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In the fibre segment, sales revenue increased due to sales of nonwovens innovation platform products, higher sales volume for acetate tow due to customer buying patterns, and continued growth in the textiles innovation platform. The higher sales volume was partially offset by lower acetate tow selling prices attributed to lower industry capacity utilisation.
Reported EBIT included insurance proceeds in excess of costs in the second quarter of 2018 resulting from the coal gasification incident. Excluding this unusual item, adjusted EBIT increased slightly primarily due to higher sales volume and earnings from nonwovens innovation platform products, mostly offset by lower selling prices and increased investment in growth, Eastman Chemical said in a press release.
"In second quarter, we delivered an 8 per cent increase in revenue and strong earnings growth. A significant contributor to the higher revenue was increased sales volume, with compelling 8 per cent volume growth in the additives and functional products and advanced materials segments driven by our innovation-led strategy. We remain confident that execution of our strategy will result in continued outstanding results going forward," said Mark Costa, board chair and CEO.
Eastman generated $443 million in cash from operating activities during second quarter 2018, primarily due to strong net earnings partially offset by increased working capital. In the second quarter of 2018, cash insurance proceeds, net of cash used for the coal gasification repair and restart were approximately $55 million. Share repurchases totaled $150 million in second quarter 2018.
In second quarter 2018, the company recognised a charge of $10 million to increase the one-time transition tax on the deferred foreign income component of the provisional net tax benefit recognised in fourth quarter 2017. The company continues to expect to generate $1.1 billion of free cash flow (cash from operating activities less net capital expenditures). The full-year 2018 projected earnings exclude any non-core, unusual, or non-recurring items in the remaining six months of 2018 and assume that the adjusted tax rate for the first six months of 2018 will be the actual rate for full-year 2018.
"During the first half of the year, we delivered a 17 per cent year-over-year increase in adjusted earnings per share. This performance was the result of strong volume growth in the specialty segments leveraging our innovation-driven growth model, as well as continued disciplined cost management, use of our robust free cash flow and a lower tax rate. Taking all of this together, we remain confident in our expectations for adjusted 2018 EPS growth to be between 10-14 per cent," Costa said. (RR)
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