Celanese, a global technology and specialty materials company, today reported fourth quarter 2012 adjusted earnings per share of $0.67, a 16% increase over the prior year period, driven by expanded operating EBITDA margins in the company's Consumer Specialties, Advanced Engineered Materials and Acetyl Intermediates segments. Diluted earnings per share from continuing operations for the quarter were $0.60 compared with $0.61 last year.

"Celanese completed 2012 with strong fourth quarter results reflecting the breadth of our global footprint, the depth of our product portfolio and our success in delivering innovative customer applications while also improving our cost position. As a result, we expanded operating EBITDA margins by 180 basis points and increased adjusted earnings per share by 16%% over the prior year period even with a challenging economic environment and continued trough-like demand for acetyl products and derivatives," said Mark Rohr, chairman and chief executive officer. "Celanese also delivered strong cash flow, ending the year with nearly $1 billion of cash on the balance sheet and well positioned to pursue our growth initiatives and balanced capital deployment strategy in 2013."

Operating profit for the quarter was $86 million, with sustained operating margins, compared with $97 million in the prior year. The tax rate and diluted share count for adjusted earnings per share in the fourth quarter were 17% and 160.2 million, respectively. Net earnings were $95 million in the fourth quarter of 2012 compared with the prior year results of $95 million.

Net sales in the fourth quarter were $1,501 million compared to $1,614 million in the prior year. Volumes decreased 3% on a year-over-year basis primarily due to continued soft global demand in the company's Acetyl Intermediates segment and the Acetate footprint rationalization in its Consumer Specialties segment. Pricing also decreased 3% on a year-over-year basis mainly due to lower global demand for photovoltaic applications in the company's Industrial Specialties segment and lower raw material costs in its Acetyl Intermediates and Industrial Specialties segments.

Recent Highlights

• Completed a $500 million offering of 4.625% senior unsecured notes due in 2022. In connection with completion of the offering, the company repaid $400 million of its existing senior secured credit facility indebtedness that was set to mature in 2016 and used the remaining proceeds, together with cash on hand, to make a $100 million contribution to its U.S. pension plan.

• Completed the shutdown of the company's acetate tow and flake manufacturing operations at its Spondon, Derby, United Kingdom site. These manufacturing operations were included in the company's Consumer Specialties segment.

Fourth Quarter Business Segment Overview

Advanced Engineered Materials delivered growth in the fourth quarter despite a challenging economic environment in Europe and normal seasonality. Net sales increased to $299 million compared with $292 million in the prior year period as its innovative customer-oriented solutions drove a 4% increase in volumes while currency had a 2 % unfavorable impact. Fourth quarter operating EBITDA was $88 million, a $15 million improvement over prior year, driven by the higher volumes and higher equity earnings. Equity earnings from the company's affiliates were $47 million compared with $36 million in the prior year period, primarily due to a significant turnaround in its Asian affiliates in fourth quarter of 2011. Operating profit improved by $4 million over the prior year period.

Consumer Specialties delivered strong results in the quarter while positioning the business for enhanced future profitability through the rationalization of its manufacturing footprint with the closure of the Acetate facility at its Spondon site. Net sales in fourth quarter of 2012 were $281 million as compared to $306 million in the prior year period primarily due to 13% lower volumes as a result of the facility closure. Pricing was 5 % higher than the prior year on continued strong global demand. Fourth quarter operating EBITDA was $86 million, a $13 million increase over the prior year as cost efficiencies from the footprint rationalization and higher pricing more than overcame lower volumes. Operating profit increased to $60 million from $59 million in fourth quarter of last year.

Industrial Specialties' net sales in the fourth quarter of 2012 were $251 million compared to $272 million in the prior year period. Volumes increased 2% driven by increased demand in Asia and North America for Emulsions applications which was partially offset by lower European volumes. Pricing in the fourth quarter was lower than the prior year primarily due to lower demand for photovoltaic applications in EVA Performance Polymers and lower raw material costs across the segment. Operating EBITDA was $20 million compared with $30 million in the prior year period as increased demand in Emulsions did not offset lower demand for premium EVA applications. Operating profit in the fourth quarter of 2012 was $6 million compared with $17 million in the prior year period.

Net sales for Acetyl Intermediates in the fourth quarter of 2012 were $773 million compared to $849 million in the prior period. Global demand for acetyl products and their downstream derivatives remained at low levels during the quarter resulting in 5% lower pricing and 3% lower volumes compared to the prior year period. Operating EBITDA in the fourth quarter of 2012 was $88 million compared with $95 million in the same period last year. However, operating EBITDA margins expanded modestly on lower raw material costs and cost efficiencies. Operating profit was $64 million in the fourth quarter of 2012 versus $67 million in same quarter in 2011.

Taxes

The tax rate for adjusted earnings per share was 17% for 2012 and 2011. The effective tax rate for continuing operations for 2012 was 7% compared with 20 percent in the prior year. The lower effective tax rate in 2012 was primarily due to recognition of $142 million in tax benefits from foreign tax credits partially offset by $38 million from a timing difference for when the company records tax on one of its strategic affiliates.

Strategic Investments

Earnings from equity investments, which are reflected in the company's earnings and operating EBITDA, were $79 million in the fourth quarter of 2012, a $33 million increase from the prior year period primarily due to a significant plant turnaround in its Asian affiliates in the fourth quarter of 2011 as well as the company's share of a gain related to debt restructuring at a subsidiary of one of its Infraserv affiliates. The Infraserv gain is included in other adjustments and thereby excluded from the company's operating EBITDA for the fourth quarter and the year. The cash flow impact of equity investments in the fourth quarter was consistent with the prior year period at $40 million.

Cash Flow

During 2012, the company generated $722 million in cash from operating activities, an $84 million increase from the same period last year, primarily driven by lower trade working capital versus the prior year period. The company also made total pension contributions of $294 million in 2012, an increase of $81 million over the prior year period. Cash used in investing activities during 2012 was $500 million compared with $441 million in the same period last year. The 2012 results include the company's acquisition of two product lines from Ashland and investments in future growth initiatives. Net cash provided by financing activities during 2012 was $49 million compared with net cash used of $253 million in the prior year. In 2012, the company completed a $500 million unsecured notes offering and repaid $400 million of its senior secured term loans that were set to mature in 2016. In 2011, the company used a net of $116 million to prepay a portion of these term loans. Net debt at the end of 2012 was $2,139 million, a $196 million decrease from the end of 2011.

Outlook

"We anticipate the challenging global economic environment will continue into 2013, particularly with the uncertainty in the European Union. Growth in China should improve throughout the year but I expect that growth to be modest when compared to historic levels," said Rohr. "Earnings growth in 2013, despite the impact of a two percentage point increase in our adjusted tax rate, should be consistent with our long-term growth objectives of 12 to 14% and be driven by Celanese-specific initiatives. We remain focused on growth platforms that expand the company's addressable opportunities and technology innovation that enhances the competitive position of our high volume products. In 2013, we will continue to take steps to reduce the impact of a challenging global economy on some of our portfolio, while accelerating the return on businesses where our solutions capability is opening new windows of opportunity for our customers."