materials (composites and adhesives for the aerospace industry), specialty chemicals (resins and coatings for metal, plastic, and wood), and additives used in industrial processes. Its Cytec Engineered Materials unit includes aerospace resins systems, carbon fiber products, and industrial and pressure-sensitive adhesives. Cytec Specialty Chemicals makes chemicals for industries such as mining, automotive, architectural and construction, wood and paper, and opto-electronics.
The company produces liquid and powder coating resins, mining chemicals, phosphines, and polymer additives. It has manufacturing and research facilities in 14 countries and holds a 50% stake in Korean company SK Cytec.
Cytec Industries has divided its operations into four reportable business segments: Engineered Materials, In-Process Separation, Additive Technologies, and Coating Resins. The company's In-Process Separation unit develops technologies and formulations for separating desired materials from orebodies. The last three segments make up Cytec Specialty Chemicals. Its Engineered Materials unit makes advanced composites that use strong and lightweight materials (called prepregs and resin infusion systems) manufactured from high-performance fibers (such as carbon fiber) with epoxy and certain resins.
Cytec focuses on maintaining a broad range of products and tries to concentrate most of its resources on products for which it has a competitive edge. It has grown through strategic acquisitions and investments in its three core platforms: engineered materials, in-process separation, and coatings. It continues to invest in research and development for its composites technology, and it has ramped up its production capacity in China and Germany. The company also has a large commercial jet backlog, which will help it offset soft demand in other markets.
The company maintains a number of long-term contracts to supply advanced composites to aerospace customers. It is a major supplier to the F-35 Joint Strike Fighter and F-18 fighter jet programs, and Lockheed Martin is one of its key customers. In 2011 the company secured a contract extension with Lockheed Martin until 2016 that it expects to generate about $1.1 billion in sales. The company also supplies to the large commercial transport market, including aerospace programs such as the Boeing 787 and 747-8 and the Airbus 380.
In addition, Cytec has been a leading supplier to the business and regional jet market, including emerging markets in China and Russia. In 2012 it signed a long-term contract to supply structural composite and adhesive materials to a subsidiary of the Commercial Aircraft Corporation of China (COMAC) for its C919 airliner.
Despite increased raw material costs in 2011, Cytec reported $3.1 billion in net sales -- a 12% hike from $2.7 billion the previous year. Price increases of 8%, favorable exchange rates of 2%, and volume increases of 2% resulted in improved sales in all segments in 2011. Coating Resins benefited that year from an 11% hike in prices over 2010. And Engineered Materials benefited that year from an increase in build rates in the commercial aerospace market, which helped drive up the segment's sales volumes. The company's net income of $207.8 million in 2011 increased nearly 21% over that of 2010 ($172.3 million).
In 2012 the company began reviewing all options for its Coating Resins business, including its Pressure Sensitive Adhesives products. In 2011 Cytec sold its Building Block Chemicals (BBC) business to private investment firm H.I.G. Capital for about $180 million. BBC is the sole manufacturer of melamine in North America, a major producer of acrylonitrile in the US, and a supplier of sulfuric acid in the Gulf of Mexico region.
To expand the global footprint of its In-Process Separation business, Cytec acquired manufacturing plants from India-based Star Orechem International in 2012 for about $37 million. The acquisition will help Cytec meet growing demand for its metal extraction product line from its copper mining customers in Africa and the Asia/Pacific region. The plants will manufacture Cytec's ACORGA-brand solvent extractants.
In another big spending move, the company in 2012 bought London-based composites manufacturer Umeco for $439 million in cash. Composite metals, used in aerospace, automotive, and industrial applications, are expected to rise in demand when more manufacturers use them to reduce weight and lower emissions. Cytec Industries is confident of the industry's growth and is also looking to make other bolt-on acquisitions to boost its other businesses.