Eastman Chemical Company EMN is benefiting from cost-cutting and productivity actions as well as its innovation-driven growth model amid challenges from soft demand in certain markets.

Eastman Chemical, which is among the prominent players in the chemical space along with Dow Inc. DOW, Celanese Corporation CE and Air Products and Chemicals, Inc. APD, is expected to benefit from lower operating costs from its operational transformation program in 2024.

EMN is taking action to keep its manufacturing and administrative costs in control. It achieved cost savings of around $200 million in 2023, net of inflation.  Pricing initiatives and lower raw material and energy costs are also expected to support the company’s bottom line. The company plans to maintain pricing discipline and improve asset utilization throughout the year.

Eastman aims to increase new business revenues by utilizing its innovation-driven growth strategy. Innovation and market development initiatives are expected to support its sales volumes. Its specialty portfolio is expected to drive sales growth across key end markets such as consumer durables, building & construction and transportation.

The company is also expected to gain from the revenues and earnings generated by its Kingsport methanolysis facility in 2024. It anticipates a $50 million incremental EBITDA contribution from the Kingsport facility.

Eastman Chemical also remains focused on maintaining a disciplined approach to capital allocation with an emphasis on debt reduction. It returned $526 million to shareholders in 2023 through dividends and share repurchases. It also raised its dividend for the 14th consecutive year. EMN expects to repurchase shares worth around $300 million in 2024.

However, EMN is exposed to headwinds from weak demand in certain markets. It is seeing soft demand in building & construction and cautious customer behavior in consumer durables and electronics. Demand in building & construction remains sluggish in most regions. 

While Eastman Chemical is seeing an end of customer inventory de-stocking across most of its end markets, the same is expected to continue in medical applications in the second half of 2024. Weaker demand is expected to adversely impact its performance in the third quarter of 2024.

EMN, on its second-quarter call, said that it expects earnings per share for 2024 to be between $7.40 and $7.85. It also expects to deliver around $1.4 billion in operating cash flow in 2024.

Another prominent chemical maker, Dow updated its third-quarter 2024 earnings guidance last month. It sees revenues of roughly $10.6 billion and operating EBITDA of about $1.3 billion. DOW stated that its revised outlook is mainly prompted by a major unexpected incident in late July at one of its ethylene crackers in Texas. The company is also dealing with higher input costs and margin pressures in Europe.

Celanese expects adjusted earnings in the range of $2.75-$3 per share for the third quarter of 2024. Based on the impact of the second-quarter force majeure and ongoing demand issues, CE forecasts full-year adjusted earnings per share in the range of $10.25 to $10.75.

Air Products, on its fiscal third-quarter call, maintained its fiscal 2024 full-year adjusted earnings per share projection of $12.20 to $12.50, suggesting a 6-9% increase from the previous year. The company’s adjusted earnings per share guidance for the fiscal fourth quarter is $3.33-$3.63.

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