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Celanese (CE) Declares Force Majeure Due to Supply Disruptions

Celanese Corporation CE declared force majeure and instituted sales controls for acetic acid and vinyl acetate monomer (VAM) in the Western Hemisphere. This decision is driven by severe force majeure conditions and operational setbacks faced by several suppliers of crucial raw materials essential for Celanese's production processes.

The company is currently evaluating the impact of these supply chain disruptions, alongside other operational issues affecting its Acetyl Chain network in the U.S. Gulf Coast. It is undertaking steps to mitigate production losses.

The Acetyl Chain division is committed to meeting customer demands by leveraging its comprehensive network capabilities. Over the years, the business strategically invested in enhancing the flexibility of its integrated supply chain, allowing it to minimize disruptions to customers. During this period of sales control, all non-contracted orders will be assessed individually.

Celanese is facing production shortfalls of acetic acid and VAM at its U.S. Gulf Coast facilities. It expects a 15-20% unfavorable impact in the second quarter due to ongoing issues. To keep supplying customers, Celanese is leveraging its flexibility by using alternative, higher-cost production sites, sourcing externally and adjusting logistics. This will likely increase its costs but minimize the impact on its customers.

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Celanese regrets any inconvenience this situation may cause customers and is committed to maintaining close communication to minimize the impact. Further details or timing regarding the full impact on customers or the company's financial outlook cannot be provided at this time, CE noted. It will offer additional updates on resolving these challenges and their financial implications during the second-quarter earnings report.

Celanese’s shares have gained 28.1% in the past year compared with a 10.8% fall of the industry.

Zacks Investment Research
Zacks Investment Research


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Celanese, on its first-quarter call, stated that it projects adjusted earnings between $2.60 and $3 per share for second-quarter 2024, factoring in an expected impact of approximately 30 cents from the M&M amortization. The company predicted higher earnings performance in the second quarter and into the second half of 2024, driven by improved profitability of its acquired product portfolio, benefits from its Clear Lake expansion, the Uentrop closure and the SAP S/4HANA ERP integration.

Celanese Corporation Price and Consensus

 

Celanese Corporation Price and Consensus
Celanese Corporation Price and Consensus

Celanese Corporation price-consensus-chart | Celanese Corporation Quote

 

Zacks Rank & Key Picks

Celanese currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Basic Materials space are Carpenter Technology Corporation CRS, sporting a Zacks Rank #1 (Strong Buy), and ATI Inc. ATI and Ecolab Inc. ECL, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CRS’s current-year earnings is pegged at $4.31, indicating a year-over-year rise of 278%. CRS’ earnings beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, with the average earnings surprise being 15.1%. The company’s shares have soared 102.5% in the past year.

ATI’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, with the earnings surprise being 8.34%, on average. The stock has surged 47.2% in the past year.

The Zacks Consensus Estimate for Ecolab's current-year earnings is pegged at $6.59, indicating a year-over-year rise of 26.5%. ECL beat the consensus estimate in each of the last four quarters, with the earnings surprise being 1.3%, on average. The stock has rallied nearly 33.6% in the past year.

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