MOSCOW (MRC) -- Eastman Chemical has reported second-quarter net earnings down 89.5% year-on-year (YOY), to USD27 million, on sales down 18.6%, to USD1.92 billion, reported Chemweek.
Adjusted earnings fell 57.2% YOY, to 85 cents/share, short of analysts’ consensus estimate of USD1.05/share, as reported by Refinitiv (New York, New York). Lower volumes, lower selling prices, and reduced capacity utilization hit both sales and profits, as the COVID-19 pandemic cut into demand in key end markets, including transportation, construction, and consumer durable goods.
“Our sales revenue in the first half of the year was relatively solid, demonstrating the value of a diverse set of end markets and the benefit of our innovation-driven growth model,” says Eastman board chair and CEO Mark Costa. “And, we moved swiftly to aggressively manage costs to offset meaningfully lower capacity utilization.”
Additives and functional products segment sales declined 16.8% YOY, to $685 million, while segment adjusted EBIT fell 51.0%, to USD72 million. The declines were driven by lower sales volumes and capacity utilization, as well as a less-favorable product mix.
Advanced materials segment sales were down 18.5% YOY, to USD567 million, while segment adjusted EBIT declined 55.9%, to USD64 million. The pandemic resulted in volume declines and reduced capacity utilization, with the consumer durable goods and transportation end markets showing particularly sluggish demand.
Chemical intermediates segment sales declined 26.9% YOY, to USD461 million, while segment adjusted EBIT fell 65.1%, to USD22 million. The COVID-19 pandemic cut into demand, reducing sales volumes and selling prices, and lower crude oil prices made U.S. olefins production less globally competitive.
Fibers segment sales were down 0.9% YOY, to USD211 million, while segment adjusted EBIT decreased 9.8%, to $46 million. Sales were flat as higher acetate tow volumes nearly offset lower demand for textile products.
Eastman is “seeing demand for products serving the auto, tires, building and construction, and consumer durables end markets begin to recover sequentially from the low levels of the second quarter leading to increased capacity utilization, particularly in advanced materials,” Costa says.
As MRC reported earlier, 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 DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
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.