Eastman Chemical Q4 2008 operating profit tumbles
Eastman Chemical Company announced a loss of $0.03 per diluted share for fourth quarter 2008 versus earnings from continuing operations of $1.25 per diluted share for fourth quarter 2007. Excluding the items described below for both periods, fourth-quarter 2008 earnings were $0.05 per diluted share, while fourth-quarter 2007 earnings from continuing operations were $1.27 per diluted share.
Included in the earnings for fourth quarter 2008 were asset impairments and restructuring charges of $24 million from completion of the restructuring at the South Carolina facility and charges related to a corporate severance program, other operating income of $16 million from the sale of certain mineral rights at an operating manufacturing site, and accelerated depreciation costs of $1 million. Fourth-quarter 2007 earnings from continuing operations included accelerated depreciation costs of $12 million and reductions to previously recognized asset impairments and restructuring charges resulting in a gain of $4 million.
“The current global recession has resulted in an unprecedented decline in demand and negatively impacted our fourth-quarter results," said Brian Ferguson, chairman and CEO. "The strategic actions we have taken over the last five years, as well as the cost reduction measures we recently announced, position us to weather the current storm and rebound decisively when demand recovers.”
Sales revenue for fourth quarter 2008 was $1.3 billion, a 23 percent decline compared with fourth quarter 2007. Sales revenue for both fourth-quarter 2008 and fourth-quarter 2007 included contract ethylene sales resulting from the fourth-quarter 2006 divestiture of the polyethylene business and contract polymer intermediates sales resulting from the fourth-quarter 2007 divestiture of PET polymers manufacturing facilities and related businesses in Mexico and Argentina. Fourth-quarter 2007 sales revenue also included sales from the divested Mexico and Argentina PET manufacturing facilities. Excluding these sales for both periods, sales revenue declined 16 percent as sales volume declined 18 percent. The decline in sales volume was attributed to the global recession which resulted in an unprecedented drop in demand.
Operating earnings in fourth quarter 2008 were $5 million compared with operating earnings of $144 million in fourth quarter 2007. Excluding accelerated depreciation costs, asset impairments and restructuring charges, and other operating income, fourth-quarter 2008 operating earnings were $14 million. Fourth-quarter 2007 operating earnings, excluding accelerated depreciation costs and a gain from reductions to previously recognized asset impairments and restructuring charges, were $152 million. The decline in operating earnings was due primarily to the sharp decline in demand which resulted in lower sales volume and historically low capacity utilization which resulted in higher unit costs. The company's fourth-quarter 2008 raw material and energy costs increased by $25 million compared with fourth quarter 2007.