Eastman Expands Production Capacity - Analyst Blog

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Eastman Chemical Company ( EMN ) has announced that it has completed the expansion of its facility for hydrogenated hydrocarbon resins located in Middelburg, Netherlands. This is the third expansion to its Regalite hydrogenated hydrocarbon resins. This expansion has increased the capacity of the Middelburg facility two fold since 2006.

The enhanced capacity will enable the company to meet the growing demand from consumers and will also help in ensuring reliable and continuous supply of hydrocarbon resins to the markets in the future.

The Regalite resins are used for a wide range of applications such as plastic modifications, hot melt adhesives and polymer compounds. Due to their versatile and compatible properties Regalite resins can be used in combination with many kinds of polymers. They are highly stable and offer high color and adhesive quality.

The Middelburg facility is the largest of its kind that specializes in the production of dispersions, rosin resins and hydrocarbon resins. The previous two expansions to hydrocarbon resins were made at the company's facilities in Longview, Texas and Jefferson, Pennsylvania.

Recently, Eastman released its third quarter 2011 results. The company reported third-quarter earnings of $1.19 per share, compared with $1.11, a year earlier and the Zacks Consensus estimate of $1.11. This excludes $7 million of restructuring charges primarily for severance associated with the acquisition and integration of Sterling Chemicals, Inc.

After including the charges, earnings from continuing operations were $1.16 per diluted share in the third quarter of 2011 versus $1.11 in the year ago quarter.

Revenues climbed 20% year over year to $1.8 billion, driven by increased selling prices.

Operating earnings in the third quarter 2011 decreased by $3 million year over year to $263 million driven by higher selling prices and higher sales volume and offset by higher raw material and energy costs.

For the remainder of the year, the company expects sales volume to decline due to normal seasonality and customer inventory destocking. The company also expects continued volatility in raw material and energy costs. As a result, it forecasts fourth-quarter 2011 earnings per share to be higher than fourth quarter 2010 and full-year 2011 earnings per share of approximately $4.62, excluding asset impairments and restructuring charges and gain.

Eastman Chemical's diversified chemical portfolio, along with its integrated and diverse downstream businesses, is driving earnings. Eastman benefits from business restructuring and cost-cutting measures. The company has sold unprofitable units and closed down poorly performing ones.

The company, however, faces volatility in raw material and energy costs, higher pension expenses and other growth-related costs.

Celanese Corp. ( CE ), The Dow Chemical Co. ( DOW ) and EI DuPont de Nemours & Co. ( DD ) are other major in its major business segments.

Currently, Eastman has a short-term (1 to 3 months) Zacks #3 Rank (Hold) and a long-term (6 months and higher) Neutral recommendation.


 
CELANESE CP-A ( CE ): Free Stock Analysis Report
 
DU PONT ( EI ) DE ( DD ): Free Stock Analysis Report
 
DOW CHEMICAL ( DOW ): Free Stock Analysis Report
 
EASTMAN CHEM CO ( EMN ): Free Stock Analysis Report
 
Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Stocks
Referenced Stocks: CE , DD , DOW , EI , EMN


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