Eastman mulling options for tire additives unit

Kingsport, Texas – Eastman Chemical Co. is scheduled to release first quarter 2021 financial results on 29 April and it will be interesting to see if the company issues any updates regarding its tire additives business.

In commentary around its recently issued 2020 annual report, Eastman executives said the company was continuing to explore options, including potential joint ventures and divestments for the unit.

Part of Eastman’s Additives & Functional Products segment, the tire additives business supplies vulcanising agents, anti-degradants, process resins and post-cure stabilisers.

Restructuring measures seem increasingly on the cards in 2021, with Eastman expecting continued challenges in the tire additives business despite signs of recovery in the automotive market overall. 

In 2020, a drop in forecast sales and earnings at the tire additives unit led Eastman to cut its ‘estimated fair value’ by $50 million – so that, as of 31 Dec, ‘goodwill allocated’ to the unit was $725 million.

The downgrade was linked to “weakened demand in ‘transportation’ markets due to the global pandemic and competitive pricing pressures as a result of global capacity increases.” 

Eastman also posted an impairment charge of $3 million related to the closure of a tire additives manufacturing facility in Asia Pacific as part of ongoing site-optimisation programme.

For 2021, Eastman forecast substantial company-wide business improvements, helped by a general market recovery as well as gains from restructuring/efficiency measures.

However, it also expected “continued competitive pressure in markets for tire additives and adhesives resins products to negatively impact financial results.”