Expect full year 2009 EPS of $2.00 - $3.00; Company committed to generating positive free cash flow
KINGSPORT, Tenn., March 9, 2009 – Eastman Chemical Company (NYSE:EMN) today announced it is taking additional actions to further reduce costs by more than $100 million in response to the ongoing global economic recession. These actions, in addition to those announced in December, increase Eastman’s expected total cost savings in 2009 to more than $200 million. Eastman is taking the following actions to achieve these savings:
Reducing base pay for U.S. employees by 5 percent effective March 30, 2009, with equivalent cost reductions in bargaining unit sites and locations outside the U.S.
Implementing a global targeted reduction in force of between 200-300 employees within the next 4-6 weeks
Reducing non-critical maintenance costs
Reducing logistics costs
Further reducing discretionary spending
“The severity of the current economic environment led to the actions we are announcing today,” said Brian Ferguson, chairman and CEO. “Despite our expectation that sales volume will continue to be at depressed levels, we remain committed to taking the necessary actions to deliver solid operating cash flow in 2009 that will more than support both our dividend and capital expenditures.”
In addition to taking actions to reduce costs, the company lowered its budgeted 2009 capital expenditures to between $300 and $350 million. The company also expects to generate approximately $100 million of cash from working capital in 2009, assuming continued difficult economic conditions and raw material and energy costs similar to current levels.
Commenting on the outlook for full-year 2009 earnings, Ferguson said, “While visibility into global demand continues to be limited, the actions we are taking to reduce costs position us to better weather the storm. Assuming a modest improvement in demand that increases our capacity utilization from the current rate of approximately 71 percent to between 75-80 percent for the remainder of the year, we expect our full-year 2009 earnings per share will be between $2.00-$3.00 excluding charges related to cost cutting actions.”
The cost reduction actions announced today will result in a first-quarter 2009 pre-tax restructuring charge of approximately $30 million.
Forward Looking Statements: This news release includes forward-looking statements concerning current expectations for: reduced costs and the financial impact of cost reduction actions; cash flows from operations and from working capital; dividends; capital expenditures; economic and business conditions; demand and sales volumes for the company’s products; raw material and energy costs; utilization of the company’s manufacturing assets; accounting charges related to cost reduction actions; and earnings per share. Such expectations are based upon certain preliminary information, internal estimates, and management assumptions, expectations, and plans, and are subject to a number of risks and uncertainties inherent in projecting future conditions, events, and results. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions or expectations prove to be inaccurate or are unrealized. Important factors that could cause actual results to differ materially from such expectations are and will be detailed in the companys filings with the Securities and Exchange Commission, including the Form 10-K filed for 2008 available on the Eastman web site at www.eastman.com in the Investors, SEC filings section.
Eastman manufactures and markets chemicals, fibers and plastics worldwide. It provides key differentiated coatings, adhesives and specialty plastics products; is a major supplier of cellulose acetate fibers; and produces PET polymers for packaging. As a Responsible Care® company, Eastman is committed to achieving the highest standards of health, safety, environmental and security performance. Founded in 1920 and headquartered in Kingsport, Tenn., Eastman is a FORTUNE 500 company with 2008 sales of $6.7 billion and approximately 10,500 employees. For more information about Eastman and its products, visit www.eastman.com.