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Celanese (CE) Surpasses Earnings and Sales Estimates in Q1

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Celanese Corporation CE logged earnings from continuing operations of $2.83 per share in first-quarter 2021, up from $1.88 in the year-ago quarter.

Barring one-time items, adjusted earnings were $3.46 per share, up from $2.29 in the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of $3.01.

Revenues of $1,798 million increased 23% year over year and beat the Zacks Consensus Estimate of $1,745.8 million. A 15% rise in pricing more than offset a 3% decline in volumes. The company faced disruptions from the winter storm Uri in the first quarter. However, it benefited from continued improvement in demand.

Celanese Corporation Price and EPS Surprise

Celanese Corporation Price and EPS Surprise
Celanese Corporation Price and EPS Surprise

Celanese Corporation price-eps-surprise | Celanese Corporation Quote

Segment Review

Net sales in the Engineered Materials unit were $645 million in the first quarter, up around 15% year over year. The segment benefited from continued strength in automotive, electronics, and industrial end markets. Volumes rose sequentially in the quarter on the back of higher demand while prices increased on the company’s pricing actions in the wake of raw material inflation.

The Acetyl Chain segment posted net sales of $1,056 million, up roughly 32% year over year. Volumes declined sequentially due to the impacts of Uri, Chinese New Year and typical winter seasonality. Prices rose on the back of record Chinese acetic acid pricing and tight industry conditions.

Net sales in the Acetate Tow segment were $119 million, down around 8% year over year. Volume decreased sequentially on lower raw material and logistics availability.

Financials

Celanese ended the quarter with cash and cash equivalents of $791 million, up around 39% year over year. Long-term debt fell around 7% year over year to $3,135 million.

Celanese generated operating cash flow of $116 million and free cash flow of $19 million in the first quarter. Capital expenditures amounted to $92 million.

The company also returned $328 million to shareholders through dividends and share repurchases during the first quarter.

Outlook

Celanese stated that demand for its Engineered Materials and Acetyl Chain products remains strong in most end markets. The company expects adjusted earnings for the second quarter of roughly $4.00 per share factoring in current industry dynamics, higher inventory costs from Uri, and minimal turnaround requirements. Moreover, Celanese now expects adjusted earnings of $12.50-$13.50 per share for 2021.

Price Performance

Celanese’s shares have gained 97.5% in the past year compared with 48.4% rise of the industry.

Zacks Rank & Key Picks

Celanese currently sports a Zacks Rank #1 (Strong Buy).

Other top-ranked stocks worth considering in the basic materials space include Nucor Corporation NUE, Fortescue Metals Group Limited FSUGY and Impala Platinum Holdings Limited IMPUY.

Nucor has a projected earnings growth rate of 190.4% for the current year. The company’s shares have rallied around 102% in a year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fortescue has a projected earnings growth rate of 104.9% for the current fiscal. The company’s shares have shot up around 134% in a year. It currently sports a Zacks Rank #1.

Impala Platinum has an expected earnings growth rate of 197.6% for the current fiscal. The company’s shares have surged around 259% in the past year. It currently carries a Zacks Rank #1.

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