Celanese Corporation
CEO : Ms. Lori J. Ryerkerk BS
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | 3.2% YoY | -90.8% | 46.7% | 2023-02-24 |
Lori Ryerkerk says,
Expected Increase in Acetyls
- Projected $50 million to $100 million increase in Q2 off of Q1
- Lower natural gas pricing in the U.S. benefits margins for U.S.-based production
- Frankfurt VAM restart and quicker recovery in construction paints and coatings in Europe
- Volume rebound and productivity improvements
Expected Increase in Engineered Materials and M&M
- Projected $40 million lift in Q2 due to lower raw material costs
- Destocking finished and strong improvement in order books in March
- Modest improvement in automotive production
- Additional synergies from M&M acquisition
- Continued productivity improvements
Overall Comfort With Q2 Guidance
- Projected numbers are not unknown territory for the company
- Positive trends in energy pricing, raw material costs, and demand recovery
- Confidence in reaching $12 to $13 guidance by delivering about 350 for the last three quarters of the year
Brandon Ayache says,
Financial Performance
- Fantastic Q4 2022 earnings performance with a net sales revenue of $1.8 billion, exceeding the guidance range provided in Q3 2022.
- Adjusted earnings per share was $3.15, reflecting a 44% increase compared to the previous year.
- The company generated a record $480 million of free cash flow in Q4 2022.
Business Outlook
- The company is confident in its ability to deliver strong financial performance in 2023, supported by strong demand across all businesses and geographies.
- Celanese anticipates a continued strong demand for its products, and the company plans to expand its production capacities to meet this demand.
Dividend and Share Repurchase
- Celanese announced a 30% increase in its quarterly dividend to $0.72 per share.
- The company also plans to repurchase $1 billion of shares over the next 12 months.
Capital Expenditures
- In 2023, Celanese plans to invest $600 million in capital expenditures to support business growth and productivity improvements.
COVID-19 Impact
- The company has experienced some supply chain disruptions and inflationary pressures due to the ongoing COVID-19 pandemic.
- Celanese expects these challenges to continue in the near term, but the company is actively managing the situation to minimize the impact on its operations and financial performance.
Q & A sessions,
Factors Expected to Impact Supply Demand Dynamics
- Lower demand for shipping raw materials from Asia to Europe
- Low-energy prices resulting in better pricing for European customers
- Higher demand in China making it less attractive to ship across
Projected EBITDA for M&M Assets
- Expected EBITDA for 2022 was $500 million, but lower year-end challenges resulted in a $700 million projection for next year
- Team is working on pricing, product pipeline, and cross-selling to achieve a $800 million EBITDA run rate by the end of 2023
Factors Contributing to Synergy Capture and Volume Recovery
- Synergy uplift expected to be $120 million for next three quarters
- Volume recovery in M&M assets, particularly from Vital and Asia
- Pricing on differentiated products
- Productivity at M&M plant expected to generate an additional $40-$50 million
Expected Benefits and Debt Reduction from Food Ingredient Joint Venture
- Joint venture with Mitsui expected to generate $400 million to $450 million for debt reduction from food ingredient’s deal
- Joint venture structure considered beneficial for both companies
- Western company providing sweeteners creating positive movement in demand and pricing
Comparison of Fourth Quarter 2021 and 2022 Dynamics
- Similar to 2021, end-of-year destocking and anticipation of lower prices contributed to slower start in Q1 2022
- Supply chain issues resolved, leading to increased confidence in buying material and a return to more normal trajectory
Expected Contributions and Foundational Earnings for Next Few Years
- Expect EM and acetyls to contribute roughly evenly for next few years, with acetyls possibly showing more volatility due to market reactions
- Foundational level of earnings before Tow acquisition is $1 billion to $1.1 billion
No bad stock 