KINGSPORT — Eastman Chemical Co. on Thursday posted increases in sales and earnings for the second quarter of the year despite economic uncertainty and sharp rises in raw material and energy costs.
The Kingsport-based company reported net earnings of $115 million or $1.48 per diluted share in the second quarter this year vs. net income of $105 million or $1.22 per share in the same period of 2007.
“Given the sharp increase in raw material and energy costs during the quarter and the continuing global economic uncertainty, our year-over-year increase in earnings per share is further evidence of the strength and diversity of our portfolio of businesses,” said Eastman Chairman and Chief Executive Officer Brian Ferguson.
Sales revenue in the quarter totaled $1.8 billion, up 4 percent from the same period last year. Excluding sales from divested businesses in both the 2007 and 2008 periods, second quarter 2008 sales revenue rose 8 percent, as higher selling prices more than offset a 4 percent decline in sales volume.
Operating earnings in the second quarter were $172 million vs. $160 million in the 2007 quarter. Excluding accelerated depreciation costs and asset impairments and restructuring charges in both periods, operating earnings were $178 million in the 2008 second quarter vs. $176 million in the same period a year ago.
Eastman reported that its raw material and energy costs increased by about $200 million in the second quarter this year vs. the same time last year.
Eastman reports its financial performance by business segments. In the coatings, adhesives, specialty polymers and inks segment, sales revenue rose 10 percent while operating earnings were $51 million in the quarter vs. $66 million in the 2007 period.
In the fibers segment, sales revenue increased 9 percent while operating earnings totaled $62 million in the 2008 quarter vs. $51 million in the same period of 2007.
In the performance chemicals and intermediates segment, sales revenue rose by 12 percent and operating earnings were $58 million in the quarter, compared with $64 million in the 2007 period.
In the specialty plastics segment, sales revenue rose 17 percent and operating earnings were $13 million, down from $20 million in the second quarter of 2007.
And in the performance polymers segment, sales revenue fell 24 percent primarily due to the divestiture of the PET polymers plants in Mexico and Argentina in the fourth quarter 2007. Excluding accelerated depreciation costs and asset impairments and restructuring charges for both periods, operating results for the company’s domestic PET sites improved to $6 million in earnings in the second quarter vs. a loss of $10 million in the same period of 2007. The company credited its new IntegRex PET operations in South Carolina for the improvement in operating results.
Eastman generated $132 million in cash from operating activities during the second quarter.
As for the third quarter this year, Ferguson said current business conditions “include a softening U.S. economy and global economic uncertainty.”
He said the company expects a continued significant rise in raw material and energy costs in the third quarter. But because of its global geographic profile and diverse product portfolio, the company expects that third quarter earnings per share will be similar to earnings in the third quarter last year, excluding gains and charges in both periods.
Eastman manufactures and markets chemicals, fibers and plastics and posted sales of $6.8 billion in 2007. The company employs 10,500 people worldwide, including about 7,000 in Kingsport.