Eastman Chemical Co.

Overview Key strengths Key risks Integrated producer of a broad range of advanced materials, chemicals, and fibers with widespread applications. Exposure to cyclical end markets like automotive, durables, and construction, which partially offsets the company?s participation in more stable markets like personal care, health care, and water treatment. Increasing emphasis on relatively stable, high-margin, specialty chemicals. Muted demand growth until second-half 2024 because of customers? destocking and the global economic slowdown. Effective price/cost management. Some manufacturing site concentration associated with the large Kingsport, Tenn. Facility and uncertain timing related to the Longview, Texas and Port-Jérôme-sur-Seine, France molecular recycling facilities. Appropriate weighted average credit measures for the rating, after considering potential volatility. Through sizable acquisitions over the past decade, Eastman Chemical

...The company's specialty chemicals business is well positioned to benefit from emerging end markets. Through sizable acquisitions over the past decade, Eastman Chemical Co. has successfully transformed to a majority-specialty chemicals company from a commodity- focused company. Demand for Eastman's products from increasing adoption of electric vehicles (both hybrid and battery electric) may bolster its market position, particularly within its Additives & Functional Products (AFP) and Advanced Materials (AM) segments. Management estimates that about 70% of the AM segment's end products cater to high-end premium markets, of which about 25% are of auto builds. This portion of auto builds may grow in the high- single-digit percent area, which is a faster rate than the overall auto build growth rate. We believe that the company will be able to capture new opportunities and further solidify its position in the market. Management estimates that it realizes 3.5x the volume content in electric vehicles...

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