EPSTEIN
page 4 / 655 . OCR, unverified
(outages/turnarounds: $0.20), lower propane costs ($0.15-$0.20). acquisitions
($0.10-plus), base business growth ($0.35) and share buybacks ($0.20). To
reflect lower Fibers earnings, we are trimming our '14E EPS by $0.05 to $6.90,
up 7% and our '15E by $0.05 to $7.70 up 12%.
Date
July 2014
Results
Price at 29 Jul 2014 (USD)
81.57
Price target
100.00
52-week range
90.20 - 72.67
Olivia Ow:0*A
Research Analyst
411 212 250-5473
daykl.begleiteredb.com
FIJITomin
Research Associate
(+I I 212 250-8619
ramanan.sivelingarn@db.com
.idle I I int! 0r.)..vil
Research Associate
I+ I) 212 250-3624
jermainertrown@db.crxn
105
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n. •a*r
tii:#41.(ad7
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ant
VIZ
8.12
1n3
603
2111
sesouro 0•11.10.1
S&P 00011400C Oleteson
Performance PM
lm
3m
12m
Absolute
-6.7
-5.4
8.6
S&P 600 INDEX
0.6
4.9
16.9
Source DetOorre as
Target price of-ST00
Our $100 target price is based on
Eastman trading at 13x '15E EPS in
12mos, a 12% discount to its
differentiated chemical peer Dow. Risks:
weaker tire demand,
increased leverage and the Solutia
integration.
Year End Dec 31
2013A
2014E
2015E
FY EPS (USD)
6.44
6.90
7.70
Sour. Onto'. Bank avower, moon ore
Deutsche Bank Securities Inc.
Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should
be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should
consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST
CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 148/04/2014.
CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e)
CONFIDENTIAL
DB-SDNY-0 124308
SDNY_GM_00270492
EFTA01461978
--- SOURCE: IMAGES__0087__EFTA01461979.txt ---
METADATA_SOURCE: IMAGES0087
METADATA_FILENAME: EFTA01461979.pdf
----------------------------------------
29July 2014
Chemicals / Specialty
Eastman Chemical
(Figure 1: Eastman O2 20 i 1 lie,tult:T.
Segment
0714
02'13
% change
Sales
32.403
$2,440
1%
Additives &
Functional Products
$452
$430
5%
Adhesives &
Plasticizers
$358
$339
13%
Advanced Materials
$831
$625
1%
Fibers
$388
$363
0%
Specialty Fluids &
Intermediates
$033
$677
(0%)
Operating profit
$441
$434
(3$
Additives &
Functional Products
$103
$105
(2%)
Adhesives &
Plasticizers
$56
$50
12%
Advanced Materials
SSD
$81
(1%)
Fibers
$123
$116
e%
Specialty Fluids &
Intermediates
$96
$118
(19%)
Operating margin
179%
1110%
-70bps
Additives &
Functional Products
22.8%
24.4%
-100bps
Adhesives &
Plasticizers
15.0%
14.7%
+80bps
Advanced Materials
12.7%
13.0%
-30(10s
Fibers
31234
32.0%
-10bps
Specialty Fluids &
Intermediates
15.2%
17.4%
-230bps
Inane evens,
($48)
($48)
(2%)
Other
Insane/Expense
$8
Pretax profile
$404
3408
(1%)
Twee
($112)
($124)
Tax rate
28%
30%
Non-controlling IM
Earnings from ops
One time Items
Page 2
121
$290
$0
en>
$282
($18)
0%
3%
Comment
Vols: flat, Price: flat, FX: +1%. Marginal sales growth as higher demand in
Additives & functional, Adhesives & plasticizers and Fibers offset by lower
demand in Specialty fluids & intermediates. Acquired BP's aviation turbine oil
business for $283MM. Outlook FY'14 Expects sales to grow at global GDP
growth rate in H2'14.
Vole: +4%, Price: flat, FX: +1%. Upside driven by higher demands for coating
product lines partially offset by continues destocking in China (primarily for
commercial tires). Outlook: Expects vols to be better in H274.
Vols: +9%, Price: .4%. FX: +1%. Upside led by higher sales vols for adhesives
resins and plasticizers more than offsetting lower selling prices due to cont'd
competitive pressure as increased supply of adhesive resins and weak
plasticizers demand in APac and Europe regions.
Vols: flat, Price: flat, FX: +1%. Lower sales growth as higher vets for premium
products like interlayers with acoustic properties and Eastman Tritan"'
copolyestei offset by weak demand for Flexvue coated films. Outlook: Expects
sales growth to be in the range of 4%-5% in H2'14 on higher demand for premium
Products
Vols: +2%, Price: +4%, FX: flat. Higher growth driven by improved selling prices
and sales of acetate flake to EMN's China acetate tow joint venture more than
offsetting by lower vols of acetate tow due to additional industry capacity.
Outlook: Expects lower sales vols 17 H2'74
Vols: -13%%, Price: +2%, FX: Ilat. Downside due to the unplanned shutdown of
the plant (due to power disruption) and lower sales vols for intermediates
product line partially offset by improved yob of acetyl-based products.
Downside primarily due to higher raw material costs. outage costs alongside
competitive pressure in core products partially offset by better product mix.
Weakness due to higher raw mat. & energy costs (elm propane) partially offset
by higher vols. Outlook: FY'14 EBIT: -$410-$430MM.
Higher earnings due to improved vols. better productivity and lower operating