Eastman Chemical Company (EMN) Deutsche Bank’s 17th Annual Basic Materials Conference summary

Market and demand trends

• Consumer discretionary markets, including autos and building construction, remain stable compared to last year, with autos slightly softer and building construction steady due to unchanged interest rates.

• Stable markets like personal care, medical, and agriculture are experiencing low single-digit growth, with no major headwinds or snapbacks.

• Demand has held up well despite economic uncertainty, supported by strong employment, though concerns remain for the second half of the year.

• Europe and China are facing more economic challenges than North America, but overall demand remains resilient.

• No significant demand destruction observed yet from recent price impacts, but future effects are being monitored.

Financial performance and guidance

• Guidance for Q2 earnings ($1.70-$1.90) is on track, with Advanced Materials showing sequential improvement and higher-margin product sales.

• Advanced Materials segment is expected to achieve 4%-5% revenue growth this year, driven by circular economy initiatives and high-value products.

• Additives & Functional Products and Chemical Intermediates are performing solidly, with Chemical Intermediates earnings likely exceeding initial estimates due to market tightness.

• Fibers segment faces challenges from Mid-East demand and destocking, but customer contracts remain intact.

• Utilization rates and operational efficiency have improved from Q1 to Q2, supporting earnings stability.

Supply chain and geopolitical impacts

• Naphtha and methanol shortages due to Gulf disruptions are causing tight supply, with recovery expected to take six to nine months after conflict resolution.

• North American chemical assets benefit from secure supply and cost advantages, with U.S.-based production seen as more reliable.

• Chinese capacity additions continue, but are not cost-advantaged and face limits on further expansion.

• Industry sentiment is divided on how quickly supply chains will normalize, but consensus is that demand remains stable.