Celanese(CE) - 2023 Q4 - Earnings Call Transcript

Financial Data and Key Metrics - The company expects a significant uplift in M&M earnings in Q1 2024, with Q1 anticipated to be the highest quarterly EBITDA since the acquisition [13] - Synergies for 2024 are expected to be $150 million, with 40$100 million in synergies in 2023, slightly lower than earlier expectations due to volume-related issues [75] - The foundational level of earnings in acetyls is $1.3 billion, with an expected increase of$100 million in 2024 due to productivity from the Clear Lake expansion [85] Business Line Data and Key Metrics - The M&M business is expected to see recovery in auto versus seasonal destocking experienced in Q4 2023, with initial fixed cost improvements becoming more meaningful in the second half of 2024 [38] - The nylon business is seeing stability and expanding margins, with efforts to recover lost volume share [70] - The acetate tow business exceeded its $245 million EBIT target in 2023, contributing to the stabilization of the acetyl chain [77] Market Data and Key Metrics - In China, demand for consumption is approaching normal levels, but exports to Europe remain depressed [30] - In the Americas, demand is gradually returning, with improvement in industrial sectors but seasonal destocking in auto [30] - Europe is expected to take longer to return to normal demand patterns, with some improvement in construction and VAM pricing [32] Company Strategy and Industry Competition - The company is focused on controlling controllable factors, with a$11 to $12 guide assuming diminishing destocking but not a significant uptick in demand [31] - The SAP integration was completed smoothly, with the last version going live on February 1, 2024, marking a significant step in achieving synergies [16][40] - The company is committed to deleveraging to a 3x target, with a focus on free cash flow generation and maintaining investment grade [91][95] Management Commentary on Operating Environment and Future Outlook - Management is confident in delivering$150 million in synergies for 2024, driven by footprint optimization, SAP integration, and cross-sell opportunities [72] - The company expects a meaningful lift in M&M earnings in Q1 2024, driven by lower raw material and fixed costs [13] - The outlook for 2024 assumes below-normal demand patterns but without destocking, with a focus on controllable factors [31] Other Important Information - The company completed its SAP integration, which is expected to help achieve the next level of synergy and improve operational efficiency [40] - The Clear Lake acetic acid expansion is expected to contribute $100 million in productivity, with potential for higher returns in periods of high demand [55] - The company is focused on creating a business model for nylon that delivers a minimum of 25$100 million in productivity, with potential for higher returns in periods of high demand [55]