Consumables
Eastman Announces First-Quarter 2011 Financial Results
Friday 29. April 2011 - Eastman Chemical Company (NYSE:EMN) today announced earnings from continuing operations of $2.52 per diluted share for first quarter 2011 versus $1.43 per diluted share for first quarter 2010.
“We continue to demonstrate that we have established a new level of earnings performance for the company,” said Jim Rogers, chairman and CEO. “We grew volume year over year in every business segment and in every region of the world. Furthermore, we remain well positioned for future growth with our solid balance sheet, which was further strengthened by the cash from the sale of the PET business.”
(In millions, except per share amounts) 1Q2011
1Q2010
Sales revenue $1,758 $1,370
Earnings per diluted share from continuing operations $2.52 $1.43
Net cash used by operating activities ($146) ($225)
Net cash used by operating activities
excluding impact of adoption of amended
accounting guidance* ($146) ($25)
*For reconciliations to reported company cash flows, see Table 4A in the accompanying first-quarter 2011 financial tables.
Sales revenue for first quarter 2011 was $1.8 billion, a 28 percent increase compared with first quarter 2010 due to higher sales volume and higher selling prices. The higher sales volume was attributed to strengthened end-use demand primarily in the packaging, transportation, and other markets and the positive impact of growth initiatives. The higher selling prices were in response to higher raw material and energy costs and were also attributed to strengthened demand, particularly in the U.S., and tight industry supply.
Operating earnings in first quarter 2011 increased to $284 million compared with operating earnings of $189 million in first quarter 2010. Operating earnings increased due to higher selling prices and higher sales volume, which more than 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 $20 million by an outage at the companys Longview, Texas, manufacturing facility.
Segment Results 1Q 2011 versus 1Q 2010
Coatings, Adhesives, Specialty Polymers and Inks – Sales revenue increased by 25 percent due to higher selling prices and higher sales volume. The increase in selling prices was in response to higher raw material and energy costs and also attributed to strengthened demand, particularly in the U.S., and tight industry supply. The higher sales volume was attributed primarily to strengthened end-use demand in the transportation, industrial, and packaging markets, particularly in the U.S. Operating earnings in first quarter 2011 increased to $98 million compared with operating earnings of $65 million in first quarter 2010. The increase was due to higher selling prices, higher sales volume, and the increased benefits from cracking propane to produce low-cost propylene, which more than offset higher raw material and energy costs. First-quarter 2010 operating earnings were negatively impacted approximately $8 million by an outage at the companys Texas manufacturing facility.
Fibers – Sales revenue increased by 8 percent primarily due to higher sales volume. The higher sales volume was mainly due to increased utilization of the recently completed Korean acetate tow manufacturing facility. Operating earnings in first quarter 2011 increased to $81 million compared with $78 million in first quarter 2010 due to higher sales volume partially offset by higher raw material and energy costs.
Performance Chemicals and Intermediates – Sales revenue increased by 44 percent due to higher sales volume and higher selling prices. The higher sales volume was primarily due to the restart of a previously idled cracking unit at the companys Texas facility and growth in plasticizer product lines, which include the acquired Genovique Specialties plasticizer product lines. The higher selling prices were in response to higher raw material and energy costs and also attributed to strengthened demand in the U.S. and tight industry supply, particularly for olefin-derivative product lines. Operating earnings in first quarter 2011 increased to $88 million compared to $35 million in first quarter 2010. The increase was due primarily to higher selling prices, higher sales volume, and the increased benefits from cracking propane to produce low-cost propylene, which more than 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 $10 million by an outage at the companys Texas manufacturing facility.
Specialty Plastics – Sales revenue increased by 24 percent primarily due to increased selling prices and higher sales volume. The increased selling prices were in response to higher raw material and energy costs, particularly for paraxylene. The increase in sales volume was attributed to strengthened end-use demand for specialty packaging and consumer and durable goods, and the positive impact of growth initiatives for core copolyesters and Eastman Tritan copolyester product lines. Operating earnings in first quarter 2011 increased to $30 million compared with operating earnings of $19 million in first quarter 2010. The increase was due to higher sales volume and increased capacity utilization, particularly for the new Eastman Tritan copolyester resin manufacturing facility, which led to lower unit costs, and increased selling prices partially offset by higher raw material and energy costs.
Cash Flow
Eastman used $146 million in cash from operating activities during first quarter 2011, including a $100 million contribution to the U.S. defined benefit pension plan. Working capital increased by $270 million primarily due to increased sales revenue. First-quarter 2011 cash flows also included the receipt of approximately $615 million from the sale of the PET business of the Performance Polymers segment which is reflected in cash flows from investing activities. During first quarter 2011, share repurchases totaled $74 million.
Outlook
Commenting on the outlook for second quarter and full year 2011, Rogers said: “We began the year with a very strong first quarter, driven mainly by volume growth throughout the company and higher selling prices. We expect the momentum from the first quarter will continue into the second quarter and for the full year. As a result, we expect second quarter 2011 earnings per share to be slightly higher than first quarter 2011 and full year 2011 earnings per share to be slightly higher than $9. Key variables include whether inflationary pressures negatively impact global demand and the volatility of raw material and energy costs, particularly the spread between prices for propane and propylene.”