KINGSPORT, Tenn. (WJHL) — Eastman Chemical Company estimates the Jan. 31 steam line failure at its Kingsport plant reduced the company’s adjusted earnings by $125 million, according to the company’s first-quarter financial results published on Thursday.
Eastman said the $125 million consists of an estimated $75 million gross profit impact from lower sales revenue and about $50 million of accelerated costs. Even with the steam line failure’s impact, the company is still expecting strong earnings growth for the year.
“These costs were associated with normal business operations, including labor, benefits, and depreciation,” Eastman said in its first-quarter results report. “They were accelerated into the first quarter due to extended asset downtime instead of being assigned to inventory and realized throughout the year.”
The company said that all areas of its Kingsport manufacturing site have resumed normal operations following the incident, which resulted in five employees receiving minor injuries and environmental discharges. Debris possibly containing asbestos fell in neighborhoods near the plant, which prompted a class action lawsuit.
Eastman reported a 13% increase in first-quarter revenue year-over-year, with sales totaling $2.7 billion. Earnings per share were down slightly from the first quarter of 2021 at $1.80 compared to $1.99 last year.
Eastman cited continued strong demand and “the benefit of our innovation-driven growth model,” CEO Mark Costa said. He also said Eastman expects to recover much of the losses from the steam line incident later in the year.
