Chemical and advanced materials maker Celanese Corporation CE will hike list and off-list selling prices of acetic acid in response to the rapid rise and sustained volatility in global methanol prices.
The price of acetic acid will increase by RMB300 per metric ton in China. This rise in price will be effective immediately or as contracts permit.
Celanese’s strong presence in emerging markets will enable it to deliver incremental earnings in 2015. Its earnings are expected to be driven by company-specific initiatives, including product innovation and enhancement of efficiencies through productivity.
The company swung to a loss on a reported basis in fourth-quarter 2014 (reported on Jan 22) on account of lower sales. Adjusted earnings for the quarter topped the Zacks Consensus Estimate while revenues missed. The company expects its business strength to offset the volatility in the macro environment in 2015.
Celanese remains focused on reducing costs and running its plants more efficiently amid an uncertain operating backdrop. It is aggressively expanding its capacity in the emerging Asian markets. The company’s expansion initiatives in China are expected to support earnings growth. Celanese’s integrated chemical complex in Nanjing, China, serves as a base for expansion in Asia, supporting the region's increasing demand.
Moreover, Celanese continues to generate strong cash flows and remains focused on returning value to its shareholders. The company repurchased 4.3 million shares in 2014 for $250 million. Its cash dividend payments also jumped 73% year over year to $144 million last year.
However, Celanese is exposed to raw material supply issues and cost pressures. The company is still witnessing weak acetyl demand in China and Europe, given the sluggish economic conditions. It also faces headwinds associated with the expiry of a methanol contract in mid-2015.
Celanese is a Zacks Rank #3 (Hold) stock.
Better-ranked stocks in the diversified chemical space include Asahi Kasei Corp. AHKSY, Innospec Inc. IOSP and Air Products & Chemicals Inc. APD. While Asahi Kasei and Innospec sport a Zacks Rank #1 (Strong Buy), Air Products carries a Zacks Rank #2 (Buy).
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