Eastman Chemical Co. is continuing its global PET sell-off, finding a buyer for plants in Mexico and Argentina and receiving a combined offer for plants in the Netherlands and England.
Eastman sold PET resin plants in Mexico and Argentina to Mexican conglomerate Alfa SAB de CV for an undisclosed price, according to a Sept. 17 news release. In the deal, Alfa, based in San Pedro Garza García, Mexico, receives a 405 million-pound-per-year plant in Zarate, Argentina, and one in Cosoleacaque, Mexico, with capacity for 330 million pounds.
``Eastman is taking a number of actions to improve the financial performance of its overall PET polymers business,'' said Greg Nelson, an Eastman executive vice president and head of the polymers business group. ``The sale of these nonintegrated assets is an important element of that effort,'' Nelson said in a news release.
Eastman opened a 770 million-pound-capacity plant in Columbia, S.C., earlier this year that uses the firm's IntegRex technology. Eastman claims IntegRex can reduce the cost of making PET by more than 15 percent.
Alfa operates a purified terephthalic acid plant near Eastman's Mexico facility, and already owns DAK Americas Inc., a PET maker with plants in Wilmington and Fayetteville, N.C.; and Charleston, S.C. Alfa also is a 50-50 partner with Brussels, Belgium-based Basell Holdings BV in polypropylene maker Indelpro SA de CV in Monterrey, Mexico. In 2007, Alfa posted sales of almost $7.1 billion.
Since early 2006, Kingsport, Tenn.-based Eastman has sold its polyethylene business to Westlake Chemical Co. and a PET plant in San Roque, Spain, to Spanish chemicals maker La Seda de Barcelona SA.
In a separate move, La Seda has placed a bid on Eastman PET plants in Rotterdam, Netherlands, and Workington, England. Annual PET capacity in Rotterdam is about 420 million pounds, while the Workington site - which also makes PET fiber - has annual PET resin capacity of about 310 million pounds. The deal for the two plants is worth about $250 million, according to a Sept. 17 Reuters news report. Eastman spokeswoman Martha Lawson declined to comment. Barcelona-based La Seda posted sales of $350 million in 2007.
Meanwhile, a company associated with La Seda major shareholder Manuel Matos Gil - ImatosGil Investmentos SGPS - has announced plans to build a 992 million-pound-capacity PET plant in Saudi Arabia, in a joint venture with local firm Chemical Development Co. of Khobar.
The two-stage program calls for the PET unit, using La Seda technology, to start up in late 2009, followed by a PTA plant, with 1.54 billion pounds of capacity in late 2010.
Eastman - North America's largest PET maker - posted sales of almost $7.5 billion in 2006, up almost 6 percent from the previous year. But overall profit fell 27 percent to $409 million. The firm's performance polymers unit, which includes PET, also struggled in 2006, with sales up only 2 percent to $2.6 billion. The unit's 2006 operating earnings tumbled 70 percent to $54 million.
Eastman's struggles have continued in 2007, with first-half sales flat at $3.7 billion and profit dropping 17 percent to $182 million. Performance polymers posted a first-half operating loss of $29 million for the company. Officials pinned the loss on volatile raw material and energy costs and on low operating rates in the PET market.
In a July 30 note to investors, stock analyst Kevin McCarthy said his firm, Banc of America Securities LLC in New York, ``expects steady earnings and cash flow in Eastman's specialty businesses to compensate partially for oversupply and consequent earnings pressure from PET resin.''