Eastman Lays Tow Acetate Foundation - Analyst Blog

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Eastman Chemical Company ( EMN">EMN ) has recently laid the foundation of a new plant inHeifei , China, to manufacture acetate tow. The new facility will be operated and owned by EastmanShuangwei Fibers Company (ESFCL ), which is in partnership with China National Tobacco, and it is estimated to generate 30,000 metric tons of acetate tow on the completion of the plant.

Owing to this joint venture, Eastman will be able to extend its operations into the world's rapidly growing economy, China, where this plant is going to be the company's first investment for an acetate tow facility. The plant will become functional from the middle of 2013.

 Thus through this joint venture Eastman intends to expand its global acetate tow business with China playing a significant role in the company's expansion plans. This new plant is expected to satisfy the growing needs of the customers.

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

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

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

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

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

Eastman battles with large multinational companies such as Celanese Corp. ( CE ) and The Dow Chemical Co. ( DOW ) and EI DuPont deNemours & Co. ( DD ) across 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
 
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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: CE , DD , DOW , EI , EMN

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