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Chemical company Eastman Chemical Company (EMN - Analyst Report) had acquired Solutia Inc. for approximately $4.8 billion in Jul 2012, the transition of which is said to be on track. The acquisition has strengthened Eastman Chemical‘s position as a prominent specialty chemical company and has provided organic growth and innovation opportunities for heritage Solutia products like Saflex poly-vinyl butyral (PVB).

Eastman Chemical and Solutia both have notable experiences in polymer development and with this alliance they are leveraging their capabilities to accelerate their development efforts.

Eastman Chemical is increasing resources to become the innovation and quality leader in the PVB and interlayers industry. Eastman Chemical had added acoustic capability to its high-speed automated line in Belgium in 2012. Eastman Chemical has also designed its Mexican plant optimally to meet shorter production cycles for lower-volume, high-value premium products.

Eastman Chemical has streamlined its production at their large-scale plants so as to maintain the viability of PVB products. However, this led to closure of a small sub-scale plant in Brazil earlier in 2013. Eastman is developing an advantaged PVB resin technology in Malaysia in order to supply Saflex sheet requirements in Suzhou China more efficiently.

Eastman Chemical posted better-than-expected second-quarter 2013 results on Jul 29, with both revenues and adjusted earnings topping the Zacks Consensus Estimates. The company’s adjusted earnings (from continuing operations) of $1.80 per share beat the Zacks Consensus estimate by 16 cents and exceeded the year-ago earnings of $1.40. The adjusted earnings exclude costs related to the acquisition of Solutia Inc. as well as restructuring and impairment charges.

Revenues shot up 32% year over year to $2,440 million, beating the Zacks Consensus Estimate of $2,407 million.

Moving forward, Eastman Chemical believes that its portfolio of specialty businesses, strong foothold in key markets, vast geographic presence and diversified end markets will help it to deliver strong earnings despite sluggish global economic growth.

Considering these factors, Eastman Chemical has raised its full-year adjusted earnings (from continuing operations) forecast to $6.40 to $6.50 per share from its earlier view of $6.30 to $6.40.

Eastman Chemical currently holds a Zacks Rank #2 (Buy).

Other companies in the chemical industry having favorable Zacks Rank are Cytec Industries Inc. (CYT - Snapshot Report), Northern Technologies International Corp. and PPG Industries Inc. (PPG - Analyst Report). All of them carry a Zacks Rank #2 (Buy).
 

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