Eastman releases financial report for the first quarter of 2019

April 29, 2019 - Eastman Chemical Company (NYSE: EMN) released its financial report for the first quarter of 2019. Mark Costa, chairman and CEO of Eastman, said: "at the beginning of 2019, many challenges in the fourth quarter of last year continued to the first quarter, including the reduction of demand for special products in China and Europe due to trade problems and the slowdown of flow of low-cost raw materials. Despite these challenges, adjusted EBIT in the first quarter was 28% higher than in the fourth quarter of last year, indicating that we are making continuous progress. The advantages of an innovation driven growth model continue to give us confidence in the resilience of our business portfolio and our ability to generate sustainable cash flows in the future. " Comparison of business performance between the first quarter of 2019 and the first quarter of 2018 additives and functional materials continuous competitive pressure has reduced sales revenue of adhesive resin products, while global trade pressure has also reduced sales revenue of tire additives products. In addition, adverse changes in exchange rates and lower prices have also had a negative impact on sales revenue, especially for the nursing chemicals business. The reported and adjusted EBIT decrease is mainly due to the decrease in sales volume and adverse changes in exchange rate.

Special materials - the decrease of sales revenue is mainly due to the decrease of sales volume of special plastics and the adverse change of exchange rate. The decrease of sales volume of special plastics is due to the uncertainty caused by the trade dispute between China and the United States, which leads to the continuous reduction of customers' inventory reserves. The sales volume and product mix of high performance film and advanced intermediate film are relatively stable. The reported and adjusted EBIT decrease is mainly due to the decrease in sales volume and adverse changes in exchange rate. Chemical intermediates - the main reason for the decrease in sales revenue is that the refined propylene investment project reduces the volume production of ethylene while maintaining propylene production, which leads to the decrease in volume sales of ethylene products. The decrease of raw material prices of some olefin products (especially glycol) leads to the decrease of market prices, which leads to the decrease of sales prices and finally has a negative impact on sales revenue. Report EBIT growth due to the net cost impact of coal gasification events in the first quarter of 2018. The decrease of EBIT after adjustment is mainly due to the decrease of sales volume and the decrease of sales price slightly higher than the decrease of raw material cost of some olefin products (especially glycol). Fiber - the decrease in sales revenue is mainly due to the decrease in sales volume of acetate tow caused by China's trade-related problems and changes in other customers' purchase patterns, as well as the decrease in sales price of acetate tow. Report EBIT includes the net cost of coal gasification events in the first quarter of 2018.

The decrease of EBIT after reporting and adjustment is mainly due to the decrease of acetate tow sales, but the increase of textile sales and the decrease of raw material cost offset some adverse effects to some extent. Cash flow in 2019, the company's free cash flow (cash from operating activities minus net capital expenditure) is expected to continue to exceed US $1.1 billion. Available cash is used preferentially to pay quarterly dividends, repay debts, invest in growth projects and repurchase shares. In the first quarter of 2019, due to the normal seasonal growth of working capital, operating activities consumed a net cash flow of US $5 million, and the free cash flow was US $111 million. In the first quarter of 2019, the company returned $212 million to shareholders, including $87 million in dividends and $125 million in share repurchases. "We achieved strong and sustained profit growth in the first quarter and are expected to maintain a steady growth momentum in the second quarter," Costa said of its outlook for the whole year of 2019. While we continue to expand our special product business, we also use the innovation driven growth model to achieve the growth of new business. However, in the first half of this year, the global business environment is full of challenges, and the challenges in the fourth quarter of last year still exist. This includes a slowdown in global economic growth, partly due to the continuation of trade disputes between China and the United States, a slowdown in the flow of low-cost raw materials and a stronger dollar. Considering the challenging global business environment in the first half of this year and our commitment to shareholder value creation, we are taking further cost cutting measures. Looking to the future, with the improvement of business in March and April, we see that the macroeconomic challenges are easing, which makes us confident that the global economy will continue to strengthen in the second half of the year. Combined with all these factors, we continue to expect adjusted earnings per share growth of 6-10% in 2019. "