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Financial Roundup: Eastman and Hunstman Score in 2Q, Deckers Improves and Kering Powers Along

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Textile firms Eastman and Huntsman delivered strong top and bottom line results, while brand manager Deckers narrowed its loss and luxe king Kering rolled along.

Eastman Chemical Co.

In a Nutshell: Eastman Chemical Co. delivered strong gains in sales and earnings in the second quarter ended June 30, although its Fibers unit saw sales falloff due to lower selling prices, particularly for acetate tow, attributed to lower industry capacity utilization rates. Operating earnings in Fibers for the Kingsport, Tenn.-based company also fell, impacted by lower selling prices, but partially helped by lower operating costs.

[READ MORE ABOUT EASTMAN’S NAIA BRAND: Eastman Knocks on Wood With New Naia Fiber]

Sales: Revenue rose 5.2 percent to $2.42 billion in the quarter compared to $2.3 billion a year earlier. Fiber unit sales fell 8% to $215 million from $234 million in the year-ago period.

Earnings: Operating earnings increased 11.7 percent to $420 million in the period from $376 million a year earlier. This resulted in earnings of $2 per diluted share in the quarter versus $1.71 per diluted share for second quarter of 2016.

CEO’s Take: Mark Costa, chairman and chief executive officer, said, “We delivered 18 percent year-over-year growth in adjusted EPS demonstrating the robustness of our portfolio, the strength of our transformation and the value of our integration. Our innovation-led strategy resulted in strong revenue growth driven by continued volume growth in our specialty businesses, and we increased selling prices in our intermediates business. We continue to demonstrate the strength of our portfolio in this slow growth global economy, and remain confident in the sustainability of our strong cash flows.”

Huntsman Corp.

In a Nutshell: The Textile Effects division of Huntsman Corp. saw revenues increase in the second quarter ended June 30 from a year earlier thanks to higher sales, partially offset by lower average selling prices. Sales at the unit rose in textile chemicals and dyes, particularly in the Asia region. Overall, the Texas-based chemical giant posted strong earnings growth and said its definitive agreement to merge with Clariant remains on track and is expected to achieve in excess of $400 million in annual cost synergies with another $25 million in annual tax savings, creating in excess of $3.5 billion of value for shareholders.

Sales: Revenue in the second quarter increased 3.1 percent to $2.61 billion from $2.54 billion a year earlier.

Earnings: Net income nearly doubled to $183 million in the quarter compared to $94 million in the prior-year period. Adjusted earnings before interest, taxes, depreciation and amortization increased 27% to $413 million from $325 million in the year-ago quarter.

CEO’S TAKE: Peter R. Huntsman, president and chief executive officer, said, “Our businesses continue to benefit from solid underlying fundamentals, enhanced free cash flow generation and our downstream strategy. We are on pace to achieve earnings growth in each of our business segments in 2017…Having begun our integration planning with Clariant, we are now more confident than ever in our ability to exceed our stated synergy targets, seamlessly integrate these two complementary organizations and create significant value for the combined company’s shareholders.”

Deckers Brands

In a Nutshell: Deckers Brands, a global marketer and distributing of footwear, apparel and accessories brands such as UGG, Koolaburra, Teva and Sanuk, posted a sale gain in the first quarter ended June 30 while narrowing its losses from a year earlier. Deckers said the year-over-year increase was primarily due to earlier than planned global wholesale shipments, an increase in direct-to-consumer comparable sales and stronger than expected sales in the Hoka One One brand.

Sales: Net sales increased 20.3 percent to $209.7 million compared to $174.4 million for the same period last year. UGG brand net sales for the first quarter increased 24.9 percent to $114.7 million compared to $91.9 million for the same period last year. Teva brand net sales for the quarter increased 8.6 percent to $37.7 million compared to $34.7 million, while Sanuk brand sales declined 2% to $26.2 million from $26.7 million.

Earnings: Deckers cut its net loss to $42.1 million in the period from $58.9 million a year earlier. The operating loss was $56.3 million compared to $78.3 million for the same period last year.

CEO’s Take: Dave Powers, president and CEO, said: “Our first quarter results reflect solid consumer demand for our spring product offering across our brands combined with earlier than planned shipments of certain fall orders. While it is still early in the year, we are encouraged by our recent top-line performance. Looking ahead, we believe the product, marketing and distribution strategies we’ve implemented across our brand portfolio, along with the anticipated benefits from our cost savings initiatives, have us well positioned to achieve the operating profit improvement targets we established for fiscal 2018 and longer-term.”

Kering

In a Nutshell: Boosted by a powerful performance from its Gucci brand, Kering achieved record operating profits for its luxury activities in the first half through June. The French conglomerate said its Saint Laurent and Balenciaga are on track to reach revenues of 3 billion euros ($3.53 million) and 1 billion euros ($1.18 billion), respectively.

Sales: Group sales increased 25.4 percent to 3.72 billion euros ($4.73 billion) in the period, with Western Europe and Asia-Pacific driving retail sales thanks to a rebound in tourism. The luxury division as a whole, which also includes brands such as Bottega Veneta, Balenciaga and Alexander McQueen, saw revenues increase 25.3 percent in organic terms.

Earnings: Net profit jumped 77.6 percent to 825.8 million euros ($970.4 million) in the first half. Operating income rose 57.1 percent to 1.27 billion euros ($1.49 million), while the operating margin reached 17.5 percent, up 330 basis points versus the same period a year earlier.

CEO’s Take: François-Henri Pinault, chairman and chief executive officer, said: “Thanks to the execution of our strategy, we achieved outstanding revenue growth in the first half, clearly outperforming the sector, and delivered record profits and operating margins. Our vision of luxury, grounded in creative audacity and in the sincerity of our brands’ values, is more relevant than ever. This excellent first half raises our confidence in the group’s capacity to realize another year of growth and improved operating performances.”

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