Eastman Chemical Co. (EMN) Monday reported a decline in second-quarter profit, hurt mainly by lower sales and as well on transaction and integration charges related to Solutia acquisition.
Eastman Chemical, which makes chemicals, synthetic fibers and plastics, said sales for the quarter dropped 2 percent to $1.85 billion from $1.89 billion last year. Eight Wall Street analysts on a consensus estimated revenues of $1.94 billion for the quarter.
Eastman's sales declined at every segment except one, as overall volumes stagnated and selling prices dropped 1 percent.
Coatings, adhesives, specialty polymers and inks segment revenues edged down to $486 million from $491 million last year, due to slightly lower selling prices. Specialty plastics segment sales slipped 6 percent to $315 million, on lower sales volumes. Fiber sales dropped 4 percent to $318 million due to an unfavorable shift in product mix that was partially offset by higher selling prices.
Sales at performance chemicals and intermediates, Eastman's largest unit, inched up to $732 million from $729 million last year, as higher sales volume and a favorable shift in product mix were offset by lower selling prices.
Kingsport, Tennessee-based Eastman's profit for the quarter decreased to $179 million or $1.27 per share from $220 million or $1.51 per share last year.
In January, Eastman Chemical agreed to buy smaller rival Solutia Inc. (SOA) for about $4.7 billion, including debt, to "strengthen Eastman as a top-tier specialty chemical company."
Chief Executive Jim Rogers said, "The integration of Solutia is well underway and our capture of cost synergies is on plan such that we are poised to deliver earnings growth and generate significant cash for years to come."
Adjusted earnings from continuing operations for the quarter dropped to $1.40 per share from $1.44 per share last year.
Adjusted earnings exclude charges of $33 million related to Solutia acquisition in second quarter 2012 and a $15 million gain in second quarter 2011 from the sale of a previously impaired asset.
On average, 10 analysts polled by Thomson Reuters expected earnings of $1.30 per share for the quarter. Analysts' estimates typically exclude special items.
Looking forward to the full year 2012, Rogers said, "Despite persistent global economic uncertainty, we continue to expect double-digit year-over-year earnings growth resulting from the solid performance of heritage Eastman businesses and second half earnings from the acquired Solutia businesses."
The company still expects 2012 earnings of $5.30 per share. Analysts currently expect earnings of $5.17 per share for fiscal 2012.
EMN closed Monday's trading on the NYSE at $51.00, down $0.74 or 1.43%, on a volume of 2.7 million shares. The stock is down $0.31 or 0.60% in after-hours.
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