Specialty material company Celanese Corp. (CE) stated it will expand Ethylene Vinyl Acetate (EVA) capacity by up to 15% in the second half of 2011, at its Edmonton manufacturing facility, driven by strong growth in strategic and high-value segments.
With Celanese’s unique technology advantage, which allows it to produce a wide range of high value added EVA products, the company is well positioned to satisfy the needs of new high-growth applications.
Chinais the fastest growing EVA market and the increase in the photovoltaic cell industry in China and strong demand for EVA in other parts of Asia has led to the increase in global EVA production.
Similarly, in August 2010, DuPont Packaging & Industrial Polymers (P&IP) and China Petroleum & Chemical Corp., known as Sinopec, started EVA production at their joint venture ethylene vinyl acetate production plant in Beijing.
The joint venture combines the manufacturing expertise of Sinopec and the latest EVA technology from DuPont P&IP. The venture supplies a broad range of high-quality, specialty EVA products and will serve market segments such as flexible packaging, adhesives, sealants, document lamination, wire and cable, footwear, renewable energy and electronics.
Recently, Celanese reported its adjusted earnings of 73 cents per share in the fourth quarter of 2010, beating the Zacks Consensus Estimate of 68 cents. Diluted earnings per share in the quarter were 64 cents versus $0.00 in the prior-year quarter.
Encouraged by the strength of its 2010 performance, its confidence in its earnings growth programs and its expectations for a continued, modest global economic recovery, the company raised its outlook for full-year 2011. The company now expects its full- year 2011 adjusted earnings per share to be at least 60 cents higher and operating EBITDA to be at least $150 million higher than the 2010 results.
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, driven by the strong performance in the Advanced Engineered Materials business.
The company is operating its facilities in the Acetyl Intermediates segment at above the industry utilization rates of 80%, which provides cost advantages. Capacity utilization has also improved in the Industrial Specialties segment due to 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 its financial flexibility.
Currently, Celanese holds a short-term Zacks #2 Rank over the next one-to-three months, and a long-term Neutral recommendation (6 months and higher).
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