Eastman Chemical Company EMN reported first-quarter 2023 earnings of $1.12 per share, reflecting a decline of 37.8% from the year-ago quarter's $1.80.
EMN posted adjusted earnings of $1.63 per share, down 20.9% from the year-ago quarter figure of $2.06. It surpassed the Zacks Consensus Estimate of $1.22.
The company’s revenues in the first quarter were $2,412 million, which beat the Zacks Consensus Estimate of $2,369.1 million. Sales decreased around 11.13% from $2,714 million reported in the prior-year quarter.
The top line declined due to the challenging global economic environment owing to higher-than-normal customer inventory destocking, weak demand, particularly in consumer durables and buildings and construction end markets, and an unfavorable impact from foreign currency exchange rates.
Eastman Chemical Company Price, Consensus and EPS Surprise
Eastman Chemical Company price-consensus-eps-surprise-chart | Eastman Chemical Company Quote
Advanced Materials: Revenues from this segment increased 0.7% year over year to $742 million in the first quarter. This marginal increase is due to higher selling prices offset by lower sales volume and an unfavorable impact from foreign currency. In 2022, strong levels of inflation resulted in higher selling prices in this quarter, notably for advanced interlayers and specialty plastics. Lower speciality plastics sales volume/mix was caused by persistent weak demand and aggressive customer inventory destocking, notably in the consumer durables and consumables end markets.
Additives & Functional Products: Revenues from this segment were $777 million, reflecting a decline of 12.6% from the year-ago quarter. Higher selling prices partly mitigated the impact of lower sales volume in all product lines, mainly due to lower demand and consumer destocking, which led to the decline in sales for this segment.
Chemical Intermediaries: Net sales from this segment were down 17.6% year over year to $589 million. Sales volume was lower in plasticizers and olefins due to continued weak end-market demand, including building and construction, consumer durables and industrial. Selling prices were lower due to reduced raw material prices.
Fibers: This segment reported net sales amounting to $303 million, which reflected a rise of 42.3% year over year. The increase in revenues was mainly attributable to significantly higher selling prices for acetate tow due to an increase in industry capacity utilization and higher raw material, energy and distribution prices throughout 2022.
Eastman Chemical reported cash used in operating activities of $2 million in the reported quarter against cash provided of $17 million a year ago. The company also returned $94 million to its shareholders through dividends in the quarter.
Eastman Chemical stated that it will continue with its pricing discipline through the remainder of 2023, which is expected to enable it to substantially recover margins. Also, the company is on track to reduce manufacturing, supply chain and non-manufacturing costs by a total of $200 million for the year, net of inflation.
EMN projects its cash flow from operating activities to be roughly $1.4 billion for 2023. The company expects adjusted EPS for full-year 2023 to grow between 5% and 15%, excluding a roughly 75 cents pension headwind.
EMN’s shares are down 21.5% over a year compared with a 2.1% decline recorded by its industry.
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Zacks Rank & Key Picks
EMN currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the Basic Materials space include Steel Dynamics, Inc. STLD, Linde plc LIN and PPG Industries, Inc. PPG
Steel Dynamics currently carries a Zacks Rank #1 (Strong Buy). Shares of STLD have gained 21.7% in the past year. It topped the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 10.7% on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Linde, currently carrying a Zacks Rank #2 (Buy), has a projected earnings growth rate of 9.1% for the current year. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 0.97% upward in the past 60 days. It has a trailing four-quarter earnings surprise of 5.9%, on average. The stock has gained 17.3% over the past year.
PPG Industries currently carries a Zacks Rank #2 and has a projected earnings growth rate of 20.2% for the current year. Shares of PPG have gained 8.6% in the past year. It delivered a trailing four-quarter earnings surprise of 6.8% on average.
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