Eastman Chemical Company (EMN) filed Quarterly Report for the period ended 2009-09-30.
Eastman Chemical Company is a global chemical company with a broad portfolio of chemical plastic and fiber products. The company manufactures and sells chemicals and specialty polymers supplied to the inks coatings adhesives sealants and textile industries; fine chemicals; performance chemicals and intermediates; specialty plastics; polyester plastics such as polyethylene terephthalate sold under the trademark EASTAPAK polymers; and fibers. Eastman Chemical Company has a market cap of $3.82 billion; its shares were traded at around $56.19 with a P/E ratio of 20.9 and P/S ratio of 0.6. The dividend yield of Eastman Chemical Company stocks is 3.3%. Eastman Chemical Company had an annual average earning growth of 3.3% over the past 10 years.
Highlight of Business Operations:
The Company generated sales revenue of $1.3 billion and $1.8 billion in third quarter 2009 and 2008, respectively. Excluding the results of contract ethylene sales and contract polymer intermediates sales from third quarter 2008, sales revenue decreased by 21 percent. The Company generated sales revenue of $3.7 billion in first nine months 2009 compared to $5.4 billion in first nine months 2008. Excluding the results of contract ethylene sales and contract polymer intermediates sales from both periods, sales revenue decreased by 26 percent. Sales revenue decreases for both third quarter and first nine months 2009 compared to the same periods in 2008 were due to lower selling prices in response to lower raw material and energy costs and lower sales volume primarily attributed to the global recession.
Operating earnings were $191 million in third quarter 2009 compared with $174 million in third quarter 2008. Excluding accelerated depreciation costs and asset impairments and restructuring charges, operating earnings were $179 million in third quarter 2008. The increase in third quarter 2009 was due to lower raw material and energy costs and cost reduction actions more than offsetting lower selling prices and lower sales volume. The increased operating margin was attributed to a favorable shift in company product mix due to a higher percentage of overall sales revenue from the Fibers, CASPI, and Specialty Plastics ("SP") segments compared to the PCI and Performance Polymers segments.
Operating earnings were $347 million in first nine months 2009 compared with $514 million in first nine months 2008. Excluding asset impairments and restructuring charges in first nine months 2009 and 2008 and accelerated depreciation costs in first nine months 2008, operating earnings were $370 million in first nine months 2009 compared with $544 million in first nine months 2008. Eastman's reduced earnings reflect continued weakness in demand for the Company's products that caused lower sales volume and continued low capacity utilization which resulted in higher unit costs. This weakness in demand, which is attributed to the global recession, has been moderating throughout 2009 resulting in sequential sales volume and operating earnings increases each quarter. First nine months 2009 operating earnings also included approximately $20 million in costs related to the reconfiguration of the Longview, Texas facility. Operating earnings benefited from cost reduction actions which will positively impact results throughout the year.
Earnings from continuing operations were $101 million in third quarter 2009 compared to $100 million in third quarter 2008. Excluding accelerated depreciation costs, asset impairments and restructuring charges, and net deferred tax benefits, earnings from continuing operations were $102 million in third quarter 2008. Earnings from continuing operations were $168 million in first nine months 2009 compared to $330 million in first nine months 2008. Excluding accelerated depreciation costs, asset impairments and restructuring charges, and net deferred tax benefits, earnings from continuing operations were $182 million and $338 million in first nine months 2009 and 2008, respectively.
The Company generated $668 million in cash from operating activities during first nine months 2009 compared to $293 million in first nine months 2008. The improvement was primarily due to a decrease in working capital in 2009 compared to an increase in working capital in 2008, as well as a change in tax accounting method reflected as a provision for deferred income taxes. The Company expects to generate positive free cash flow (operating cash flow less capital expenditures and dividends) in excess of $300 million in 2009, assuming continued difficult economic conditions and raw material and energy costs similar to current levels.
Gross profit in first nine months 2009 decreased compared to first nine months 2008 in all segments except the Fibers segment due to continued weakness in demand for the Company's products attributed to the global recession. This weak demand caused lower sales volume and lower capacity utilization which resulted in higher unit costs. In addition, first nine months 2009 included approximately $20 million in costs related to the reconfiguration of the Longview, Texas facility. The reconfiguration costs impacted the PCI and CASPI segments. First nine months 2009 also benefited from cost reduction actions. First nine months 2008 included accelerated depreciation costs of $8 million resulting from the previously reported shutdown of the cracking units in Longview, Texas and of higher cost PET polymer assets in Columbia, South Carolina. The Company's first nine months 2009 raw material and energy costs decreased by approximately $725 million compared with first nine months 2008.
EMN is in the portfolios of HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
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