Celanese Cuts Dividend Amid Profit Slump

(Reuters) – Specialty chemicals company Celanese (NYSE: CE) has reduced its quarterly dividend by approximately 95%, as well as announced further cost-cutting plans following a significant profit decline, causing its shares to drop 14% in extended trading on Monday.

Profit Decline

In the third quarter, net earnings fell by about 87%, amounting to $120 million, largely due to a rapid slowdown in commercial activity in both the automotive and industrial segments.

The company described the temporary dividend reduction, effective from the first quarter of 2025, as a prudent measure to support deleveraging. Additionally, the company aims to cut costs further, expecting savings of over $75 million by the end of 2025.

CEO Statement

CEO Lori Ryerkerk stated that while teams executed value-enhancing initiatives and improvements, these efforts have been increasingly offset in the current environment, leading to earnings that fell short of expectations.

Industry Context

Last month, fellow industry player Dow began forecasting fourth-quarter revenue below market expectations and initiated a review of some European assets due to declining demand.

Celanese announced its strategy to reduce manufacturing costs through the end of 2024 by temporarily idling production facilities globally and aims to drive cash generation via an anticipated $200 million inventory release in the fourth quarter.

Future Projections

The company predicts fourth-quarter adjusted profits of $1.25 per share, which is significantly below the average analysts' expectation of $2.93 per share, according to data compiled by LSEG. Demand conditions are expected to deteriorate further.

Celanese manufactures chemical products for coatings, paints, pharmaceuticals, and polymers. The chemicals industry, previously grappling with high inventories leading to destocking, now faces weaker demand in critical markets, including China and Europe.