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We applaud the company’s intent to exit from PET business, which remained a heavy burden on the overall company results, despite
years of diligent efforts to improve its performance via Integrex technology. The PET marketplace has been structurually disfunctional for
many years, with new capacity being rapidly added despite the persistent flood of overcapacity. The exit from PET should allow EMN to re-
focus management time on profitable growth, both by internal measures and also by bolt-on M&A.
This decision is likely difficult for EMN, as PET has been one of the core businesses for the company for many years, predating EMN’s
emergence as a public stock in 1993. PET was a strong business (highly profitable and fast growing) in the 1980s and early 1990s, but then
April 23, 2010
Eastman Chemical (EMN - US$ 67.12) 2-Equal Weight
Change of Price Target
Another Strong Q as Vol Grow
EMN Q1'10 EPS of $1.37 was another beat,
driven by strong operating leverage as volumes
increased, along with higher selling prices. Spec
Plastics segment had the highest upside surprise
with 50% volume growth, followed by PCI. Fibers
held onto strong results this Q, although volumes
were flat yoy on tough comps.
EMN expects Q2'10 EPS to be $1.50-$1.60 -
marking another strong Q ahead. FY'10 guidance
was set at $5.00 - $5.25. Overall, EMN guidance
has tended to be very conservative, as fixed and
variable cost improvements, along with impressiv