Reduced demand and other challenges have led Eastman Chemical Co. to reduce its earnings expectations for the third quarter.
In a Sept. 13 news release, officials with Eastman in Kingsport, Tenn., said that the firm was lowering its expected earnings per share for the quarter from $2.46 to $2. The announcement led to Eastman's per-share stock price falling 11 percent to close at $84.11 on that date.
Board Chairman and CEO Mark Costa said in the release that there were three main factors negatively impacting Eastman's volume and product mix in the third quarter.
"While demand across some end markets, including agriculture and personal care, is demonstrating resilience, demand has slowed more than expected in August and September, in particular in the consumer durables and building and construction end markets and the European and Asian regions," he added.
Costa said that at the same time, logistics "have been challenged" by an acceleration of marine logistics issues on the U.S. East Coast, particularly impacting specialty products in Advanced Materials bound for other regions, and that operational issues "have also impacted volume and product mix, as recovery of our polymer lines from an electricity outage in July at our Kingsport facility took longer than expected."
Commenting on higher costs in the quarter, Costa said that certain costs "have trended higher than expected and are impacting third-quarter performance, particularly for natural gas in the U.S., which reached a 14-year high during the quarter."
In response to these challenges and continued uncertainty, Costa added that Eastman is raising prices on its products where appropriate to offset higher costs. The firm also is implementing measures to control costs across the company.
"As we close a challenging third quarter, our commitment to our growth programs is unwavering," Costa said. "Our investments have us well positioned as a leading specialty materials company, underpinned by our leadership position in the circular economy."
Eastman officials added that the update to the firm's outlook doesn't include any potential impact from a potential for a rail worker strike in the U.S. The potential for a strike appears to have passed with a tentative agreement announced Sept. 15.
Eastman will announce third-quarter 2022 financial results after the close of U.S. equities markets on Oct. 27.
In the first half of 2022, Eastman's total sales were up almost 8 percent to $5.5 billion, as profit for the half more than tripled to $493 million. Sales in the firm's Advanced Materials unit, including Tritan-brand copolyester, were up almost 7 percent to $1.6 billion for the half, but the unit's pretax profit declined almost 32 percent to $202 million.
On Wall Street, Eastman's per-share stock began the year near $120 but was just under $83 in early trading Sept. 15 for a decline of around 30 percent so far in 2022.
Eastman employs 14,000 worldwide and posted sales of $10.5 billion in 2021.