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Eastman Reports Fourth-Quarter Results

Published on 2011-02-02. Author : SpecialChem

KINGSPORT, Tenn. -- Eastman Chemical Company announced earnings from continuing operations of $0.23 per diluted share for fourth quarter 2010. These results were negatively impacted by $0.11 per share due to non-deductibility of early distributions under the executive deferred compensation plan. Fourth-quarter 2009 loss from continuing operations was $0.21 per diluted share ($1.35 earnings per diluted share from continuing operations excluding the items described in the "Asset Impairments and Restructuring Charges and Debt Extinguishment Costs" section in this release).

"The strength of our portfolio of businesses was clearly demonstrated throughout 2010," said Jim Rogers, chairman and CEO. "We've established a new level of earnings performance for the company, and we are continuing our efforts to build upon these earnings. In addition, our solid balance sheet and expectation for continued strong cash generation position us for further earnings growth."

Sales revenue for fourth quarter 2010 was $1.5 billion, a 23 percent increase compared to fourth quarter 2009 due to higher sales volume and increased selling prices. The higher sales volume was attributed primarily to strengthened end-use demand in packaging, durable goods, and other markets and the positive impact of growth initiatives. The increase in selling prices was in response to higher raw material and energy costs.

Operating earnings in fourth quarter 2010 were $161 million compared to an operating loss of $4 million in fourth quarter 2009. Excluding asset impairments and restructuring charges, net, in both periods, operating earnings in fourth quarter 2010 were $187 million compared with operating earnings of $173 million in fourth quarter 2009. Operating earnings increased primarily due to higher sales volume and increased capacity utilization which led to lower unit costs and higher selling prices which were mostly offset by higher raw material and energy costs.

Segment Results 4Q 2010 versus 4Q 2009

Coatings, Adhesives, Specialty Polymers and Inks - Sales revenue increased by 16 percent due to higher selling prices and higher sales volume. The higher selling prices were in response to higher raw material and energy costs. The increase in sales volume was attributed primarily to strengthened end-use demand in the packaging and transportation markets in Europe and the U.S. and the positive impact of growth initiatives. Excluding asset impairments and restructuring charges, net, in both periods, operating earnings in fourth quarter 2010 were $53 million while fourth-quarter 2009 operating earnings were $76 million. The decline in operating earnings was primarily due to higher raw material and energy costs and higher costs of growth and business development initiatives, partially offset by higher selling prices and higher sales volume.

Fibers - Sales revenue increased by 18 percent due to a favorable shift in product mix and higher sales volume. The favorable shift in product mix and higher sales volume was due to increased acetate tow sales volume attributed to customer buying patterns. Fourth-quarter 2010 operating earnings, excluding asset impairments and restructuring costs, were $78 million compared to $73 million in fourth quarter 2009. The increase was primarily due to higher sales volume and the favorable shift in product mix.

Performance Chemicals and Intermediates - Sales revenue increased by 31 percent primarily due to higher selling prices and higher sales volume. The increased selling prices were in response to higher raw material and energy costs and also attributed to strengthened demand in North America and Asia Pacific, particularly for olefin-derivative product lines. The higher sales volume was primarily due to growth in plasticizer product lines, which include the acquired Genovique Specialties plasticizer product lines. Operating earnings in fourth quarter 2010, excluding asset impairments and restructuring charges, were $51 million compared with operating earnings of $25 million in fourth quarter 2009. Operating earnings increased year over year primarily due to higher selling prices more than offsetting higher raw material and energy costs and increased sales volume.

Specialty Plastics - Sales revenue increased by 26 percent due to higher sales volume and higher selling prices. The increase in sales volume was attributed to strengthened end-use demand for specialty packaging and consumer and durable goods, and the positive impact of growth initiatives for core copolyesters and Eastman Tritan™ copolyester product lines. Selling prices increased in response to higher raw material and energy costs, particularly for paraxylene. Operating earnings in fourth quarter 2010, excluding asset impairments and restructuring charges, were $24 million compared to $9 million in fourth quarter 2009. Operating earnings increased due to the higher sales volume, increased capacity utilization which led to lower unit costs, and higher selling prices. These were partially offset by higher raw material and energy costs.

Corporate FY 2010 versus FY 2009

For full-year 2010, Eastman announced earnings from continuing operations of $5.75 per diluted share ($6.96 earnings per diluted share from continuing operations excluding the items described in the "Asset Impairments and Restructuring Charges and Debt Extinguishment Costs" section in this release). These results were negatively impacted by $0.11 per share due to non-deductibility of early distributions under the executive deferred compensation plan as described in the "Income Taxes" paragraph in this release. Full-year 2009 earnings from operations were $2.09 per diluted share ($3.83 earnings per diluted share from continuing operations excluding the items described in the "Asset Impairments and Restructuring Charges and Debt Extinguishment Costs" section in this release). For reconciliations to reported company and segment earnings, see Tables 3 and 4 in the accompanying financial tables. For description of discontinued operations, see the "Discontinued Operations" paragraph in this release.

Eastman's full-year 2010 sales revenue was $5.8 billion, an increase of 33 percent year-over-year. The increase was primarily due to higher sales volume and increased selling prices. The higher sales volume was attributed primarily to strengthened end-use demand in packaging, durable goods, and other markets and the positive impact of growth initiatives. Selling prices increased in response to higher raw material and energy costs.

Operating earnings for full-year 2010 were $862 million compared to operating earnings of $345 million for full-year 2009. Excluding asset impairments and restructuring charges, net, in both periods, full-year 2010 operating earnings were $891 million and full-year 2009 operating earnings were $541 million. Operating earnings increased primarily due to higher sales volume and increased capacity utilization which led to lower unit costs and higher selling prices which more than offset higher raw material and energy costs.

Segment Results FY 2010 versus FY 2009

Coatings, Adhesives, Specialty Polymers and Inks - Sales revenue increased by 29 percent primarily due to higher sales volume and higher selling prices. The increase in sales volume was attributed primarily to strengthened end-use demand in the packaging and transportation markets in Europe and the U.S. and the positive impact of growth initiatives. The higher selling prices were in response to higher raw material and energy costs, particularly for propane. Excluding asset impairments and restructuring charges, net, in both periods, 2010 operating earnings were $299 million and 2009 operating earnings were $224 million. Operating earnings increased primarily due to higher sales volume, increased capacity utilization which led to lower unit costs, and higher selling prices, which more than offset higher raw material and energy costs.

Fibers - Sales revenue increased by 11 percent due to higher sales volume and a favorable shift in product mix. The higher sales volume and favorable shift in product mix were due to higher sales volume of acetate tow and of acetate yarn, both attributed to strengthened demand due to the global economic recovery. Excluding asset impairments and restructuring charges, net, in both periods, 2010 operating earnings were $326 million, compared with 2009 operating earnings of $296 million. The increase was due to higher sales volume, improved acetyl stream capacity utilization, and the favorable shift in product mix.

Performance Chemicals and Intermediates - Sales revenue increased by 49 percent due to higher sales volume and higher selling prices. The higher sales volume was primarily due to growth in plasticizer product lines, which include the acquired Genovique Specialties plasticizer product lines, and also attributed to strengthened end-market demand due to the global economic recovery. The higher selling prices were in response to higher raw material and energy costs. Operating earnings, excluding asset impairments and restructuring charges, net, in both periods, were $231 million in 2010 compared to $47 million in 2009. Operating earnings increased primarily due to higher selling prices more than offsetting higher raw material and energy costs, higher sales volume, and increased capacity utilization which led to lower unit costs.

Specialty Plastics - Sales revenue increased by 39 percent primarily due to higher sales volume. The higher sales volume was attributed to strengthened end-use demand across all markets due to the global economic recovery and the positive impact of growth initiatives for core copolyesters and the Tritan™ copolyester product lines. Excluding asset impairments and restructuring charges, net, in both periods, operating earnings were $93 million in 2010 compared to $13 million in 2009. The increase in operating earnings was primarily due to higher sales volume and increased capacity utilization which led to lower unit costs.

Outlook

Commenting on the outlook for first quarter and full year 2011, Rogers said: "We begin 2011 with a strengthening global economy and expected benefits from the combination of the restart of an olefin cracking unit, lower interest expense, a full year of results from our Genovique Specialties acquisition, our acetate tow expansion in Korea, and strong market adoption of our Tritan™ copolyester products. We also face headwinds from expected volatility in raw material and energy costs, higher pension expense, and costs related to growth projects. As a result, we expect first-quarter 2011 earnings from continuing operations to be between $1.75 and $1.85 per share. In addition, we expect earnings per share from continuing operations in 2011 to be slightly more than 10 percent above 2010 earnings from continuing operations." Gains from the sales of assets are excluded from earnings per share projections.

About Eastman

Eastman's chemicals, fibers and plastics are used as key ingredients in products that people use every day. Approximately 10,000 Eastman employees around the world blend technical expertise and innovation to deliver practical solutions. The company is committed to finding sustainable business opportunities within the diverse markets and geographies it serves. A global company headquartered in Kingsport, Tennessee, USA, Eastman had 2010 sales of $5.8 billion.

Forward-Looking Statements

This news release includes forward-looking statements concerning current expectations for future economic and business conditions, the financial impact of past strategic acquisitions, portfolio and restructuring and cost reduction actions, demand and sales volumes for the company's products, raw material and energy costs, pension expense, costs of growth projects, and earnings per share for first quarter and full year 2011. Such expectations are based upon certain preliminary information, internal estimates, and management assumptions, expectations, and plans, and are subject to a number of risks and uncertainties inherent in projecting future conditions, events, and results. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions or expectations prove to be inaccurate or are unrealized.

Source: Eastman


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