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2016-01-28

Eastman Chemical Company: Eastman Announces Fourth-Quarter and Full-Year 2015 Financial Results

KINGSPORT, Tenn., Jan. 28, 2016 - Eastman Chemical Company (NYSE:EMN) today
announced earnings, excluding non-core items, of $1.59 per diluted share for
fourth quarter 2015 versus $1.64 per diluted share for fourth quarter 2014.
Reported earnings were $0.83 per diluted share in fourth quarter 2015 versus
$0.11 per diluted share in fourth quarter 2014. For detail of the excluded
items and reconciliation to reported company and segment earnings, see Tables
3A and 4.

"We delivered our sixth consecutive year of solid earnings growth and record
cash from operations in 2015," said Mark Costa, chairman and CEO. "These
results reflect the strength and robustness of our strategy to transform
towards a specialty portfolio as we managed through a very challenging global
business environment. We benefitted from volume growth in specialty
businesses, mix upgrade in Advanced Materials from growth of high value,
innovative products, accretion from high quality specialty acquisitions, and
continued disciplined cost management." See "Outlook" for the items excluded
from annual earnings comparisons.

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| (In millions, except per share amounts) 4Q15 4Q14 FY15 FY14 |
| Sales revenue $2,225 $2,349 $9,648 $9,527 |
| |
| Earnings per diluted share $0.83 $0.11 $5.66 $4.95 |
| Earnings per diluted share excluding non-core $1.59 $1.64 $7.28 $7.07 |
| |
| items* |
| Net cash provided by operating activities $562 $460 $1,612 $1,408 |
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*For reconciliation to reported company and segment earnings, see Tables 3A
and 4.

Corporate Results 4Q 2015 versus 4Q 2014

Sales revenue for fourth quarter 2015 was $2.2 billion versus $2.3 billion for
fourth quarter 2014, primarily due to lower selling prices more than
offsetting sales revenue from the Taminco Corporation and Commonwealth
Laminating&Coating, Inc. businesses acquired in December 2014. Excluding
non-core items, fourth-quarter 2015 operating earnings were $343 million
compared with $362 million for fourth quarter 2014 as earnings from the
acquired businesses and increased Advanced Materials sales volume were more
than offset by propane hedges and lower acetate tow sales volume. Reported
fourth-quarter 2015 operating earnings were $172 million compared with $27
million for fourth quarter 2014. Fourth-quarter 2015 and 2014 non-core items
included losses from annual mark-to-market of pension and other
post-retirement benefit plans, and fourth quarter 2015 non-core items
included restructuring severance costs.

Segment Results
4Q 2015 versus 4Q 2014

Additives&Functional Products -
Sales revenue increased primarily due to sales of products of the acquired
Taminco specialty amines and crop protection businesses. These revenues were
partially offset by lower coatings and other formulated products selling
prices, primarily due to lower raw material and energy costs. Excluding
non-core items in fourth quarter 2014, operating earnings decreased to $97
million for fourth quarter 2015 compared with $99 million for fourth quarter
2014 as earnings from the acquired businesses were more than offset by
propane hedges.

Adhesives&Plasticizers -
Sales revenue decreased primarily due to lower selling prices. Lower
plasticizers selling prices were primarily in response to lower raw material
and energy costs and continued competitive pressure resulting from weak
demand in Asia Pacific. Operating earnings increased to $49 million for
fourth quarter 2015 compared with $41 million for fourth quarter 2014
primarily due to lower raw material and energy costs exceeding lower selling
prices.

Advanced Materials -
Sales revenue increased primarily due to increased sales volume and sales of
products of the acquired Commonwealth performance films business. These
revenues were partially offset by lower selling prices primarily for
copolyesters due to lower raw material and energy costs. Excluding non-core
items in fourth quarter 2014, operating earnings increased to $83 million for
fourth quarter 2015 compared with $62 million for fourth quarter 2014
primarily due to higher sales volume and earnings from the acquired business.

Fibers -
Sales revenue decreased primarily due to lower acetate tow sales volume,
especially in China. Excluding non-core items in fourth quarter 2015,
operating earnings decreased to $107 million for fourth quarter 2015 compared
with $122 million for fourth quarter 2014 primarily due to lower acetate tow
sales volume.

Specialty Fluids&Intermediates -
Sales revenue decreased primarily due to lower selling prices and lower
chemical and other intermediates sales volume more than offsetting sales of
products of the acquired Taminco functional amines business. The lower
selling prices were primarily in response to lower raw material and energy
costs. Excluding non-core items in fourth quarter 2014, operating earnings
decreased to $20 million for fourth quarter 2015 compared to $49 million for
fourth quarter 2014 as propane hedges and lower selling prices more than
offset lower raw material and energy costs and earnings from the acquired
business.

Corporate Results 2015 versus 2014

Sales revenue was $9.6 billion, a 1 percent increase compared with 2014 due to
sales of products of acquired businesses partially offset by lower selling
prices, particularly in the Specialty Fluids&Intermediates segment. Excluding
the non-core items described in Tables 3A and 4, operating earnings for 2015
were $1.7 billion, a 6 percent increase compared with 2014 primarily due to
earnings of the acquired businesses and lower raw material and energy costs
exceeding lower selling prices. Reported 2015 operating earnings were $1.4
billion compared with $1.2 billion for 2014.

Segment Results 2015 versus 2014

Additives&Functional Products
- Sales revenue increased primarily due to sales of products of the acquired
Taminco specialty amines and crop protection businesses. These revenues were
partially offset by lower coatings and other formulated products selling
prices, primarily due to lower raw material and energy costs and an
unfavorable shift in foreign currency exchange rates. Excluding non-core
items in 2014, operating earnings increased to $462 million for 2015
compared with $398 million for 2014 primarily due to earnings from acquired
businesses and lower raw material and energy costs exceeding lower selling
prices, partially offset by propane hedges.

Adhesives&Plasticizers -
Sales revenue decreased primarily due to lower plasticizers selling prices and
an unfavorable shift in foreign currency exchange rates. Lower plasticizers
selling prices were primarily in response to lower raw material and energy
costs and continued competitive pressure. Operating earnings increased to
$239 million for 2015 compared with $196 million for 2014 primarily due to
lower raw material and energy costs exceeding lower selling prices, partially
offset by propane hedges and an unfavorable shift in foreign currency
exchange rates.

Advanced Materials -
Sales revenue increased due to increased sales volume and sales of products of
the acquired Commonwealth performance films business, partially offset by an
unfavorable shift in foreign currency exchange rates and lower selling
prices, primarily for copolyesters due to lower raw material and energy
costs. Excluding non-core items, operating earnings increased to $409 million
for 2015 compared with $293 million for 2014 primarily due to higher sales
volume and improved product mix, earnings from the acquired business, and
lower raw material and energy costs exceeding lower selling prices, partially
offset by an unfavorable shift in foreign currency exchange rates.

Fibers -
Sales revenue decreased primarily due to lower acetate tow sales volume
attributed to customer inventory destocking, especially in China, and lower
acetyl chemicals sales volume due to decreased sales to the cellulose acetate
flake joint venture in Kingsport. Excluding non-core items for 2015,
operating earnings decreased to $390 million for 2015 compared with $474
million for 2014 primarily due to lower acetate tow and acetyl chemicals
sales volume.

Specialty Fluids&Intermediates -
Sales revenue decreased primarily due to lower selling prices and lower
chemical and other intermediates sales volume more than offsetting sales of
products of the acquired Taminco functional amines and aviation turbine oil
businesses. The lower selling prices were primarily in response to lower raw
material and energy costs. Excluding non-core items in 2014, operating
earnings decreased to $253 million for 2015 compared to $305 million for 2014
primarily due to propane hedges more than offsetting earnings from the
acquired businesses.

Provision for Income Taxes

Excluding the tax impact of non-core items, the fourth-quarter 2015 effective
tax rate was 17 percent. The fourth quarter 2015 tax rate included benefit
from the extension in December 2015 of favorable U.S. federal tax provisions.
Excluding the tax impact of non-core items, the full-year 2015 effective tax
rate was 25 percent compared to 26 percent for full year 2014.

Cash Flow

Cash from operating activities was $1.6 billion in 2015. Free cash flow
(defined as cash from operating activities minus capital expenditures) was a
record $960 million in 2015. During 2015 the company reduced net debt
(defined as total borrowings less cash and cash equivalents) by $589 million,
contributed $125 million to its U.S. defined benefit pension plans, and
repurchased $103 million of shares.

Outlook

Commenting on the outlook for full year 2016, Costa said: "We enter 2016 well
positioned to benefit from our strong portfolio of specialty businesses which
leverage world-class technology platforms to deliver solid growth in
attractive end markets and accelerated earnings growth from our high value,
innovative specialty products. However, we face increasing challenges
including stagnant global economic growth, the collapse in the price of oil,
and weakening currencies in Asia and Europe. In this environment, we are
taking decisive actions to accelerate our innovation and market development
activities and significantly increase our cost reduction efforts. Given
current business conditions, we are driving hard to deliver 2016 earnings per
share that approach 2015 earnings per share." Non-core and any non-recurrin...

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