Specialty material company Celanese Corporation’s (CE - Analyst Report) Acetate business will increase the price of its acetate tow for core grade items by 8% to 10% (Free On Board plant basis) effective July 1, 2012. The company said that the price of unique and/or low volume as well as specialty tow items will be raised by a differentiated amount.
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 continues to accelerate growth in the emerging markets, including Asia. Celanese’s 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.
Celanese released its first-quarter 2012 results in April 2012. The company reported adjusted earnings (excluding one-time charges and gains) of 72 cents per share in the quarter, down from 96 cents a year ago. The results were below the Zacks Consensus Estimate of 77 cents. However, the reported profit jumped 28.9% year-over-year to $183 million or $1.15 per share.
Sales for the quarter amounted to $1,633 million, up 3% year over year, exceeding the Zacks Consensus Estimate of $1,616 million. The growth was driven by higher volumes and pricing in the company’s acetyl intermediates and industrial specialties divisions. However, higher costs and weaker demand in Europe led to a decline in operating profit by 91.8% to $98 million.
According to Celanese, challenging market conditions in Europe and Asia will last longer this year than expected. Therefore, the company will operate plants at appropriate levels to maximize profits while keeping a lid on discretionary spending. It expects to cut costs and expand customer relationships to counteract weak demand.
Celanese, which competes with BASF SE (BASFY) and Methanex Corporation (MEOH - Analyst Report), currently retains a Zacks #3 Rank, reflecting a short-term (1 to 3 months) Hold rating. Currently, we have a long-term (more than 6 months) Neutral recommendation on the stock.