Eastman Chemical mulls sale of PET business after it recorded operating loss in Q1-10

27-Apr-10

Eastman Q1-10 financial results showed that its Performance Polymers unit including PET posted an operating loss of US$13 mln despite a growth in sales figure by 18%. Based on sales, the Performance Polymers segment constituted the smallest of Eastman’s five reporting segments in Q1 and the only one to show an operating loss. The PET business has not been a profitable business for the company since 2005 as per Plastics News, and despite the company’s good efforts, it continues to be a very challenging industry. Hence, Eastman plans to review strategic options, including a possible divestiture, for its PET business. The company hopes to find a buyer for the business by the end of the year and has hired Bank of America Merrill Lynch as its financial advisor for the proposed sale. A potential PET sale by Eastman had been rumoured for some time. The firm had sold off its PET operations outside of the US in recent years as profitability in the industry has declined. PET profitability has been impacted by a number of factors, including low growth in the carbonated soft drink segment and light-weighting of bottles, which has allowed processors to make thinner bottles which use less PET.