Celanese Reports Full-year Results 2002.Business Editors KRONBERG, Germany--(BUSINESS WIRE)--Feb. 13, 2003 Celanese AG: Celanese earnings improve significantly in 2002: -- Net earnings rise to EUR 187 million; EPS up to EUR 3.72 -- EBITDA excluding special charges increases 11 % to EUR 440 million -- Proposed dividend of EUR 0.44 per share Productivity, efficiency and results oriented o·ri·ent n. 1. Orient The countries of Asia, especially of eastern Asia. 2. a. The luster characteristic of a pearl of high quality. b. A pearl having exceptional luster. 3. corporate culture: -- Restructuring and cost reduction initiatives "Focus" and "Forward" generated EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 100 million in savings -- Six Sigma Not to be confused with Sigma 6. Six Sigma is a set of practices originally developed by Motorola to systematically improve processes by eliminating defects.[1] A defect is defined as nonconformity of a product or service to its specifications. company-wide successfully implemented Strategic portfolio optimization: -- Emulsions and powder emulsions business acquired -- Trespaphan OPP OPP Opposite OPP Opportunity/Opportunities OPP Office of Pesticide Programs OPP Ontario Provincial Police (Ontario, Canada) OPP Office of Polar Programs (National Science Foundation) films business divested Celanese AG (CZZ CZZ Chazan-Ziv-Zakai Bound :FSE FSE 1. feline spongiform encephalopathy. 2. focal symmetrical encephalomalacia. ; CZ:NYSE NYSE See: New York Stock Exchange ) today reported a significant increase in net earnings to EUR 187 million or EUR 3.72 per share for 2002, compared to a net loss of EUR 385 million or EUR 7.65 per share a year earlier. Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
The increase in net earnings in 2002 was mainly the result of higher volumes, lower raw material and energy costs, cost savings from restructuring and lower special charges. In the fourth quarter of 2002, EBITDA before special charges rose 60 % to EUR 99 million, compared with the year-earlier period. Net earnings were EUR 90 million after a loss of EUR 419 million in the respective quarter of 2001. These figures reflect improved pricing, lower raw material costs and higher volumes in the Acetyls business as well as higher volumes and lower raw material costs, in Ticona. The company also announced today that it will ask its shareholders at the April 1, 2003 annual general meeting to approve the distribution of a dividend of EUR 0.44 per share, payable on April 2, 2003. "The solid improvement in performance amid difficult business conditions is a result of our strategy of focusing on core businesses, taking growth opportunities and strengthening productivity. We will continue with this strategy by growing into higher value-added businesses, increasing profitability and maintaining a strong balance sheet," said Celanese Chief Executive Officer Claudio Sonder. Celanese reduced net financial debt by 40 % to EUR 497 million as of December 31, 2002 from EUR 835 million a year earlier. The improvement resulted from a continuing high level of cash-flow from operations, net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from divestitures and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. currency movements. "In a year of some operating pressure, Celanese strengthened its financial position," said Chief Financial Officer Perry Premdas. "Due to strong cash flow management in each segment, we were able to finance an acquisition, contribute over EUR 100 million to our U.S. pension funds, and resume share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. while reducing our net debt at the same time." Strengthening the core businesses and portfolio optimization In 2002, Celanese took a major step to enhance the value of its acetyls business through the acquisition of the European emulsions and worldwide emulsion emulsion: see colloid. emulsion Mixture of two or more liquids in which one is dispersed in the other as microscopic or ultramicroscopic droplets (see colloid). Emulsions are stabilized by agents (emulsifiers) that (e.g. powders businesses of Clariant AG of Switzerland. The acquisition extends Celanese's acetyls value chain into higher value businesses. Consistent with its strategy of optimizing the portfolio Celanese also divested its non-core Trespaphan OPP films business and its U.S. amines amines (  mēnz´),n.pl organic compounds that contain nitrogen. business. In addition the company formed a joint venture with U.S.-based Hatco Corporation. The joint venture, "EsteCH" will manufacture and market neopolyol esters esters (esˑ·terz), n.pl organic compounds synthesized from acids and alcohols, typically possessing fruity aromas. used in high performance synthetic lubricants lubricants preparations for the lubrication of passages to reduce frictional injury, e.g. oily preparations, including petroleum jelly, lanolin or water-soluble preparations such as methyl cellulose. . Celanese finalized See finalization. an agreement with Degussa AG to establish a 50/50 joint venture for the European oxo chemicals activities. The agreement is being reviewed by the European authorities and is expected to be approved in 2003. Focus on productivity and efficiency Celanese's "Focus" and "Forward" restructuring initiatives, started in 2001, generated approximately EUR 100 million in savings in 2002. On completion of these initiatives in 2003, annual savings are expected to increase to about EUR 140 million. As a consequence of the restructuring programs, the company had shed close to 1,500 positions by the end of 2002. In addition, Celanese's company-wide operational excellence efforts, including Six Sigma, continued to contribute to profitability. "Celanese today is a much leaner and more efficient company than it was three years ago," said Dave Weidman, Chief Operational Officer of Celanese. "The worldwide Celanese team of employees is embracing a results-oriented culture that focuses on increasing productivity and growth. Six Sigma has been a wonderful tool to successfully implement change." Employees At the end of 2002, Celanese had 10,700 employees worldwide. The slight reduction, compared to 10,750 in 2001, was due to the divestitures and restructuring programs, which were nearly offset by the acquisition of the emulsions business. Outlook At the start of 2003, visibility remains low and economic growth has been slow and uneven. We expect higher raw material and energy costs and a strong euro exchange rate versus the dollar to continue during the first six months of 2003. Based on current hydrocarbon hydrocarbon (hī'drōkär`bən), any organic compound composed solely of the elements hydrogen and carbon. The hydrocarbons differ both in the total number of carbon and hydrogen atoms in their molecules and in the proportion of hydrogen conditions and our assumptions of a continued slow economic recovery and ongoing cost reduction and productivity improvements, we expect EBITDA excluding special charges for the first half of 2003 to be as or slightly better than first half of 2002. In the Acetyl acetyl /ac·e·tyl/ (as´e-til) (as´e-tel?) (ah-se´til) the monovalent radical CH3COsbond, a combining form of acetic acid. a·ce·tyl n. Products segment, the supply / demand balance is expected to normalize normalize to convert a set of data by, for example, converting them to logarithms or reciprocals so that their previous non-normal distribution is converted to a normal one. following temporary industry production outages and maintenance turnarounds in the second half of last year. We are confident that the newly acquired emulsions businesses will contribute to profitability in this segment. We remain cautious with respect to demand in the Technical Polymers Ticona segment, as end-use markets are affected by the uncertain outlook for consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. . Segment Results Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for Acetyl Products decreased by 11 % to EUR 1,923 million in 2002 from EUR 2,155 million in 2001 as higher volumes could not offset lower pricing and currency effects. Although overall selling prices were lower year on year, pricing rose steadily throughout 2002 as a result of higher demand, temporarily tight supply conditions and a slight upturn in raw material costs. EBITDA excluding special charges improved to EUR 252 million in 2002 from EUR 208 million in 2001 due to lower raw material costs, higher sales volumes and benefits from productivity and restructuring initiatives. Net sales for the Chemical Intermediates segment decreased by 11 % to EUR 907 million in 2002 from EUR 1,020 million in 2001 mainly as the result of lower pricing and unfavorable currency effects. EBITDA excluding special charges decreased to EUR 22 million in 2002 from EUR 30 million in 2001 as benefits from lower raw material and energy costs only partially offset lower pricing. Net sales for the Acetate acetate (ăs`ĭtāt'), one of the most important forms of artificial cellulose-based fibers; the ester of acetic acid. The first patents for the production of fibers from cellulose acetate appeared at the beginning of the 20th cent. Products segment decreased by 12 % to EUR 670 million in 2002 from EUR 762 million in 2001, as the result of lower sales volumes and unfavorable currency movements. Average pricing for acetate was stable in 2002. EBITDA excluding special charges decreased to EUR 81 million in 2002, compared to EUR 91 million in 2001 due to lower volumes and unfavorable currency movements. Net sales for the Technical Polymers Ticona segment decreased by 2 % to EUR 757 million as lower selling prices and unfavorable currency movements offset higher volumes. EBITDA excluding special charges rose 67 % to EUR 87 million in 2002, mainly as the result of reduced raw material costs and increased sales volumes. Net sales of the Performance Products segment, which consists of the Nutrinova food ingredients business, increased by 1 % to EUR 161 million as increased volumes from the strong growth of the high intensity sweetener Sweetener A special feature added to a debt obligation or preferred stock to promote marketability. Notes: Warrants and convertibles are two popular sweeteners. See also: Convertible Bond, Kicker, Warrant Sweetener Sunett(R) was largely offset by price decreases. EBITDA excluding special charges rose to EUR 55 million in 2002 mainly on higher volumes. Basis of Presentation: Effective January 1, 2002, Celanese adopted Statement of Financial Accounting Standards ("SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System ") No. 142, "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ", and ceased amortizing goodwill and intangibles without finite lives. The related charges in 2001 were a net expense of EUR 77 million in selling, general and administrative expense and a EUR 6 million expense in equity in net earnings of affiliates and a EUR 4 million expense in discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . Additionally, the standard requires that all negative goodwill on the balance sheet be written off immediately and classified as a cumulative effect of change in accounting principle on the consolidated statement of operations See Income statement. . As a result, income of EUR 10 million was recorded in the first quarter of 2002. In 2002, Celanese changed the actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin valuation measurement date for its US pension and other postretirement benefit plans from September 30 to December 31 in order to bring the valuation date in line with its fiscal year end and to allow for a more current measurement of the related actuarial components. This was accounted for as a change in accounting principle and resulted in a cumulative effect adjustment of income of EUR 9 million in the fourth quarter of 2002 and a reduction of 2002 full-year pension expense of approximately EUR 15 million. The results presented in this release, together with the adjustments made to present the results on a comparable basis, have not been audited and are based on the internal financial data furnished fur·nish tr.v. fur·nished, fur·nish·ing, fur·nish·es 1. To equip with what is needed, especially to provide furniture for. 2. to management. Additionally, the quarterly results should not be taken as an indication of the results of operations to be reported to be spoken of; to be mentioned, whether favorably or unfavorably. See also: Report by Celanese for any subsequent period or for the full fiscal year. Results restated: The results for all periods of 2001 and 2002 have been restated to reflect the reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. of Trespaphan (formerly in the Performance Products segment) and amines (formerly in the Chemical Intermediates segment) as discontinued operations Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. : Any statements contained in this report that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Words such as "anticipate", "believe," "estimate," "intend," "may," "will," "expect," "plan" and "project" and similar expressions as they relate to Celanese or its management are intended to identify such forward-looking statements. Investors are cautioned that forward-looking statements in this report are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Important factors include, among others, changes in general economic, business and political conditions, fluctuating exchange rates, the length and depth of product and industry business cycles, changes in the price and availability of raw materials, actions which may be taken by competitors, application of new or changed accounting standards or other government agency regulations, the impact of tax legislation and regulations in jurisdictions in which Celanese operates, the timing and rate at which tax credit and loss carryforwards Loss Carryforward An accounting technique with which a company applies net operating losses of the current year to future year's profits in order to reduce tax liability. Notes: can be utilized, changes in the degree of patent and other legal protection afforded to Celanese's products, potential disruption or interruption of production due to accidents or other unforeseen events, delays in the construction of facilities, potential liability for remedial actions A remedial action is a change made to a nonconforming product or service to address the deficiency. Rework and repair are generally the remedial actions taken on products, while services usually require additional services to be performed to ensure satisfaction. under existing or future environmental regulations and potential liability resulting from pending or future litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , and other factors discussed above. Many of the factors are macroeconomic mac·ro·ec·o·nom·ics n. (used with a sing. verb) The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. in nature and are therefore beyond the control of management. The factors that could affect Celanese's future financial results are discussed more fully in its filings with the U.S. Securities and Exchange Commission. Celanese AG does not assume any obligation to update these forward-looking statements, which speak only as of their dates. Note(a):Operating data have been restated to reflect the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of the Trespaphan oriented polypropylene polypropylene (pŏl'ēprō`pəlēn), plastic noted for its light weight, being less dense than water; it is a polymer of propylene. It resists moisture, oils, and solvents. (OPP) films and U.S. amines businesses, which appear as discontinued operations. Timing of upcoming events: April 1, 2003 Annual General Meeting April 30, 2003 Report on Q1 results July 29, 2003 Report on Q2 results October 30, 2003 Report on Q3 results Note to editors: The annual results will be presented at a press conference in Frankfurt/Main at 10:00 am (CET CET abbr. Central European Time CET Central European Time CET n abbr (= Central European Time) → hora de Europa central CET abbr ) today, and during an analysts' conference call at 3:00 pm (CET) today. Speeches, presentations and a live internet audio See RealAudio. webcast of the press conferences will be available on www.celanese.com.
Financial Highlights
in EUR millions Q4 Q4 Chg FY FY
2002 2001 in 2002 2001
%
----------------------------------------------------------------------
Net sales 1,069 1,063 1 4,325 4,777
EBITDA excluding special
charges(1) 99 62 60 440 398
EBITDA margin(2) 9.3% 5.8% 10.2% 8.3%
Special (charges), net 6 (496) n.m. 1 (496)
Depreciation & amortization
expense(3) 68 99 -31 286 390
Operating profit (loss)(3) 37 (533) n.m. 155 (488)
Earnings (loss) before taxes(3) 40 (531) n.m. 166 (490)
Earnings (loss) from continuing n.m.
operations(3) 24 (402) 113 (364)
Net earnings (loss)(3) 90 (419) n.m. 187 (385)
Capital expenditures 74 85 -13 218 217
----------------------------------------------------------------------
Net earnings (loss) per share (EPS
in EUR)(4):
EPS from continuing operations 0.48 (7.99) n.m. 2.25 (7.23)
Discontinued operations 1.13 (0.34) 1.09 (0.42)
Cum. effect of change in
accounting principle 0.18 0.00 0.38 0.00
Net earnings (loss) 1.79 (8.33) n.m. 3.72 (7.65)
Average shares outstanding
(thousands) 50,299 50,335 0 50,329 50,332
----------------------------------------------------------------------
Dec 31 Dec 31
in EUR millions 2002 2001
--------------------------------------------------------
Trade working capital(5) 618 605 2
Total financial debt(6) 615 880 -30
Net financial debt(7) 497 835 -40
Shareholders' equity 2,005 2,210 -9
Total assets 6,127 7,064 -13
--------------------------------------------------------
(1) Earnings before interest, taxes, depreciation and amortization
excluding special charges equals operating profit plus depreciation &
amortization plus special charges
(2) EBITDA excluding special charges as a percentage of net sales
(3) Refer to "Basis of Presentation"
(4) Per-share data are based on weighted average shares outstanding in
each period
(5) Trade accounts receivable from 3rd parties and affiliates, net of
allowance for doubtful accounts, plus inventories, less trade
accounts payable to 3rd parties and affiliates.
(6) Short- and long-term debt
(7) Total financial debt less cash & cash equivalents
n.m. = not meaningful
Segment Net Sales
Chg.
in EUR millions Q4 Q4 in % FY FY
2002 2001 2002 2001
----------------------------------------------------------------------
Acetyl Products 494 456 8 1,923 2,155
Chemical Intermediates 226 225 0 907 1,020
Acetate Products 166 189 -12 670 762
Technical Polymers Ticona 172 169 2 757 773
Performance Products 35 37 -5 161 159
----------------------------------------------------------------------
Segment total 1,093 1,076 2 4,418 4,869
Other activities 16 21 -24 68 83
Intersegment eliminations (40) (34) 18 (161) (175)
---------------------------------------------- --------------
Total 1,069 1,063 1 4,325 4,777
----------------------------------------------------------------------
Factors Affecting Q4 Segment Sales
in percent Volume Price Currency Other Total
----------------------------------------------------------------------
Acetyl Products 4 13 -9 0 8
Chemical Intermediates 8 1 -9 0 0
Acetate Products -2 1 -11 0 -12
Technical Polymers Ticona 13 -4 -7 0 2
Performance Products 13 -18 0 0 -5
Segment total 6 5 -9 0 2
----------------------------------------------------------------------
Factors Affecting Full Year Segment
Sales
in percent Volume Price Currency Other Total
----------------------------------------------------------------------
Acetyl Products 4 -12 -3 0 -11
Chemical Intermediates 0 -8 -3 0 -11
Acetate Products -7 0 -5 0 -12
Technical Polymers Ticona 4 -3 -3 0 -2
Performance Products 10 -9 0 0 1
Segment total 2 -8 -3 0 -9
----------------------------------------------------------------------
Segment EBITDA Excluding Special
Charges
in EUR millions Q4 Q4 Chg in. FY FY
2002 2001 % 2002 2001
----------------------------------------------------------------------
Acetyl Products greater
than
71 25 100 252 208
Chemical Intermediates 9 10 -10 22 30
Acetate Products 19 23 -17 81 91
Technical Polymers Ticona 10 0 n.m. 87 52
Performance Products 10 9 11 55 50
---------------------------------------------- --------------
Segment total 119 67 78 497 431
Other activities (20) (5) n.m. (57) (33)
---------------------------------------------- --------------
Total 99 62 60 440 398
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