Eastman Swings To 4Q Net Loss Amid Falling Revenue, Charges

   DOW JONES NEWSWIRES 
 

Eastman Chemical Co. (EMN) swung to a fourth-quarter net loss amid falling revenue and volumes at all of the company's units and a $24 million restructuring and severance-related charge.

Following the news, shares moved down 5.9% to $25.74 in after-hours trading, after closing down 4.9% in the regular session.

Chemical companies have been hurt by rapid demand deterioration in recent months, as major customers in the construction, automotive and textile industries cut production.

The maker of specialty chemicals reported a net loss of $2 million, or 3 cents a share, compared with net income of $98 million, or $1.21 a share, a year earlier.

Excluding restructuring charges and impairments, earnings from continuing operations were down to 5 cents a share from $1.27.

Revenue decreased 22% to $1.35 billion.

Last month, the company lowered its per-share earnings view to be significantly less than its 90-cent projection in October. Analysts polled by Thomson Reuters forecast per-share earnings of 35 cents on revenue of $1.4 billion.

Gross margin dropped to 10.8% from 16.7% as overall volumes fell 22%. Rising costs and tough competition have hurt the company's margins over the past few quarters.

Sales in the performance chemicals and intermediates segment, its largest unit, were down 27% to $392 million as volumes fell 18%. The coatings, adhesives, specialty polymers and inks segment's sales dropped 14% to $311 million as volumes fell 27%.

Chief Executive Brian Ferguson said the company expects weak demand to continue into the first quarter, though he does see a "modest" increase in demand and "slightly higher" earnings sequentially. Wall Street expected 58 cents. Ferguson said capacity utilization likely reached a bottom in December.

Last month, Eastman said it would cut costs by $100 million in 2009 amid the slowing global economy, with plans to freeze salaries in 2009, eliminate overtime whenever possible and cut the use of contractors and part-time labor.

The company's stock is down nearly two-thirds from its 52-week high in May.

-By John Kell, Dow Jones Newswires; 201-938-5285; [e-mail]

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