Celanese Corporation Reports Record Second Quarter Results; ...

Tag : 100% acetate

Second Quarter Segment Overview
Advanced Engineered Materials
Advanced Engineered Materials continued to execute its growthstrategy, as global expansion offset the impacts of ongoingchallenges in the U.S. automotive sector and initial signs ofweakness in the European sector. Net sales increased to $300million from $257 million in the same period last year, primarilyon positive currency impacts, as well as higher volumes,particularly in Asia. Operating profit increased to $37 millionfrom $32 million in the prior year period, as increased volumes andlower overall expense more than offset significantly higher rawmaterial and energy costs, including ethylene and otherpetroleum-based feedstocks. Operating EBITDA, however, was $68million compared with $70 million in the same period last year,mainly due to lower earnings from equity affiliates.
Consumer Specialties
Consumer Specialties continued to contribute stable earnings,driven by its expansion in Asia and successful integration of itsacquired Acetate Products Limited (APL) business. Net salesincreased to $292 million compared with $281 million in the sameperiod last year, driven by higher pricing on continued strongdemand and positive currency impacts. Higher acetate tow volumeshelped to offset lower acetate flake volumes resulting from thecompany's strategic decision to shift flake production to itsexpanded acetate China ventures, and slightly lower volumes forSunett®, the company's high-intensity food sweetener business.Operating profit was $46 million, $2 million lower than last year'sresults, as the higher pricing could not fully offset significantlyhigher raw material and energy costs in the period. OperatingEBITDA increased to $107 million from $104 million in the sameperiod last year, however, on higher dividends from the company'sChina ventures.
Industrial Specialties
Continued revitalization of the Industrial Specialties businessesdelivered improved results, despite continued softness in certainmarkets and significantly higher raw material costs. Net salesincreased to $386 million from $355 million in the same period lastyear, primarily driven by higher pricing related to increased rawmaterial costs, as well as favorable currency impacts. Increasedvolumes related to the company's strategic expansion in Asia wereoffset by volume declines in North American and southern Europeanpainting and coating applications. Operating profit increased to$20 million, compared with a loss of $1 million in the prior yearperiod, as higher pricing more than offset higher raw materialcosts and the lower volumes. The 2007 results includedapproximately $19 million of expense related to the company'srevitalization activities. Operating EBITDA was $37 millioncompared with $34 million in the second quarter of 2007.
Acetyl Intermediates
Strategic expansions in Asia, attractive industry fundamentals, andadvantaged raw material positions drove significant sales andearnings growth in Acetyl Intermediates. Net sales were $1,067million compared with $829 million in the same period last year,driven by higher pricing on continued strong demand, increasedvolumes from its Nanjing acetic acid unit, and positive currencyimpacts. Operating profit increased to $148 million from $91million and operating EBITDA increased to $227 million from $148million in the same period last year, as the volume and pricingmore than offset higher raw material and energy costs in theperiod. Increased dividends from the company's Ibn Sina methanoland MTBE cost affiliate also contributed to the improved results.The prior year's operating results included a partial impact of theunplanned outage at the company's Clear Lake, Texas, facility.
Taxes
The tax rate for adjusted earnings per share was 26 percent in thesecond quarter of 2008 compared with 28 percent in the secondquarter of 2007. The U.S. GAAP effective tax rate for continuingoperations for the second quarter of 2008 was 18 percent comparedwith 26 percent in the same period last year. The decrease in theU.S. GAAP effective tax rate for the period ended June 30, 2008 wasprimarily due to the U.S. income tax effect resulting from thematurity of cross currency swap arrangements in June 2008. The taxrate for adjusted earnings per share is based upon the company'sprevious guidance which did not include these items. Cash taxes forthe first six months of 2008 were $45 million, $96 million lowerthan the prior year period.
Equity and Cost Investments
Earnings from equity investments and dividends from costinvestments, which are reflected in the company's adjusted earningsand operating EBITDA, totaled $92 million in the second quarterversus $72 million in the same period last year. Higher dividendsfrom the company's acetate China ventures and Ibn Sina costaffiliate offset lower earnings from the Advanced EngineeredMaterials equity affiliates. Equity and cost investment dividends,which are included in cash flow s, were $87 million compared with $59 million in the prior yearperiod.
Cash flow
The company generated $346 million in cash from operatingactivities during the first six months of 2008 compared with $79million generated during the same period last year, driven bystrong operating performance and lower cash taxes. The 2008 resultsincluded a $107 million payment related to the resolution of alegacy litigation matter and an increased use of cash in tradeworking capital. The 2007 results included a $74 million cashpayment related to a long-term management compensation program.
Cash used in investing activities was $33 million at the end of thesecond quarter and included a $93 million payment to settle a crosscurrency swap that matured in June 2008.
During the first half of 2008, the company repurchasedapproximately $126 million of its outstanding common shares and hasapproximately $274 million in authorized purchases remaining. Netdebt at the end of the second quarter was $2,640 million, adecrease of $91 million from the fourth quarter of 2007. Cash andcash equivalents at the end of the second quarter were $983 millioncompared with $825 million at the end of 2007.
During the quarter, the company received a scheduled progresspayment of $311 million related to the relocation of Ticona'sKelsterbach production facility, reflected in investing activities;and $59 million in associated value added tax, reflected inoperating activities.
Outlook
The company reaffirmed its full year outlook for adjusted earningsper share to between $3.60 and $3.85 based on the strength of itsperformance in the first half of 2008 and continued execution ofits earnings growth strategy. On a comparable basis, 2007 resultswere $3.29 per share. The guidance is based on an adjusted tax rateof 26 percent and an estimated year-end weighted average of 166million diluted shares outstanding. The company also reaffirmed itsoperating EBITDA guidance range of between $1,355 million and$1,415 million.
"The rapid escalation of raw material and energy prices, along withconcerns of slowing economic growth in the U.S. and parts of Europehave created challenges in the short-term," said Weidman. "With ourgeographic and end market diversity, advantaged feedstockpositions, and an integrated business model, we believe thatCelanese is well-positioned to mitigate the potential impact oftoday's environment."
About Celanese Corporation:
As a global leader in the chemicals industry, Celanese Corporationmakes products essential to everyday living. Our products, found inconsumer and industrial applications, are manufactured in NorthAmerica, Europe and Asia. Net sales totaled $6.4 billion in 2007,with approximately 70% generated outside of North America. Knownfor operational excellence and execution of its businessstrategies, Celanese delivers value to customers around the globewith innovations and best-in-class technologies. Based in Dallas,Texas, the company employs approximately 8,400 employees worldwide.
Forward-Looking Statements
This release may contain "forward-looking statements," whichinclude information concerning the company's plans, objectives,goals, strategies, future revenues or performance, capitalexpenditures, financing needs and other information that is nothistorical information. When used in this release, the words"outlook," "forecast," "estimates," "expects," "anticipates,""projects," "plans," "intends," "believes," and variations of suchwords or similar expressions are intended to identifyforward-looking statements. All forward-looking statements arebased upon current expectations and beliefs and variousassumptions. There can be no assurance that the company willrealize these expectations or that these beliefs will provecorrect. There are a number of risks and uncertainties that couldcause actual results to differ materially from the forward-lookingstatements contained in this release. Numerous factors, many ofwhich are beyond the company's control, could cause actual resultsto differ materially from those expressed as forward-lookingstatements. Certain of these risk factors are discussed in thecompany's filings with the Securities and Exchange Commission. Anyforward-looking statement speaks only as of the date on which it ismade, and the company undertakes no obligation to update anyforward-looking statements to reflect events or circumstances afterthe date on which it is made or to reflect the occurrence ofanticipated or unanticipated events or circumstances.
Source: Celanese Corporation