Eastman Announces First-Quarter 2012 Financial Results
(Thomson Reuters ONE) -
KINGSPORT, Tenn., April 26, 2012 - Eastman Chemical Company (NYSE:EMN) today
announced earnings from continuing operations of $1.13 per diluted share for
first quarter 2012 versus $1.39 per diluted share for first quarter 2011.
Excluding $14 million of transaction and financing costs in first quarter 2012
related to the pending acquisition of Solutia and a $15 million other
postretirement benefit (OPEB) plan gain in first quarter 2011 (described below),
earnings from continuing operations were $1.22 per diluted share in first
quarter 2012 and $1.32 per diluted share in first quarter 2011. For
reconciliation to reported company and segment earnings, see Tables 3 and 4 in
the accompanying first-quarter 2012 financial tables.
"We delivered solid first quarter results despite persistent global
economic uncertainty, and we remain well positioned for full year earnings
growth," said Jim Rogers, chairman and CEO. "In addition, we are on track to
complete the Solutia acquisition by mid-2012, which we expect will significantly
enhance our earnings growth in the future."
___________________________________________________________________________
(In millions, except per share amounts) 1Q2012 1Q2011
Sales revenue $1,821 $1,758
Earnings per diluted share
from continuing operations $1.13 $1.39
Earnings per diluted share from
continuing operations excluding
Solutia acquisition transaction and
financing costs and OPEB plan gain* $1.22 $1.32
Net cash provided by (used in)
operating activities $19 ($146)
____________________________________________________________________________
*For reconciliations to reported company and segment earnings, see Tables 3 and
4 in the accompanying first-quarter 2012 financial tables.
Sales revenue for first quarter 2012 was $1.8 billion, a 4 percent increase
compared with first quarter 2011 due primarily to higher selling prices. The
higher selling prices were in response to higher raw material and energy costs.
Operating earnings in first quarter 2012 were $264 million compared to $314
million in first quarter 2011. Excluding $9 million of transaction costs in
first quarter 2012 related to the pending acquisition of Solutia and the $15
million OPEB plan gain (described below) in first quarter 2011, operating
earnings were $273 million and $299 million, respectively.
Segment Results 1Q 2012 versus 1Q 2011
Coatings, Adhesives, Specialty Polymers and Inks - Sales revenue increased
slightly in first quarter 2012 compared with first quarter 2011. First-quarter
2012 operating earnings were $98 million compared to $104 million in first
quarter 2011, with the decline primarily due to an unfavorable shift in product
mix resulting from lower sales volume in the polymers product line.
Fibers - Sales revenue increased by 11 percent primarily due to higher selling
prices and a favorable shift in product mix. The higher selling prices were in
response to higher raw material and energy costs, particularly for wood pulp.
The favorable shift in product mix was primarily due to higher acetate tow
volume in Asia Pacific attributed to customer buying patterns. Operating
earnings in first quarter 2012 increased to $101 million compared with $86
million in first quarter 2011 due to higher selling prices and the favorable
shift in product mix partially offset by higher raw material and energy costs.
Performance Chemicals and Intermediates - Sales revenue increased by 6 percent
primarily due to higher sales volume in the U.S., mainly in acetyl product
lines. Operating earnings in first quarter 2012 were $77 million compared to $94
million in first quarter 2011, with the decline primarily in Asia Pacific due to
lower selling prices attributed to weakened market demand primarily for olefin
derivatives and higher raw material and energy costs. In addition, operating
earnings increased in the U.S. primarily due to the benefit of producing versus
purchasing olefins, while lower operating earnings in Europe were attributed to
weakened market demand and higher raw material and energy costs.
Specialty Plastics - Sales revenue decreased by 5 percent in first quarter 2012
compared to first quarter 2011 primarily due to lower sales volume partially
offset by higher selling prices. The decrease in sales volume, mainly in Asia
Pacific, was attributed to weakened demand primarily in the LCD and consumer and
durable goods markets. Selling prices increased in response to higher raw
material and energy costs, particularly for paraxylene. First-quarter 2012
operating earnings were $30 million compared to $35 million in first quarter
2011. The decline was primarily due to lower sales volume and resulting lower
capacity utilization, and higher raw material and energy costs. These were
partially offset by higher selling prices.
Cash Flow
Eastman generated $19 million in cash from operating activities during
first quarter 2012. Working capital increased by $109 million as receivables
increased due to higher sales revenue. The company contributed $25 million to
the U.S. defined benefit pension plans during the quarter, and expects to
contribute approximately $100 million in full year 2012.
Outlook
Commenting on the outlook for full year 2012, Rogers said: "Although there is
continued uncertainty, we anticipate slow global economic growth but with
particular strength in the U.S. In addition, we anticipate reduced volatility in
raw material and energy costs, and we expect that producing versus buying
olefins will be a tailwind for 2012. We also expect continued benefit from
incremental capacity additions as well as recent acquisitions, including the
expected mid-year close of the Solutia acquisition. As a result, we expect full-
year 2012 earnings per share to be approximately $5.30, which would be an
increase of approximately 10 percent compared with full year 2011 earnings per
share." Acquisition-related costs and charges, asset impairments and
restructuring charges, and mark-to-market pension and OPEB adjustments are
excluded from earnings per share for both periods.
Accounting Methodology Change for Pension and OPEB Plans; Description of First-
Quarter 2011 OPEB Plan Gain
As previously disclosed, Eastman has elected to change its method of accounting
for actuarial gains and losses for its pension and OPEB plans. The new method
recognizes actuarial gains and losses in operating results in the year incurred
rather than amortizing them over future periods. Under the new method of
accounting, these gains and losses are now measured annually at December 31 and
recorded as a mark-to-market ("MTM") adjustment during the fourth quarter of
each year, and any quarters in which an interim remeasurement is triggered. The
new method has been retrospectively applied to the financial results for all
periods. In first quarter 2011, the Company recognized a $15 million gain under
the new accounting method due to the interim remeasurement of the OPEB plan
obligation. The exit of employees associated with the sale of the PET business
triggered the interim MTM remeasurement.
Eastman will host a conference call with industry analysts on April 27 at 8:00
a.m. EDT. To listen to the live webcast of the conference call and view the
accompanying slides, go to www.investors.eastman.com, Events & Presentations. To
listen via telephone, the dial-in number is 913-312-1298, passcode number
8471527. A web replay, a replay in downloadable MP3 format, and the accompanying
slides will be available at www.investors.eastman.com, Events & Presentations
beginning at 9:00 a.m. EDT, April 30. A telephone replay will be available
continuously from 9:00 a.m. EDT, April 30, at (888) 203-1112 or (719) 457-0820,
passcode 8471527.
Eastman's chemicals, fibers and plastics are used as key ingredients in products
that people use every day. Approximately 10,000 Eastman employees around the
world blend technical expertise and innovation to deliver practical solutions.
The company is committed to finding sustainable business opportunities within
the diverse markets it serves. A global company headquartered in Kingsport,
Tenn., USA, Eastman had 2011 sales of $7 billion. For more information, visit
www.eastman.com.
Forward Looking Statements: This news release includes forward-looking
statements concerning current expectations for global economic conditions; the
timing and expected benefits of the completion of the Solutia acquisition and
other acquisitions and capacity additions; raw material and energy costs,
including for propane and propylene; and earnings per share for 2012. Such
expectations are based upon certain preliminary information, internal estimates,
and management assumptions, expectations, and plans, and are subject to a number
of risks and uncertainties inherent in projecting future conditions, events, and
results. Actual results could differ materially from expectations expressed in
the forward-looking statements if one or more of the underlying assumptions or
expectations prove to be inaccurate or are unrealized. Important factors that
could cause actual results to differ materially from such expectations are and
will be detailed in the company's filings with the Securities and Exchange
Commission, including the Form 10-K filed for 2011 available, and the Form 10-Q
to be filed for first quarter 2012 and to be available, on the SEC web site at
www.sec.gov and the Eastman web site at www.eastman.com in the Investors, SEC
filings section.
# # #
Contacts:
Media: Kristin Sturgill
423-229-2526 / ksturgill(at)eastman.com
Investors: Greg Riddle
212-835-1620 / griddle(at)eastman.com
Q1 2012 Financial Tables:
http://hugin.info/150386/R/1606672/509416.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Eastman Chemical Company via Thomson Reuters ONE
[HUG#1606672]
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Datum: 26.04.2012 - 17:16 Uhr
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