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Eastman delivers solid earnings in second quarter

24 Jul '09
5 min read

2Q 2009 Segment Results
Coatings, Adhesives, Specialty Polymers and Inks – Sales revenue declined by 27 percent primarily due to lower sales volume and lower selling prices. The lower sales volume was due to weak customer demand attributed to the global recession, particularly for products sold into the automotive, building and construction, and packaging markets. Operating earnings were $48 million in second quarter 2009 compared to $51 million in second quarter 2008 excluding asset impairments and restructuring charges, net, in both quarters.

Operating earnings declined slightly as lower raw material and energy costs and cost reduction actions were more than offset by lower sales volume and lower capacity utilization resulting in higher unit costs, including costs related to the reconfiguration of the Longview, Texas, site. Compared to first quarter 2009, operating earnings increased significantly due to a 22 percent increase in sales volume attributed to seasonality and improved customer buying patterns, lower raw material and energy costs, and cost reduction actions.

Fibers – Sales revenue increased by 1 percent as higher selling prices more than offset lower sales volume. The higher selling prices were in response to higher raw material and energy costs. Sales volume declined as higher acetate tow volume was more than offset by lower volumes for acetate yarn and acetyl chemical products. Operating earnings increased to $74 million in second quarter 2009 compared with $62 million in second quarter 2008 due to higher selling prices, cost reduction actions, and a favorable shift in product mix, partially offset by lower sales volume.

Performance Chemicals and Intermediates – Sales revenue declined by 51 percent, and excluding contract ethylene sales resulting from the divestiture of the polyethylene business, declined by 42 percent due to lower selling prices and lower sales volume. The lower selling prices were primarily due to lower raw material and energy costs and the lower sales volume was primarily in olefin-based derivatives and was attributed to the global recession.

Operating earnings were $5 million in second quarter 2009 compared with $58 million in second quarter 2008 excluding asset impairments and restructuring charges and accelerated depreciation costs in second quarter 2008. The decline was due to lower selling prices, lower sales volume, lower capacity utilization resulting in higher unit costs, and approximately $15 million in costs related to the reconfiguration of the Longview, Texas, site, partially offset by lower raw material and energy costs and cost reduction actions.

Performance Polymers – Sales revenue declined by 31 percent, and excluding contract polymer intermediates sales to divested manufacturing facilities in second quarter 2008 declined by 25 percent due to lower selling prices. The lower selling prices were primarily due to a decline in raw material and energy costs, primarily for paraxylene. Sales volume excluding contract polymer intermediates sales was unchanged as higher volume from the company's IntegRex™ technology based PET facility was offset by lower volume from the company's conventional PET manufacturing assets which were significantly rationalized in first quarter 2008.

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Eastman Chemical Company

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