Celanese Corporation (CE), a leading global chemical company, reported net earnings of 58 cents per share in the third quarter of 2009, beating the Zacks Consensus Estimate of 42 cents. Results, however, were lower than last year’s 78 cents. Weak pricing and lower volumes, especially for Acetyl Intermediates and Industrial Specialties products on weak global demand led to net sales of $1.3 billion in the quarter, down 28% from the same period last year. The Acetyl Intermediates segment primarily serves customers in the chemical, paint and adhesives industries. Consumer Specialties: Net sales slid 8% to $271 million in the quarter, driven by lower sales volumes primarily in North America and Europe and negative currency impacts. However, higher pricing, lower raw material and energy costs and benefits from the company’s fixed cost reduction efforts drove a 24% rise in operating profit to $52 million. Consumer Specialties continued ...

On August 5th, Celanese Corporation (CE) notified that it is planning to shut down two plastic and polyester material production units, the Cleveland County plant and Grover facility, at the Ticona Manufacturing subsidiary in North Carolina. The closure is a result of a significant decline in demand for products made at the facility and challenging market conditions, especially in the automotive and electronics sectors. Celanese stated that the shut down would result in layoffs of about 100 workers by around September 30 this year. About half of the employees to be laid off will be production operators with the rest being warehouse operators, lab analysts and mechanics. Further job cuts will be made in February 2010. The plants employed 150 workers. The layoffs will be permanent, and the plant's polymer production unit will be closed entirely. Celanese is planning to move the operations to Kentucky....

The Dallas-based global hybrid chemical company Celanese Corporation (CE) has a strong growth strategy with development in Asia as a key factor. There is $400 million of free cash flow per year, primarily focused on share repurchase.

However, Celanese is likely to face slackening demand in 2008-2009 due to a global economic slowdown, combined with exceptionally high raw material and energy costs. Major raw materials are natural gas, ethylene and methanol. As the economy slows, the company will find it difficult to pass these to customers.

Currently, Celanese is valued at 3.0x our 2008 estimate of $3.70. There is higher pricing on continued strong global demand for Acetyl Intermediates products. In addition, the company has leadership positions in oligopolistic markets that have solid fundamentals.

However, higher raw material costs and a slackening demand due to global economic slowdown force us to rate the shares a Hold with a target

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