Eastman PET sale would boost margins, improve chem profile - firm

03 August 2010 15:56  [Source: ICIS news]

HOUSTON (ICIS)--A sale of Eastman Chemical’s polyethylene terephthalate (PET) business would result in margin improvements and a better performance chemicals profile, a US investment firm said on Tuesday.

Dahlman Rose said it believed Eastman shares were still weighed down by the PET business, which Eastman said last week was struggling amid difficult conditions in the North American PET market. Eastman said it hoped to complete a sale by the end of the year.

The sale of the business would cut revenues by about 12% to $775m (€597m) but would have no material impact on earnings, according to the investment firm.

Overall, Eastman’s second-quarter earnings per share (EPS) of $2.02/share were well ahead of prior guidance of $1.60/share. The company cited a faster-than-expected recovery in its markets, and pushed its full-year EPS estimate to $6.20-6.40/share, up from the $5.25-5.50/share level given in early June.

Dahlman Rose was even more bullish on the Eastman, raising its full-year EPS projection to $6.47/share in 2010, up from a prior estimate of $5.41/share.

“While we expect earnings momentum to subside during [second half 2010] due to normal seasonality, lower raw material volatility, and return of product from competitor’s outages, we believe some of the outperformance is due to Eastman’s operational initiatives that may be sustainable,” the investment firm said.

As such, Dahlman Rose maintained its buy rating for Eastman. The firm also boosted its 2011 EPS guidance to $6.59/share, up from a prior guess of $5.89/share.

($1 = €0.77)

For more on Eastman visit ICIS company intelligence
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By: Ben DuBose
+1 713 525 2653



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