Celanese (NYSE:CE) executives said the company expects supply-chain conditions in its Acetyl Chain business to moderate during the second half of 2026, while cost actions, targeted growth initiatives and free-cash-flow generation remain central to its strategy.
During the company’s second-quarter earnings call, President and Chief Executive Officer Scott Richardson said Celanese benefited in the second quarter from the flexibility of its global production and supply-chain network, particularly as it worked to provide reliable supply to customers affected by disruptions. Europe was among the regions more acutely affected by the supply-chain crisis, he said.
Acetyl Chain Conditions Normalize
Celanese expects third-quarter results to reflect higher inventory-absorption effects following the accelerated closure of its Lanaken facility and the pull-forward of certain engineered-materials closures. In addition, Richardson said the Ibn Sina joint venture did not operate for much of the second quarter, which is expected to reduce equity earnings by about $10 million for the year, with nearly all of that impact occurring in the third quarter.
Richardson said Acetyl Chain profitability has historically been weighted toward the Western Hemisphere, with more than 80% of profitability generated there in 12 of the past 15 years. Although Asian margins increased temporarily from late February into the early part of the second quarter, he said those gains were short-lived and had returned to pre-war levels by the middle of the quarter.
Western Hemisphere margins have not returned to pre-war levels, Richardson said, but the company expects markets to remain relatively constructive through year-end. Supply chains have normalized to some extent as material has flowed from regions outside the Middle East, a development that has created some margin compression. Celanese is seeking to contract business gained through its supply reliability for 2027 and beyond.
Acetyl Chain volumes were flat year over year in the second quarter. Richardson attributed that outcome largely to product mix, as gains in the vinyls chain were offset by continued destocking in acetate tow. He said destocking in acetate tow moderated during the quarter and customer order patterns have begun to normalize compared with last year, though some destocking is expected to continue in the second half.
The Lanaken closure is now expected to occur during the current quarter, sooner than previously anticipated. The earlier closure will produce a higher inventory-absorption impact in the second half, but Richardson said it should create a cleaner cost structure for 2027. Celanese expects to realize some related cost benefits in the fourth quarter, with a more substantial improvement next year.
Engineered Materials Emphasizes Value and Growth Niches
In Engineered Materials, Celanese is concentrating on higher-value applications rather than pursuing broad volume growth. Richardson said the company has identified growth opportunities within more narrowly defined market segments, including data centers, medical applications, electronics and drug delivery.
Electronics currently represents about 10% of Engineered Materials revenue and 10% to 15% of its contribution margin, according to Richardson. Medical represents less than 10% of revenue but about 20% of contribution margin. The company believes those businesses can support durable growth through deeper customer alignment and differentiated product development.
Richardson also highlighted data-center applications, where the company is supplying materials and engaging in development work with customers. He said artificial-intelligence data-center servers require additional materials for connector protection, signal management, thermal management and wire-and-cable applications, creating what he described as a larger opportunity set than traditional servers.
Automotive volumes generally moved with lower vehicle builds during the quarter, he said. Excluding a divestiture, overall Engineered Materials volume was approximately flat year over year, as declines in automotive were offset by growth in non-auto markets. Richardson said the company is prioritizing revenue growth, share gains and product mix over volume growth in standard-grade automotive materials, particularly amid additional polymer capacity in China.
Management said it has implemented price increases in Engineered Materials to address raw-material inflation. Richardson said pricing strengthened through the second half of the second quarter, helping support margin expansion, but raw-material costs are expected to create pressure in the third quarter as they flow through inventory.
Cash Flow, Restructuring and Deleveraging
Chief Financial Officer Chuck Kyrish reaffirmed Celanese’s expectation for $700 million to $800 million in free cash flow for 2026. The company generated $140 million of free cash flow in the second quarter despite nearly $200 million of working-capital use, primarily related to accounts receivable, he said.
Year to date, working capital represented nearly a $300 million use of cash. Kyrish said the company expects that effect to normalize in the second half and now anticipates full-year working capital to be neutral to slightly positive. He characterized the 2026 free-cash-flow range as a sustainable baseline for future years, with further potential from inventory reductions and lower restructuring cash costs.
Celanese expects $80 million to $100 million of cost reductions as it enters 2027. Kyrish said the company expects to capture roughly half of the benefits from its engineered-materials nylon restructuring in 2026, while it expects to realize about one-third of the savings from the Lanaken action this year. The remaining benefits are expected next year.
The company remains committed to its goal of $1 billion in divestitures by the end of 2027. Richardson said Celanese is about halfway toward that objective following the Micromax transaction and expects to announce at least one additional deal by the end of 2026.
Kyrish said Celanese expects to end 2026 with net debt of about $10 billion and aims to finish 2027 at about $9 billion. The company continues to view approximately three times net debt to EBITDA as its long-term leverage target, with its next objective being to move below four times leverage after crossing five times during 2026.
About Celanese (NYSE:CE)
Celanese Corporation is a global chemical and specialty materials company that develops, manufactures and markets a broad portfolio of products serving diverse industries. The company operates through two primary business segments—Engineered Materials and Acetyl Chain—offering solutions that range from high-performance polymers and specialty additives to industrial chemicals and intermediates. Its engineered materials are used in applications such as automotive components, consumer electronics, medical devices and packaging, while its acetyl derivatives find uses in coatings, adhesives, solvents and personal care products.
In the Engineered Materials segment, Celanese produces a variety of high-performance thermoplastics, polyether-block-amide (PEBA) elastomers and functional additives designed to enhance product durability, thermal resistance and sustainability.
