Sales revenue up at Eastman's Fibers segment

23 Apr '10

5 min read

Eastman Chemical Company announced earnings of $1.37 per diluted share for first quarter 2010 versus $0.03 per diluted share for first quarter 2009. Excluding restructuring charges of $26 million, first-quarter 2009 earnings were $0.25 per diluted share. For reconciliations to reported company and segment earnings, see Tables 3 and 4 in the accompanying first-quarter 2010 financial tables.

"With volumes recovering and product mix improving, our first-quarter earnings demonstrated the strength of our core businesses," said Jim Rogers, president and CEO. "The combination of these solid businesses and the strategic actions we have taken have positioned us well to take full advantage of the economic recovery."

Commenting on the outlook for second quarter and full year 2010, Rogers said: "During the first quarter, there were clear signs of a global recovery in our sales volume. Looking forward, we expect to continue to benefit from improved sales volume and higher capacity utilization which results in lower unit costs. We also expect raw material and energy costs to remain volatile. As a result, we expect second quarter 2010 earnings per share to be between $1.50 and $1.60 per share. In addition, due primarily to the combination of the stronger recovery in 2010 and the strategic actions we have taken, we expect full year 2010 earnings per share to be between $5.00 and $5.25." Any charges related to restructuring actions are excluded from earnings per share projections.

Sales revenue for first quarter 2010 was $1.6 billion, a 39 percent increase compared with first quarter 2009 primarily due to higher sales volume, a favorable shift in product mix, and higher selling prices. The higher sales volume was due primarily to improved customer demand compared with the depressed levels in first quarter 2009 and the increase in selling prices was in response to higher raw material and energy costs.

Operating earnings in first quarter 2010 increased to $182 million compared with operating earnings of $51 million excluding restructuring charges in first quarter 2009.

Operating earnings increased due to higher sales volume and higher capacity utilization which led to lower unit costs and a favorable shift in product mix. In addition, higher selling prices mostly offset higher raw material and energy costs. First-quarter 2010 operating earnings included $12 million in sales revenue from an acetyl license and were negatively impacted approximately $25 million by the previously announced outage at the company's Longview, Texas, manufacturing facility.

Segment Results 1Q 2010 versus 1Q 2009
Fibers – Sales revenue increased by 3 percent primarily as a result of higher selling prices in response to higher raw material costs. Operating earnings in first quarter 2010 increased to $79 million compared with operating earnings of $73 million excluding restructuring charges in first quarter 2009. This increase was due to higher selling prices and higher capacity utilization for acetate yarn product lines.

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