Eastman Chemical Co.’s Fibers division saw sales and operating earnings decline in the second quarter ended June 30.
Sales revenue in the segment decreased 22 percent to $234 million from $299 million in the year-ago period, primarily due to lower volume, particularly for acetate tow and acetate flake, and lower selling prices, particularly for acetate tow. Lower acetate tow volume was due to customer inventory destocking in China and lower acetate flake volume was blamed on the timing of shipments to Eastman’s China acetate tow joint venture.
Operating earnings in the Fibers unit fell 22.5 percent to $72 million compared to $93 million in the second quarter of 2015, with Eastman citing the decline in sales.
Overall, the Kingsport, Tenn.-based company reported a 20 percent decrease in operating earnings to $2.3 billion from $2.53 billion a year earlier, on sales that fell 9.3 percent to $376 million from $469 million year-to-year.
“The progress we have made executing our strategy to become a more specialty chemical company is enabling us to better navigate an especially challenging global economy,” said Mark Costa, chairman and chief executive officer. “The actions we have taken to focus and accelerate our innovation and market development program and add attractive acquisitions, while also reducing costs, have mitigated the impact of slow global growth and volatile raw material and energy costs. We remain confident in the resiliency of our portfolio and the sustainability of our strong cash flow going forward.”
Eastman said sales revenue declined primarily due to lower selling prices, particularly in Chemical Intermediates. Operating earnings were weighted down by the performance in the Chemical Intermediates and Fibers units.
Commenting on the outlook for full-year 2016, Costa said: “During the first half of the year, we delivered strong growth of high value, innovative specialty products and we expect that to continue. 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. The challenges we face have intensified, including increasing competitive pressures particularly from the Asia-Pacific region and compressing olefin spreads.”
Eastman is a global specialty chemical company that produces a broad range of products. Eastman serves customers in about 100 countries and had 2015 revenues of $9.6 billion. The company employs about 15,000 people around the world.