Photo courtesy Eastman
by Scott Robertson
Despite a challenging fourth quarter of 2018, Eastman Chairman and CEO Mark Costa has doubled down on a year-old statement that the company plans to have $500 million in new revenue growth from innovation in 2020. The 2018 figure was $360 million.
“Three-hundred-sixty million dollars in new revenue growth from innovation for our portfolio is actually pretty good,” Costa told business, government and community leaders from throughout the Tri-Cities at the company’s annual leaders’ breakfast at MeadowView Conference Resort and Convention Center March 6. “Our goal is, it gets to about 500. That’s the guidance we gave investors last February. And so, we’re aiming to do about 400 this year and get to 500 in 2020. That is a good number. If we can sustain that number and keep incrementally improving it, that’s what we need to actually drive growth for the company.
“Not only is it adding new growth, but almost always the project we’re launching in that growth has margins that are higher than something average. So, you’re getting a lift in cash and earnings generation to your weight average just moving up with that growth on what you’re selling. That’s a big part of what we call the mix upgrade that drives through the future of the company.”
During the first three quarters of 2018, Eastman was humming along. During last year’s leaders breakfast, for instance, EMN shares were trading above $100. The fourth quarter, however, erased the gains realized from January through September. Materials costs had been pushing higher even as the company flourished during the first three quarters. So when demand decreased dramatically in the fourth quarter, the company was left with a large inventory of expensive product.
Costa confirmed the company’s dedication to its innovation strategy, saying he was hopeful that within a month the U.S. and China would end the trade war that has affected the company’s bottom line. Costa did, however, make it clear that he supported the trade war’s goals of leveling the playing field and making China more “mature” in its trade practices.
“Right now, their economy certainly hurting much more than ours. We know that and see it in our demand every day. So, they need to do a deal,” Costa said. “I think (President) Trump is highly incented to do something because he wants to get reelected and that does matter, in that declining economies don’t work out well for incumbents.”
Costa also took a moment to thank regional leaders for the progress made in promoting regional economic development in 2018. He hinted at more Eastman support for such efforts in the future, but declined to delve into specifics.