“In the third quarter, global economic conditions worsened as uncertainty related to trade issues escalated and impacted consumer discretionary markets such as transportation and consumer durables, which was somewhat offset by our innovation and market development efforts,” said Mark Costa, board chair and CEO. “We continue to make strong progress growing new business revenue from innovation and market development initiatives, particularly in the Advanced Materials segment. In addition, we remain focused on aggressively managing costs. We also delivered strong free cash flow, which is a priority for us in this difficult environment.”
In the Fibers segment, Eastman's sales revenue decreased primarily due to lower acetate flake sales volume to its acetate tow joint venture in China attributed to customer buying patterns, partially offset by sales from the acquired INACSA cellulosic yarn business and increased sales of textile innovation products. Third-quarter 2019 adjusted EBIT decreased primarily due to inventory recovery in third quarter 2018 as result of the coal gasification incident and less favourable product mix.
In the Chemical Intermediates business, sales revenue decreased due to lower selling prices across the segment and lower sales volume, particularly of intermediates and functional amines products. The lower selling prices were attributed to raw material price declines and increased competitive activity. Lower intermediates sales volume was attributed to increased competitive activity, and lower functional amines sales volume was attributed to weaker demand in agricultural end-markets resulting from wet weather in North America earlier in the year. Third-quarter 2019 adjusted EBIT included a negative impact of approximately $15 million as a result of a local power disruption, which affected Eastman's Longview, Texas, manufacturing site. Adjusted EBIT declined due to increased planned manufacturing site maintenance costs, lower sales volume and lower selling prices partially offset by lower raw material costs. The increased site costs were partially offset by benefits from the recent refinery-grade propylene investment and continued cost management.
“For the first nine months of the year, we’ve remained focused on what we can control in this difficult business climate. We have increased new business revenue from innovation, particularly in the Advanced Materials segment, as well as continued to aggressively manage costs. However, we have seen business conditions worsen due to global trade uncertainty and other macro factors. As a result, we are now expecting lower sales volume and lower capacity utilisation in the fourth quarter. Taking all of this together, assuming the current economic conditions continue, we expect 2019 adjusted EPS to be between $7.00 and $7.20 and free cash flow to approach $1.1 billion,” said Costa.
Fibre2Fashion News Desk (RKS)
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