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Celanese's (CE) Q1 Earnings Top Estimates, Revenues Trail

Zacks Equity Research

Celanese Corporation CE logged earnings from continuing operations of $2.64 per share in first-quarter 2019, down from $2.68 in the year-ago quarter.

Barring one-time items, adjusted earnings were $2.62 a share, down from $2.79 in the year-ago quarter. It, however, topped the Zacks Consensus Estimate of $2.49.

Revenues of $1,687 million fell roughly 9% year over year and lagged the Zacks Consensus Estimate of $1,769.6 million. Sales were impacted by lower volumes and prices. The chemical maker witnessed a challenging business environment during the quarter.

Celanese Corporation Price, Consensus and EPS Surprise

 

Celanese Corporation Price, Consensus and EPS Surprise | Celanese Corporation Quote

Segment Review

Net sales in the Engineered Materials unit were $663 million in the quarter, flat year over year. Higher pricing and improved sales mix were offset by lower volumes and unfavorable currency impact. The company commercialized 1,075 projects during the quarter, up 45% year over year.   

Net sales in Acetate Tow segment were $166 million, flat year over year. Sales were impacted by reduced volumes due to lower global industry utilization.

The Acetyl Chain segment posted net sales of $889 million, down around 15% year over year. Sales were impacted by reduced volumes and pricing due to lower global demand.

Financials

Celanese ended the quarter with cash and cash equivalents of $441 million, down around 10% year over year. Long-term debt was down roughly 12% year over year to $2,933 million.

Celanese generated operating cash flow of $307 million and free cash flow of $224 million during the quarter. Net capital expenditure was $79 million for the quarter. Moreover, the company returned $270 million to shareholders through dividends and share repurchases during the reported quarter.

Outlook

Celanese backed its adjusted earnings per share guidance of roughly $10.50 for 2019, considering that underlying fundamentals will start to improve later this year.  

The company does not expect a significant improvement in demand in the second quarter and expects second-quarter performance to be similar to the first quarter. Celanese will continue to invest in its businesses and further expand its capability to boost growth and create value for shareholders.

Price Performance

Celanese’s shares have lost 6.4% over a year, underperforming its industry’s 6% rise.



 

Zacks Rank & Other Key Picks

Celanese currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the basic materials space include Sandstorm Gold Ltd. SAND, Flexible Solutions International Inc. FSI and W. R. Grace & Co. GRA.

Sandstorm Gold has an expected earnings growth rate of 200% for the current year and carries a Zacks Rank #1 (Strong Buy). The company’s shares have gained around 18% over the past year.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Flexible Solutions has an expected earnings growth rate of 171.4% for the current year and carries a Zacks Rank #2. Its shares have rallied roughly 94% in the past year.

W. R. Grace has an expected earnings growth rate of 10.4% for the current year and carries a Zacks Rank #2. Its shares have gained around 14% in the past year.

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