Celanese Corp (CE) Q2 2025 Earnings Call Highlights: Strategic Moves Amid Market Challenges

Release Date: August 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Celanese Corp (NYSE:CE) is focused on achieving a $2 per share quarterly EPS run rate through controllable actions such as cost structure improvements and executing differentiated business models. The company is prioritizing free cash flow generation, with a target of $700 million to $800 million for the year, translating to approximately $7 per share. Celanese Corp (NYSE:CE) is actively reducing inventory levels in the Engineered Materials segment through various strategies, including warehouse consolidation and SKU rationalization. The company is leveraging its low-cost production capabilities in the Western Hemisphere, particularly in the acetyls business, to maintain profitability despite challenging market conditions. Celanese Corp (NYSE:CE) is pursuing divestitures, such as the Micromax process, to strengthen its balance sheet and focus on core operations.

Negative Points

Order books have weakened, particularly in the China automotive sector and European demand, impacting the Engineered Materials segment. The company is experiencing volume weakness in the Western Hemisphere acetyl chain, which has continued into the third quarter. Celanese Corp (NYSE:CE) is facing challenges in achieving price increases in certain Engineered Materials products, with some pricing at unsustainable levels. The acetyls business is impacted by overcapacity in Asia, leading to lower third-party acetic acid sales and margin compression. Visibility on order books is limited, with short-term visibility in both acetyls and Engineered Materials segments, making it difficult to predict future demand accurately.

Q & A Highlights

Warning! GuruFocus has detected 6 Warning Signs with CE.

Q: Can you provide more color on the weakening order books you mentioned, particularly in which end markets this is occurring? A: Scott Richardson, President and CEO, explained that the weakening is primarily seen in China automotive orders and European demand within the Engineered Materials segment. The Americas have remained relatively stable, but there is also volume weakness in the Western Hemisphere's acetyl chain.

Q: How do you plan to achieve the $2 per share quarterly EPS run rate, and when do you expect to reach it? A: Scott Richardson stated that the $2 target is achievable through concrete plans focusing on cost structure improvements and executing differentiated business models. The path includes inventory movement, cost actions, and price opportunities in Engineered Materials. The timeline may be delayed due to current demand conditions, but the company is prepared to capitalize on any demand changes.

Story Continues

Q: What is the impact of the $25 million inventory reduction in the EM segment for Q3, and is it related to weaker demand? A: Scott Richardson and Chuck Kyrish, CFO, explained that the inventory reduction is part of a multiyear effort to operate with lower inventory levels. The $25 million impact is due to a mix of production campaigns and current demand trends, resulting in a sequential negative earnings impact for Q3.

Q: Are tariffs in China affecting your tow business, and how is the VAM and acetic acid business performing in China? A: Scott Richardson confirmed that tariffs are not impacting the tow business as it operates through a joint venture in China. The VAM and acetic acid business is above breakeven, with a focus on downstream products for better value. Some US material is sold in Asia, either directly or through swaps.

Q: How do you view the structural challenges in your businesses, and are there any long-term issues affecting earnings power? A: Scott Richardson expressed confidence in the company's actions to increase earnings power and readiness for demand changes. He highlighted cost structure improvements and strategic positioning in the Western Hemisphere as key factors. While some business areas face challenges, the company is focused on continuous improvement and adaptability.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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