Celanese Corporation (NYSE: CE), a global chemical and specialty materials company reported its financial results for the full year and fourth quarter of 2022.
The company delivered a robust financial performance in 2022 despite the challenges posed by COVID-19, supply chain disruptions, and other external factors.
Net Sales:
Celanese Corporation generated record net sales of $9.7 billion in 2022, representing a 13 percent increase over the prior record set in 2021. The increase in net sales was driven by a combination of pricing and volume increases of 11 percent and 6 percent, respectively. The company delivered year-over-year pricing growth and productivity across both business segments to largely offset over $1.2 billion in raw material, energy, and supply chain cost inflation over 2021.
Adjusted Earnings per Share:
Celanese Corporation reported the second-highest ever adjusted earnings per share of $15.88 for full year 2022, within 12 percent of the all-time high delivered in 2021 and 44 percent higher than the next-best year. The difference between GAAP diluted earnings per share and adjusted earnings per share for 2022 was primarily due to an income tax provision for U.S. GAAP that was a benefit for the full year 2022 due to non-recurring internal restructuring transactions related to the M&M acquisition.
Operating Profit:
The company reported a 2022 consolidated operating profit of $1.4 billion and adjusted EBIT of $2.2 billion. The Acetyl Chain generated a GAAP operating profit of $1.4 billion and adjusted EBIT of $1.6 billion, at 25 and 28 percent margins, respectively. The Engineered Materials business segment delivered GAAP operating profit of $631 million and adjusted EBIT of $621 million, at 16 and 15 percent margins, respectively.
Cash Flow:
During the year, Celanese Corporation generated record operating cash flow of $1.8 billion and free cash flow of $1.3 billion. The company returned $297 million in cash to shareholders via dividends in 2022.
Mobility & Materials (M&M) Business Acquisition:
On November 1, 2022, Celanese Corporation successfully completed the acquisition of the Mobility & Materials (M&M) business of DuPont, acquiring a broad portfolio of engineered thermoplastics and elastomers, industry-renowned brands and intellectual property, global production assets, and a world-class organization. The acquisition establishes Celanese as the preeminent global specialty materials company. Full-year 2022 financial results reflect the contribution of M&M performance in November and December.
Fourth Quarter Results:
Celanese Corporation reported fourth-quarter GAAP diluted earnings per share of $7.03 and adjusted earnings per share of $1.44. The company generated an operating cash flow of $541 million and free cash flow of $395 million in the quarter. Despite an exceptionally challenging end to 2022, including accelerated destocking, poor sequential demand in Asia due to COVID, challenging competitive dynamics in Europe, and the impact of Winter Storm Elliott, Celanese Corporation delivered a resilient performance.
Business Segment Overview:
Acetyl Chain Segment:
- Net sales of $5.7 billion, a 3% decrease from the prior year
- 6% increase in pricing, 6% decrease in volume, and 3% unfavorable impact from foreign currency
- Commercial pricing actions offset $650 million in raw material, energy, and supply chain cost inflation over the prior year
- Pivoted volume from Asia to incremental demand and margin in the Western Hemisphere in the first half of 2022
- Took actions to reduce costs and align production with market demand in the second half of the year, including idling the Frankfurt VAM unit and all five major production units in China at different points in the fourth quarter
- Generated GAAP operating profit of $1.4 billion and adjusted EBIT of $1.6 billion, at margins of 25 and 28 percent, respectively
- Successful completion of the strategic overhaul of the former Acetate Tow segment resulted in resegmentation into the Acetyl Chain
Engineered Materials Segment:
- Delivered record net sales of $4.0 billion in 2022, a 48% increase over the prior year
- Net sales are driven by volume and price increases of 33% and 23%, respectively, and an 8% unfavorable impact from foreign currency
- Organic volume growth in automotive, electronics, and medical end-markets as well as volume contributions from Santoprene and M&M acquisitions offset underlying demand softness and destocking in the second half of the year
- Significant expansion of pricing as a result of broad commercial initiatives, including implementation of an energy surcharge, to mitigate nearly $600 million in raw material, energy, and supply chain cost inflation
- Delivered GAAP operating profit of $429 million and adjusted EBIT of $779 million
- Affiliate earnings contributed $202 million during the year
Cash Flow and Tax:
- Operating cash flow of $1.8 billion and free cash flow of $1.3 billion for full year 2022
- Capital expenditures of $543 million in 2022
- Returned $297 million in cash to shareholders via dividends in the year
- Tax rate for U.S. GAAP purposes was a benefit of (34) percent for full year 2022 due to deferred tax benefits related to non-recurring internal restructuring transactions
- Effective tax rate for adjusted earnings was 13% for 2022
Outlook
- Anticipated first quarter adjusted earnings per share of $1.50 to $1.75, inclusive of approximately $0.30 per share of M&M transaction amortization
- Expect upward trajectory in quarterly earnings across 2023 as a result of demand improvement, enhancements to businesses, and M&M synergies