We have retained our Neutral recommendation on chemical and
advanced materials maker
) following its mixed fourth-quarter 2012 results. We remain on
the sidelines factoring in weak demand for acetyl products.
The company's adjusted earnings of 67 cents per share for the
fourth quarter, posted on Jan 28, beat the Zacks Consensus
Estimate by 4 cents. However, sales fell 7% year over year to
roughly $1.5 billion and missed expectations. Weak pricing and
lower volume in the Acetyl Intermediates segment hurt revenues.
The company expects the challenging economic conditions to
sustain moving ahead.
Celanese is among the world's largest producers of acetyl
products as well as the leading global producer of
high-performance engineered polymers. The company's strong
presence in emerging markets will enable it to deliver
incremental earnings in 2013. Moreover, Celanese remains focused
on returning value to its shareholders, backed by strong cash
Celanese is aggressively expanding capacity in the emerging Asian
markets. Its expansion initiatives in China are expected to
support earnings growth. The company's integrated chemical
complex in Nanjing, China, serves as a base for expansion in
Asia, supporting the region's increasing demand.
However, Celanese is witnessing weak demand and pricing in its
core acetyl business. Weak global demand for acetyl products led
to a decline in pricing and volume in the Acetyl Intermediates
division in the fourth quarter. The challenging economic
conditions in Europe and sluggish growth in Asia may impact the
company's results moving ahead.
Moreover, Celanese is exposed to volatility in raw material costs
and currency headwinds. The company's balance sheet leverage is
also relatively high, limiting its financial flexibility.
Celanese currently carries a short-term (1 to 3 months) Zacks
Rank #3 (Hold).
Other Stocks to Consider
Other companies in the chemical industry worth considering are
Akzo Nobel NV
). While both Akzo Nobel and BASF hold a Zacks Rank #1 (Strong
Buy), Air Products retains a Zacks Rank #2 (Buy).
AKZO NOBEL NV (AKZOY): Free Stock Analysis
AIR PRODS & CHE (APD): Free Stock Analysis
BASF SE (BASFY): Free Stock Analysis Report
CELANESE CP-A (CE): Free Stock Analysis
PETROLOGISTICS (PDH): Free Stock Analysis
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