Effective July 1, 2011, specialty materials company Celanese Corp. (CE) will increase the prices of acetic acid, Acetic Anhydride, MIBC and MIBK by $0.03/LB and that of Vinyl Acetate Monomer and Ethyl Acetate by $0.05/LB in the US, Canada and Mexico.
A few days back, Celanese also announced that it will increase the prices of all emulsions sold in Europe, the Middle East and Africa by €90/t also effective July 1, 2011. This price increase includes all emulsions and affects applications including, but not limited to, adhesives, paint and coatings, building and construction, non wovens, glass fiber, carpet and textiles.
Recently, Celanese reported that its first-quarter 2011 exceeded the Zacks Consensus Estimate. Adjusted earnings were 96 cents per share in the first quarter of 2011, beating the Zacks Consensus Estimate of 83 cents. Diluted earnings per share in the quarter were 87 cents versus 6 cents in the prior-year quarter.
Quarterly revenues grew 14% year over year to $1.6 billion, primarily due to higher volumes across all business segments as well as improved volumes. Results were above the Zacks Consensus Estimate of $1.5 billion.
Operating profit jumped to $188 million from a loss of $14 million in the prior-year quarter. Operating margins came in at a positive 8.5% from a negative 99% last year.
Celanese is one of the world's largest producers of acetyl products, as well as a leading global producer of high-performance engineered polymers. The company's earnings outlook has been improving driven by the strong performance in the Advanced Engineered Materials business.
The company is operating its facilities in the Acetyl Intermediates segment at above the industry utilization rate of 80%, which provides cost advantages. Capacity utilization has also improved in the Industrial Specialties segment due to the rising demand in the Asia Pacific.
However, Celanese is exposed to volatile raw material (natural gas, ethylene and methanol) prices used in the production of basic chemicals in the Acetyl Intermediates segment, principally formaldehyde, acetic acid and vinyl acetate monomer.
The company also faces stiff competition from larger peers, E.I. DuPont de Nemours and Co. (DD) and The Dow Chemical Co. (DOW) in the Advanced Engineered Material Segment as well as in the Industrial Specialties segment. Celanese's balance sheet leverage is also relatively high, which limits financial flexibility.
Currently, Celanese has a short-term (1 to 3 months) Zacks #1 Rank (Strong Buy) and a long-term (6 months and higher) Neutral recommendation.
CELANESE CP-A (CE): Free Stock Analysis Report
DU PONT (EI) DE (DD): Free Stock Analysis Report
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