US Eastman hikes profit forecast on specialty plastics growth

30 July 2010 18:53  [Source: ICIS news]

HOUSTON (ICIS)--Post-recession earnings for Eastman Chemical are improving at a more rapid pace than expected, partly on strength in the company’s specialty plastics segment, the chief executive of the US polyester producer said on Friday.

“To see [yearly] earnings per share (EPS) of greater than $6 in this recovery, I thought it might be 2012,” CEO Jim Rogers said on a conference call for second-quarter earnings. “Clearly the recovery has come faster than anyone expected, including us.”

The company posted a second-quarter EPS of $2.02/share, well ahead of prior earnings guidance of $1.60/share. As such, the company adjusted upward its full-year 2010 guidance to $6.20-6.40/share from the $5.25-5.50/share given in early June.

Eastman said that demand in June and July had been particularly strong.

Rogers noted that a large chunk of the demand growth could be seen in the company’s specialty plastics division, where second-quarter sales surged 44% year over year to $271m (€206m).

“Specialty plastics has seen two good quarters in a row now, and we expect the second half of their year to be better than the first,” Rogers said.

“There aren’t too many parts of any business across this industry saying the second half will be better than the first half,” he added.

Eastman said the business was continuing to gain market share following the May opening of its new Tritan copolyester plant in Kingsport, Tennessee.

Copolyesters produced there can be used as a polycarbonate (PC) replacement in items that previously used the controversial bisphenol-A (BPA), according to the company. In fact, demand for Tritan was already outpacing the overall growth rate of Eastman’s specialty plastics, it said.

The Kingsport plant was running at near its 30,000 tonnes/year capacity, with an additional 30,000 tonnes/year of resin capacity expected online in 2011, Rogers said.

As a whole, the specialty plastics division was also benefiting from higher volumes of cellulosic plastics sold into the liquid crystal display (LCD) television market, Eastman said.

“I just love that [specialty plastics] business because I can see how it’s growing,” Rogers said.

Overall, Eastman’s second-quarter earnings increased to $148m on a 38% rise in sales.

The company’s stock moved higher by $1.96, or 3.3%, to $61.72/share in mid-day Friday trading on the New York Stock Exchange.

($1 = €0.76)

For more on Eastman visit ICIS company intelligence
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By: Ben DuBose
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