Eastman Chemical Co., the Kingport, Tenn.-based chemical, fiber and materials manufacturer, saw sales revenue in its fibers division decrease in the first quarter ended March 31 primarily due to lower acetyl chemical sales and lower acetate tow selling prices, mostly offset by higher acetate tow volume.
In the Fibers division, sales in the quarter fell 1.4 percent to $280 million from $284 million. Acetyl chemical sales were hurt by lower-cost internal sourcing of cellulose acetate flake raw materials rather than from the venture in Kingsport. Higher acetate tow sales was attributed to customer buying patterns.
Excluding a noncore item in the first quarter of 2015, operating earnings in the fiber unit decreased 4.4 percent to $86 million in the quarter from $90 million in the year-ago period, as lower selling prices were partially offset by higher acetate tow sales volume, lower raw-material and energy costs, and reduced operating costs.
Eastman Chromspun solution-dyed acetate yarn is used in apparel fabrics, draperies, linings, bedspreads and ribbons, while Eastman Estron acetate filament yarn has a more luxurious look and feel, and is available in bright and dull lusters for sportswear and eveningwear. Both consist of pure cellulose acetate.
Overall, Eastman said reported first-quarter operating earnings increased 28 percent to $399 million compared with $311 million in the 2015 period. Excluding noncore items, first-quarter operating earnings fell 6.6 percent to $406 million from $435 million in the year-ago period, as an increase in Advanced Materials was more than offset by a decline in Chemical Intermediates.
Sales revenue for the first quarter dipped 8.3 percent to $2.2 billion versus $2.4 billion in the same period last year, primarily due to a decline in Chemical Intermediates.
“Our solid first-quarter earnings demonstrate the resilience of our portfolio in the face of a challenging global business environment,” said Mark Costa, chairman and chief executive officer of Eastman. “We are focused on driving results for stockholders through strong growth from our high-value, innovative products, as well as disciplined cost management. We remain confident in our long-term strategy to win with our specialty products in attractive end markets.”
Eastman generated $47 million in cash from operating activities during the first quarter. Strong earnings were partially offset by a seasonal increase in working capital. Priorities for uses of available cash include payment of the quarterly dividend, repayment of debt, funding targeted growth initiatives and repurchasing shares.
Commenting on the outlook for the full year, Costa said: “Our solid first-quarter earnings demonstrate that we continue to benefit from strong growth of high-value, innovative specialty products. We are also benefiting from the actions we have taken to accelerate our innovation and market development activities, and to significantly increase our cost reduction efforts. However, we face increasing competitive pressures from slow global economic growth, low oil prices and weaker Asian and European currencies.”
Eastman serves customers in about 100 countries and had 2015 revenues of approximately $9.6 billion. The company employs approximately 15,000 people globally.