Eastman Chemical Q1 2025 slides: 19% EPS growth amid economic headwinds

Eastman Chemical Company (NYSE:EMN) reported a strong start to 2025 with 19% adjusted EPS growth in the first quarter, despite navigating economic uncertainties and trade disputes. The company presented its Q1 2025 financial results on April 24, highlighting margin improvements and strategic initiatives while moderating capital expenditure plans in response to global economic conditions.

Quarterly Performance Highlights

Eastman delivered solid financial results in the first quarter of 2025, with adjusted earnings per share of $1.91, representing a 19% increase from $1.61 in Q1 2024. This performance was driven by innovation, commercial excellence, and operating leverage, which collectively enabled a 170-basis-point year-over-year improvement in adjusted EBIT margin.

The company reported revenue of $2,290 million for Q1 2025, slightly down from $2,310 million in the same period last year, but up 2% from Q4 2024. Adjusted EBIT reached $311 million, a 13.5% increase from $274 million in Q1 2024, while adjusted EBIT margin expanded to 13.6% from 11.9% a year ago.

As shown in the following corporate financial results:

"We had a strong start to 2025 with 19% adjusted EPS growth in the first quarter, in line with our January guidance," the company noted in its presentation. Eastman highlighted that its innovation strategy is enabling significant margin improvement through commercial excellence and operating leverage.

Segment Performance Analysis

Performance varied across Eastman’s business segments, with Additives & Functional Products (AFP) showing particular strength while the Fibers segment faced challenges.

The AFP segment delivered impressive results with revenue of $733 million, up 4% year-over-year, and adjusted EBIT of $141 million, representing a 29.4% increase from Q1 2024. The segment’s adjusted EBIT margin expanded to 19.2% from 15.5% a year ago, driven by higher selling prices, improved volume/mix in coatings additives and specialty fluids, and better asset utilization.

The segment performance details are illustrated here:

Advanced Materials also performed well, with adjusted EBIT of $116 million and a margin of 16.1%, up from 13.9% in Q1 2024. This improvement was driven by favorable product mix from new application wins in consumer durables, stable price-cost dynamics, and continued cost discipline.

In contrast, the Fibers segment experienced significant headwinds with revenue declining 13% year-over-year to $288 million and adjusted EBIT falling to $88 million from $117 million in Q1 2024. The company attributed this decline to inventory destocking in acetate tow and a discontinued product.

Chemical Intermediates showed modest improvement with revenue of $545 million, up 4% from Q1 2024, and adjusted EBIT of $19 million, resulting in a slight margin improvement to 3.5% from 3.1% a year ago.

Strategic Initiatives & Circular Economy

Eastman’s Circular Economy platform remains a key strategic focus, with strong operational performance at the Kingsport methanolysis facility. The company reported that the facility achieved its best-ever uptime and production quantities, producing at an annualized level more than 2.5 times 2024 levels, with significant progress on cost-reduction targets.

The company expects around $75 million in EBITDA in FY25 versus FY24 from the Kingsport facility. However, Eastman noted that tariffs and economic uncertainty are delaying customers’ timelines for new product launches, prompting a two-pronged strategy in durables and packaging to drive faster uptake.

The following slide details the Circular Economy platform performance:

While remaining committed to its Longview, TX project, Eastman is moderating 2025 capital spend, with groundbreaking expected in the fourth quarter of 2025 and mechanical completion still on track for 2028.

Financial Position & Outlook

Eastman emphasized its strong financial position and focus on controllables amid economic uncertainties. The company has reduced its FY 2025 capital expenditure plans to approximately $550 million from the previously guided $700-800 million, reflecting a more cautious approach in the current environment.

The company’s financial strength is illustrated in the following slide:

Eastman expects to deliver approximately $1.2 billion of operating cash flow in 2025 across various macroeconomic scenarios. The company has also increased its cost reduction target to approximately $75 million and plans to repurchase $100-200 million of shares in 2025.

Looking ahead, Eastman is navigating several uncertainties, including global trade disputes that could result in a wide range of outcomes. The company estimates an impact of approximately $30 million in Q2 2025 from tariffs currently in place. Other challenges include less seasonal growth due to customer caution, higher raw material and energy costs, and volatility in foreign exchange rates.

For the second quarter of 2025, Eastman provided EPS guidance in the range of $1.70 to $1.90, moving to a quarterly guidance approach given the current economic uncertainties.

The company updated several underlying assumptions for FY2025, including Brent crude oil at approximately $70/barrel (down from $75/barrel), adjusted foreign currency exchange rates, and reduced capital expenditures, while maintaining its full-year adjusted effective tax rate at 15-16%.

Despite the challenging global economic environment, Eastman’s focus on innovation, cost discipline, and strategic initiatives positions the company to continue delivering value to shareholders while navigating uncertainties in the year ahead.

Full presentation:

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