Thursday, Eastman Chemical Co. (EMN), a manufacturer and marketer of chemicals, fibers, and plastics worldwide, reported solid third quarter earnings despite significant raw material and energy cost volatility, uncertain prospects for the global economy, and difficulty in the financial markets. Revenues for the quarter grew 8%. The company expects fourth quarter earnings per share from continuing operations excluding items to be near the low end of analysts' expectations range.
The Kingsport, Tennessee-based Eastman Chemical's net earnings were $100 million or $1.33 per share, sharply higher than $20 million or $0.24 per share in the same period last year.
Earnings from continuing operations were $100 million or $1.33 per share, up from $25 million or $0.30 per share in the previous year period.
Excluding accelerated depreciation costs, and asset impairments and restructuring charges, third quarter earnings from continuing operations were $102 million $1.35 per share, compared to $107 million or $1.27 per share in the prior year period.
On average, six analysts surveyed by First Call/Thomson Financial expected the company to report earnings of $1.35 per share for the quarter.
Quarterly sales increased 8% to $1.82 billion from $1.69 billion in the corresponding period last year. Excluding contract ethylene and contract polymer intermediates sales, quarterly sales was $1.70 billion, up 12% from $1.52 billion a year ago, as higher selling prices in response to higher raw material and energy costs more than offset a 3% decline in sales volume. Five Wall Street analysts estimated revenues of $1.82 billion for the quarter.
The sales for both the periods included contract ethylene sales resulting from divestiture of the polyethylene business and contract polymer intermediates sales resulting from the divestiture of PET polymers' manufacturing facilities and related businesses in Mexico and Argentina.
Sales from Coatings, Adhesives, Specialty Polymers and Inks segment rose 11% to $410 million from $368 million last year, primarily due to higher selling prices in response to higher raw material and energy costs, particularly for propylene, propane and adhesives raw materials.
Fibers sales increased 4% to $269 million from $258 million a year ago, primarily due to higher selling prices in response to higher raw material and energy costs, particularly for wood pulp and methanol.
Sales from Performance Chemicals and Intermediates segment increased by 17% to $594 million from $509 million in the previous year period, as higher selling prices more than offset lower sales volume. Excluding the contract ethylene sales, sales from the segment increased by 19% due to higher selling prices in response to higher raw material and energy costs, which more than offset a 2% decline in sales volume.
Performance Polymers sales decreased by 14% to $293 million from $340 million in the prior year period, primarily due to the divestiture of the PET polymers manufacturing facilities and related businesses in Mexico and Argentina in fourth quarter 2007.
Excluding contract polymer intermediates sales and sales from the divested Mexico and Argentina PET manufacturing facilities, sales from Performance Polymers manufacturing sites increased by 4% as 17% higher selling prices in response to higher raw material and energy costs, particularly for paraxylene and ethylene glycol, were partially offset by a 12% decline in sales volume.
Sales from Specialty Plastics segment increased by 17% to $253 million from $217 million in the year earlier period, primarily due to a 8% increase in sales volume, particularly in Asia Pacific and North America, and higher selling prices in response to higher raw material and energy costs.
Sales in U.S. and Canada region rose to $1.12 billion from $1.02 billion, and Asia Pacific region sales increased to $309 million from $259 million, and Europe, Middle East and Africa region sales increased to $248 million from $231 million, while Latin America region sales declined to $138 million from $181 million in the previous year period.
Operating earnings for the quarter rose to $174 million from $46 million in the year earlier period. Excluding accelerated depreciation costs and asset impairments and restructuring charges, operating earnings was $179 million, up from $169 million in the prior year period.
During the third quarter, the company generated $214 million in cash from operating activities, reflecting continued strong net earnings, partially offset by increases in working capital. Share repurchases totaled $231 million during the third quarter. For the remainder of 2008, priorities for use of available cash are to pay the dividend, to fund targeted growth initiatives, and to repurchase shares under the authorized share repurchase plan.
The company's CEO Brian Ferguson said, "We continue to benefit from the diversity of our portfolio of businesses and the actions we have taken over the last five years to improve our profitability and strengthen our financial position. We also continue to confront economic weakness in North America and Europe, slowing demand growth in Asia, and volatile raw material and energy costs."
For the nine-month period, net earnings was $348 million or $4.50 per share, higher than $202 million or $2.38 per share in the previous year period. Earnings from continuing operations for the period rose to $330 million or $4.27 per share from $220 million or $2.60 per share a year ago.
Excluding accelerated depreciation costs, and asset impairments and restructuring charges, earnings from continuing operations for the period was $338 million or $4.38 per share, up from $322 million or $3.80 per share in the year-ago period.
Sales for the period increased to $5.38 billion from $5.09 billion in the comparable period last year.
Given the current expectations for weak economic growth through the end of the year, the company anticipates earnings per share from continuing operations excluding gains and charges related to strategic actions for the fourth quarter of 2008 to be near the low end of the current analysts' estimates range on First Call, which is $0.90 per share. Analysts, on average, expect earnings of $1.11 per share for the fourth quarter.
The stock closed Thursday's regular trading session at $36.83, down $1.40 or 3.66% on a volume of 2.13 million shares. For the past 52-week, the stock had been trading between $34.73 and $78.29.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.