KINGSPORT, Tenn. (WJHL) — Eastman Chemical Company saw a drop in third-quarter earnings, but the decline was on par with what the company was expecting.
In its third-quarter financial results announced Thursday, the Kingsport-based company reported $2.05 in adjusted earnings per share for third-quarter 2022, down 16% from 2021’s third-quarter earnings of $2.46 per share.
Eastman updated its third-quarter earnings expectations in September, predicting earnings of $2.00 per share instead of the “solid growth” that was originally forecast. CEO Mark Costa cited declining product demand, logistical challenges, and a July power outage at the company’s Kingsport plant as reasons for the lower expectations.
“Our team has done an excellent job managing through a challenging environment, including driving mix improvement with innovative products and demonstrating commercial excellence in our pricing,” Costa said in a company release Thursday.
Eastman reported its selling prices overall were 14% higher than the same period a year earlier.
“We remained focused on implementing significant price increases to offset higher raw material, energy, distribution, and other costs, which were at a higher level in the third quarter than at any other time during this inflationary period,” Costa said. “Our focus for the remainder of the year is on generating strong operating cash flow and driving progress on milestones for our key growth initiatives.”
Eastman reported decreased demand in several key end markets, including building and construction and industrial.
Two incidents that occurred at Eastman’s Kingsport plant are expected to have a negative impact of around $100 million on the company’s earnings before interest and taxes (EBIT) for the full year. Eastman says the Jan. 31 “steam line failure” resulted in $75 million in lost sales and the July 22 power outage limited the company’s ability to recover from sales lost in the first quarter.
The company expects fourth-quarter earnings per share of $1.10–1.40.
New molecular recycling plant
Eastman also announced that it has reached a definitive agreement with PepsiCo for supplying Eastman’s planned third molecular recycling plant. The new facility will be based in the U.S. with startup expected in 2016, according to the company. It will process about 160,000 metric tons of plastic, carpet, and textiles into polymers that can be reused for food-grade packaging, textiles, and other items.
Costa said in the news release Eastman was “excited” about the deal with PepsiCo, saying it demonstrated “our leadership position in the circular economy.”
The company’s first molecular recycling facility is being built in Kingsport.