Effective October 15, 2011, Celanese Corp. (CE), a specialty material company, will increase the price of all vinyl acetate/ethylene (VAE) emulsions sold in the Americas by $0.03 per wet pound.
The emulsions are used in adhesives, paint and coatings, carpet, paper, building and construction, nonwovens, glass fiber and textiles.
Last month, Celanese reported adjusted earnings of $1.66 per share in the second quarter of 2011, beating the Zacks Consensus Estimate of $1.41. Diluted earnings per share in the quarter were $1.29 per share, up 48% year over year.
Quarterly revenues grew 16% year over year to $1.75 billion, primarily driven by higher volumes across all business segments and favorable currency impacts. Results were above the Zacks Consensus Estimate of $1.39 billion. Operating profit jumped to $209 million compared with $156 million in the prior-year quarter.
The company raised its outlook for the full-year 2011, encouraged by the strength of its second-quarter 2011 performance, its confidence in its earnings growth programs, and its expectations for a continued modest global economic recovery.
The company now expects 2011 operating EBITDA to be at least $275 million higher than 2010’s results of $1,122 million, and adjusted earnings per share to be at least $1.20 higher than 2010’s results of $3.37, based on a tax rate and diluted share count of 17% and 159.2 million shares, respectively. The company had previously expected 2011 operating EBITDA and adjusted earnings per share to be at least $200 million and $0.85 higher than 2010, respectively.
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 rates 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 region.
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, such as 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 its financial flexibility.
Currently, Celanese has a short-term (1 to 3 months) Zacks #3 Rank (Hold) and a long-term (6 months and higher) Neutral recommendation.
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