Eastman Chemical Company

This is our first report on the renowned chemical industry giant, Eastman Chemical Company. The company delivered a highly disappointing set of results given the macroeconomic volatility. The below-par performance was despite the impact of price increases and margins were impacted by the effect of inflation. The first half of the quarter has been successful for Chemical Intermediates. Although they remained up, the management was unable to recoup the spreads they had sort of given up in the second part of 2021. Since Eastman is committed to returning its margins to 2019 levels before the inflationary pressures began, the opportunity to reduce raw material and distribution costs and to benefit from a spread tailwind in 2023 is possible given that inflation is at its current high level. The textile industry has grown tremendously, and their product receives much interest. We initiate coverage on the stock of Eastman Chemical Company with a ‘Hold’ rating.