Eastman reports mixed results

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Eastman Chemical's $3.4bn (€2.5bn) purchase of Solutia in early 2012 increased the Tennessee-based firm's annual sales total, but also reduced its growth rate.

Combined, Eastman-Solutia sales fell almost 2% to about $9.1bn (€6.7bn) in 2012, including a gain of almost 13% in the legacy Eastman businesses. Eastman-only profit for 2012 fell more than 30% to $444m (€327.5m). No combined profit total was included in a 31 January news release.

Sales for 2012 in Eastman's adhesives and plasticizers unit - which was not affected by the Solutia deal - grew almost 4% to more than $1.4bn (€1bn). That unit's operating earnings also grew 5% to $263m (€194m). In the release, officials said that the unit's sales revenue increased because of higher sales volume from continued substitution of phthalate plasticisers with non-phthalate plasticisers.

Eastman's advanced materials unit - including Eastman's Tritan-brand copolyester and Solutia's polyvinyl butral (PVB) products – did not fare as well, with sales slipping almost 3% to less than $2.3bn (€1.7bn). Eastman-only sales, however, were strong, growing more than 40% to almost $1.7bn (€1.3bn). Operating earnings at the combined advanced materials unit also tumbled 16% to $210m (€154.9m).

In the release, officials said that the combined sales decrease was attributed primarily to weakened demand in PVB sheet end markets, particularly the transportation market in Europe. It also was affected by weakened demand in specialty copolyester end markets, particularly durable goods and consumables. The sales drop was partially offset by increased sales in performance films, they said.

Eastman Chairman and CEO Jim Rogers sounded optimistic in the release, in spite of early mixed results.

"Eastman delivered another year of consistently strong earnings, with fourth-quarter results providing an outstanding way to end 2012," he said. "This high level of performance was driven by our market-leading businesses and the significant strategic actions we have taken to improve our portfolio."

Rogers added that the firm is "well-positioned for continued growth in 2013 and beyond, supported by strong cash generation."

Eastman's per-share stock price has performed well on Wall Street in recent months, The price was under $55 (€40.57) in late October, but was near $73 (€53.83) in early trading 5 February - an increase of almost 33% in less than four months.


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