Remain on track to produce material and realize revenue from the Kingsport methanolysis facility around end of year
Eastman Chemical Company has registered a 16 per cent drop in its sales revenue at US$ 2,267 million during Q3 2023 due to 11 per cent lower sales volume/mix and 5 per cent lower selling prices. Eastman had posted sales revenue of US$2,709 million during Q3 2022.
“Sales volume/mix was lower across most product lines due to the continuation of weak primary demand and continued customer inventory destocking across several end markets, including consumer durables, building and construction, agriculture, and medical. Lower selling prices in Chemical Intermediates and Additives & Functional Products more than offset higher selling prices in Fibers,” the company said.
EBIT during Q3 2023 at US$ 256 million also dropped from US$324 during Q3 2022 due to lower sales volume/mix, lower capacity utilization to drive cash generation, increased pension expense, as well as an unfavorable impact from foreign currency. These factors were partially offset by lower variable costs more than offsetting lower selling prices and benefits from cost reduction actions.
During the quarter, the company generated more than US$500 million cash from operating activities, underpinned by decisive actions to reduce inventories. Eastman Chemical is on track to achieve full-year cost reductions of more than US$200 million, net of inflation.
“Our third-quarter results reflect decisive steps we took to aggressively reduce inventories and prioritize strong cash generation,” said Mark Costa, Board Chair and CEO.
“We delivered this strong cash flow against a backdrop of persistently weak demand and continued inventory destocking across several of our key end markets. We are encouraged to see modest improvements in demand across some markets, including consumer durables and personal care, but the pace of recovery has been slower than expected. We continue to focus on controllable actions, including maintaining cost discipline, defending the value of our products with resilient pricing, and managing working capital. These actions contribute to my confidence in the resiliency of our portfolio and sustainability of our strong cash flow going forward. We are also incredibly excited to be on track for producing material and realizing revenue from our Kingsport, Tennessee, methanolysis facility around the end of the year, further positioning Eastman as a leader in the circular economy.”
Commenting on the outlook for full-year 2023, Costa said: “Despite the continued challenging global economic environment, we were able to deliver on our earnings and cash flow expectations for the third quarter. This performance was the result of disciplined pricing across the portfolio, strong results in the Fibers segment, and decisive actions to generate strong cash flow. We also remain on track to reduce our cost structure by a total of $200 million for the year, net of inflation. As we enter the fourth quarter, demand remains muted as customers are cautious in the current challenging environment. We are also expecting normal seasonality in key end markets, including building and construction, consumer durables, and performance films automotive applications. And we will continue our decisive actions to generate cash. Taking this together, we expect 2023 EPS to be between $6.30 and $6.50, and for 2023 operating cash flow to approach $1.4 billion.”
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