Celanese reports decreased operating profit in first quarter 2004
Celanese AG today reported first quarter 2004 net earnings of EUR54 million, or EUR1.09 per share, from EUR50 million, or EUR1.00 per share a year earlier. In the first quarter 2004 report, the company said operating profit declined to EUR28 million from EUR66 million in the same quarter last year.
Net earnings benefited from income of EUR19 million from discontinued operations resulting mainly from the completion of the sale of the acrylates business. Operating profit was lower than a year earlier due to higher raw material and energy costs, special charges, and the strength of the Euro versus the U.S. dollar.
"Celanese's businesses experienced strong volume growth in the quarter, benefiting from stepped up activity in some of our markets," said Vice-Chairman and Chief Operating Officer David Weidman. "However, it remains to be seen whether the upturn will develop into a broad-based economic recovery."
Net sales decreased 6% to EUR995 million as increased volumes (+8%) did not offset unfavorable currency movements (-10%) and the effects of discontinued businesses (-4%). Volume increases were particularly strong in the Acetate Products and Technical Polymers Ticona segments.
In response to greater demand, Ticona has announced a number of capacity expansion plans, including a 20% increase for polyacetal in North America, where total capacity will rise to 102,000 metric tons per year at the Bishop, Texas facility by the end of 2004.
During the quarter, costs for most raw materials, especially natural gas, rose. Price increases in the Chemical Products segment were offset by decreases in the other segments. The company recorded in the first quarter of 2004 EUR22 million of special charges largely relating to the tender offer by a subsidiary of The Blackstone Group. Operating profit in the first quarter of 2003 benefited from EUR17 million of income associated with stock appreciation rights.
Net debt increased by 4% to EUR404 million as of March 31, 2004 from EUR387 million as of December 31, 2003. The increase primarily reflects lower levels of cash and cash equivalents as well as the appreciation of the U.S. dollar during the first quarter of 2004. Trade working capital increased by 12% to EUR577 million from EUR513 million at the end of last year. The increase is largely the result of higher trade receivables resulting from stronger sales during the first quarter of 2004 compared to the fourth quarter of 2003.
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