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About Eastman Chemical Company

Eastman Chemical Company is a major international producer of acetate tow for cigarette filters. From manufacturing sites in the US and six European countries (including the UK, Germany, and France) it also turns out chemicals, fibers, plastics, rubber materials, polymers, and solvents. Eastman's products include such items as food and medical packaging, films, and toothbrushes. Its end markets include transportation, building and construction, tobacco, consumer durables, food and agriculture, and health and wellbeing.The company was once part of film giant Eastman Kodak.

Operations

Eastman Chemical went public in 1994, but the company traces its roots to the 19th century. George Eastman, after developing a method for dry-plate photography, established the Eastman Dry Plate and Film Company in 1884 in Rochester, New York (the name was changed to Eastman Kodak in 1892).

In 1886 Eastman hired scientist Henry Reichenbach to help create and manufacture new photographic chemicals. As time passed, Reichenbach and the company's other scientists came up with chemicals that were either not directly related to photography or had uses in addition to photography.

Eastman bought a wood-distillation plant in Kingsport, Tennessee, in 1920 and formed the Tennessee Eastman Corporation to make methanol and acetone for the manufacture of photographic chemicals. The company, by this time called Kodak, introduced acetate yarn and Tenite, a cellulose ester plastic, in the early 1930s. During WWII the company formed Holston Defense to make explosives for the US armed forces.

Kodak began to vertically integrate Tennessee Eastman's operations during the 1950s, acquiring A. M. Tenney Associates, Tennessee Eastman's selling agent for its acetate yarn products, in 1950. It also established Texas Eastman, opening a plant in Longview to produce ethyl alcohol and aldehydes, raw materials used in fiber and film production. At the end of 1952, Kodak created Eastman Chemical Products to sell alcohols, plastics, and fibers made by Tennessee Eastman and Texas Eastman. Also that year Tennessee Eastman developed cellulose acetate filter tow for use in cigarette filters. In the late 1950s the company introduced Kodel polyester fiber.

Kodak created Carolina Eastman Company in 1968, opening a plant in Columbia, South Carolina, to produce Kodel and other polyester products. It also created Eastman Chemicals Division to handle its chemical operations.

In the late 1970s Eastman Chemicals Division introduced polyethylene terephthalate (PET) resin used to make containers. It acquired biological and molecular instrumentation manufacturer International Biotechnologies in 1987.

Eastman Chemicals Division became Eastman Chemical Company in 1990. In 1993 it exited the polyester fiber business. When Kodak spun off Eastman Chemical in early 1994, the new company was saddled with $1.8 billion in debt.

Eastman's 1996 earnings were reduced when oversupply lowered prices for PET. Eastman opened plants in Argentina, Malaysia, and the Netherlands in 1998.

Eastman added to its international locations in 1999 by opening a plant in Singapore and an office in Bangkok. It also bought Lawter International (specialty chemicals for ink and coatings) with locations in Belgium, China, and Ireland. In 2000 the company began restructuring into two business segments (chemicals and polymers) and acquired resin and colorant maker McWhorter Technologies.

In 2001 Eastman acquired most of Hercules' resins business. In November the company announced that it had postponed plans to split into two companies (one focusing on specialty chemicals and plastics, the other concentrating on polyethylene, plastics, and acetate fibers) until mid-2002 due to the weak economy. In early 2002 the company announced that it had cancelled those plans altogether and would operate the two as separate divisions.

The following year Eastman announced it would split off part of its coatings, adhesives, specialty polymers, and inks (CASPI) segment. The division had been underperforming and had been hit particularly hard by the high costs of raw materials and a general overcapacity in the marketplace. Eastman sold a portion of CASPI to investment firm Apollo Management for $215 million. Businesses included in the sale were composites, inks and graphic arts raw materials, liquid and powder resins, and textile chemicals. (Apollo called the acquired businesses Resolution Specialty Materials, and then joined RSM with Resolution Performance Products and another of its chemical companies, Borden Chemical, to form the new Hexion Specialty Chemicals in 2005.)

It restructured its divisional alignment in 2006 in an attempt to group together related product groups and technologies. In the process, Eastman disbanded its former Voridian Division.

At the end of 2007, the company decided to divest its PET facilities in the UK and the Netherlands as well as its Dutch PTA plants. Eastman sold the facilities to Indorama for about $330 million.

Chairman and CEO Brian Ferguson retired in 2009 after nearly seven years as CEO. James Rogers, who had been president of the company and head of the chemicals and fibers group, became his successor, and Ferguson became executive chairman.

In 2009 the company joined with SK Chemicals in a joint venture to construct a cellulose acetate tow facility in Ulsan, South Korea. Eastman owns 80% of the JV and operates the plant. It also bought a facility in China in 2010 in a joint venture with Mazzucchelli 1849 SPA. The previous year, Eastman had expanded an acetate tow facility it owns in the UK.

Eastman Chemical acquired Genovique Specialties Corporation, a global provider of benzoate plasticizers, from Arsenal Capital Partners in 2010. Genovique produces benzoic acid, sodium benzoate, and specialty plasticizers with operations in North America, Europe, and Asia.

Eastman bought Houston-based Sterling Chemicals for $100 million in 2011. The company plans to use Sterling's plasticizers manufacturing plant to produce its own line of non-phthalate plasticizers, Eastman 168, for its PCI segment. The non-phthalate plasticizers, used to soften vinyl, are an alternative to phthalates, which have seen restrictions because of safety concerns.

To raise cash for core businesses, in 2011 Eastman sold its Texas-based TX Energy unit to Zero Emission Energy Plants. The TX Energy facility will convert petroleum coke, an oil refining waste product, into hydrogen and pipeline-quality carbon dioxide.

Eastman Chemicals completed its exit of its Performance Polymers segment in 2011 by selling its polyethylene terephthalate (PET) business to DAK Americas, LLC for about $600 million. Eastman Chemicals had been a top producer of PET, a plastic used to make packaging for soft drinks, food, and water.

In a major move, in 2012 Eastman acquired US-based chemicals firm Solutia in a $4.7 billion cash-and stock deal. With the addition of Solutia, Eastman became a top-tier specialty chemicals company. Its products include rubber materials, specialty polymers (synthetic plastics), solvents, adhesives, plasticizers (additives to soften plastics such as PVC), and specialty fluids.

The Solutia purchase not only broadened Eastman Chemicals' portfolio but also its geographic reach. The addition was a significant step in the company's growth strategy, particularly in the Asia/Pacific region and other emerging markets, and the company expected the transaction to accelerate the expansion of its businesses worldwide.

That year Eastman also bought Dynaloy, a specialty chemical company in Indianapolis. Dynaloy sells cleaning products used in the manufacture of semiconductors, and the acquisition supports Eastman's efforts to expand its CASPI segment.

In 2012 Eastman's joint venture with Sinopec Yangzi Petrochemical announced plans to build a major hydrogenated hydrocarbon resin plant in Nanjing, China, capable of producing 50,000 metric tons of Eastman's Adhesives and Plasticizers segment's Regalite hydrocarbon resins.

To meet customer growth, in 2013 the company's Fibers segment joint venture with China National Tobacco completed a new 30,000 metric ton acetate tow manufacturing facility in Hefei, China.

Geographic Reach

Eastman has operations in Belgium, Estonia, France, Germany, Netherlands, the UK, and the US. Eastman has about 50 manufacturing sites and equity interests in three manufacturing joint ventures in some 15 countries that supply chemicals, plastics, and fibers products to customers throughout the world.

The US is Eastman Chemical's largest territory at around 45% of total sales. The EMEA region (Europe, Middle East, and Africa) accounts for around a quarter of sales, as does the Asia-Pacific region. Latin America generates the remaining roughly 5% of sales.

Sales and Marketing

Eastman Chemical markets and sells products in more than 100 countries through a global marketing and sales organization, which has a presence in the US and around 30 other countries.

The company's products are also marketed through indirect channels, which include distributors and contract representatives, primarily outside of the US. Products are shipped to customers directly from Eastman's manufacturing plants and from distribution centers worldwide.

Some of the markets the company serves are Adhesives, Appliances, Agriculture, Building & Construction, Childcare items, Coatings, Consumer Durable Goods, Personal Care & Cosmetics, and Electronics.

With a relatively diversified customer base, its top 100 customers account for around 55% of Eastman's total sales.

Financial Performance

Eastman earned $9.6 billion in revenues in 2017 (2016: $9 billion).  The 6% increase came from the AFP, CI, and AM segments (primarily higher sales volumes, followed by higher selling prices of chemical products), more than offsetting a decline in the Fibers segment. The decline in Fibers came from operation disruptions relating to an explosion in the Kingsport coal gasification area (estimated above $110 million in damage costs). 

Net income also climbed to $1.4 billion, from $854 million the year prior, primarily from a $100 million benefit from income tax provisions compared to $190 million expense the year before. Results further improved from the absence of a $85 million pay out in 2016 for early debt extinguishment, and almost $40 million less in asset impairment charges. 

Cash holdings went up slightly to $190 million. Operations generated $1.7 billion, offset by $1 billion in financing activities, and $640 million in investments.  

Strategy

Eastman aims to drive 1-2% revenue growth in 2016-18 through innovation and market development initiatives. It has invested in two manufacturing sites (in Germany and Malaysia) to capitalize on advances in the manufacture of Crystex insoluble sulfur.

An unfortunate glitch came in the fourth quarter of 2017, when operation were disrupted due to an explosion in the Kingsport coal gasification area that will cost the company upwards of $110 million in damages.

However, the company successfully completed the retrofit of its Nienburg, Germany manufacturing facility and continued work on the expansion of the rubber additives facility in Malaysia. Eastman also commercialized its Tertrashield performance polyester resins, providing improved performance for the automotive coatings, industrial, and food packaging markets.

Other developments include work on 60,000 tons of extra capacity in the Eatman Tritan copolyester plant in Kingsport, Tennessee, and further construction on a polyvinyl butyral resin plant in Malaysia.

Eastman is also adding emphasis to its specialty businesses and products by divesting or monetizing its excess ethelyne capacity and restructuring following the Taminco acquisition.

Eastman Chemical Company

200 S WILCOX DR
Kingsport, TN 37660-5147
Phone: 1 (423) 229-2000

Stats

Employer Type: Publicly Owned
Stock Symbol: EMN
Stock Exchange: , NYSE
Chairman and CEO: Mark J. Costa
SVP and CTO: Stephen G. Crawford
EVP and CFO: Curtis E. Espeland
Employees (This Location): 6,500
Employees (All Locations): 14,500

Major Office Locations

Kingsport, TN

Other Locations

Anniston, AL
Axis, AL
Decatur, AL
Foley, AL
Phoenix, AZ
Anaheim, CA
Canoga Park, CA
Huntington Beach, CA
Orange, CA
Palo Alto, CA
Dania, FL
Miami, FL
Sauget, IL
Saint Gabriel, LA
Springfield, MA
Chestertown, MD
Trenton, MI
Saint Louis, MO
Rochester, NY
Allentown, PA
Jefferson Hills, PA
Monongahela, PA
Gaston, SC
Akron, TN
Blountville, TN
Kingsport, TN
Euless, TX
Houston, TX
Longview, TX
Texas City, TX
Axton, VA
Courtland, VA
Fieldale, VA
Martinsville, VA
Shanghai, China
Bulandet, Norway
Moscow, Russia
Taipei City, Taiwan
Antwerpen, Belgium
Gent, Belgium
Merelbeke, Belgium
Singapore, Singapore