“The highest percentage reduction of people was at the vice president (level), and the next highest was at the director level,” said Jim Rogers, who will succeed Brian Ferguson as Eastman CEO after the company’s May 7 shareholder meeting.
“We know this is a little different in how many companies choose to reduce their head count, but we felt it made sense for us.”
Rogers made the comments in a conference call with industry analysts Friday morning, a day after Eastman released its first quarter financial results.
Earlier this month, Eastman eliminated 300 jobs companywide, including 200 in Kingsport. Rogers said that by reducing high-level jobs, the company flattened its management structure, bringing it in line with the overall size of the company.
“This new structure we hope will empower employees to drive increased speed, focus and flexibility. It increases accountability for delivering results, and it supports Eastman’s long-term growth strategy reflecting who we are today as a company and where we are going in the future,” Rogers said.
On Thursday, Eastman posted earnings of $2 million or 3 cents per diluted share, down from $133 million or $1.46 per share a year ago. Sales revenue totaled $1.1 billion, down 35 percent vs. the first quarter of 2008.
Rogers said the decline reflects customer de-stocking as well as weakened market demand.
“That’s really the story for the first quarter, and don’t you bet it will probably be the story throughout the year,” he said.
Eastman Chief Financial Officer Curt Espeland said the company’s work force reduction and other cutbacks “are improving an already solid financial foundation that will sustain us through even an extended period of weak demand.”
He said the cost-reduction actions will be evident in the company’s second quarter results and throughout 2009.
“These were difficult but necessary actions to improve the financial performance of the company and to maintain our strong financial profile,” Espeland said.
Meanwhile, he said Eastman is “actively evaluating all options” to create shareholder value. He said those options include developing additional growth opportunities, exploring merger and acquisition opportunities, and if appropriate, repurchasing the company’s shares.
“Eastman has a strong balance sheet, sufficient liquidity and a history of financial discipline. Plus the actions we have taken recently to reduce costs and strategically over the last several years provides us with a portfolio of businesses that are well positioned to recover with improved economic conditions,” Espeland said.
Headquartered in Kingsport, Eastman employs 10,300 people worldwide, including 6,800 in Kingsport.