Eastman Chemical Perks Up Texas Facility - Analyst Blog


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.

DU PONT (EI) DE (DD): Free Stock Analysis Report
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EASTMAN CHEM CO (EMN): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: DD , DOW , EI , EMN



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