US Eastman 'getting handle’ on weak adhesives, plasticizers ops: CEO

25 October 2013 15:59  [Source: ICIS news]

HOUSTON (ICIS)--Eastman Chemical is “starting to get a handle” on the problems in its underperforming adhesives and plasticizers business, the CEO of the US-based chemicals major said on Friday.

The segment saw a 44% year-on-year decline in third-quarter operating earnings, to $41m (€30m), mainly because of lower selling prices and higher raw material and energy costs.

However, “longer-term, I can easily see a time when [adhesives and plasticizers] is performing better than it is today”, Eastman CEO Jim Rogers said in response to analysts’ questions during the company’s third-quarter earnings call.

On the adhesives side, Eastman expects to see long-term growth from adhesives use in hygiene products, particularly in Asia. In plasticizers, Eastman benefits from the substitution of phthalate plasticizers by non-phthalate plasticizers, the CEO said.

Rogers said that the “stress” in adhesives and plasticizers, which accounted for less than 14% of the company’s overall third-quarter sales of $2.3bn, underlined the strength of Eastman’s diversified overall portfolio.

“This segment is definitely underperforming”, but Eastman will still achieve about 20% earning growth in 2013, he said.

Mark Costa, who is due to take over from Rogers as CEO on 1 January, added that adhesives and plasticizers remained a good business for Eastman, and “it still provides a good, attractive return, even at these margins”.

Costa said that the segment’s main problem were current supply/demand imbalances.

On the negative side, demand continued to be weak, but “the good news is that destocking seems to be behind us”, he said.

($1 = €0.72)

By: Stefan Baumgarten
+1 713 525 2653

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