Celanese Q2 Report: Engineered Materials Net Profit Soars 70%, End-Market Demand Remains Weak

On August 11, Celanese announced a net profit of $202 million for the second quarter, an increase from a loss of $17 million in the first quarter and a 32% increase from $153 million in the same period last year. Total revenue was $2.532 billion, up 5% from the previous quarter but down 4% from the same period last year. Adjusted earnings per share were $1.44, up 153% from 57 cents in the previous quarter but down 39% from $2.38 in the same period last year, exceeding the S&P Capital IQ analysts' expectation of $1.40. The company attributed the quarter-on-quarter growth to self-help measures and noted that demand in the Engineered Materials (EM) and Acetyl Chain business segments remained weak.

"Overall, our performance benefited from a favorable engineered materials product mix—which reflects the actions we have taken to achieve regional production and inventory alignment, as well as the continued progress we are making in achieving significant cost reductions across both businesses," President and CEO Scott Richardson said in prepared remarks for the company's earnings call on August 12. "However, persistent weakness in demand for acetate tow, along with lower-than-expected uplift from sales volume and pricing initiatives in the vinyls business this quarter, partially offset the aforementioned performance gains."

Richardson stated that the end markets for the two businesses remained "challenged" this quarter, especially in the Chinese market. "The development of major engineering materials end markets such as automotive, industrial, and electronics basically met expectations, but demand remains below normal levels. Due to the continued weakness in areas such as coatings, paints, and construction, the main end markets for acetic chain faced greater resistance. In addition, the customer inventory rebalancing of acetate tow did not ease as expected this quarter, and we expect demand to remain weak for the rest of the year."

Looking ahead, the company stated that it expects demand in most major end markets to slow down in the second half of 2025. "Considering these dynamics and our intention to release cash by reducing inventory, we anticipate adjusted earnings per share in the third quarter to be between $1.10 and $1.40," Richardson said.

Performance of Each Business Segment

The adjusted earnings before interest and taxes (EBIT) for the Acetyl Chain business amounted to $196 million, a 17% increase compared to the previous quarter's $168 million. Total sales were $1.1 billion, consistent with the previous quarter, as decreases in volume and price were offset by exchange rate impacts. The company stated: "Demand in key end markets such as paints, coatings, and construction remains weak. In Asia, the oversupply in the Chinese market has exacerbated this issue." Celanese indicated: "The Acetyl Chain business continues to take actions to drive earnings stability, including optimizing the production of low-cost assets in the U.S., reducing operating rates at high-cost facilities, and reducing global distribution costs to adapt to the demand environment."

The adjusted EBIT for the engineering materials business segment was $214 million, a 70% increase from $126 million in the previous quarter, with sales reaching $1.4 billion, up 12%. Celanese stated, "Sales this quarter slightly improved compared to the previous quarter, due to eased inventory pressure in the European automotive sector, but still remain below normal levels. Order volumes began to weaken in June, especially in Europe and China, and this trend has continued into the early third quarter." The company noted that strong profitability was driven by prudent actions taken earlier this year to address the weak demand environment and trade flow challenges.