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Celanese (CE) Closes Next Polymers Buyout, Expands in India

Zacks Equity Research

Celanese Corporation CE has completed the acquisition of one of India’s largest engineering thermoplastics (ETP) compounders, Next Polymers Ltd. However, financial details of the deal have been kept under wraps.
In October 2018, the company entered into a definitive agreement to buy Next Polymers. The buyout complements Celanese’s growing business in India and strengthens its position as a leader in India’s ETP market by broadening its capability to serve nylon and other engineered materials customers with high product quality and service level. Moreover, the acquisition offers customers with wide range of polymer products.

Per Celanese, the buyout further expands the company’s global manufacturing footprint with topnotch domestic compounding facility and 10 production lines to support customers in a fast-growing market and leverage export base. Moreover, the acquisition reinforces Celanese’s commitment to waste reduction by compounding polymers with post-industrial content.

Headquartered in Mumbai, Next Polymers specializes in custom compounding of several ETP materials with a compounding production facility of roughly 20 kilo tons per annum located in India’s union territory of Dadra & Nagar Haveli.

In the past six months, Celanese has underperformed the industry it belongs to. The stock has lost around 17.9% compared with the industry’s fall of 8.8%.

Celanese is taking appropriate pricing actions amid a volatile pricing environment for raw materials. The company’s strategic measures including operational cost savings through productivity actions and price hike initiatives are likely to provide an impetus to its earnings.

In third-quarter earnings call, Celanese raised its adjusted earnings per share guidance for full-year 2018 to roughly $10.90-$11.10, owing to strength in Engineered Materials (EM) and Acetyl Chain units. The company expects momentum in Acetyl Chain and EM to continue. The EM segment is expected to maintain the pace of earnings growth with traction from new projects and bolt-on acquisitions.

Celanese Corporation Price and Consensus


Celanese Corporation Price and Consensus | Celanese Corporation Quote

Zacks Rank & Stocks to Consider

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

A few better-ranked stocks in the basic materials space are Verso Corporation VRS, Ingevity Corporation NGVT and Cameco Corporation CCJ.

Verso has an expected earnings growth rate of 63.5% for 2019 year and a Zacks Rank #1 (Strong Buy). The company’s shares have gained 35.7% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ingevity has an expected earnings growth rate of 21.5% for 2019 and a Zacks Rank #2 (Buy). The company’s shares have gained 15.4% in the past year.

Cameco has an expected earnings growth rate of 20% for 2019 and a Zacks Rank #2. Its shares have gained 16.4% in a year’s time.

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