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Eastman Chemical sales fall 8.7%, volumes improve sequentially

November 10/2020

MOSCOW (MRC) -- Eastman Chemical reports third-quarter net earnings of USD165 million, down 38% year on year (YOY), as volumes remained lower YOY due to the COVID-19 pandemic but improved sequentially, reported Chemweek.

Adjusted earnings of USD1.57/share was down 19.1% YOY but beat the analysts consensus estimate of USD1.37/share, as reported by Refinitiv (New York). Net sales fell 8.7%, to USD2.1 billion. Volumes fell 5% YOY, but in end markets hit hardest by the pandemic, such as transportation, building and construction, and consumer durables, showed signs of improvement over the second quarter.

Demand across most of our end markets improved in the third quarter resulting in 10% higher sales revenue and almost 60% higher adjusted earnings sequentially, says Mark Costa, Eastman chair and CEO. This performance continues to demonstrate the value of having a diverse set of end markets and the benefit of our innovation-driven growth model. We also are continuing to aggressively manage costs, enabling us to significantly mitigate the financial impact of COVID-19.

Additives and functional products earnings before interest and taxes (EBIT) fell 25.7% YOY, to USD107 million, on sales down 10.8% US742 million. Sales revenue decreased primarily due to lower sales volume, lower selling prices, and less favorable product mix. The negative impact of COVID-19 on demand resulted in lower sales volume of products sold in transportation end markets, particularly aviation fluids and certain coatings additives. Lower selling prices were attributed primarily to increased competition in tire additives. Cost pass-through contracts also contributed to lower selling prices.

Advanced materials EBIT declined 18.9% YOY, to USD129 million, on sales down 4.2%, to USD668 million. Sales revenue decreased due to lower sales volume, less favorable product mix, and lower selling prices. Sales volume recovered to 2% below third quarter 2019 due to strong recovery in auto demand and innovation and market development, particularly for product lines in Performance Films. Specialty Plastics also continued with strong and steady performance. Lower selling prices were attributed to lower raw material prices, particularly for paraxylene used in copolyester products.

Chemical intermediates posted EBIT down 8.8% YOY, to USD31 million, on sales down 12.6%, to USD506 million. Sales revenue decreased due to lower selling prices and lower sales volume across the segment. Lower selling prices were attributed to lower raw material prices. Lower sales volume was due to planned maintenance shutdowns and also attributed to the negative impact of COVID-19 on demand.

Fibers EBIT fell 19.6% YOY, to $41 million, on sales down 5.1%, to USD206 million. Sales revenue benefited from stable acetate tow sales volume but declined due to lower textile products sales volume attributed to the impact of COVID-19 and lower acetate tow selling prices, primarily due to previously negotiated multiyear contracts.

Assuming current economic conditions continue, Eastman expects fourth-quarter adjusted earnings similar to the prior year quarter of USD1.42/share. "With demand having improved throughout the third quarter and into October, we entered the fourth quarter with solid momentum, Costa says. However, the resurgence of COVID-19 is increasing uncertainty in the global economic outlook, further limiting visibility for the back half of the fourth quarter.

As MRC informed previously, Air Liquide plans to invest over USD160 million in new capacity and upgrades to support a long-term agreement under which the company will supply additional gaseous oxygen, nitrogen, and syngas to Eastman Chemicals Longview, Texas, facility.

We remind that in 2016, Eastman Chemical's chief executive Mark Costa announced that the company wanted to reduce its surplus ethylene and commodity intermediates, but did not intend to sell its cracker in Longview, Texas.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC"s ScanPlast report, Russia"s estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers" inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

Eastman is a global specialty chemical company that produces a broad range of products found in items people use every day. With a portfolio of specialty businesses, Eastman works with customers to deliver innovative products and solutions while maintaining a commitment to safety and sustainability. Its market-driven approaches take advantage of world-class technology platforms and leading positions in attractive end-markets such as transportation, building and construction and consumables. Eastman focuses on creating consistent, superior value for all stakeholders. As a globally diverse company, Eastman serves customers in more than 100 countries. The company is headquartered in Kingsport, Tennessee, USA and employs approximately 14,500 people around the world.
Author:Margaret Volkova
Tags:PP, PE, paraxylene (PX), PP random copolymer, propylene, HDPE, PET-granulate, terephthalic acid, ethylene, petrochemistry, construction, packaging, Eastman Chemical, Russia, USA.
Category:General News
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