Celanese (CE) Q4 2011 earnings summary

Executive summary

• FY11 net sales rose to $6.763B from $5.918B; operating profit reached $690M vs. $503M, and net earnings were $607M vs. $377M.

• Higher pricing across segments, favorable currency and stronger volumes in Advanced Engineered Materials and Industrial Specialties drove revenue growth; Acetyl Intermediates volumes fell on outages and year-end destocking.

• Q4 net sales were $1.614B, operating profit $97M and diluted EPS $0.60, down from Q3’s $1.807B, $196M and $1.05, respectively.

Financial highlights

• Gross profit increased to $1.434B from $1.180B; higher pricing more than offset higher raw-material costs, while 2011 also benefited from the absence of 2010 asset write-offs and accelerated amortization.

• Continuing-operations pretax earnings rose to $755M from $538M; equity earnings of affiliates were $192M vs. $168M and cost-investment dividends were $80M vs. $73M.

• Cash from operating activities increased to $638M from $452M, supported by higher earnings and lower cash taxes; higher working capital and pension contributions partly offset the increase.

• Capital spending excluding the Kelsterbach relocation was $349M in 2011 vs. $201M in 2010; relocation-related capital spending was $204M vs. $312M.

Outlook and guidance

• FY12 revenue expected to grow faster than global GDP, with earnings growth expected to exceed revenue growth through technology advantages and productivity; affiliate earnings also expected to improve, with no planned affiliate turnarounds.

• 2012 capital expenditures expected at $350M–$400M, excluding Kelsterbach relocation and European capacity expansion; an additional €30M of Kelsterbach relocation outflows was anticipated.

• Industrial ethanol plans included ~200,000 tons of added capacity at Nanjing by mid-2013, pending approvals, plus plans for one or possibly two China complexes; Clear Lake’s technology unit expected commissioning by mid-2012.

• Expected 2012 cash resources were considered sufficient for liquidity and debt service; $154M was available under the credit-linked facility and $600M under the revolving facility.