Performance Chemicals and Intermediates – Sales revenue increased by 39 percent due to higher selling prices and a favorable shift in product mix. The higher selling prices were in response to higher raw material and energy costs. The favorable shift in product mix was due to increased sales revenue from plasticizer product lines, $8 million from an acetyl technology license, and $15 million of sales revenue from the recently acquired Sterling Chemicals business.
Operating earnings in third quarter 2011 increased to $78 million excluding restructuring charges compared to $74 million in third quarter 2010. Third-quarter 2011 operating earnings included $8 million of costs from the unplanned outage of an olefin cracking unit and $8 million from an acetyl technology license. Operating earnings in third quarter 2010 included $12 million from the partial settlement of an insurance claim. In third quarter 2011 compared with third quarter 2010, operating earnings were positively impacted by higher selling prices and the favorable shift in product mix more than offsetting higher raw material and energy costs.
Cash Flow Eastman generated $212 million in cash from operating activities during third quarter 2011 driven by strong net earnings. Inventories increased during the quarter primarily due to preparation for planned manufacturing maintenance in the fourth quarter. Third-quarter 2011 cash flows included $28 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 third quarter 2011, share repurchases totaled $115 million.
Outlook Commenting on the outlook for fourth quarter and full year 2011, Rogers said: "For the remainder of the year, we expect sales volume to decline due to normal seasonality and customer inventory destocking. We also expect continued volatility in raw material and energy costs. As a result, we expect fourth-quarter 2011 earnings per share to be higher than fourth quarter 2010 and for full-year 2011 earnings per share to be approximately $4.62, excluding asset impairments and restructuring charges and gains."
Eastman's chemicals, fibers and plastics are used as key ingredients in products that people use every day. Approximately 10,000 Eastman employees around the world blend technical expertise and innovation to deliver practical solutions.
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