All segments report record quarterly earnings - Eastman
29 Jul '11
6 min read
Fibers Sales revenue increased by 21 percent due to a favorable shift in product mix, higher sales volume, and higher selling prices. The favorable shift in product mix was mainly due to higher acetate tow sales volume resulting from increased utilization of the recently completed acetate tow manufacturing facility in Korea. The higher selling prices were in response to higher raw material and energy costs, particularly for wood pulp. Operating earnings in second quarter 2011 increased to $93 million compared with $81 million in second quarter 2010 due to higher acetate tow sales volume in Asia Pacific and higher selling prices, partially offset by higher raw material and energy costs.
Performance Chemicals and Intermediates Sales revenue increased by 35 percent due to higher selling prices and higher sales volume. The higher selling prices were in response to higher raw material and energy costs and were also attributed to strengthened demand in the U.S. and tight industry supply. The higher sales volume was due to growth in plasticizer product lines and was also attributed to customer buying patterns for acetyl chemicals. In addition, sales volume increased due to the fourth quarter 2010 restart of a previously idled olefins cracking unit at the Texas facility. Operating earnings in second quarter 2011 increased to $88 million compared to $71 million in second quarter 2010 excluding restructuring charges. The increase was due primarily to higher selling prices, higher sales volume, and the increased benefits from cracking propane to produce propylene at low cost, which more than offset higher raw material and energy costs.
Specialty Plastics Sales revenue increased by 23 percent due primarily to higher selling prices, which more than offset higher raw material and energy costs, particularly for paraxylene. Operating earnings in second quarter 2011 increased to $37 million compared with operating earnings of $21 million in second quarter 2010. Operating earnings increased in the Asia Pacific region due to higher selling prices and in the Europe, Middle East and Africa region due to both higher sales volume and higher selling prices.
Cash Flow Eastman generated $207 million in cash from operating activities during second quarter 2011, primarily due to strong net earnings. Second-quarter 2011 cash flows included $55 million of a total anticipated $110 million tax payment for the gain on the sale of the PET business completed in first quarter 2011. During second quarter 2011, share repurchases totaled $103 million.
Outlook Commenting on the outlook for third quarter and full year 2011, Rogers said: "Our strong portfolio of businesses delivered significant earnings growth in the first half of 2011, and we expect they will continue to deliver earnings growth in the second half of the year. We also expect normal seasonal declines in our sales volume, and continued volatility in raw material and energy costs.
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