Eastman Chemical forecasts downbeat quarterly profit, to reduce inventory as tariffs bite
Global chemical companies are under pressure to reassess strategies due to increasing production costs, lackluster demand and stringent environmental regulations in key markets.
The industry is also bracing itself for the impact of U.S. President Donald Trump's sweeping tariffs on most imports, which have forced companies to contend with higher raw material costs and weakening demand.
"As we have entered the second half of the year, we are encountering a global macroeconomic environment that remains challenging," CEO Mark Costa said.
"Customer caution is intensifying due to a changing tariff landscape and weak underlying demand," Costa added.
Eastman Chemical makes a wide range of chemicals used in manufacturing end-products across the construction, agricultural and automotive sectors.
The impacts of the trade dispute and seasonality would result in a decline in volumes in the second half of the year, the company said, adding that it plans to reduce inventory by more than $200 million below current levels.
The reduction of inventory is expected to negatively impact earnings by $75 million to $100 million for the rest of the year, with around $50 million of that impact expected in the current quarter.
The Kingsport, Tennessee-based company said it expects an adjusted profit of $1.25 per share for the third quarter ending September 30, falling short of analysts' expectations of $1.91 per share, according to data compiled by LSEG.
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