Eastman Chemical Company has announced steps to improve
profitability by addressing under-performing businesses and product lines
in one of its major segments.
Eastman identified the businesses and product lines
in its coatings, adhesives, specialty polymers and inks segment (CASPI)
that are performing below acceptable financial levels in their current
structure and outlined strategic alternatives of divestiture and consolidation
to improve the segment's financial performance. The steps associated with
the segment's under-performing businesses and product lines are estimated
to improve the segment's operating earnings in 2004 by at least $50 million.
On completion of these steps, Eastman expects the annual earnings run
rate for the CASPI segment to improve by $75 million to $100 million.
"The businesses and product lines within the CASPI
segment that we are focusing on are not meeting the company's expectations
for profitability under their current structure," said Brian Ferguson,
chairman and CEO. "We will be making decisions and taking actions
on the strategic alternatives of restructuring, divesting and consolidation
in an aggressive manner. This work is under way, and our goal is to have
this completed within the next eight to 12 months, with some actions expected
to be completed by year end."
Eastman has retained J.P. Morgan to assist in evaluating
the strategic alternatives for the CASPI businesses and product lines
that are performing below acceptable financial levels in their current
structure. The businesses and product lines that are the focus of today's
announcement include the following:
- Acrylate ester monomers
- Composites (unsaturated polyester resins)
- Inks and graphic arts raw materials
- Liquid resins
- Powder resins
- Textile chemicals
Sales revenues in 2002 for this portion of the CASPI
segment were approximately $650 million, and 2002 operating results were
a loss of approximately $75 million. The company expects the operating
loss in 2003 to be greater than the operating loss in 2002 for these businesses
and product lines. There are approximately 2,400 employees associated
with this portion of the CASPI segment.
"We will be taking actions with these businesses
and product lines in stages over the next year," Ferguson said. "After
completing these actions, we expect the CASPI segment to have double-digit
operating margins."
Ferguson continued, "I want to assure our customers
for these product lines that we remain committed to meeting their needs
as we take these actions. We expect to improve our overall performance
in the markets in which we compete both on a product and a service level,
and we will be working on an individual basis with customers to ensure
that this happens."
Headquartered in Kingsport, Tenn., Eastman manufactures
and markets chemicals, fibers and plastics. The company has approximately
15,800 employees in more than 30 countries and had 2002 sales of $5.3
billion.
Source: Eastman
Chemical Company |