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UPDATE 1-Eastman Chemical profit beats forecasts after Solutia deal
July 30, 2012 / 9:55 PM / 5 years ago

UPDATE 1-Eastman Chemical profit beats forecasts after Solutia deal

* Second-quarter profit drops but beats forecasts

* Eastman completed $3.4 bln Solutia buyout

* Company sees full-year earnings topping forecasts

July 30 (Reuters) - Eastman Chemical Co posted quarterly profit on Monday that beat forecasts, as lower supply costs helped offset a drop in demand for specialty plastics.

For the second quarter, the company said net income fell to $179 million, or $1.26 per share, from $220 million, or $1.51 per share, in the year-ago quarter.

Excluding one-time items, including costs to integrate rival Solutia, the company earned $1.40 per share.

By that measure, analysts expected earnings of $1.30 per share, according to Thomson Reuters I/B/E/S. Analysts expected $1.94 billion in revenue.

Eastman this month completed its $3.4 billion buyout of specialty chemicals maker Solutia Inc, part of a strategy to boost margins by growing in niche markets. Solutia makes a key ingredient in tire production, as well as parts for Apple’s iPad and’s Kindle.

Eastman said on Monday it still expects to earn $5.30 per share this year, which is above the $5.17 per share that Wall Street expects.

“Despite persistent global economic uncertainty, we continue to expect double-digit year-over-year earnings growth resulting from the solid performance of heritage Eastman businesses and second-half earnings from the acquired Solutia businesses,” Eastman Chief Executive Jim Rogers said in a statement.

During the second quarter, demand dipped for acetate tow, a key fiber used to make cigarette filters and felt-tipped pens. In the company’s largest segment, a drop in demand for coatings was offset by cheaper raw material supply costs.

Eastman’s stock has jumped 31 percent so far this year, closing Monday at $51 per share.

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