Celanese and Mitsubishi Gas Chemical Complete Restructuring of Korea Engineering Plastics JV
March 31 2022 - 5:00PM
Business Wire
Restructured JV will support global growth of
Celanese POM products
Celanese Corporation (NYSE: CE), a global chemical and specialty
materials company, today announced the completion of the
restructuring of Korea Engineering Plastics Co. (KEP), a joint
venture owned 50 percent by Celanese and 50 percent by Mitsubishi
Gas Chemical Company, Inc. (MGC), as previously announced in
December 2020.
KEP will now focus solely on manufacturing and supplying high
quality products to its shareholders, who will independently market
them globally and without competitive restrictions. Celanese and
MGC believe that focusing KEP’s efforts on manufacturing and
supplying its shareholders with a leading portfolio of innovative
products is a necessary response to the globalization of the
engineering plastics industry, the fragmentation of the marketing
supply chain, and other changes in industry conditions since KEP
was first formed in 1987 to manufacture and market polyoxymethylene
(POM) in Asia, with a particular focus on serving domestic demand
in South Korea. This restructuring will also allow Celanese greater
access to original equipment manufacturers in Asia, as well as more
direct participation in key markets outside of China.
“With the completion of this restructuring, Celanese now has
access to world-scale POM polymerization capabilities globally,
with committed access to approximately 70kta of POM production in
Asia and corresponding global marketing rights,” said Tom Kelly,
Senior Vice President, Celanese Engineered Materials. “Celanese
maintains typical governance rights of the KEP joint venture and is
excited to create further value from its 50 percent stake in KEP
through this restructuring. Celanese will benefit from KEP’s
technical manufacturing expertise and broad product portfolio that
will be marketed using Celanese’s commercial teams, project model
and global supply chain network.”
With the completion of the restructuring, Celanese and MGC will
continue to look into additional ways to leverage KEP’s
manufacturing strengths, including assessing potential future
expansions of its polymer and compounding capabilities. Included in
the final terms of the restructuring, Celanese agreed to sell land
to KEP, currently leased by KEP, at its Ulsan, South Korea site, at
a market value of approximately $10 million, thereby monetizing a
non-strategic asset for Celanese and further solidifying KEP’s
presence in Ulsan.
POM is one of the world’s most widely used engineered materials,
known for its high dimensional stability, hardness and creep
resistance. These unique qualities allow POM to be used as a broad
replacement for metal parts. Along with its copolymer resins, POM
is widely used as an engineering plastic across almost every
industry.
Financial Details of the Agreement
In 2021, KEP delivered approximately $30 million in equity
earnings to the Celanese Engineered Materials business. Celanese
expects the restructuring of the KEP venture to be immediately
accretive to adjusted EBIT and adjusted EPS. Incremental adjusted
EBIT of $25 - $40 million will be driven by Celanese marketing and
synergy realization to give a run-rate adjusted EPS accretion of
$0.15 to $0.20 over the next three years.
About Celanese
Celanese Corporation is a global chemical leader in the
production of differentiated chemistry solutions and specialty
materials used in most major industries and consumer applications.
Our businesses use the full breadth of Celanese's global chemistry,
technology and commercial expertise to create value for our
customers, employees, shareholders and the corporation. As we
partner with our customers to solve their most critical business
needs, we strive to make a positive impact on our communities and
the world through The Celanese Foundation. Based in Dallas,
Celanese employs approximately 8,500 employees worldwide and had
2021 net sales of $8.5 billion. For more information about Celanese
Corporation and its product offerings, visit www.celanese.com.
Forward-Looking Statements: This release may contain
“forward-looking statements,” which include information concerning
the company’s plans, objectives, goals, strategies, future revenues
or performance, capital expenditures and other information that is
not historical information. When used in this release, the words
“outlook,” “forecast,” “estimates,” “expects,” “anticipates,”
“projects,” “plans,” “intends,” “believes,” and variations of such
words or similar expressions are intended to identify
forward-looking statements. All forward-looking statements are
based upon current expectations and beliefs and various
assumptions. There can be no assurance that the Company or its
customers will realize these benefits or that these expectations
will prove correct. There are a number of risks and uncertainties,
many of which are beyond the Company’s control, that could cause
actual results to differ materially from the forward-looking
statements contained in this release. Risk factors include those
that are discussed in the Company’s filings with the Securities and
Exchange Commission. Any forward-looking statement speaks only as
of the date on which it is made, and the Company undertakes no
obligation to update any forward-looking statements to reflect
events or circumstances after the date on which it is made or to
reflect the occurrence of anticipated or unanticipated events or
circumstances.
This release uses the following Non-US GAAP measures: adjusted
EBIT and adjusted earnings per share. These measures are not
recognized in accordance with US GAAP and should not be viewed as
an alternative to US GAAP measures of performance or liquidity. The
most directly comparable financial measure presented in accordance
with US GAAP in our consolidated financial statements for adjusted
EBIT is net earnings (loss) attributable to Celanese Corporation
and for adjusted earnings per share is earnings (loss) from
continuing operations attributable to Celanese Corporation per
common share-diluted.
Definitions of Non-US GAAP Financial Measures
- Adjusted EBIT is a performance measure used by the Company and
is defined by the Company as net earnings (loss) attributable to
Celanese Corporation, plus (earnings) loss from discontinued
operations, less interest income, plus interest expense, plus
refinancing expense and taxes, and further adjusted for Certain
Items (refer to Table 8 of our Non-US GAAP Financial Measures and
Supplemental Information document). We do not provide
reconciliations for adjusted EBIT on a forward-looking basis
(including those contained in this document) when we are unable to
provide a meaningful or accurate calculation or estimation of
reconciling items and the information is not available without
unreasonable effort. This is due to the inherent difficulty of
forecasting the timing and amount of Certain Items, such as
mark-to-market pension gains and losses, that have not yet
occurred, are out of our control and/or cannot be reasonably
predicted. For the same reasons, we are unable to address the
probable significance of the unavailable information.
- Adjusted earnings per share is a performance measure used by
the Company and is defined by the Company as earnings (loss) from
continuing operations attributable to Celanese Corporation,
adjusted for income tax (provision) benefit, Certain Items, and
refinancing and related expenses, divided by the number of basic
common shares and dilutive restricted stock units and stock options
calculated using the treasury method. We do not provide
reconciliations for adjusted earnings per share on a
forward-looking basis (including those contained in this document)
when we are unable to provide a meaningful or accurate calculation
or estimation of reconciling items and the information is not
available without unreasonable effort. This is due to the inherent
difficulty of forecasting the timing and amount of Certain Items,
such as mark-to-market pension gains and losses, that have not yet
occurred, are out of our control and/or cannot be reasonably
predicted. For the same reasons, we are unable to address the
probable significance of the unavailable information. Note: The
income tax expense (benefit) on Certain Items ("Non-GAAP
adjustments") is determined using the applicable rates in the
taxing jurisdictions in which the Non-GAAP adjustments occurred and
includes both current and deferred income tax expense (benefit).
The income tax rate used for adjusted earnings per share
approximates the midpoint in a range of forecasted tax rates for
the year. This range may include certain partial or full-year
forecasted tax opportunities and related costs, where applicable,
and specifically excludes changes in uncertain tax positions,
discrete recognition of GAAP items on a quarterly basis, other
pre-tax items adjusted out of our GAAP earnings for adjusted
earnings per share purposes and changes in management's assessments
regarding the ability to realize deferred tax assets for GAAP. In
determining the adjusted earnings per share tax rate, we reflect
the impact of foreign tax credits when utilized, or expected to be
utilized, absent discrete events impacting the timing of foreign
tax credit utilization. We analyze this rate quarterly and adjust
it if there is a material change in the range of forecasted tax
rates; an updated forecast would not necessarily result in a change
to our tax rate used for adjusted earnings per share. The adjusted
tax rate is an estimate and may differ from the actual tax rate
used for GAAP reporting in any given reporting period.
For more information on the historical non-GAAP financial
measures used by the Company, including the most directly
comparable GAAP financial measure for each historical non-GAAP
financial measures used, including definitions and reconciliations
of the differences between such non-GAAP financial measures and the
comparable GAAP financial measures, please refer to the Non-US GAAP
Financial Measures and Supplemental Information document available
on our website, investors.celanese.com, under Financial
Information/Non-GAAP Financial Measures.
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version on businesswire.com: https://www.businesswire.com/news/home/20220331005984/en/
Investor Relations Brandon Ayache +1 972 443 8509
brandon.ayache@celanese.com
Media Relations – Global W. Travis Jacobsen +1
972-880-0659 william.jacobsen@celanese.com
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