Eastman Chemical Navigates Earnings Slump with Deep Cuts and Bet on Advanced Recycling
KINGSPORT, Tenn. — Eastman Chemical Company's latest financial results underscore the pressures facing the traditional chemicals sector. The company reported its lowest annual earnings in several years on Thursday, a stark contrast to the growth in its advanced recycled plastics business. In response to persistent macroeconomic uncertainty, management outlined an aggressive plan combining deeper cost cuts with a strategic pivot towards its innovative recycling technology to improve profitability by 2026.
For the fourth quarter, adjusted earnings per share landed at 75 cents. The full-year 2025 figure totaled $5.42, a significant drop from $7.89 in 2024. Annual sales revenue also fell to $8.75 billion, down 6.7% from the previous year's $9.38 billion.
Amid the downturn, a bright spot emerged from the company's Kingsport methanolysis facility. This "molecular recycling" process breaks down hard-to-recycle plastics to create materials that rival the quality of virgin plastic derived from fossil fuels. CEO Mark Costa highlighted that production at the facility surged more than 2.5 times compared to 2024, contributing approximately $60 million in incremental earnings.
"The limitations of traditional mechanical recycling—from discoloration to polymer strength issues—are becoming more apparent," Costa stated during an investor call. "Our technology essentially recreates a virgin polymer, and we're finding the clarity can be superior. This quality advantage is why customers like Pepsi are pulling forward volumes of our recycled PET for next year."
To preserve cash flow, Eastman implemented "aggressive actions" in 2025, saving about $100 million. These cuts included a reduction in global workforce by roughly 7%, or nearly 1,000 positions, achieved largely through attrition and retirements, with some layoffs. Looking ahead, Costa announced an escalation of these measures, targeting an additional $125 million to $150 million in cost reductions for 2026.
"We are balancing our momentum on key initiatives against continued macro uncertainty," Costa explained. "Our innovation model, with methanolysis as the largest driver, remains central to our growth. We expect improved manufacturing utilization and are expanding commercial activities into targeted applications to boost rates."
The company generated $970 million in operating cash flow for 2025, down about a quarter from 2024's near $1.3 billion, reflecting the broader earnings challenge.
Industry Voices React
Eleanor Vance, Sustainable Materials Analyst at Greenleaf Advisors: "Eastman's bet on molecular recycling is a necessary long-term play. The quality argument is compelling for brand owners under regulatory and consumer pressure. However, the scale and energy economics of the process remain a hurdle for widespread adoption."
David Chen, Portfolio Manager at Horizon Capital: "The cost-cutting is severe but expected in this environment. The real story is whether the methanolysis earnings can grow fast enough to offset declines in the legacy portfolio. The 2026 guidance hinges entirely on that transition."
Marcus Thorne, former chemical engineer and industry blogger: "This is a classic case of rearranging deck chairs. They're firing workers to please Wall Street while touting a 'green' technology that's still a niche operation. Calling it 'molecular recycling' is brilliant marketing, but let's see it move the needle on their billion-dollar revenue shortfall before celebrating."
Priya Sharma, Supply Chain Director for a global consumer goods brand: "We're actively evaluating Eastman's rPET. The consistency and clarity are game-changers for our packaging. If they can scale reliably, it could reshape our sustainability roadmap."
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