Celanese (CE) Q2 Earnings Top, Profit Shoots Higher - Analyst Blog

By
A A A

Chemical and advanced materials maker Celanese Corporation ( CE ) saw its profit jump in second-quarter 2014 on higher margins across its Advanced Engineered Materials, Industrial Specialties and Acetyl Intermediates segments. 

Profit from continuing operations (as reported) soared 94% year over year to $258 million or $1.66 per share in the quarter from $133 million or 83 cents per share posted in the prior-year quarter.

Adjusted earnings (excluding one-time items) of $1.47 per share jumped 31% from $1.12 per share reported in the year-ago quarter. It also outstripped the Zacks Consensus Estimate of $1.23.

Celanese Corporation - Earnings Surprise | FindTheBest

Revenues and Margins

Sales rose 7% year over year to $1,769 million in the quarter, coming ahead of the Zacks Consensus Estimate of $1,723 million. 

Consolidated segment income margin rose to 18.6% from roughly 16% a year ago, boosted by the company's continued efforts to deliver customer centric-applications and strategic actions to leverage current industry trends.  

Segment Review

Advanced Engineered Materials: The segment's income margin increased 170 basis points (bps) on a sequential basis to 24.2% in the quarter on record sales of $389 million. The results were driven by the ability of the division to develop products and applications that are tailored per customers' requirements. Volumes rose 4% sequentially on strong demand of advanced polymers in autos. Reported operating profit came in at $56 million in the quarter.

Consumer Specialties:  Income margin was 37% in the reported quarter on income of $107 million. The division's income fell sequentially, impacted by interruptions in plant operations at Celanese's cellulose derivatives facility in Virginia due to power outage. Volumes fell 3% sequentially while pricing declined by less than 1%. Segment operating profit was $80 million.

Industrial Specialties: Income margin rose 20 bps sequentially on income of $22 million. Volumes went up 2% sequentially, helped by improved demand for Ethylene Vinyl Acetate (EVA) polymers in North America. Pricing rose 4% sequentially in response to increased raw material costs as well as better product mix in EVA polymers . Operating profit came in at $24 million in the quarter.

Acetyl Intermediates: Income margin increased 480 bps sequentially to 16.2% on income of $146 million. The results were driven by higher pricing and strategic actions by the company. Pricing increased 6%, partly due to the company's strategic measures at the non-integrated facilities in Europe. Operating profit came in at $143 million in the quarter.

Financials

Celanese exited the quarter with cash and cash equivalents were $1,064 million, down 4% year over year. The company's long-term debt was $2,880 million, essentially flat year over year. Celanese generated operating cash flows of $253 million in the reported quarter on the back of strong earnings.

Celanese deployed $39 million of cash on dividends and $50 million on share repurchases during the quarter and had $297 million remaining under its existing repurchase authorization as of Jun 30, 2014.

Celanese, during the quarter, raised its quarterly dividend by 39% to 25 cents per share from the prior payout of 18 cents a share.

Outlook

Based on its strong first-half performance, Celanese now expects adjusted earnings growth of 15% to 17% for 2014, versus 12% to 14% expected earlier. It said that it will focus more on company-specific initiatives for 2015 (including innovation and productivity programs) which will help it offset expected headwind associated with the expiry of a methanol contract in mid-2015. 

Celanese currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the chemical space are Marrone Bio Innovations, Inc. ( MBII ), Ashland Inc. ( ASH ) and LyondellBasell Industries NV ( LYB ). While Marrone Bio Innovations sports a Zacks Rank #1 (Strong Buy), Ashland and LyondellBasell carry a Zacks Rank #2 (Buy).


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ASHLAND INC (ASH): Free Stock Analysis Report

CELANESE CP-A (CE): Free Stock Analysis Report

LYONDELLBASEL-A (LYB): Free Stock Analysis Report

MARRONE BIO INV (MBII): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: ASH , CE , LYB , MBII

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

270,887,127
    $93.89 unch
225,243,115
  • $40.93 ▼ 2.74%
135,900,109
  • $47.52 ▲ 1.80%
89,467,924
  • $5.35 ▼ 1.11%
85,105,358
  • $16.95 ▼ 0.53%
80,748,539
  • $39.80 ▼ 4.21%
68,491,586
  • $3.57 ▼ 1.79%
62,097,356
  • $100.96 ▼ 0.82%
As of 9/19/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com