Celanese Corporation (CE - Free Report) declared that it is closing its acetate tow manufacturing unit in Ocotlan, Jalisco, Mexico. This move is geared to strengthen the company’s competitive position, cut fixed costs and align future production capacities with expected industry demand.
The company has witnessed challenging global business environment for acetate tow products. With declining global demand, Celanese doesn’t expect improvements either.
However, the company will continue to serve its acetate tow customers by optimizing its global production network, which includes fully-owned facilities in Lanaken, Belgium, and Narrows, Virginia, United States, and acetate tow joint-venture facilities in China. Celanese anticipates to operate its acetate tow unit in Ocotlan through the fourth quarter of 2018 to ensure a smooth closure process.
Celanese has outperformed the industry in a year’s time. While shares of the company have moved up around 31%, the industry saw a rise of roughly 12.1%.
Celanese raised earnings guidance for 2018 based on strength across its Acetyl Chain and EM units. The company now envisions adjusted earnings per share to grow in the range of 20-25% year over year in 2018, up from its earlier view of 12-16% growth.
Celanese remains focused on growth through acquisitions. The purchase of Italy-based SO.F.TER. Group has strengthened Celanese’s solutions capability and project pipeline. Moreover, the acquisition of Nilit's nylon compounding unit is in sync with Celanese’s plans to become a leading nylon compound supplier.
The buyout allows Celanese to extend its global leadership position in the engineered materials business. The recent buyout of Omni Plastics also reinforces Celanese’s global asset base by adding compounding capacity in the Americas, which will allow the company to continue supporting a diverse and growing customer base.
Moreover, the company’s strategic initiatives including productivity actions and efficiency enhancement are expected to continue to support its earnings. The company should also gain from expansion in emerging regions. Also, it continues to generate strong cash flows and remains focused on returning value to its shareholders.
Celanese Corporation Price and Consensus
Zacks Rank & Stocks to Consider
Celanese is a Zacks Rank #1 (Strong Buy) stock.
Some other top-ranked companies in the basic materials space are FMC Corp. (FMC - Free Report) , The Chemours Company (CC - Free Report) and Koninklijke DSM NV (RDSMY - Free Report) .
FMC Corp has an expected long-term earnings growth rate of 16.4% and sports a Zacks Rank #1. Its shares have gained around 17.5% over a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Chemours has an expected long-term earnings growth rate of 15.5%. Its shares have gained around 29% over a year.
Koninklijke DSM has an expected long-term earnings growth rate of 7.7%. Its shares have gained around 43% over a year.
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