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Eastman Reports Earnings of USD 1.71 per Diluted Share for Third Quarter 2015

Published on 2015-11-03. Author : SpecialChem

KINGSPORT, Tenn. -- Eastman Chemical Company announced earnings, excluding non-core items, of $1.84 per diluted share for third quarter 2015 versus $1.89 per diluted share for third quarter 2014. Reported earnings were $1.71 per diluted share for third quarter 2015 versus $1.39 per diluted share for third quarter 2014.

Eastman Chemical Company
Fig. 1: Eastman Chemical Company

“Our solid third-quarter earnings once again demonstrate the quality and value of our portfolio transformation to specialty market and product positions,” said Mark Costa, chairman and CEO. “The combination of volume growth in specialty businesses, mix upgrade from growth of high value, innovative products, accretion from high quality, specialty acquisitions, and disciplined cost management offset declining olefin prices and a strong U.S. dollar. We remain confident that we will deliver our sixth consecutive year of earnings growth in 2015.” See “Outlook” for the items excluded from annual earnings comparisons.

Corporate Results 3Q 2015 versus 3Q 2014

Sales revenue for third quarter 2015 was $2.4 billion, a 1 percent increase compared with third quarter 2014, primarily due to sales revenue from the Taminco Corporation and Commonwealth Laminating & Coating, Inc. businesses acquired in 2014. These revenues were mostly offset by lower selling prices, particularly in the Specialty Fluids & Intermediates and Additives & Functional Products segments, and an unfavorable shift in foreign currency exchange rates. Excluding the non-core items described in Tables 3A and 4, third-quarter 2015 operating earnings were $459 million compared with $427 million for third quarter 2014. The increase was primarily due to overall lower raw material and energy costs exceeding lower selling prices, earnings from the acquired businesses, and increased volume and improved product mix in Advanced Materials, partially offset by propane hedges and an unfavorable shift in foreign currency exchange rates. Reported third-quarter 2015 operating earnings were $432 million compared with $338 million for third quarter 2014.

Segment Results 3Q 2015 versus 3Q 2014

Additives & Functional Products – Sales revenue increased primarily due to sales of products of the acquired Taminco specialty amines and crop protection businesses. These revenues were partially offset by lower coatings and other formulated products selling prices, primarily due to lower raw material and energy costs, and an unfavorable shift in foreign currency exchange rates. Excluding non-core items in third quarter 2014, operating earnings increased to $126 million for third quarter 2015 compared with $102 million for third quarter 2014 primarily due to lower raw material and energy costs and earnings from the acquired businesses, partially offset by lower selling prices and propane hedges.

Adhesives & Plasticizers – Sales revenue decreased primarily due to lower plasticizers selling prices and an unfavorable shift in foreign currency exchange rates. Lower plasticizers selling prices were primarily in response to lower raw material and energy costs. Operating earnings increased to $74 million for third quarter 2015 compared with $52 million for third quarter 2014 primarily due to lower raw material and energy costs for both adhesives resins and plasticizers, partially offset by lower selling prices, an unfavorable shift in foreign currency exchange rates and propane hedges.

Advanced Materials – Sales revenue increased primarily due to sales of products of the acquired Commonwealth performance films business and increased sales volume and improved product mix, partially offset by an unfavorable shift in foreign currency exchange rates and lower selling prices, primarily for copolyesters, due to lower raw material and energy costs. Excluding non-core items in both periods, operating earnings increased to $116 million for third quarter 2015 compared with $80 million for third quarter 2014 primarily due to lower raw material and energy costs, higher sales volume and improved product mix, and earnings from the acquired business, partially offset by lower selling prices and an unfavorable shift in foreign currency exchange rates.

Fibers – Sales revenue decreased primarily due to lower acetyl chemical sales volume while acetate tow and acetate yarn sales volume increased sequentially to slightly below the previous year. Lower acetyl chemicals sales volume was due to decreased sales to the cellulose acetate flake joint venture in Kingsport. Operating earnings decreased to $102 million for third quarter 2015 compared with $112 million for third quarter 2014 primarily due to lower sales volume.

Specialty Fluids & Intermediates – Sales revenue decreased primarily due to lower olefin-based intermediates selling prices and lower chemical and other intermediates sales volume more than offsetting sales of products of the acquired Taminco functional amines business. The lower selling prices were primarily in response to lower raw material and energy costs. Excluding non-core items in third quarter 2014, operating earnings decreased to $48 million for third quarter 2015 compared to $96 million for third quarter 2014, primarily due to propane hedges and lower chemical and other intermediates sales volume more than offsetting earnings from the acquired business.

Cash Flow

Eastman generated $368 million in cash from operating activities during third quarter 2015 primarily due to strong net earnings. The company contributed $90 million to its U.S. defined pension plans during the quarter. Priorities for uses of available cash include payment of the quarterly dividend, repayment of debt, and funding targeted growth initiatives.

Outlook

Commenting on the outlook for full year 2015, Costa said: “Our strong earnings through the first nine months of 2015 reflect solid performance in our specialty businesses, including strong volume growth and product mix improvement, as well as the benefit of the accretive acquisitions we completed in 2014 and disciplined cost management. We also continue to face challenges from slow global economic growth, lower olefin prices, and the strong U.S. dollar. Despite these challenges, we remain confident we will deliver a sixth consecutive year of earnings growth and continued strong cash flow.” Non-core and any non-recurring items are excluded from the earnings per share projection.

The earnings for 2014, 2013, 2012, 2011, 2010, and 2009 referenced in the second paragraph of this release are non-GAAP and exclude the non-core items detailed, with reconciliation to GAAP earnings, in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the company’s Annual Reports on Form 10-K for 2014, 2013, 2012, and 2011.

About Eastman

Eastman is a global specialty chemical company that produces a broad range of products found in items people use every day. With a portfolio of specialty businesses, Eastman works with customers to deliver innovative products and solutions while maintaining a commitment to safety and sustainability. Its market-driven approaches take advantage of world-class technology platforms and leading positions in attractive end-markets such as transportation, building and construction and consumables. Eastman focuses on creating consistent, superior value for all stakeholders. As a globally diverse company, Eastman serves customers in approximately 100 countries and had 2014 revenues of approximately $9.5 billion. The company is headquartered in Kingsport, Tennessee, USA and employs approximately 15,000 people around the world.

Source: Eastman
 

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