Eastman CEO predicts 2013 earnings growth for all core divisions

01 February 2013 16:09  [Source: ICIS news]

LONDON (ICIS)--Eastman Chemical is predicting that operating earnings will increase in 2013 across all core business segments, the US-based chemicals company said on Friday.

The company is predicting that operating earnings for its additives and functional products, adhesives and plasticizers, advanced materials, fibres, and specialty fluids and intermediates divisions will all exceed 2012 levels this year.

Eastman forecasts that earnings for its additives and functional products division will be approximately $410m (€303m), compared to $395m in 2012, driven by a restructured product mix, recovering US tyre and auto industries, and a forecast strong environment for solvents producers.  

Growth is expected to be partially offset by increased benzene costs, according to Eastman CEO Jim Rogers.

“We’ve been taking action over the last several years to leverage our assets with a better product mix, and we’re starting to see the benefits from these actions,” said Rogers.

The unit generated operating earnings of $395m in 2012 compared to $365m in 2011, driven by lower raw material and energy costs, with gains partially offset by lower selling prices, particularly for solvents products.

Adhesives and plasticizers earnings are expected to increase by $17m year on year to around $280m in 2013, driven by continued growth for non-phthalate plasticizers following the start-up of a manufacturing facility for the materials at the company’s US Texas City site during the year.

Earnings for the unit in 2012 were up 5% on 2011 to $263m, as higher sales volumes lower material and energy costs helped to offset lower prices.

Advanced materials operating earnings are expected to rebound to 2011 levels of around $250m following a decline in 2012 to $210m on the back of weakened demand for polyvinyl butyral (PVB) sheet and specialty materials end markets, efforts to reduce divisional inventory, and capacity expansion costs.

 “We expect advanced materials to increase operating earnings... due to increased volumes in specialty materials and performance films, higher value product mix... and improvements in fixed cost absorption as we begin to fill out recent expansions,” Rogers said.

Eastman’s fibres division is expected to mark its 10th year of consecutive earnings growth in 2013 to around $400m on the back of strong acetate tow volumes and higher prices. Higher selling prices also helped to drive a 6% increase in operating earnings for the unit in 2012 to $388m.

Specialty fluids and intermediates earnings are expected to grow 6% to around $380m in 2013, driven by favourable olefin spread movements so far this year, and an improved volume and mix in fluid products.

Operating earnings for the division grew by 29% year on year in 2012 due to lower material and energy costs helping to offset lower prices and higher operating costs, the company said.

The company is currently focused on reducing earnings volatility, according to CFO Curt Espeland, who added that Eastman has already locked in around 50% of its bulk ethylene sales at 2012 rates.

Eastman – which reported a $54m net loss for the fourth quarter of 2012 as a result of one-time charges including asset impairment and restructuring charges - is targeting earnings per share of $6.30-6.40, compared to $5.38 per share for the full-year 2012.

($1 = €0.74)

By: Tom Brown
+44 208 652 3214

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