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Celanese Corp (CE) Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered sequential improvement: net sales $2.53B (+6% q/q), GAAP diluted EPS $1.90, adjusted EPS $1.44, operating EBITDA $532M (21% margin) and adjusted EBIT $344M (13.6% margin). Engineered Materials (EM) drove the beat via mix and HIPs; Acetyl Chain (AC) was resilient despite vinyls/tow headwinds .
  • Against S&P Global consensus, CE modestly beat on adjusted EPS ($1.44 vs $1.40*) and revenue ($2.53B vs $2.49B*); EBITDA tracked below SPGI consensus definitions (est. $512M* vs actual $427M*; Celanese “operating EBITDA” was $532M) with definitional nuance important for comparisons .
  • Guidance: Q3 adjusted EPS guided to $1.10–$1.40 (inventory actions ~($25M) sequential headwind); 2025 free cash flow reiterated at $700–$800M; continued cost actions and portfolio moves (Micromax® divestiture advancing; site exits targeted $5–$10M 2026 savings) .
  • Near-term stock narrative: beat on revenue/EPS, but softer order books into Q3 and explicit inventory destock headwind temper momentum; management outlined a controllable path to a $2.00/share quarterly EPS run-rate as actions mature and demand normalizes .

What Went Well and What Went Wrong

What Went Well

  • Engineered Materials: net sales up 12% q/q to $1.44B on +9% volumes and +3% FX; operating profit $165M, adjusted EBIT $214M, operating EBITDA $326M (23% margin), supported by HIPs and favorable mix .
  • Cash generation: operating cash flow $410M and free cash flow $311M; management emphasized cash as the top priority enabling $200M delayed draw term loan repayment and a further $150M five‑year term loan paydown post quarter .
  • CEO tone on execution: “cash generation is our number one priority… over $300 million of free cash flow in the quarter,” and confidence in actions to drive value despite weak demand .

What Went Wrong

  • Demand softness: order books weakened in June, especially Europe/China (EM) and Western Hemisphere (AC); management expects a softening demand environment in H2 .
  • Acetyl Chain pressure: acetate tow slower than anticipated and vinyls pricing/volume actions did not fully materialize; AC net sales $1.12B slightly down q/q with operating profit $154M vs $162M in Q1 .
  • Explicit Q3 earnings headwind: ~($25M) sequential impact from inventory reduction efforts plus short order visibility (2–4 weeks AC; ~2 weeks EM) constraining confidence in near‑term trajectory .

Financial Results

Consolidated performance vs prior periods (oldest → newest; all USD)

MetricQ4 2024Q1 2025Q2 2025
Net Sales ($ Billions)$2.370 $2.389 $2.532
Diluted EPS – Continuing Ops ($)$1.08 ($0.15) $1.90
Adjusted EPS ($)$1.45 $0.57 $1.44
Operating EBITDA ($ Millions)$517 $414 $532
Operating EBITDA Margin (%)21.8% 17.3% 21.0%
Adjusted EBIT ($ Millions)$333 $234 $344
Adjusted EBIT Margin (%)14.1% 9.8% 13.6%
Operating Profit ($ Millions)$248 $168 $233

Year-over-year comparison (Q2)

MetricQ2 2024Q2 2025
Net Sales ($ Billions)$2.651 $2.532
Diluted EPS – Continuing Ops ($)$1.42 $1.90
Adjusted EPS ($)$2.38 $1.44
Operating EBITDA ($ Millions)$632 $532
Adjusted EBIT ($ Millions)$451 $344

Actual vs S&P Global consensus (Q2 2025)

MetricConsensus Q2 2025*Actual Q2 2025Delta
Revenue ($ Billions)$2.486*$2.532 +$0.046
Adjusted/Primary EPS ($)$1.40*$1.44 +$0.04
EBITDA ($ Millions)$512*$427*(−$85)

Values retrieved from S&P Global.*

Note: Celanese discloses “Operating EBITDA” of $532M; SPGI “EBITDA” definitions may differ from company “Operating EBITDA” .

Segment breakdown (oldest → newest)

SegmentMetricQ4 2024Q1 2025Q2 2025
Engineered MaterialsNet Sales ($ Millions)1,281 1,287 1,442
Engineered MaterialsOperating Profit ($ Millions)(1,508) 96 165
Engineered MaterialsAdjusted EBIT ($ Millions)156 126 214
Engineered MaterialsOperating EBITDA ($ Millions)270 235 326
Acetyl ChainNet Sales ($ Millions)1,110 1,116 1,115
Acetyl ChainOperating Profit ($ Millions)216 162 154
Acetyl ChainAdjusted EBIT ($ Millions)253 168 196
Acetyl ChainOperating EBITDA ($ Millions)316 229 260

KPIs (oldest → newest)

KPIQ4 2024Q1 2025Q2 2025
Operating Cash Flow ($ Millions)494 37 410
Free Cash Flow ($ Millions)381 (73) 311
Capital Expenditure ($ Millions)105 102 93
Net Debt ($ Millions)11,617 11,833 11,768
Cash & Equivalents ($ Millions)962 951 1,173

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPSQ2 2025$1.30–$1.50 Actual delivered $1.44 Met midpoint
Adjusted EPSQ3 2025N/A$1.10–$1.40 New range (cautious)
Free Cash FlowFY 2025$700–$800M $700–$800M reiterated Maintained
Inventory Actions (Earnings Impact)Q3 2025N/A~($25M) sequential headwind New disclosure
Adjusted Effective Tax RateFY 2025~9% ~9% Maintained
Cost Savings from Site Exits (Elotex®/Vamac®)FY 2026N/A~$5–$10M savings New action
Balance Sheet LiquidityThrough 2030N/ANew $1.75B unsecured revolver (to 2030) Strengthened

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Demand/Order BooksSevere destock in EM; AC seasonality; cautious H1 setup Order books weakened in June; Europe/China softness; Western Hemisphere AC weakness Deteriorated into Q3
Inventory & Cash FocusWorking capital draw; cash as priority; FCF $700–$800M for 2025 $410M CFO/$311M FCF; ~($25M) Q3 EPS headwind from inventory draw; FCF reiterated Sustained cash-centric
Path to $2 EPS/QuarterActions underway; cost programs expanded to ~$120M “$2 per quarter is achievable”; bridges outlined (costs, HIPs, price pockets, AC downstream) Clearer roadmap
China/AC Over-supplyAC impacted by China supply; pivot downstream Breakeven+ in Asia; less third-party acetic; more downstream (emulsions/RDP); Western Hemisphere volumes key Ongoing pivot downstream
Automotive/EV MixEM projects in EVs expanded despite demand weakness EV tailwinds intact; regional mix differs; pipeline building for 2026+ Mixed near term; long-term positive
Tariffs/MacroTariff uncertainty; limited direct impact Q1 No tow tariffs impact; macro uncertainty persists Neutral on tariffs; macro cautious
Portfolio/DivestituresMylar JV closure; divestiture plans; Micromax process initiated Micromax in second round; broad buyer interest; other projects gaining traction Advancing

Management Commentary

  • Strategic priorities: “generate cash to deleverage… intensify cost improvements, and drive top-line growth through differentiated business models” (EM HIPs; AC optionality) .
  • Cash discipline: “over $300 million of free cash flow in the quarter… pay off our delayed draw term loan” .
  • Demand outlook and guidance: “softening demand… anticipate third quarter adjusted EPS to be $1.10 to $1.40… expectation remains to deliver $700 to $800 million of free cash flow in 2025” .
  • EM execution: HIPs and mix supported margins; ongoing goal to reduce ~$100M inventory in 2025 .
  • Portfolio actions: progressing Micromax® divestiture; exiting Sempach (Elotex®) and Sarnia (Vamac®) sites targeting ~$5–$10M savings in 2026 .

Q&A Highlights

  • Bridge to $2 EPS/quarter: Management detailed controllable drivers (cost footprint, HIPs, discrete pricing in EM, AC downstream opportunities); demand normalization would accelerate timing .
  • Inventory destock headwind: ~($25M) Q3 sequential impact; Q2 benefited ~$10–$15M from semi‑annual EM campaign; reversal in Q3 expected .
  • Acetyl Chain dynamics: tow destock continues; vinyls demand soft; Asian margin compression; pivot to downstream products; Western Hemisphere volume is key earnings lever (3% volume ≈ ~$10M/quarter) .
  • Liquidity and debt: new $1.75B revolver through 2030; focus on paying 2026–2027 maturities via FCF and ~$1B divestiture proceeds (not relying on revolver) .
  • EV/auto: EV tailwinds intact, regional mix differs; building 2026+ pipeline across EV propulsion, batteries, cooling, and advanced suspension systems .

Estimates Context

  • Q2 2025: Adjusted/Primary EPS $1.44 vs $1.40* consensus; revenue $2.53B vs $2.49B*; EBITDA below SPGI consensus definitions (est. $512M* vs actual $427M*; Celanese “operating EBITDA” was $532M, highlighting definitional differences) .
  • Q3 2025 consensus: EPS ~$1.22* and revenue ~$2.51B* vs company guidance $1.10–$1.40 and indications of softer demand and ~($25M) inventory headwind, implying potential consensus risk if macro softness persists .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Quality beat with EM-driven mix and strong cash conversion; however, management flagged weakening orders and a Q3 inventory draw headwind, tempering near-term momentum .
  • Revenue/EPS beat vs consensus; watch EBITDA comparability across definitions when benchmarking peers and models .
  • The controllable path to $2 EPS/quarter is credible (cost footprint, HIPs, discrete pricing, AC downstream), but timing depends on demand normalization; actions continue irrespective of macro .
  • Balance sheet flexibility improved (new $1.75B revolver; debt paydowns); 2026–2027 maturities targeted via FCF and divestitures; liquidity risk appears contained near term .
  • Segment lens: EM margins benefiting from HIPs and mix; AC resilient with optionality but Western Hemisphere volume is the swing factor; small volume changes have outsized earnings impact .
  • 2025 FCF $700–$800M reiterated; expect continued inventory release and operating cash flow strength even with elevated interest expense ($650–$700M commentary) .
  • Tactical setup: Q3 guide brackets and short order visibility suggest cautious positioning near term; potential re‑rating catalyst is traction on divestitures and visible demand stabilization in Western Hemisphere end markets .

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