Celanese Earnings: Reduced Input Costs Aid Profit Recovery Despite Weak Demand Environment

Celanese's fourth-quarter results reflected the benefit of favorable input costs versus global competitors, which underpins our narrow moat rating based on cost advantage. Despite customer inventory destocking leading to a 3% year-over-year volume decline and 3% lower prices versus the prior-year quarter, operating EBITDA grew 34% year over year. The company benefited from lower prices for US natural gas, which is Celanese's primary feedstock, while prices are often set by marginal-cost producers that use higher-cost European or Asian natural gas or Brent oil-based feedstock. Having updated our model to incorporate the fourth-quarter results, we are maintaining our $160 fair value estimate. Our narrow moat rating is also unchanged.