Celanese Hikes Polyacetal Prices

Zacks

Chemical and advanced materials maker Celanese Corporation (CE) declared that it will raise prices for all Hostaform and Celcon polyacetal (POM) product line grades by 5%. The price increase will be effective Jan 1, 2014, or as per the contracts.

On Oct 17, 2013, Celanese expanded its POM manufacturing business in the Asia region to strengthen the product’s manufacturing base in that region and support its customers.

The company also intends to continue investments in, and expansion of, its joint venture agreements with Polyplastics in Malaysia, Korea Engineering Plastics (KEP) in Korea, and SABIC in Saudi Arabia as a part of its growth strategy.

These partnerships enables Celanese to offer a high quality, diverse portfolio of polyacetal products to its global customers, with optimum lead times, in their respective regions. The joint venture agreements will also expand commercial, application development and technical resources in Asia. This will also enable Celanese to utilize its full breadth of chemistry, technology and product expertise to create value for the customers.

Celanese released its third-quarter 2013 results on Oct 18. The company’s adjusted earnings (excluding one-time items) of $1.20 per share beat the Zacks Consensus Estimate of $1.15. Earnings (as reported) from continuing operation was $1.07 per share in the quarter, up roughly 34% from 80 cents recorded a year ago.
 
Sales in the quarter were $1,636 million, up 1.7% year over year, but missed the Zacks Consensus Estimate of $1,643 million.

Celanese expects earnings growth, on the back of company-specific initiatives, to be consistent with its long-term growth plan. These initiatives, including innovation of new products and enhancement of efficiencies through productivity, are expected to drive earnings in 2014.

Celanese plans to cut costs and run its plants more efficiently to counter weak demand. Moreover, it is aggressively expanding capacity in the emerging Asian markets. The company’s strong presence in these markets should enable it to deliver incremental earnings this year and next.

However, Celanese is witnessing weak demand and pricing in its core acetyl business. Moreover, it is exposed to volatility in raw material costs and has a highly leveraged balance sheet.

Celanese currently has a Zacks Rank #3 (Hold).

Other companies in the chemical industry worth considering are Asahi Kasei Corp. (AHKSY), Johnson Matthey plc (JMPLY) and Methanex Corp. (MEOH). While Asahi Kasei and Johnson Matthey hold a Zacks Rank #1 (Strong Buy), Methanex carries a Zacks Rank #2 (Buy).

Read the Full Research Report on CE
Read the Full Research Report on MEOH
Read the Full Research Report on AHKSY
Read the Full Research Report on JMPLY


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