Eastman Chemical 's ( EMN ) first-quarter
2013 adjusted earnings (from continuing operations) of $1.62 per
share beat the Zacks Consensus estimate by a nickel and were well
above the year-ago earnings of $1.22. The adjusted earnings exclude
costs related to the acquisition of Solutia Inc. as well as
restructuring and impairment charges.
On a reported basis, the Tennessee-based chemicals maker logged a
profit (from continuing operation) of $247 million or $1.57 a
share, a 55% year-over-year surge. The bottom line was boosted by a
healthy rise in revenues.
Revenues and Margins
Revenues surged roughly 27% year over year to $2,307 million, yet
trailed the Zacks Consensus Estimate of $2,393 million. The top
line was driven by strong gains across the Additives and Functional
Products and Advanced Materials divisions and the contributions of
the Solutia acquisition.
Eastman Chemical saw higher sales across all geographic regions in
the reported quarter. Revenues from the U.S. and Canada rose
roughly 8% year over year to $1,081 million. Sales from
Asia-Pacific soared 53% to $595 million. Europe, Middle East and
Africa (EMEA) recorded a 48% jump in sales to $513 million while
Latin American revenues climbed 39% to $118 million.
Operating earnings shot up 49% year over year to $393 million in
the quarter on higher sales. Adjusted operating earnings climbed
48% year over year to $403 million.
Revenues from the Additives and Functional Products division
cruised 59% year over year to $419 million in the reported quarter,
buoyed by the acquisition of Solutia's rubber materials product
lines. Revenues include sales of certain products which were
earlier reported in the Adhesives & Plasticizers segment.
Sales from the Adhesives & Plasticizers segment dipped 8% to
$345 million on lower volume, stemming from weak demand for
adhesives resins sold to consumables markets.
Revenues from the Advanced Materials division doubled year over
year to $584 million, boosted by the addition of Solutia's
interlayers and performance films product lines.
Fibers segment sales rose 7% to $346 million, helped by higher
selling prices as a result of an increase in raw material and
energy costs and increased volume.
Sales from the Specialty Fluids and Intermediates segment rose 7%
to $607 million, aided by the addition of Solutia's specialty
fluids product lines.
Financial ConditionCELANESE CP-A (CE): Free Stock Analysis ReportEASTMAN CHEM CO (EMN): Free Stock Analysis
ReportFMC CORP (FMC): Free Stock Analysis ReportSHIN-ETSU CHEM (SHECY): Get Free ReportTo read this article on Zacks.com click here.Zacks Investment
Eastman Chemical exited the quarter with cash and cash equivalents
of $178 million, down 69% year over year. Total debt jumped roughly
three-fold year over year to nearly $4.8 billion, primarily due to
the assumption of Solutia debt. The company generated operating
cash flows of $5 million during the year, down 74% year over
Moving forward, Eastman Chemical feels that its strong foothold in
key markets, vast geographic presence and diversified end markets
will help it to deliver strong earnings. However, uncertainty
regarding the timing of a recovery in Europe and volatility in raw
material and energy costs remain as overhangs.
Considering there factors, Eastman Chemical has backed its full
year adjusted earnings (from continuing operations) forecast of
$6.30 to $6.40 a share. The current Zacks Consensus Estimate for
2013 is $6.42
Eastman Chemical's diversified chemical portfolio, along with its
integrated and diverse downstream businesses remains its strength.
The company should continue to benefit from the synergies of its
Solutia acquisition. It also stands to gain from business
restructuring, cost-cutting measures and increased capacity
Eastman Chemical currently holds a Zacks Rank #2 (Buy).
Other companies in the chemical industry that are worth
considering include Shin-Etsu Chemical Co., Ltd. (
Celanese Corporation ( CE ) and FMC
Corp. ( FMC
). While Shin-Etsu Chemical retains a Zacks Rank #1 (Strong Buy),
both Celanese and FMC hold a Zacks Rank #2 (Buy).