KINGSPORT, Tenn. (WJHL) — Eastman Chemical’s third-quarter earnings of $256 million were 21% below the same period of 2022, according to financial results released Thursday.

The Kingsport-headquartered chemical giant also said in a news release that it expects to begin producing and selling material from its Kingsport “methanolysis” facility by the end of the year. That new facility uses “molecular recycling” to break discarded or recycled materials down to the molecular level and create a product indistinguishable from virgin plastic without the need for extracting new raw material.

Eastman CEO Mark Costa said the company still managed to deliver high cash flow “against a backdrop of persistently weak demand,” primarily through reducing inventories.

The company’s earnings per share of $1.49 was slightly better than Wall Street estimates of $1.45, but far below last year’s $2.46. After adjusting for non-core and unusual items, the difference was narrower, at $1.47 for Q3 2023 compared to $2.05 per year last year.

Eastman began 2023 predicting a softening of sales, and so far this year that’s been borne out, with sales of $7 billion running 15% below the first nine months of 2022’s $8.2 billion.

But the company also announced cost-cutting moves to start the year that included about 420 layoffs worldwide, including about 200 people locally. Costa said those cost-cutting moves were going according to plan and the plan was to continue a conservative approach. The decrease in inventories alone ($177 million), compared to the addition of $220 million in inventory during Q3 2022, more than accounted for the $258 million in additional cash flow compared to the previous year.

For the first nine months of the year Eastman has destocked inventories to the tune of $549 million, compared to adding $147 million of inventory through the same period last year. Year to date the company’s cash flow is $922 million, about $400 million more than this point in 2022.

“We are encouraged to see modest improvements in demand across some markets, including consumer durables and personal care, but the pace of recovery has been slower than expected,” Costa said.

Costa said Eastman expects full-year earnings of between $6.30 and $6.50 per adjusted share. Those earnings are $4.89 per share through three quarters, compared to $6.26 per share last year.

Eastman stock ended Thursday at $70.10 per share and is near its lowest level of the past three years. A year ago it stood at $75.56.