Eastman Chemical Company
(
EMN
) announced the completion of start up of its non-phthalate
plasticizer manufacturing facility in Texas City. The facility,
which Eastman bought in mid-2011, will produce Eastman 168,
non-phthalate plasticizer, thereby increasing its capacity by about
60%. With the capacity expansion, the company will be able to serve
the growing needs of non-phthalate plasticizers worldwide.
Non-phthalate plasticizers are not only used to provide
flexibility to polyvinyl chloride (PVC) in a wide variety of
applications, but are also used in products, such as toys, food
contact materials and medical devices. The plasticizers also
cater to end-markets, such as building and construction, health and
wellness, and infant care.
Last month, Eastman released its first-quarter 2012 results. The
company reported earnings of $1.13 per share for the quarter, down
from $1.39 a year ago. Excluding costs associated with its imminent
acquisition of Solutia and one-time gains, the Tennessee-based
chemicals maker earned $1.22 a share in the quarter, surpassing the
Zacks Consensus Estimate of $1.14.
Revenues increased 4% year over year to $1,821 million, but
missed the Zacks Consensus Estimate of $1,881 million. The growth
was aided by increased selling prices. Geographically, revenues
from the U.S. and Canada rose 9% to $1,002 million; Asia Pacific
inched down 2% to $388 million; Europe, Middle East and Africa fell
2.5% to $346 million; and Latin America decreased 3% to $85
million.
Eastman Chemical expects the global economy to grow slowly and
volatility in raw material and energy costs to diminish in the
near-term. The company expects earnings for 2012 to be roughly
$5.30 a share. It anticipates capacity additions and acquisition of
Solutia, which will be consummated in mid-2012, will contribute to
earnings growth.
Eastman Chemical's diversified chemical portfolio, along with
its integrated and diverse downstream businesses, have been driving
earnings. The company benefits from business restructuring and
cost-cutting measures. It already sold unprofitable units and
closed down the poorly performing ones.
The company, which competes with
The Dow Chemical Company
(
DOW
) and
E. I. du Pont de Nemours and Company
(
DD
), holds a short-term Zacks #2 Rank (Buy) and we currently have an
Outperform recommendation on the shares of Eastman Chemicals for
the long-term.
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