Eastman CEO Jim Rogers notified employees by internal memo Tuesday that employee pay cuts will be reversed in less than three weeks. The cuts were implemented as of April 1 to help the company reduce expenses during the global recession.
“This year, we’ve had to make some hard decisions which affected our business and our personal lives. We’ve seen the slowdown of some growth projects, reorganization, reassignments, a 5 percent pay reduction, and more. It’s been a tough year, but we’ve pulled together to make the best of it. Our actions have helped us achieve positive business results so far and will help prepare us for the future. I’d like to thank each of you for your contributions and continuing cost discipline,” Rogers told employees.
He said that before restoring the pay cuts, the company wanted to see solid third quarter financial results, a satisfactory fourth quarter earnings outlook, and an expectation for 2010 to be better than 2009.
Steb Hipple, economist at East Tennessee State University, said the pay cut reversal probably won’t have a big impact on the holiday selling season.
“But for the Kingsport area, and to some extent the broader Tri-Cities area, this will be a positive element looking ahead to 2010 retail activity,” Hipple said.
Rogers and other Eastman executives were in New York City for an investors day with industry analysts on Tuesday. At the event, Rogers said Eastman expects to earn about $3.50 per share for 2009, excluding asset impairments and restructuring charges. That beats analysts expectations of $3.41 per share for the year.
Rogers also said the company expects to deliver 20 percent annual earnings per share growth from 2009 through the recovery by building on its core businesses and financial strength.
Rogers said the company expects earnings to reach $6 per share at the recovery period, projected for 2012, when Eastman is operating its factories at 90 percent capacity.
In comparison, Eastman’s earnings were $4.50 per share in 2008.
“We want to be an outperforming company,” Rogers said.
Company officials said Eastman will pursue joint venture projects and acquisitions where appropriate.
The company is also rethinking at least one project it was pursuing — an industrial gasification plant in Beaumont, Texas.
Eastman Chief Financial Officer Curt Espeland said the Beaumont project has faced unexpectedly high construction costs, and for it to move forward capital estimates must be lower, and financing must be made available through the Federal Loan Guarantee Program.
He said Eastman would seek a partner in the project if it decides to move ahead in the future.
And Eastman officials said Tuesday the company would temporarily shut down the IntegRex plant in Columbia, S.C., in December to repair equipment. The plant, which produces polyethylene terephthalate (PET) to make plastic packaging, has been plagued by operational challenges, which contributed to a third quarter operating loss of $10 million for the company’s performance polymers segment.
Eastman employs 10,000 people, including 6,800 in Kingsport.