The News
Eastman Chemical raised its selling prices 7% from a year earlier in the third quarter. Sales rose 8% to $2.39 billion, while sales volume grew only 1%.
Eastman says it is on track to put through about $500 million of price increases this year, measured against its plans from before the Middle East conflict began.
“Input costs continued to elevate, and the Eastman team successfully implemented higher sequential price increases in our specialties,” said CEO Mark Costa.
The details
The biggest price increases came in Eastman’s chemical intermediates and additives businesses, where it raised prices 12% and 10%. Eastman tied both to higher raw material and distribution costs, plus tight olefin supply linked to the Middle East conflict.
Chemical Intermediates prices rose 12% and volume rose 4%, mostly in olefins and their derivatives.
Additives & Functional Products prices rose 10%. Its cost-pass-through contracts adjusted to raw material and distribution costs.
Advanced Materials prices rose 4%. Eastman said specialty plastics prices went up because of “higher raw material and distribution costs.”
Fibers prices fell 4%, the only decline, on lower contract pricing for acetate tow.
Eastman has already put the next round of increases into effect for North American buyers of solvents and plasticizers. The notices say each increase applies on the effective date “or as contracts allow.”
Glycol ether solvents (EB, DB, DTB and their acetates) rose 10 cents a pound on Oct 31 in North America and Latin America. Eastman cited demand and operating costs, mainly raw materials.
Plasticizers rose 5 to 8 cents a pound on Nov 1 in North America: DOP by 8 cents, DOA by 6 cents, and Eastman 168 and VersaMax Plus by 5 cents.
A month earlier, on Oct 1, ethyl acetate, acetic acid and acetic anhydride rose 4 to 5 cents a pound in the Americas.
Those higher prices also showed up in Eastman’s profit, alongside fuller plants. Earnings before interest and taxes, excluding non-core items, rose to $305 million from $210 million.
That profit equaled 12.8% of sales, up from 9.5%.
Additives & Functional Products earned more because prices rose faster than its costs and its plants ran fuller.
Advanced Materials profit nearly doubled, from better plant use and less planned maintenance.
Fibers profit fell to $52 million from $67 million, hurt by lower tow prices and higher raw material and distribution costs.
At the same time, Eastman expects customers to order less in the fourth quarter. It still plans more price increases, because it says costs kept rising through the quarter.
Eastman expects “sequential demand declines with normal seasonality and some additional customer caution.”
It is “taking additional price actions across the company” after “the acceleration of raw material and distribution costs through this quarter.”
Sales already fell 5% from the second quarter, to $2.39 billion from $2.51 billion.
Worth noting
Eastman is holding more finished product than it did at the start of the year. Finished goods inventory reached $1.47 billion at the end of September, up 8% from Dec 31. Raw materials and supplies rose 9% to $716 million. For buyers, that means Eastman has product on hand even as it raises prices.
(Photo: Lloyd Sutton/Alpha Presse, courtesy of CN)
