CE Stock Price Mostly Flat on Q2 Earnings and Sales Surpassing Estimates

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Celanese Corporation (CE) has moved higher after the company reported adjusted earnings per share of $1.30 on net sales of $1.2 billion. CE said it “exceeded expectations in mitigating the effects of COVID-19 and limited its impact on second quarter earnings to less than the previously forecasted range.”

CE saw “resiliency” across all its business segments, and realized cost savings as a result of actions taken to address COVID-19 in the quarter. The company generated free cash flow of $283 million in the second quarter. CE put in place productivity initiatives that have produced $135 million in savings during the first half of the year.

Commenting on business demand, and the company’s moves to cut costs in the quarter, CEO Lori Ryerkerk said, “The decisive actions taken by our global team to fully maximize the core strengths of the Company has helped to offset the severe demand deterioration, particularly in the Western Hemisphere.”

During the quarter, Celanese also announced a plan to monetize an investment the company had previously made in a joint venture with Polyplastics. Celanese reported it expects to receive $1.575 billion in cash from the investment in the second half of 2020. And, the current plan is to reallocate the funds to higher yielding investments. 

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Celanese also noted the board of directors approved an increase in the company’s repurchase program, approving an additional $500 million allocation to its repurchase plan in July 2020. This brings the total funds allocated to repurchase shares to $1.56 billion.

CE stock, which was trading around $95 at the time of the earnings release, has inched closer to $100 over the past few trading days.

Addressing the company’s business prospects going forward, Ryerkerk said, “We have started to see demand recovery with the early third quarter order book at improved levels compared to the second quarter. We anticipate a modest sequential improvement in earnings next quarter…”

Ryerkerk also noted the company is still concerned with the impact of COVID-19 moving forward, and is closely monitoring the rising number of cases in the U.S. The CEO said, “Our focus remains on productivity, sourcing flexibility and working capital management and on taking intentional steps for recovery and growth into next year.”

Celanese currently trades at a PE of 18.6 and has a dividend yield of 2.50%.

Steven Adams’s personal position in Celanese Corporation: none.

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