Celanese Corporation CE logged earnings from continuing operations of 93 cents per share in second-quarter 2020, down from $1.67 in the year-ago quarter.
Barring one-time items, adjusted earnings were $1.30 per share, down from $2.38 in the year-ago quarter. However, the figure surpassed the Zacks Consensus Estimate of $1.09.
Revenues of $1,193 million fell 25.1% year over year, but beat the Zacks Consensus Estimate of $1,073.8 million.
Celanese Corporation Price, Consensus and EPS Surprise
Celanese Corporation price-consensus-eps-surprise-chart | Celanese Corporation Quote
Segment Review
Net sales in the Engineered Materials unit were $420 million in the quarter, down 29.2% year over year. The segment witnessed lower volumes due to global automotive demand decline along with and considerably weaker demand across industrial applications and consumer appliances stemming from the coronavirus outbreak.
The Acetyl Chain segment posted net sales of $662 million, down 23.5% year over year. Sales were affected by a sustained decline in industry pricing due to deflationary environment for raw materials, including sharp declines in ethylene and methanol.
Net sales in the Acetate Tow segment were $127 million, down 22.6% year over year.
Financials
Celanese ended the quarter with cash and cash equivalents of $539 million, up 4.1% year over year. Long-term debt fell 13.2% year over year to $2,989 million.
Celanese generated operating cash flow of $379 million and free cash flow of $283 million in the quarter. Capital expenditures amounted to $88 million for the quarter.
Outlook
Celanese stated that it witnessed demand recovery in the early third quarter order bookings at improved levels on a sequential-comparison basis. The company expects a modest sequential improvement in earnings in the Engineered Materials unit for the third quarter. It also sees a modest volume recovery in the Acetyl Chain, which is expected to offset incremental energy and turnaround costs. The company also noted that surge in coronavirus cases is a concern. Celanese is focused on productivity and working capital management.
Price Performance
Celanese’s shares have declined 17.2% in the past year against its industry’s 34.5% rise.
Zacks Rank & Key Picks
Celanese currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space include Equinox Gold Corp. EQX, B2Gold Corp BTG and Northern Dynasty Minerals Ltd. NAK, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Equinox Gold has an expected earnings growth rate of 255.2% for 2020. The company’s shares have surged 101.1% in the past year.
B2Gold has an expected earnings growth rate of 257.1% for 2020. Its shares have returned 106.4% in the past year.
Northern Dynasty has an expected earnings growth rate of 35.7% for 2020. The company’s shares have gained 65.2% in the past year.
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