Eastman Chemical Company reported an 8% increase in third-quarter 2026 revenue, driven by higher selling prices and improved performance across key businesses, as the specialty materials giant navigates rising raw material costs, mounting distribution expenses and continued geopolitical uncertainty linked to the Middle East conflict.
The company posted sales revenue of $2.385 billion for the quarter ended September 2026, up from $2.202 billion a year earlier. Earnings before interest and taxes (EBIT) surged to $305 million from $188 million in the third quarter of 2025, while adjusted EBIT climbed to $305 million from $210 million.
Diluted earnings per share jumped to $2.19, compared with $0.60 in the year-ago quarter. Adjusted earnings per diluted share rose to $1.84 from $1.14.
The results reflect Eastman's ability to push through price increases and improve operating efficiency even as demand weakened in some of its major end markets.
“Eastman delivered solid results amid ongoing global macroeconomic uncertainty and escalation of the Middle East conflict,” said Mark Costa, Board Chair and CEO.
“Input costs continued to elevate, and the Eastman team successfully implemented higher sequential price increases in our specialties. We remain on track to implement approximately $500 million of selling price increases in 2026 compared to our expectations from before the Middle East conflict began.”
Costa said sequential sales volume and product mix declined amid seasonal weakness across key markets, compounded by softer underlying demand in automotive and consumer durables.
Despite the challenging backdrop, Eastman remains committed to its cost-reduction programme, targeting savings of $125 million to $150 million in 2026, net of inflation.
Higher selling prices across Eastman's businesses were primarily driven by escalating raw material and distribution costs, alongside tight market conditions in Chemical Intermediates following the outbreak of the Middle East conflict.
The company said improved asset utilisation, lower planned maintenance expenses and favourable price-cost dynamics helped lift EBIT. However, higher variable compensation expenses partially offset those gains.
Eastman is also stepping up pricing actions to protect margins as input costs continue to rise.
Among Eastman's business segments, Additives & Functional Products and Advanced Materials recorded solid improvements, demonstrating resilience amid difficult market conditions.
Sales revenue in Advanced Materials increased 5%, supported by a 4% rise in selling prices and a 1% favourable foreign currency impact. Higher prices in specialty plastics reflected increased raw material and distribution costs.
Segment EBIT improved on the back of substantially stronger asset utilisation and lower planned maintenance costs.
Additives & Functional Products delivered a stronger 9% revenue increase, driven by 10% higher selling prices, partially offset by a 1% decline in sales volume and mix.
EBIT increased as the segment benefited from improved price-cost performance and asset utilisation.
The Fibers segment reported flat revenue as a 4% increase in sales volume and mix was offset by a 4% decline in selling prices.
Higher sales of textiles and acetyl chemical products supported volume growth, while lower acetate tow contract pricing weighed on revenue and profitability.
EBIT declined due to weaker acetate tow contract pricing and higher raw material and distribution costs.
However, Eastman expects Fibers to deliver higher acetate tow sales volumes in the second half of 2026 as customers fulfil their annual contractual commitments.
Chemical Intermediates emerged as one of the strongest performers, with revenue climbing 16%, supported by a 12% increase in selling prices and 4% higher sales volume and mix.
Increased product availability, particularly in olefins and derivatives, combined with tight market conditions linked to the Middle East conflict, supported higher prices and volumes.
The segment also reported higher EBIT, primarily reflecting improved spreads.
Eastman generated $290 million in operating cash flow during the third quarter, compared with $402 million in the corresponding period last year.
For the first nine months of 2026, operating cash flow totalled $377 million. The company returned $96 million to shareholders through dividends during the third quarter.
Management expects to release working capital in the fourth quarter and remains focused on preserving a strong investment-grade balance sheet while funding capital expenditure and dividend commitments.
Despite mounting cost pressures and an uncertain demand environment, Eastman is sticking to its full-year financial targets.
Commenting on the outlook for the fourth quarter and full year 2026, Costa said: "We expect to deliver a solid full-year performance in both earnings and cash flow, despite a challenging macroeconomic environment and the escalation of the Middle East conflict. In particular, the Middle East conflict has led to higher raw material and distribution costs and increasing interest rates.”
The company expects seasonal demand declines and additional customer caution to weigh on volumes, although innovation-driven growth is expected to provide some support.
Eastman is also intensifying its focus on expanding its circular platform and accelerating innovation across its specialty businesses.
“We expect to have higher planned shutdown costs in the fourth quarter, which will be partially offset by a continuation of cost actions through the year,” Costa said.
“When putting these factors together, we project adjusted earnings per share for full-year 2026 to be between $6.00 and $6.20 and operating cash flow to be approximately $850 million.”
