KINGSPORT, TN – Eastman Chemical Co. has announced earnings per diluted share of $0.89 for second quarter 2009 versus $1.48 for second quarter 2008. Excluding asset impairments and restructuring charges, net, in both second quarter 2009 and second quarter 2008, and accelerated depreciation costs in second quarter 2008, earnings per diluted share were $0.86 for second quarter 2009 and $1.53 for second quarter 2008.
"Although economic conditions continue to be challenging, we delivered solid earnings in the second quarter reflecting cost reduction actions we’ve taken and some improvement in demand as customer destocking appears to be mostly behind us," said Jim Rogers, President and CEO. "In addition, we generated over $100 million of free cash flow during the quarter and remain on track to meet our objective of positive full year 2009 free cash flow."
Sales revenue in second quarter 2009 was $1.3 billion, a 32 percent decrease compared with second quarter 2008. Sales revenue for both second quarter 2009 and second quarter 2008 included contract ethylene sales resulting from the fourth-quarter 2006 divestiture of the polyethylene business. Also included in second-quarter 2008 sales revenue were contract polymer intermediates sales resulting from the fourth-quarter 2007 divestiture of PET polymers manufacturing facilities and related businesses in Mexico and Argentina. Excluding these items for both periods, sales revenue declined by 27 percent due to a decline in sales volume of 13 percent primarily attributed to the global recession, and lower selling prices in response to lower raw material and energy costs particularly in the Performance Chemicals and Intermediates and Performance Polymers segments.
Operating earnings in second quarter 2009 were $131 million compared with operating earnings of $172 million in second quarter 2008. Excluding asset impairments and restructuring charges, net, in both second quarter 2009 and second quarter 2008, and accelerated depreciation costs in second quarter 2008, operating earnings were $128 million in second quarter 2009 and $178 million in second quarter 2008. Operating earnings declined in all segments except Fibers due to lower sales volume, lower capacity utilization resulting in higher unit costs, and costs related to the reconfiguration of the Longview, TX, site. Compared to first quarter 2009, operating earnings increased due to an 11 percent increase in sales volume, excluding contract ethylene sales in both periods, and lower raw material and energy costs. Operating earnings benefited in both first and second quarter 2009 from cost reduction actions.
Coatings, Adhesives, Specialty Polymers and Inks sales revenue declined by 27 percent primarily due to lower sales volume and lower selling prices. The lower sales volume was due to weak customer demand attributed to the global recession, particularly for products sold into the automotive, building and construction, and packaging markets.
Performance Chemicals and Intermediates sales revenue declined by 51 percent, and excluding contract ethylene sales resulting from the divestiture of the polyethylene business, declined by 42 percent due to lower selling prices and lower sales volume. The lower selling prices were primarily due to lower raw material and energy costs and the lower sales volume was primarily in olefin-based derivatives and was attributed to the global recession.
Performance Polymers sales revenue declined by 31 percent, and excluding contract polymer intermediates sales to divested manufacturing facilities in second quarter 2008 declined by 25 percent due to lower selling prices. The lower selling prices were primarily due to a decline in raw material and energy costs, primarily for paraxylene.
