However, when you take a closer look at the year, specifically the fourth quarter, the picture looks a little different. Eastman CEO and Board Chairman Mark Costa described it on Wednesday as a tale of two stories.
“We had a good year last year. Frankly it wasn’t a great year, but when you look at the results on a full-year basis, it looks pretty good with strong revenue and earnings growth,” Costa said. “The first nine months were great. The fourth quarter was not so great. We grew by $8 million in the first nine months and unfortunately gave it all back in the fourth quarter.”
Costa shared this message during Eastman’s annual regional leaders breakfast Wednesday morning at the MeadowView Conference Resort and Convention Center, speaking to more than 200 community and business leaders from Northeast Tennessee and Southwest Virginia.
“Transforming a 100-year-old-company isn’t easy,” Costa said. “It requires being open to new ideas and new ways of working. It requires the courage to move fast and take risks. It requires endless optimism in being able to do hard things, and it requires the understanding and support of you, our community leaders.”
During the first nine months of 2018, most of the world’s economies were experiencing growth, Costa said, and it wasn’t by accident. In the United States, there had been tax reform, reduced regulations and there was optimism about the future of the country, he said.
But by the time the fourth quarter rolled around, a couple of things happened. The price of oil worked its way up and the U.S. started a trade war with China.
“(The U.S.) was trying to address the unfair trade practices in China, which is a good idea, because if you don’t do it, we’re never going to get the situation fixed with them,” Costa said. “The good news about this was it’s temporary and not permanent as long as it gets settled in the next month, to get China back to being stable and growing.”
Costa told regional leaders that Eastman’s financial outlook for the first quarter of 2019 will look much like the company’s fourth quarter: flat. However, once the trade war is resolved — hopefully later this month — then the rest of the year should see better growth.
Regardless of what happened during the fourth quarter of 2018, Eastman still had strong growth last year and the company did so through innovation, he added.
GROWTH THROUGH INNOVATION
To support the company’s transformation to a specialty materials company, Costa said Eastman has continued to make significant investments in its portfolio, assets, capabilities and people. He pointed to a number of investments the company made last year to position itself for long-term growth, which included 10 plant expansions and major infrastructure improvements, six of which were in Kingsport.
“These investments demonstrate the confidence we have in our transformational growth strategy,” Costa said. “More than that, they show our commitment to the future. I have no doubt that the investments that we are making today will deliver returns for our company and our communities for generations to come.”
But not all of Eastman’s investments last year had to do with physical assets. Having well-trained and well-developed people is also key to the company’s future, Costa said. It’s a non-trivial effort, he said, adding that the company is still very much on the journey of having employees who are innovative and express operational excellence.
And it has to do with placing an emphasis on safety, inclusion and diversity, and coaching and mentoring.
“We’re going to continue to invest in our people, and it has more to do with inclusion than with diversity. Diversity is the easy part. Creating an inclusive culture where all members of the team really, deeply want to invest and understand each other is the heart of success of any successful culture at Eastman or any company around the world,” Costa said. “We’ve made progress, but we’ve doubled down and accelerated and made a lot of progress the last couple of years. By no means are we declaring victory and never will. We’re always on the journey of trying to find ways to be better.”