Eastman delivers solid earnings in second quarter
Eastman Chemical Company announced earnings per diluted share of $0.89 for second quarter 2009 versus $1.48 for second quarter 2008. Excluding asset impairments and restructuring charges, net, in both second quarter 2009 and second quarter 2008, and accelerated depreciation costs in second quarter 2008, earnings per diluted share were $0.86 for second quarter 2009 and $1.53 for second quarter 2008. For reconciliations to reported company and segment earnings, see Tables 3 and 5 in the accompanying second-quarter 2009 financial tables.
"Although economic conditions continue to be challenging, we delivered solid earnings in the second quarter reflecting cost reduction actions we've taken and some improvement in demand as customer destocking appears to be mostly behind us," said Jim Rogers, president and CEO. "In addition, we generated over $100 million of free cash flow during the quarter and remain on track to meet our objective of positive full year 2009 free cash flow."
Sales revenue in second quarter 2009 was $1.3 billion, a 32 percent decrease compared with second quarter 2008. Sales revenue for both second quarter 2009 and second quarter 2008 included contract ethylene sales resulting from the fourth-quarter 2006 divestiture of the polyethylene business. Also included in second-quarter 2008 sales revenue were contract polymer intermediates sales resulting from the fourth-quarter 2007 divestiture of PET polymers manufacturing facilities and related businesses in Mexico and Argentina.
Excluding these items for both periods, sales revenue declined by 27 percent due to a decline in sales volume of 13 percent primarily attributed to the global recession, and lower selling prices in response to lower raw material and energy costs particularly in the Performance Chemicals and Intermediates and Performance Polymers segments. For reconciliations to reported company and segment sales revenue, see Table 4 in the accompanying second-quarter 2009 financial tables.
Operating earnings in second quarter 2009 were $131 million compared with operating earnings of $172 million in second quarter 2008. Excluding asset impairments and restructuring charges, net, in both second quarter 2009 and second quarter 2008, and accelerated depreciation costs in second quarter 2008, operating earnings were $128 million in second quarter 2009 and $178 million in second quarter 2008.
Operating earnings declined in all segments except Fibers due to lower sales volume, lower capacity utilization resulting in higher unit costs, and costs related to the reconfiguration of the Longview, Texas, site. Compared to first quarter 2009, operating earnings increased due to an 11 percent increase in sales volume, excluding contract ethylene sales in both periods, and lower raw material and energy costs. Operating earnings benefited in both first and second quarter 2009 from cost reduction actions.