Recently, Celanese Corporation (CE), a specialty material company, announced that it has received all government approvals necessary to modify its existing integrated acetyl facility at the Nanjing Chemical Industrial Park. The facility, which is scheduled to commence in mid 2013, is expected to boost ethanol production for industrial uses in China.
The facility will use Celanese’s TCX ethanol process technology, which would help the company produce 30% to 40% additional ethanol compared with its previous expectation of 200,000 tons per year. However, the company does not expect to incur any additional cost for the modification or enhancement of the facility. As per the company, the total investment for the project would be a fraction of that required for a new plant.
Celanese’s TCX technology allows capacity to increase the returns at the facility. The company expects another facility Clear Lake, Texas to use its TCX technology, which will come on stream by mid 2012.
In February 2012, Celanese reported adjusted earnings of 58 cents per share for the fourth quarter of 2011, missing the Zacks Consensus Estimate of 63 cents per share as well as year-ago earnings of 73 cents per share. For fiscal 2011, adjusted earnings were $4.47 per share versus $3.37 per share in fiscal 2010, exceeding the Zacks Consensus Estimate of $4.46 per share.
Quarterly revenues grew 7% year over year to $1.61 billion, primarily driven by higher pricing across all operating segments. It was above the Zacks Consensus Estimate of $1.60 billion. For full-year 2011, sales increased 14% to $6.78 billion.
Since the beginning of the first quarter of 2011, Celanese is witnessing increasing demand for its products. The company remains optimistic as the leading technologies, low cost operations and a strong presence in the emerging economies are expected to boost its earnings in 2012. The company also remains on track to meet its 2013 earnings growth objectives of at least $6.00 in adjusted earnings per share.
Celanese is one of the world’s largest producers of acetyl products, as well as the leading global producer of high-performance engineered polymers. However, Celanese is exposed to volatile raw material (natural gas, ethylene and methanol) prices used in the production of basic chemicals in the Acetyl Intermediates segment, principally formaldehyde, acetic acid and vinyl acetate monomer. The company also faces stiff competition from BASF SE (BASFY) and Methanex Corporation (MEOH).
Currently, Celanese has a Zacks #3 Rank, which implies a “Hold” rating for the short-term (1 to 3 months). We have also recommended the shares of the company as “Outperform” for the long-term (6 months and higher).
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