Eastman Chemical announced on May 2 that the company's diluted earnings per share in the first quarter of 2018 would be $2.00, compared with $1.89 in the first quarter of 2017. Adjusted diluted earnings per share for the first quarter of 2018 $2.33, $1.83 for the same period in 2017.
Eastman chairman and chief executive officer Mark Costa said: 'We made a good start in 2018 and the first quarter's adjusted earnings per share achieved a 22% year-on-year growth. With our innovation-driven growth model, our Special businesses achieved significant sales growth above market in the first quarter. Our strong performance also benefited from strict capital allocation and continued attention to cost management. Effective strategic execution will continue to bring excellent results to the company in the future. Performance, we are full of confidence in this. '
Comparison of Business Performance between the First Quarter of 2018 and the First Quarter of 2017
From January 1st, 2018, the company's main measure of business performance during all reporting periods was changed to EBIT.
Comparison of Business Performance between the First Quarter of 2018 and the First Quarter of 2017
Additives and functional materials - Sales volume increases, favorable exchange rate changes, and rising sales prices drive growth in sales revenue. The increase in the sales volume of most product lines, especially animal nutrition, nursing chemicals and tire additives, and the increase in sales prices are mainly due to Improvement of the market environment and effective commercial implementation. The increase in sales volume, favorable exchange rate changes and rising sales prices also contributed to the increase in reported and adjusted EBIT, but the increase in the cost of growth projects also had an adverse effect to some extent.
Specialty materials - Sales growth was driven by higher sales of high-value products including TritanTM copolyesters, Saflex® head-up displays ('HUD's), Saflex® sound-insulated sandwiches and high-performance films, as well as improved product portfolios and Advantageous changes in exchange rates. Increased sales volume, improved product mix, and favourable changes in exchange rates have also contributed to the growth of reported and adjusted EBITs, but the increase in the cost of growth projects has also had an adverse effect to some extent.
Chemical intermediates - The increase in sales revenue was attributed to the increase in the sales price of most product lines (rising prices due to the increase in prices of raw materials and energy) and the continuous improvement of the market environment. The reason for the decrease in EBIT was reported to have been caused by coal gasification events. The increase in costs. The increase in adjusted EBIT was mainly due to the increase in sales prices that exceeded the impact of rising raw material and energy costs.
Fibre - sales of acetate tow and cellulose acetate sheets benefited from changes in revenue recognition time under the new accounting standards, which contributed to an increase in sales revenue. In addition, innovative textile and nonwoven application platform products in the first quarter of 2018 Sales revenue (included in 'Other' business in previous reports) also contributed to the increase in sales revenue of the fiber business. The reason for the decrease in reported EBIT was the increase in cost caused by coal gasification events. The adjusted EBIT growth was mainly due to Increase in sales.
cash flow
The company's free cash flow (cash generated from operating activities less net capital expenditures) is expected to exceed $1.1 billion. Cash available is used to pay quarterly dividends, repay debt, invest in growth projects and buy back shares.
Eastman used $35 million in cash for its operations in the first quarter of 2018. The strong earnings growth was partly offset by the normal seasonal increase in working capital. The net cash used for coal gasification unit repair and restart in the first quarter of 2018 was approximately 75 million U.S. share repurchase for the quarter totaled 100 million U.S. dollars.
Outlook
Looking into the full year results of 2018, Mark Costa said: “The outstanding performance of the first quarter has increased our confidence in achieving this year’s growth forecast. Our innovation-driven growth model continues to achieve results and has driven the growth of our specialty businesses. Moreover, Our strong free cash flow and moderately reduced tax rates also contribute to profitable growth. We will continue to work to offset the effects of price fluctuations in raw materials and energy, especially the price impact of olefins. Taking all these factors together, we have adjusted 2018 after each Expectations of earnings growth for stocks have increased to between 10% and 14%.
Changes in accounting standards for revenue recognition and business product changes
From the first quarter of 2018, the company adopted the "No. 606 accounting standards." According to the guidelines, the company counts revenue when control is transferred to customers (usually shipped orders are counted in total revenue). According to the previous revenue recognition accounting standards, we only record the orders that have been delivered. For this change of accounting standards, the company adopts an improved retrospective adjustment method, that is, the income that occurred before the first quarter of 2018 adopts the previous accounting standards, 2017.12 Revenue from products shipped but not yet delivered on the 31st of the month was adjusted for retained earnings. This adjustment resulted in an increase in net income after taxation of $53 million. As sales in 2018 and 2017 are also 52 weeks, it is expected that This adjustment will not have a significant impact on our annual sales revenue or EBIT. However, compared with previous years, it is expected that the difference in revenue recognition time under current and past accounting standards will have seasonal income in 2018 and EBIT trend has a certain impact.
From the first quarter of 2018, due to the acceleration of the commercialization of growth projects, the sales revenue and innovation cost of the innovative platform products for textiles and nonwovens applications that were previously included in the 'other' business will be included in the fiber business report. In addition, due to recent changes in product and operations management to better align resources for growth projects, certain products previously included in the chemical intermediate business will be included in the additive and functional materials business from the first quarter of 2018. In the report.