Celanese Corporation (CE) started production in its expanded vinyl acetate/ethylene (VAE) unit located at Nanjing Chemical Industrial Park in China.
The capacity expansion leverages the company’s improved VAE technology. The expanded unit will address the growing demand for innovative solutions used in vinyl-based emulsions and represents the company’s commitment to continue technology innovation and enhancement to meet clients’ business requirements.
Vinyl-based emulsion solutions are used in a number of applications such as low volatile organic compounds odor coatings and paints used with Celanese’s specialty adhesives and binder. They are also used in construction and building applications.
In September 2007, Celanese established an integrated chemical complex in Nanjing, China that produces Celstran long fiber-reinforced thermoplastic (LFRT), GUR ultra-high molecular weight polyethylene (UHMW-PE), emulsion polymers, acetic anhydride, vinyl acetate monomer and acetic acid.
Celanese has shown a strong commitment to China and Asia with its continued investments in Nanjing and across the region. There are at present eight units at the Celanese Nanjing Chemical Complex and more are planned at this facility, which is already Celanese’s largest complex in the world.
Last month, Celanese reported that its first-quarter 2011 exceeded the Zacks Consensus Estimate. Adjusted earnings were 96 cents per share in the first quarter of 2011, beating the Zacks Consensus Estimate of 83 cents. Diluted earnings per share in the quarter were 87 cents versus 6 cents in the prior-year quarter.
Quarterly revenues grew 14% year over year to $1.6 billion, primarily due to higher volumes across all business segments as well as improved volumes. Results were above the Zacks Consensus Estimate of $1.5 billion.
Operating profit jumped to $188 million from a loss of $14 million in the prior-year quarter. Operating margins came in at a positive 8.5% from a negative 99% last year.
Celanese is one of the world’s largest producers of acetyl products, as well as a leading global producer of high-performance engineered polymers. The company’s earnings outlook has been improving due to strong performance in the Advanced Engineered Materials business.
The company is operating its facilities in the Acetyl Intermediates segment at above the industry utilization rate of 80%, which provides cost advantages. Capacity utilization has also improved in the Industrial Specialties segment due to the rising demand in the Asia Pacific.
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 larger peers, E.I. DuPont de Nemours and Co. (DD) and The Dow Chemical Co. (DOW) in the Advanced Engineered Material Segment as well as in the Industrial Specialties segment. Celanese’s balance sheet leverage is also relatively high, which limits financial flexibility.
Currently, Celanese has a short-term (1 to 3 months) Zacks #1 Rank (Strong Buy) and a long-term (6 months and higher) Neutral recommendation.
