OREANDA-NEWS. Celanese Corporation (NYSE: CE), a global technology and specialty materials company, today reported 2015 adjusted earnings per share of $6.02 versus $5.67 in the prior year, and fourth quarter adjusted earnings per share of $1.25 versus $1.28 in the prior year quarter. These strong results demonstrate the ability of our complementary cores to create value in a challenging environment. In Materials Solutions, we combine chemistry and applications in a unique way to satisfy the needs of our customers, and in the Acetyl Chain we leverage our technology advantage across our integrated value chain to capture opportunity and maximize value.

Fourth quarter 2015 financial highlights:

  • Adjusted earnings per share of $1.25, down 2 percent from prior year
  • Adjusted EBIT margin of 19.2 percent, a fourth quarter record and an increase of 110 basis points over the prior year
  • Fourth quarter record performance for adjusted EBIT and margin in both Materials Solutions and Industrial Specialties

Full year 2015 financial highlights:

  • Record adjusted earnings per share of $6.02, up 6 percent from prior year, driven by the strength of our commercial models in both the Acetyl Chain and Materials Solutions
  • Adjusted EBIT margin of 21.8 percent was our highest ever, increasing 320 basis points over the prior year
  • Record core income and margin in Materials Solutions
  • Free cash flow of $733 million before the impact of a $177 million payment to terminate a supplier contract
  • $594 million of cash returned to shareholders, including 6.6 million shares repurchased and $174 million in dividends paid

Significant fourth quarter items impacting GAAP results:

  • Expense of $174 million related to the termination of an existing supplier agreement
  • Pension mark-to-market adjustment of $126 million, recognizing net actuarial losses and change in value of plan assets versus a mark-to-market loss of $349 million in the fourth quarter of 2014
  • Asset impairment loss of $123 million related to a write-off of ethanol assets at our integrated facility in Nanjing, China
  • Exit costs and capacity reduction costs of $62 million related to certain facilities in Lanaken, Belgium, Tarragona, Spain and Meredosia, Illinois

"I am pleased to report fourth quarter adjusted earnings of $1.25 per share and adjusted EBIT margin of 19.2 percent, a 110 basis point increase over the prior year and a fourth quarter record. Our teams did a tremendous job of managing through the considerable headwinds of currency depreciation, falling crude prices, and soft demand in Asia to deliver these strong results," said Mark Rohr, chairman and chief executive officer. "Our Materials Solutions core produced fourth quarter records for adjusted EBIT and margin, as we continue to build momentum in our opportunity pipeline that provides innovative solutions for our customers. Industrial Specialties also set fourth quarter records for adjusted EBIT and margin as we flexed our fully integrated Acetyl Chain to capture market opportunities and maximize value in a volatile market environment. For the year, we grew adjusted earnings per share by 6 percent to $6.02 per share, a second consecutive record year. We delivered record segment income margin of 21.8 percent, an increase of 320 basis points year over year. Our strong earnings translated into record free cash flow generation. We deployed $420 million of cash to repurchase approximately 6.6 million shares of stock during the year and increased dividends paid by 21 percent to $174 million in 2015. These results underscore the success we are having with our value creation models in both cores, our relentless focus on productivity and our ability to generate strong cash flow. During the year we also took a number of steps to improve our competitive position including rationalizing our manufacturing footprint, terminating a supply contract and executing on broad based productivity initiatives. The expense recognized in relation to these actions accounts for roughly $300 million of the adjustments to our reported GAAP earnings, and these steps position us well going forward," said Rohr.

Full Year Business Segment Overview

Materials Solutions

Materials Solutions generated record core income of $808 million and expanded margin by 510 basis points to 35.2 percent, also a record level. Engineered Materials (Advanced Engineered Materials excluding affiliates) adjusted EBIT increased by 47 percent year over year as we continue to provide high value to our customers well beyond the polymer. Margin in Engineered Materials expanded 710 basis points as prices remained relatively stable while raw materials declined. We successfully introduced over 1,000 new project launches in 2015 as we continue to offer the best overall materials package and project management system to drive growth in our opportunity pipeline. These strong results in Engineered Materials combined with productivity and lower raw material costs more than offset volume decline due to customer tow destocking and lower affiliate earnings.

Equity earnings from Advanced Engineered Materials affiliates declined $11 million year over year to $150 million as continued decline in MTBE pricing adversely impacted Ibn Sina and more than offset higher earnings from Korea Engineering Plastics and Polyplastics. Dividends from Cellulose Derivatives ventures declined $8 million year over year due to the expiration of a tax holiday.

Acetyl Chain

Core income in the Acetyl Chain was $498 million in 2015, 18.5 percent lower versus the prior year. Despite significant year over year headwinds from currency, falling raw materials and fewer industry outages in VAM versus prior year, the Acetyl Chain was able to post record margins for the year through commercial actions, a focus on productivity and lower energy costs. Industrial Specialties delivered record segment income of $110 million, a 71.9 percent increase year-over-year, and also generated a record margin of 10.2 percent as raw material cost reductions and productivity actions more than offset a decline in pricing for emulsion polymers.

Recent Highlights

  • Announced addition of Polyether Ether Ketone (PEEK) to the Engineered Materials portfolio in the second half of 2016 for application in automotive, electrical, electronics, industrial, oil & gas, diagnostics, and analytical end-uses.
  • Launched a global tribology product platform to meet the growing demand for high-performance materials for use in moving parts. These low-wear, low-friction engineered plastics are developed for moving and sliding parts used in everything from conveyors to vehicles to orthopedic implants.
  • Announced implementation of a series of low capital debottlenecks and technology enhancements at the Clear Lake, Texas, acetic acid facility to expand capacity by 150kt by 2016.
  • Started expansion of Clear Lake, Texas VAM facility raising plant capacity by 150kt to 450kt by 2018.
  • Entered into a Memorandum of Understanding with Push Group to form a new joint venture focused on the production of cellulose acetate-based specialty products, including high-quality plastics and films.
  • Announced capacity expansion of GUR® ultra-high molecular weight polyethylene at the Bishop, Texas facility to 38kt, with final completion expected in May 2016.
  • Confirmed permanent reduction in capacity at the Lanaken, Belgium, acetate tow production facility by 50 percent.

Fourth Quarter Business Segment Overview

Materials Solutions

Materials Solutions core income was a fourth quarter record at $194 million, 11.5 percent higher than the prior year quarter. Core margin was also a fourth quarter record of 34.8 percent, expanding by 620 basis points. Segment income and margin in Advanced Engineered Materials were both fourth quarter records. Engineered Materials expanded margin by 940 basis points, due to our ability to hold pricing in an environment of falling raw materials, which demonstrates the value of our polymers and application expertise to our customers. Consumer Specialties also recorded a highest ever segment income margin of 44.3 percent, a 470 basis points expansion from fourth quarter last year.

Productivity combined with lower energy and raw material costs more than offset volume decline driven by customer tow destocking. Equity earnings were $7 million lower than fourth quarter last year mainly due to the impact of lower MTBE on Ibn Sina.

Acetyl Chain

Acetyl Chain core income was $82 million, a 43.1 percent decline from fourth quarter last year. Margin was 10.1 percent, 460 basis points lower than the same quarter last year. Fourth quarter results in the Acetyl Chain were adversely impacted year over year by fewer unplanned industry outages in VAM and weak demand in Asia, which more than offset productivity gains and lower energy and raw material costs. Industrial Specialties registered fourth quarter record segment income of $22 million compared to $7 million last year and record margins of 9.2 percent, a 660 basis points improvement.

Cash Flow

For the year, free cash flow was $733 million before including the impact of a cash payment related to terminating a supply contract. Net of the termination payment, free cash flow was a record at $556 million. Capex for the year was $306 million and $62 million for the quarter.

During 2015, Celanese returned $594 million of cash to shareholders, repurchasing 6.6 million shares and paying $174 million in dividends. $1 billion remains under the recent share repurchase authorization as of December 31, 2015.

Outlook

"We began 2015 facing multiple headwinds, and worked extremely hard to implement commercial discipline, productivity actions and sound capital deployment strategies to deliver record results. Our performance in 2015 demonstrates our structural uniqueness and the value of our complementary cores," said Rohr. "Similarly, 2016 is starting off with its own set of challenges. In the last few months we have seen further declines in crude and the broad raw material complex, continued uncertainty in the Asian demand landscape, and a further weakening Chinese currency. That said, we are confident that our business models in Materials Solutions and the Acetyl Chain provide the framework needed to manage the current uncertainty and strengthen our ability to generate high levels of free cash flow. We also continue to build on our productivity initiatives to support growth. We anticipate adjusted earnings per share to grow 5-10 percent in 2016 which will keep us well on track to meet our 2018 targets."

Celanese Corporation is a global technology leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. With sales almost equally divided between North America, Europe and Asia, the company uses the full breadth of its global chemistry, technology and business expertise to create value for customers and the corporation. Celanese partners with customers to solve their most critical needs while making a positive impact on its communities and the world. Based in Dallas, Texas, Celanese employs approximately 7,100 employees worldwide and had 2015 net sales of $5.7 billion.