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Eastman posts "best ever" earnings, 32 percent sales increase

Hank Hayes • Jul 30, 2013 at 10:41 AM

KINGSPORT - Eastman Chemical Co. reported “best ever” earnings and a 32 percent increase in sales in this year’s second-quarter financial results compared to the second quarter of 2012.

Eastman recorded $1.80 per diluted share for this year’s second quarter 2013 versus $1.40 per diluted share for 2012’s second quarter.

Sales revenue for the quarter was $2.4 billion compared to $1.8 billion in last year’s second quarter.

“The great progress we’ve made over the past several years to improve our portfolio, including the acquisition of Solutia, shows in the continuing strength of our earnings,” Jim Rogers, Eastman chairman and CEO, said in a prepared release. “Second-quarter earnings were our best ever and position us for a fourth consecutive year of double-digit earnings growth. We continue to expect double-digit earnings growth through 2015 given our leading market positions, our end-market and geographic diversity, and the growth initiatives we are pursuing throughout the company.”

Second quarter revenue included sales from the acquired Solutia businesses. Pro forma combined sales revenue increased three percent due to higher sales volume across most segments, according to Eastman.

Operating earnings for the quarter were $428 million compared with $317 million in the second quarter of 2012. Pro forma combined operating earnings were $454 million in the second quarter compared with $403 million in the second quarter of 2012. Eastman said pro forma combined operating earnings increased primarily due to higher sales volume across most segments and higher capacity utilization which led to lower unit costs.

Eastman also generated $362 million in cash from operating activities during the quarter primarily due to strong net earnings. During the quarter, the company reduced long-term borrowings by $100 million and repurchased shares totaling $46 million.

Concerning the outlook for the rest of the year, Rogers said: “We expect our portfolio of specialty businesses to continue to deliver strong earnings despite slow global economic growth, reflecting our leadership positions in key end-markets, the diversity of the end-markets we serve, and our broad geographic footprint. As a result, we are increasing our expectations for 2013 earnings per share to between $6.40 and $6.50. We expect earnings in the second half of the year will be slightly lower than first half due to normal seasonality of sales volume.”

Eastman said Solutia integration costs, asset impairments and restructuring charges, and mark-to-market pension and OPEB gains or losses are excluded from the earnings per share projections.

Eastman’s stock closed up about one percent Monday at $75.03 per share.

For more go to www.eastman.com.

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