Eastman CEO expects slow economic growth but sees US as solid

27 April 2012 17:45  [Source: ICIS news]

HOUSTON (ICIS)--Eastman Chemical CEO Jim Rogers expects to see only slow global economic growth in 2012, but trends in the US economy will stay solid, he said on Friday.

We do expect slow economic growth globally, but with the US remaining solid,” Rogers told analysts during Eastman’s first-quarter results conference call.

Rogers said that Europe will remain weak, but it will not further deteriorate.

Meanwhile, Asia – and particularly China – is the region with the most uncertainty as growth rates there have been slowing, he said.

Eastman expects less volatility in its raw material and energy costs for the rest of 2012, he said. Also, Eastman will continue to benefit from olefins produced at a previously idled cracking unit that was restarted in late 2010, he said.

Rogers said that Eastman’s earnings would be higher in the second half of 2012 as the company expects to see first benefits from its planned acquisition of chemicals and materials firm Solutia.

That deal is on track for completion by mid-2012, Rogers said.

In the US, competition regulators have not objected to the deal, and authorities in China, South Korea and the Ukraine have given their approvals. EU competition regulatory approval is expected to be completed before the end of May.

Rogers also said that Eastman is looking at further expanding its recently launched perennial wood products business.

“The initial response to [the launch] has been terrific,” he said.

The perennial wood business is less capital intensive but has relatively high operating margins, compared with many of Eastman’s other businesses, he added.

Eastman expects full-year 2012 earnings per share at around $5.30 (€4.03), reflecting a 10% year-on-year increase from 2011, the CEO said. In 2013, Eastman’s earnings per share should exceed $6, he added.

($1 = €0.76)

Paul Hodges studies key influences shaping the chemical industry in his Chemicals and the Economy Blog

By: Stefan Baumgarten
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