Mark J. Costa
Chairman and Chief Executive Officer at Eastman Chemical
Sure. So -- and here for me, David. When you think about the overall segments, obviously, when you start with the specialty businesses, as we've noted here, there's just tremendous growth that we see possible on a number of factors, right? We've got volume and mix that should be a significant driver with the economy, to some degree, growing with the markets in it. And there's also a lot of pent-up demand out there to drive added additional growth versus GDP as consumers fulfill desires that they can't get due to supply chain constraints and we're restocking inventory, which has not at all happened yet in this year. So that's all quite positive. And when you think about that, especially the pent-up demand part, I think that's more significant in the AM segment.
So we've given you a breakdown of AM being about 70% of that variable margin improvement versus AFP. The innovation is also incredibly strong, especially in AM, where we're going to continue to outperform the underlying markets in a significant way. You've seen this in this year. You saw it last year in AM. You've seen it for the last decade. Recur offerings are also accelerating a lot of growth for us in the SP business. You've seen $600 million in new business revenue from innovation. So that's a good momentum that we take into next year. So again, those are a bit more biased towards the AM as AFP businesses also getting traction. And then market segment strategies.
We continue to sort of focus on the markets that are growing, whether it's luxury EVs, water treatment, care chemicals, where we pick up a lot of just natural market growth. And importantly, keep in mind, a lot of the growth I just described, all of its high-value mix, both within the segment and certainly at the corporate level. So there's a lot of leverage to have AM have a significant increase in earnings next year when you think about those elements. And that's also true for AFP to have good solid growth. And then on the spread side, it's the same thing. You've got really headwinds obviously this year and prices catching up to raws through the year.
And there will be -- with the price actions we're taking through the fourth quarter and a lot of effective price increases on January one in businesses, you're going to see a pretty big step-up in earnings there from spreads getting better as long as you believe raw materials are going to plateau relative to the back half of this year and then trend off in the back half of next year, which is sort of our underlying assumption. So then you pick up a pretty significant spread tailwind. It's the same thing. AFP has done a better job of sort of keeping track with prices this year because they have a lot more cost pass-through contracts. Half of the price increase in the third quarter was CPTs and AFP. Whereas AM, the interlayers business, in particular, has a lot of annual price contracts. So it takes a while to get those prices moving up. So again, that sort of supports that 70-30 split on the spread side, too.
So those businesses are both going to deliver considerable growth in earnings in AM as well as when you look at AFP on a recasted basis, minus the divestitures. So that's a lot of the growth there. Fibers, I think, will also be renegotiating, putting prices in on probably more than half of their revenue come January 1. And so earnings will improve there. And then, of course, in CI, you've got normalization. That's going to happen in that business, but it's going to be offset by volume growth that will be pretty substantial next year relative to this year in ag, plasticizers and some other growth opportunities that we have as well as less shutdown. So that all helps out. And of course, there's the cost tailwinds that we've given to you that's spread across all of these segments that give them sort of added growth. So that's sort of how it balances out, David.
