Eastman revenues hit record
By Mike Elswick email@example.com
April 26, 2012 at 10 p.m.
Eastman Chemical Co. on Thursday posted record first quarter revenues with company officials expressing optimism for the remainder of 2012.
The Kingsport, Tenn.-based company, with operations in Longview, reported revenues of $1.821 billion, up about 4 percent from the $1.758 billion in revenues reported in the first quarter. The revenue figure also edged the previous top first quarter revenue figure of $1.803 billion in 2006.
Revenue has increased for four quarters in a row.
"We delivered solid first quarter results despite persistent global economic uncertainty, and we remain well positioned for full year earnings growth," chairman and CEO Jim Rogers said in a statement. "In addition, we are on track to complete the Solutia acquisition by mid-2012, which we expect will significantly enhance our earnings growth in the future."
The company reported net earnings of $158 million for the January through March period. That was down from $210 million in the first quarter of 2011. Officials said earnings were affected by acquisition costs associated with the purchase of Solultia and by costs associated with post-retirement benefits.
Rogers said he expects full year 2012 earnings per share to be about 10 percent higher than for 2011.
"Although there is continued uncertainty, we anticipate slow global economic growth but with particular strength in the U.S.," he said. "In addition, we anticipate reduced volatility in raw material and energy costs, and we expect that producing versus buying olefins will be a tailwind for 2012."
Eastman earlier this month announced it completed capacity expansions at its Longview plant, where about 1,500 people are employed.
"We also expect continued benefit from incremental capacity additions as well as recent acquisitions, including the expected mid-year close of the Solutia acquisition," Rogers said.
At the Longview plant, the company completed its capacity expansion of its 2-ethyl hexanol (or 2-EH) facility. With this expansion and other recently completed enhancements, its 2-EH capacity has been increased by about 37,000 metric tons, according to Heidi Barners, Eastman's performance chemicals and intermediates segment oxo and plasticizers business director.
"We are happy to announce the completion of this important expansion," Barnes said in a statement. "The added capacity reinforces our commitment to reliably supply our 2-EH customers while also supporting growth in our plasticizer business for products like Eastman 168 non-phthalate plasticizer."
Those products are used as additives for fuels and lube oils. End markets for the company's 2-EH product include building and construction, transportation, medical, consumables and durable goods manufacture, Barnes said.
First quarter of 2012 compared to the first quarter of 2011:
Coatings, adhesives, specialty polymers and inks: Sales revenue increased slightly in first quarter 2012 compared with first quarter 2011. First quarter 2012 operating earnings were $98 million compared with $104 million in first quarter 2011, with the decline primarily because of an unfavorable shift in product mix resulting from lower sales volume in the polymers product line.
Fibers: Sales revenue increased by 11 percent primarily because of higher selling prices and a favorable shift in product mix. The higher selling prices were in response to higher raw material and energy costs, particularly for wood pulp.
The favorable shift in product mix mostly was because of higher acetate tow volume in Asia Pacific attributed to customer buying patterns. Operating earnings in first quarter 2012 increased to $101 million compared with $86 million in first quarter 2011 because of higher selling prices and the favorable shift in product mix partially offset by higher raw material and energy costs.
Performance chemicals and intermediates: Sales revenue increased by 6 percent primarily because of higher sales volume in the U.S., mainly in acetyl product lines.
Operating earnings in first quarter 2012 were $77 million compared to $94 million in first quarter 2011, with the decline primarily in Asia Pacific because of lower selling prices attributed to weakened market demand primarily for olefin derivatives and higher raw material and energy costs.
In addition, operating earnings increased in the U.S. primarily because of the benefit of producing versus purchasing olefins, while lower operating earnings in Europe were attributed to weakened market demand and higher raw material and energy costs.
Specialty plastics: Sales revenue decreased by 5 percent in first quarter 2012 compared to first quarter 2011 primarily because of lower sales volume partially offset by higher selling prices. The decrease in sales volume, mainly in Asia Pacific, was attributed to weakened demand primarily in the LCD and consumer and durable goods markets.
Selling prices increased in response to higher raw material and energy costs, particularly for paraxylene.