Eastman makes solid operating cash flows in Q1
Eastman Chemical Company announced earnings from continuing operations of $0.03 per diluted share for first quarter 2009 versus $1.46 per diluted share for first quarter 2008. Excluding the items described in the following paragraph, first-quarter 2009 earnings from continuing operations were $0.25 per diluted share, while first-quarter 2008 earnings from continuing operations were $1.48 per diluted share. For reconciliations to reported company and segment earnings, see Tables 3 and 5 in the accompanying first-quarter 2009 financial tables.
Included in the results for first quarter 2009 was a restructuring charge of $26 million for the previously announced reduction in force of approximately 300 people. Included in the results for first quarter 2008 were asset impairments and restructuring charges of $17 million, accelerated depreciation costs of $2 million, and net deferred tax benefits of $11 million.
"In this very difficult economic environment, we remain focused on taking the actions necessary to deliver operating cash flows that will more than support both our dividend and capital expenditures,” said Brian Ferguson, chairman and CEO. "We made good progress in the first quarter with solid operating cash flows, and are on track to meet this objective."
Sales revenue for first quarter 2009 was $1.1 billion, a 35 percent decrease compared with first quarter 2008. Sales revenue for both first quarter 2009 and first quarter 2008 included contract ethylene sales resulting from the fourth-quarter 2006 divestiture of the polyethylene business. Also included in first-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 30 percent due to a decline in sales volume of 19 percent primarily attributed to the global recession and lower selling prices. For reconciliations to reported company and segment sales revenue, see Table 4 in the accompanying first-quarter 2009 financial tables. Operating earnings in first quarter 2009 were $25 million compared with operating earnings of $168 million in first quarter 2008.
Excluding asset impairments and restructuring charges in first quarter 2009 and 2008 and accelerated depreciation costs in first quarter 2008, operating earnings were $51 million in first quarter 2009 compared with $187 million in first quarter 2008. Operating results declined in all segments except Fibers because of weak demand which resulted in lower sales volume, continued low capacity utilization, and higher unit costs. In addition, lower selling prices were offset by lower raw material and energy costs. Operating results benefited from continued implementation of cost reduction actions.
Segment Results 1Q 2009 versus 1Q 2008
Coatings, Adhesives, Specialty Polymers and Inks – Sales revenue declined by 36 percent primarily due to lower sales volume. The lower sales volume was due to the sharp decline in customer demand in all regions attributed to the global recession, particularly for products sold into the automotive, building and construction, and packaging markets. Operating earnings, excluding a restructuring charge in first quarter 2009, declined to $21 million from $59 million in first quarter 2008 due to lower sales volume and lower capacity utilization which led to higher unit costs and an unfavorable shift in product mix, partially offset by lower raw material and energy costs.