US Eastman expects no further deterioration in Europe - CEO

31 July 2012 15:23  [Source: ICIS news]

HOUSTON (ICIS)--Eastman Chemical expects the European economy to continue to perform at below normal levels, but it will not further deteriorate going forward, the CEO of the US-based producer said on Tuesday.

“Our view is that Europe is near or at recessionary levels but we are not anticipating things to get worse,” Jim Rogers told analysts during Eastman’s second-quarter earnings call.

Rogers said that North American media may have an exaggerated view of the decline in Europe.

“There seems to be a disconnect between the talking heads on TV back here and what the guys in the trenches in Europe are seeing," in terms of order patterns and customer responses, he said. Rogers recently returned from a two-week trip in Europe.

Eastman’s second-quarter sales for European, Middle East, and Africa (EMEA) were down 11% year on year, with volumes down 7%.

As a percentage of sales, EMEA contributed 17.8% to Eastman’s overall second-quarter sales of $1.85bn (€1.52bn), down from 19.6% in the 2011 second quarter.

Meanwhile, second-quarter European sales of Eastman’s recently acquired Solutia business also declined, partly because of a weak European car market, as well as the stronger US dollar versus the Europe.

In Asia Pacific, Eastman saw weaker second-quarter growth but the company does not expect to further weakening there either, Rogers said. The US economy remains solid, a trend that Eastman expects to continue, he added.

Eastman, for its part, expects to achieve double-digit year-on-year earnings growth this year, despite the persistent global economic uncertainty, Rogers said.

The company maintained its previous 2012 earnings per share guidance at $5.30, reflecting an increase of about 10% from 2011.

($1 = €0.82)

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

By: Stefan Baumgarten
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