Earnings stock to watch: Celanese Corporation (NYSE: CE)

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Celanese Corporation (NYSE: CE) posted lower than expected results for the fourth quarter of FY 19. CE in the fourth quarter of FY 19 has reported the adjusted earnings per share of $1.99, missing the analysts’ estimates for the adjusted earnings per share of $2.15, according to analysts’ consensus estimate from FactSet. The company had reported 15 percent fall in the adjusted revenue to $1.43 billion in the fourth quarter of FY 19, missing the analysts’ estimates for revenue of $1.53 billion.

For fiscal 2020, the 2020 adjusted earnings to be of $11 per share. The adjusted earnings per share in 2020 will depend upon the productivity and capital deployment as well as $70 to $80 million of turnaround expense in the Acetyl Chain and Engineered Materials occurring almost entirely in the first half.

On the other hand, CE has signed an agreement for the acquisition of Nouryon’s redispersible polymer powders business offered under the Elotex brand (Elotex business). As per the agreement, Celanese will acquire all of Nouryon’s global production facilities for redispersible polymer powders across Europe and Asia, all products under the Elotex portfolio, as well as all customer agreements, technology and commercial facilities globally. With this acquisition, CE will extend its global leadership position in the VAE emulsions space. The transaction is expected to be close in the second quarter of 2020, subject to customary closing conditions, regulatory approvals and subject to completion of the works council process. Until closing, Celanese and Elotex will operate as independent businesses.

Meanwhile, the company is taking strategic steps to expand its emulsion polymers derivatives business to extend the value of its global acetyl chain. The strategic steps include implementation of a series of capital efficient VAE (vinyl acetate ethylene) expansion and debottlenecking projects from now through the year 2023, that includes significant expansions of Celanese’s Geleen, Netherlands, and Nanjing, China, VAE emulsions production sites. CE intends to start a debottlenecking project at its Nanjing VAE production facility of 20,000 metric tons per annum by 2022. CE will further expand VAE production capacity at its Nanjing facility by 65,000 metric tons per annum by adding a third VAE reactor by late 2022, which will take the total Nanjing VAE capacity from 130,000 to 215,000 metric tons per annum.

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