Eastman earnings down on flat sales in first quarter
5:54 PM MDT | April 24, 2014 | Lindsay Frost
Eastman today announced its first quarter results, with net income dropping 6% year-on-year (YOY), to $233 million. Reported adjusted earnings of $1.61/share were 1 ct below the year-ago quarter but above analyst estimates of $1.58/share, according to Thomson Reuters (New York). Sales of $2.3 billion were flat YOY.
“We reported solid results in the first quarter despite a global economy that continues to be lackluster,” says Mark Costa, CEO of Eastman. “We remain focused on growth through Eastman-specific actions, including serving growing markets with capacity additions, improving our mix with premium products, and disciplined capital allocation. As a result, Eastman is well positioned for a fifth consecutive year of strong earnings growth.”
Within its additives and functional products segment, sales increased 1% YOY, to $423 million as higher sales volume for coatings more than offset lower sales volume for rubber additives. The higher sales volume for coatings was primarily attributed to strong demand in the building and construction transportation markets, the company says, and the lower sales volume for rubber additives was primarily attributed to customer inventory destocking in Asia Pacific. Operating earnings in the segment fell 4%, to $94 million due to higher raw material and energy costs, particularly for propane, the company says.
Adhesives and plasticizers sales were flat at $345 million as higher sales volume for adhesives resins was offset by lower selling prices for both adhesives resins and plasticizers. Operating earnings for the segment fell 4% YOY, to $47 million. Sales in advanced materials were $581 million—down half a percent YOY. Higher sales volume for its Tritan copolyester and premium acoustic interlayers was offset by lower performance films sales volume due to changes in customer incentive terms in Asia Pacific. Operating earnings increased 9%, to $71 million due to lower unit costs for specialty plastics.
Sales in the specialty fluids and intermediates segment dropped 1%, to $601 million due to lower sales volume for specialty fluids and other intermediates, partially offset by higher selling prices, the company says.
Eastman maintained full-year 2014 earnings guidance at $6.70-$7.00/share. "We expect sales revenue growth in the remaining three quarters and for full-year sales revenue to be consistent with global GDP growth," Costa says. "We also expect that benefits from Eastman-specific actions and from balanced deployment of our strong cash flow will accelerate earnings growth for the remainder of the year."