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Eastman Chemical (EMN) Gains on Cost Actions and Innovation
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Eastman Chemical Company (EMN - Free Report) is benefiting from cost-management actions and its innovation-driven growth model. However, it faces headwinds from supply-chain disruptions and high raw material costs.
Eastman Chemical, which is a prominent player in the chemicals space along with Dow Inc. (DOW - Free Report) , Celanese Corporation (CE - Free Report) and Air Products and Chemicals, Inc. (APD - Free Report) , is gaining from cost-cutting and productivity actions. It is undertaking a more aggressive approach to keep manufacturing costs in control. The company’s cost actions are expected to contribute to its earnings per share in 2022. Eastman Chemical is expected to benefit from lower operating costs from its operational transformation program and lower manufacturing shutdowns this year. It expects lower manufacturing and maintenance costs in 2022.
The company is also focused on generating new business revenues from innovation. Eastman Chemical generated roughly $600 million of new business revenues from innovation in 2021, driven by the strength in its specialty products. The company expects its specialty portfolio to drive sales growth across major markets such as consumer durables, building & construction, and transportation in 2022. Eastman Chemical will also likely gain from its strategic acquisitions and end-market recovery.
Eastman Chemical is also committed toward maintaining a disciplined approach to capital allocation, with an emphasis on financing its dividend and debt reduction. The company returned $1.4 billion to shareholders through share repurchases and dividends during 2021. Eastman Chemical also repaid $350 million of debt in 2021. It expects to generate operating cash flow of more than $1.6 billion in 2022.
However, the company faces headwinds from higher raw material, energy and distribution costs in some of its products. It saw significant headwinds from higher raw material, energy and distribution costs in the fourth quarter of 2021. The company expects these costs in 2022 to remain at the levels witnessed in fourth-quarter 2021.
The company is also exposed to headwinds from supply-chain disruptions, partly associated with the pandemic. The Omicron variant has created more supply chain disruptions. The company witnessed unfavorable impacts from supply chain constraints and higher logistics costs in the fourth quarter. Headwinds associated with supply and logistics are likely to continue to impact its first-quarter 2022 results.
The slowdown in automotive production due to the semiconductor shortage is another concern. The chip shortage is affecting automotive production globally. The shortage, partly caused by the impacts of the coronavirus pandemic, is disrupting production of parts and vehicles as well as affecting all major automotive original equipment manufacturers. This may affect demand in this market over the near term.
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Eastman Chemical (EMN) Gains on Cost Actions and Innovation
Eastman Chemical Company (EMN - Free Report) is benefiting from cost-management actions and its innovation-driven growth model. However, it faces headwinds from supply-chain disruptions and high raw material costs.
Eastman Chemical, which is a prominent player in the chemicals space along with Dow Inc. (DOW - Free Report) , Celanese Corporation (CE - Free Report) and Air Products and Chemicals, Inc. (APD - Free Report) , is gaining from cost-cutting and productivity actions. It is undertaking a more aggressive approach to keep manufacturing costs in control. The company’s cost actions are expected to contribute to its earnings per share in 2022. Eastman Chemical is expected to benefit from lower operating costs from its operational transformation program and lower manufacturing shutdowns this year. It expects lower manufacturing and maintenance costs in 2022.
The company is also focused on generating new business revenues from innovation. Eastman Chemical generated roughly $600 million of new business revenues from innovation in 2021, driven by the strength in its specialty products. The company expects its specialty portfolio to drive sales growth across major markets such as consumer durables, building & construction, and transportation in 2022. Eastman Chemical will also likely gain from its strategic acquisitions and end-market recovery.
Eastman Chemical is also committed toward maintaining a disciplined approach to capital allocation, with an emphasis on financing its dividend and debt reduction. The company returned $1.4 billion to shareholders through share repurchases and dividends during 2021. Eastman Chemical also repaid $350 million of debt in 2021. It expects to generate operating cash flow of more than $1.6 billion in 2022.
However, the company faces headwinds from higher raw material, energy and distribution costs in some of its products. It saw significant headwinds from higher raw material, energy and distribution costs in the fourth quarter of 2021. The company expects these costs in 2022 to remain at the levels witnessed in fourth-quarter 2021.
The company is also exposed to headwinds from supply-chain disruptions, partly associated with the pandemic. The Omicron variant has created more supply chain disruptions. The company witnessed unfavorable impacts from supply chain constraints and higher logistics costs in the fourth quarter. Headwinds associated with supply and logistics are likely to continue to impact its first-quarter 2022 results.
The slowdown in automotive production due to the semiconductor shortage is another concern. The chip shortage is affecting automotive production globally. The shortage, partly caused by the impacts of the coronavirus pandemic, is disrupting production of parts and vehicles as well as affecting all major automotive original equipment manufacturers. This may affect demand in this market over the near term.