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Eastman finishes 2012 with record yearly earnings per share

Sharon Hayes • Jan 31, 2013 at 5:15 AM

KINGSPORT — Eastman Chemical Co. topped off its largest acquisition in company history last year, and excluding all the charges that went with the deal, Eastman finished the year in record territory.

The Kingsport-based company on Thursday posted earnings of $5.38 per share for 2012, up from $4.81 in 2011. Those numbers exclude restructuring charges related to the acquisition of Solutia as well as charges related to changes in corporate accounting.

“It was a record year for us,” said Eastman spokesperson Tracy Broadwater. “Keep in mind we made our largest acquisition ever last year, so when you back out all of those charges, you get an apples to apples comparison, and you see we had a very strong year.”

Last summer Eastman completed its $4.8 billion acquisition of Missouri-based Solutia, which Eastman said would allow it to extend its reach around the globe and into emerging markets. The deal is also expected to boost Eastman’s earnings expectations, save costs of up to $100 million by the end of 2013, and provide Eastman with significant tax benefits.

The acquisition came with hefty charges, including severance packages for some Solutia employees and costs to shut down some Solutia operations.

Including the acquisition-related charges and accounting changes, Eastman earned $2.92 per share in continuing operations in 2012, vs. $4.24 per share in 2011.

Meanwhile, Eastman posted sales revenue of $8.1 billion for 2012, up 13 percent from the previous year. The 2012 sales number includes revenue from the acquired Solutia businesses. Pro forma combined sales revenue fell 2 percent.

Eastman also issued its fourth quarter financial report Thursday, showing the company took a loss of 35 cents per share from continuing operations in 2012, vs. 9 cents per share in 2011, including the acquisition-related charges and accounting changes.

But excluding those restructuring charges and accounting changes, Eastman earned $1.19 per share in the fourth quarter of 2012, up from 78 cents per share in the 2011 period.

“Eastman delivered another year of consistently strong earnings, with fourth-quarter results providing an outstanding way to end 2012,” said Eastman Chairman and CEO Jim Rogers. “This high level of performance was driven by our market-leading businesses and the significant strategic actions we have taken to improve our portfolio. We are well positioned for continued growth in 2013 and beyond, supported by strong cash generation.”

Looking forward, Rogers said Eastman is well positioned to generate strong earnings growth in 2013 with its technology platforms and leading positions in attractive end markets.

“We expect the continued integration of Solutia, capacity expansions serving customers in growing end-markets, and the increased benefit of producing vs. purchasing olefins will positively impact results,” Rogers said.

Still, he pointed out that global economic uncertainty continues, particularly in Europe.

“Taking all these factors into consideration, we are increasing our expectation for 2013 earnings per share from continuing operations to between $6.30 and $6.40,” Rogers said. In December, the company predicted it would earn $6.25 for 2013.

Solutia integration costs, restructuring charges and accounting changes are excluded from the earnings projection.

Eastman had 2012 pro forma combined revenues, including the Solutia acquisition, of about $9 billion. The company employs 13,500 people worldwide, including 7,000 in Kingsport.

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