Celanese Corp (CE) Q1 2025 Earnings Summary

Executive Summary

Q1 2025 adjusted EPS of $0.57 and net sales of $2.389B both exceeded Wall Street consensus; management guided Q2 adjusted EPS to $1.30–$1.50 and FY 2025 free cash flow to $700–$800M .
Mix improvement and cost productivity in Engineered Materials offset delayed JV dividend and slightly higher energy costs in Acetyl Chain; operating EBITDA margin compressed to 17.3% (from 21.8% in Q4) amid persistent demand sluggishness .
Strategic actions accelerated: $2.6B refinancing to extend maturities and lower blended rate, cost-reduction target raised to ~$120M, and intention to divest Micromax; EM and vinyls price increases announced to support margin recovery .
Near-term catalysts: Q2 EPS range implying sequential improvement as non-recurring headwinds fade and acetate JV dividend resumes; pricing initiatives in EM and vinyls, plus deleveraging focus via cash generation and divestiture proceeds .

What Went Well and What Went Wrong

What Went Well

Favorable mix and productivity in Engineered Materials drove margin support; EM operating EBITDA was $235M with 18.3% margin driven by higher-margin differentiated products and medical implant grades .
Proactive capital structure management: executed ~$2.6B notes offering, extended average debt maturity from 3.8 to 4.8 years and reduced combined 2025–2026 maturities from $2.8B to $1.1B; effective net borrowing rate ~5.04% after yen swap .
CEO tone on execution: “We intend to continue driving productivity and earnings growth… taking aggressive actions to generate cash, reduce costs, and drive growth” .

What Went Wrong

Consolidated margins compressed; operating EBITDA margin fell to 17.3% (Q4: 21.8%) on persistent global demand sluggishness in automotive, paints, coatings, and construction .
Acetyl Chain faced delayed JV dividend into Q2 due to a change in Chinese law and slightly higher energy costs; operating EBITDA margin ~20.5%, down from ~28.5% in Q4 .
GAAP diluted EPS loss of $(0.15) due to Certain Items ($43M) and refinancing expense ($32M); effective GAAP tax rate was (300)% in Q1, reflecting valuation allowance changes and lower earnings .

Financial Results

Consolidated Performance vs Prior Quarters

Metric	Q3 2024	Q4 2024	Q1 2025
Net Sales ($USD Millions)	2,648	2,370	2,389
Adjusted EPS ($)	2.44	1.45	0.57
Adjusted EBIT ($USD Millions)	457	333	234
Adjusted EBIT Margin (%)	17.3%	14.1%	9.8%
Operating EBITDA ($USD Millions)	644	517	414
Operating EBITDA Margin (%)	24.3%	21.8%	17.3%
Diluted EPS – Continuing Ops ($)	1.08	(17.45)	(0.15)

Segment Breakdown

Segment Metric	Q3 2024	Q4 2024	Q1 2025
Engineered Materials Net Sales ($USD Millions)	1,481	1,281	1,287
Engineered Materials Adjusted EBIT ($USD Millions)	237	156	126
Engineered Materials Operating EBITDA ($USD Millions)	348	270	235
Engineered Materials Operating EBITDA Margin (%)	23.5%	21.1%	18.3%
Acetyl Chain Net Sales ($USD Millions)	1,190	1,110	1,116
Acetyl Chain Adjusted EBIT ($USD Millions)	276	253	168
Acetyl Chain Operating EBITDA ($USD Millions)	339	316	229
Acetyl Chain Operating EBITDA Margin (%)	28.5%	28.5%	20.5%

KPIs

KPI	Q3 2024	Q4 2024	Q1 2025
Operating Cash Flow ($USD Millions)	79	494	37
Free Cash Flow ($USD Millions)	(16)	381	(73)
Capital Expenditures ($USD Millions)	88	105	102
Net Debt ($USD Millions)	12,118	11,617	11,833

Drivers and context:

EM margin support from favorable mix and productivity; global auto builds down ~10% sequentially while EM auto volumes grew ~5% .
Acetyl Chain sequential volume +3% with 1% price and currency declines; delayed JV dividend and slightly higher energy costs weighed on earnings .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EPS	Q2 2025	~Q1 + $1.00 → $1.25–$1.50 (based on Q1 guided $0.25–$0.50)	$1.30–$1.50	Raised midpoint; tightened range
Free Cash Flow	FY 2025	N/A	$700–$800M	New target introduced
Adjusted Tax Rate	FY 2025	N/A	~9% (anticipate 2025)	New guidance disclosure
Cost Reductions	FY 2025	~$80M (initial)	~$120M (raised by $40M)	Raised
Dividend Policy	From Q1 2025	Intend ~95% reduction starting Q1 2025	$3M dividends returned in Q1; deleveraging priority	Implemented reduction; minimal payout
Pricing Actions – Vinyls	Effective Mar 17, 2025	N/A	VAM +$100/MT (US/CA, MX/SA), emulsions +$50/MT, RDP +$60/MT	Announced increases
Pricing Actions – EM	Effective Jun 1, 2025	N/A	Broad EM grade increases (e.g., PPS +$0.40/kg, PA66 polymers +$0.25/kg)	Announced increases

Notes: Management expects Q2 tailwinds from resumption of acetate JV dividend and normalization of tow orders; mitigated direct tariff impact expected in Q2 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q1 2025)	Trend
Tariffs/Macro	Q3: Outlook worsened; dividend cut planned to support deleveraging	“Tariffs are a constant topic, we saw no direct impact in Q1… don’t anticipate direct tariff impact in Q2” ; EM has limited U.S. exposure that can be mitigated	Neutral direct impact; demand uncertainty elevated
Automotive demand	Q3: severe destocking; EU builds down 14% seq	EM auto volumes +5% seq despite global auto builds down 10%; Q2 order book shows pickup (April/May strong)	Stabilizing/sequentially improving
Pricing actions	Q3: standard-grade price compression; synergy offsets constrained	EM price increases announced; price mix helped Q1; further increases in Q2 targeted	Turning positive if realized
Nylon 66 (PA66)	Q3: trade name impairments, oversupply; pipeline push to non-auto	Industry unsustainable margins; capacity reductions and operating model changes; stabilization underway	Gradual stabilization; still challenged
China/Asia dynamics	Q3: OEM share shifts in China; asset optionality (Singapore/Frankfurt)	JV dividend timing now post-audit; “China for China” mitigates tariffs in acetyls; EM exposure manageable	Operationally manageable
Cash/deleveraging	Q3: prepayable term loan; focus on 3x net debt/EBITDA	Confident in $700–$800M FCF; inventory reduction, lower capex, lower cash taxes	Strengthening execution

Management Commentary

“No matter how the demand environment develops… we are taking aggressive actions to generate cash, reduce costs, and drive growth” — Scott Richardson, CEO .
“We expect tailwinds as several non-recurring items from the first quarter do not repeat… anticipate Q2 adjusted EPS to be $1.30 to $1.50” — Scott Richardson .
“These transactions demonstrate our commitment to proactively manage our debt maturity profile… targeted net debt to EBITDA metric of 3x” — Chuck Kyrish, CFO (on $2.6B notes issuance and swaps) .
EM strategy: focus resources on “high-impact programs” and margin discipline; ensure SG&A alignment while preserving growth capability .

Q&A Highlights

Nylon 66: Management emphasized decisive actions (capacity reductions, flexible operating rates, buying polymer when cheaper), targeting price recovery and cost streamlining; industry margins viewed as unsustainable .
Demand cadence: EM showed stronger March and April/May order books; acetate tow volumes in April +~25% vs January; paints/coatings seasonality below historical norms .
Tariffs: Minimal direct impact in acetyls given “China for China”; EM U.S. exposure in a few product families can be relocated to mitigate .
Cash generation: Free cash flow target $700–$800M for 2025 supported by working capital release, maintenance-level capex, lower cash taxes, and operational levers; inventory reduction prioritized over raising plant rates .
Run-rate potential: If demand stabilizes and tailwinds materialize, management cited exiting the year around ~$2/share run-rate EPS (conditional, not guidance) .

Estimates Context

Metric	Q3 2024	Q4 2024	Q1 2025
Primary EPS Consensus Mean ($)	2.50*	1.20*	0.386*
Actual Primary EPS ($, Adjusted)	2.44	1.45	0.57
Revenue Consensus Mean ($USD)	2,723,000,000*	2,355,536,570*	2,263,623,440*
Actual Net Sales ($USD)	2,648,000,000	2,370,000,000	2,389,000,000

Q1 2025 beat: Adjusted EPS $0.57 vs $0.386 consensus; net sales $2.389B vs $2.264B consensus. Drivers: EM mix/pricing in differentiated products, productivity, and lower-than-expected costs; offsets from delayed JV dividend and higher energy costs in Acetyl Chain .
Q4 2024 beat: Adjusted EPS $1.45 vs $1.20 consensus; net sales slightly above consensus .

Disclaimer: * Values retrieved from S&P Global.

Key Takeaways for Investors

Q1 print was a clean beat on EPS and revenue; near-term setup positive with Q2 EPS guided to $1.30–$1.50 and non-recurring headwinds fading (JV dividend, tow order timing) .
Pricing actions in EM (effective June 1) and vinyls (effective March 17) are meaningful levers to counter standard-grade margin compression; monitor realized price capture in Q2–Q3 .
Deleveraging is front-and-center: refinancing extended maturities and lowered blended rates; execution against $700–$800M FY25 FCF target is a key stock narrative and potential re-rating driver .
EM mix shift towards differentiated products and medical grades supports margins; watch nylon 66 recovery path and standard-grade price normalization efforts .
Acetyl Chain resiliency continues via downstream optionality; tailwinds expected in vinyls chain and normalization of tow orders; watch energy costs and China supply dynamics .
If demand stabilizes, management’s run-rate commentary (~$2/share exiting year) suggests upside skew; however, macro/tariff-related demand uncertainty remains the key risk factor .
Trading implications: favorable setup into Q2 on guidance and pricing actions; medium-term thesis hinges on price realization, FCF delivery, and divestiture execution supporting deleveraging.