Celanese(CE) - 2025 Q4 - Earnings Call Transcript
CelaneseCelanese(US:CE)2026-02-18 15:00

Financial Data and Key Metrics Changes - The company reported a decline in earnings year-over-year, with Adjusted EBIT in the Acetyl Chain down approximately $400 million and Engineered Materials down about $120 million [17][19] - The focus remains on cash generation, with a strong cash generation performance in 2025 despite the earnings decline [6][7] - The company is targeting free cash flow between $650 million and $750 million for 2026, with various scenarios considered for demand [44][72] Business Line Data and Key Metrics Changes - In the Acetyl Chain, the decline was primarily driven by volume and price, with significant impacts from the acetate tow business and margin compression in China [18][19] - Engineered Materials showed a mixed performance, with both volume and price declines, but cost benefits were noted [19] - The company anticipates growth in Engineered Materials, particularly in electronics and automotive sectors, while the Acetyl Chain may face challenges [21][22] Market Data and Key Metrics Changes - The electronics market is currently a bright spot, driven by AI and data center build-outs, while the automotive sector shows mixed signals, particularly in China [12][13] - The company noted some softness in the automotive market in China due to changes in EV credits and stimulus [12] - The demand environment is expected to improve in the second half of 2026, with seasonal improvements noted in early 2026 [86] Company Strategy and Development Direction - The company is focused on cash generation and reducing debt, with plans to achieve $1 billion in divestitures by the end of 2027 [14][75] - There is a strategic emphasis on divesting non-core business segments, particularly joint ventures [14][15] - The company aims to adapt to structural changes in the market, such as the shift from ICE to EV in China, and is working on enhancing operational efficiency [36][81] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the current operating environment, emphasizing the importance of cost reduction and cash flow generation [6][40] - The outlook for 2026 includes expectations for improved EBIT growth in Engineered Materials, while the Acetyl Chain may face challenges [20][21] - Management highlighted the need for continued evaluation of market conditions and operational adjustments to maintain profitability [80][81] Other Important Information - The company expects a cost benefit of $20 million to $25 million from the closure of the Lanaken plant, with some benefits expected to materialize in 2026 [9][106] - The company is actively managing working capital and inventory levels to avoid service issues while targeting further reductions [51][52] Q&A Session Summary Question: Thoughts on selling equity to address balance sheet issues - Management emphasized a focus on cash generation and debt management rather than equity sales, indicating confidence in the current strategy [6] Question: Expectations for pricing in contracts for 2026 - Management noted little change in contract pricing, with more competition observed in the spot market [8] Question: Sequential improvement in engineering materials - Management identified electronics as a bright spot, while the automotive sector remains mixed, particularly in China [12][13] Question: Timing and potential assets for divestiture - Management is confident in achieving the $1 billion divestiture target by 2027, with a focus on non-core business segments [14][15] Question: Analysis of EBIT changes in Acetyl Chain and Engineered Materials - Management attributed declines to volume and price changes, with specific challenges noted in the acetate tow business [18][19] Question: Free cash flow guidance and working capital management - Management expressed confidence in achieving free cash flow targets through various levers, despite potential demand challenges [40][72] Question: Expectations for acetyl pricing in China - Management does not anticipate significant uplifts in acetyl pricing, citing overcapacity as a concern [66][67] Question: Impact of turnaround on second quarter earnings - Management indicated that turnaround expenses would be a factor in Q2 earnings, with expectations for a similar lift as previously noted [68]

Celanese(CE) - 2025 Q4 - Earnings Call Transcript - Reportify