Celanese (CE) & Mitsui Ink New Partnership, Extend Fairway JV
Celanese Corporation CE recently announced two joint venture (JV) moves with Mitsui & Co., Ltd. to further strengthen their strategic partnership.
Celanese, which is among the prominent chemical companies along with Eastman Chemical Company EMN, Air Products and Chemicals, Inc. APD and PPG Industries, Inc. PPG, signed a term sheet to form a food ingredient JV with Mitsui. CE will contribute its food ingredient business, including all assets, technology and employees, to set up a stand-alone food ingredient JV. In this JV, Celanese will have a 30% ownership stake and the rest 70% will belong to Mitsui.
This transaction is subject to customary approvals. The companies expect to complete the transaction during the third quarter of 2023.
Along with being a leading producer of acesulfame potassium (Ace-K) sweetener, sorbic acid and potassium sorbate preservatives, Celanese is the inventor and the only western manufacturer of Sunett Ace-K, a zero-calorie, high-intensity sweetener. The company’s food ingredient business generated adjusted revenues of around $170 million and an adjusted EBITDA of $40-$50 million in 2022.
Through this JV, Celanese will integrate its technology, product portfolio and backward integration with Mitsui’s positions in several food supply chains across Asia and other regions. The company’s Acetyl Chain segment has entered into a long-term agreement to cater to the Acetyl raw materials needs of the food ingredients JV. Celanese also plans to use the cash proceeds from this transaction to deleverage itself.
Separately, the companies agreed on a long-term extension of their current Fairway Methanol LLC JV, which manufactures methanol at Celanese’s Clear Lake facility. Existing terms of the JV and ownership were extended through 2045.
Celanese, on its fourth-quarter call, said that it expects growth in its quarterly earnings through 2023 on an improvement in demand and the synergies resulting from the Mobility & Materials acquisition. Factoring in all this, it expects its adjusted earnings to be in the range of $1.50-$1.75 per share for the first quarter of 2023.
Celanese reported earnings from continuing operations of $7.03 per share in the fourth quarter of 2022, up 46% from $4.83 reported in the prior-year quarter.
Adjusted earnings for Celanese in the fourth quarter was $1.44 per share, down from $4.91 reported in the prior year. It lagged the Zacks Consensus Estimate of $1.56. Revenues of $2,348 million increased roughly 3.2% year over year, but trailed the Zacks Consensus Estimate of $2,414.9 million.
Eastman Chemical reported earnings of a penny per share in the fourth quarter of 2022, reflecting a decline of 99.6% from the year-ago quarter's $2.81. The company posted adjusted earnings of 89 cents per share, down 50.8% from the year-ago quarter figure of $1.81. It missed the Zacks Consensus Estimate of $1.26.
EMN’s revenues in the fourth quarter were $2,373 million, which beat the Zacks Consensus Estimate of $2,294.9 million. Sales decreased 11.9% from $2,694 million reported in the prior-year quarter.
Air Products recorded first-quarter fiscal 2023 earnings (from continuing operations) of $2.57 per share, reflecting a rise of 2% from the year-ago quarter's $2.52.
The company posted adjusted earnings of $2.64 per share, up 6% from the year-ago quarter figure of $2.52. It missed the Zacks Consensus Estimate of $2.73. The company’s net sales in the first quarter were $3,174.7 million, which lagged the Zacks Consensus Estimate of $3,292.9 million. APD’s net sales increased around 6% from $2,994.2 million reported in the prior-year quarter.
PPG Industries reported earnings from continuing operations of $1.01 per share in the fourth quarter of 2022, down 9.8% from the prior-year quarter’s earnings of $1.12.
PPG posted adjusted earnings of $1.22 per share, reflecting a decline of 3.2% from the year-ago quarter earnings of $1.26. It, however, surpassed the Zacks Consensus Estimate of $1.14. PPG’s net sales in the fourth quarter were $4,185 million, which beat the Zacks Consensus Estimate of $4,056.1 million. Net sales declined around 0.1% from $4,190 million reported in the prior-year quarter.
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