Eastman Chemical reported third-quarter results Thursday. Higher selling prices were due to higher raw material, energy and distribution prices. The company expects more challenges in the fourth quarter.
Mark Costa, board chair and chief executive, said, “We remained focused on implementing significant price increases to offset higher raw material, energy, distribution, and other costs, which were at a higher level in the third quarter than at any other time during this inflationary period.
“Our focus for the remainder of the year is on generating strong operating cash flow and driving progress on milestones for our key growth initiatives.”
Selling prices increased due to raw material, energy, distribution
Selling prices increased approximately $380 million in response to significantly higher raw material, energy and distribution prices.
Product mix improved due to the strength of the company’s growth model, driven by transportation and medical end markets, which was offset by lower sales volume attributed to slowing demand across several key end markets, including building and construction and industrial.
Sales volume was also impacted by a power outage at the Kingsport, Tenn., site in late July and logistical constraints.
4Q challenges to global economy have increased
Commenting on the outlook for full-year 2022, Mr. Costa said: “The mix improvement mostly offset weakening demand and destocking, primarily in building and construction and industrial end markets, particularly in Europe and China.
“We’ve also implemented significant price increases to offset historic inflation in raw material, energy, distribution and other costs.
“Looking forward to the fourth quarter, challenges to the global economy have increased, including softening end-market demand, accelerated inventory destocking and the strong U.S. dollar.
“In addition, we expect continued high energy, raw material, and distribution costs will limit spread improvement in our specialty businesses,” he said.
“In this environment, we remain focused on outperforming our underlying markets as we drive continued mix improvement. Putting this all together, we expect fourth-quarter and full-year 2022 adjusted EPS to be between $1.10 and $1.40 and $8.05 and $8.35, respectively, and operating cash flow to be between $1 billion and $1.2 billion.”
Write to Matt Walker at matthew.walker@dowjones.com
United States Steel Corporation reported third-quarter results Thursday. The company’s chief executive said energy costs are expected to remain high, and investment projects will stay on schedule.
CEO says demand headwinds persisted in quarter
President and Chief Executive David B. Burritt said, “Demand headwinds persisted through the third quarter. Across our integrated steelmaking mills, we responded quickly with footprint actions aligning supply with the current flat-rolled order book.
“The impact of these headwinds in our Mini Mill and U.S. Steel Europe segments were worsened by temporarily higher-than-normal raw material expenses in the quarter, as we worked through inventories built in response to the Ukrainian conflict,” he said.
“While we expect to work through these costlier raw materials through year-end, we remain focused on the opportunity to in-source Mini Mill metallics as a competitive cost advantage.
“Results for U.S. Steel Europe were also negatively impacted by escalating energy costs, which we expect will also remain high. Our Tubular segment continued to deliver sequential improvements, reliably serving strong demand in domestic energy end markets.”
Company has strong balance sheet, expects investments to move on time
“We are executing our Best for All strategy with confidence, supported by record cash of nearly $3.4 billion at quarter-end and our strong balance sheet,” Mr. Burritt said.
“At year-end, we expect nearly 40% of our strategic investments to be complete and they remain on-time and on-budget. These projects are expanding our competitive advantages in pursuit of our goal to provide lower carbon steel solutions for our customers with less capital intensity while improving the free cash flow and margin performance of the business.”
Write to Matt Walker at matthew.walker@dowjones.com
