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Celanese buying plans on hold

Germany“s Celanese AG said on March 11 that it would wait for an improvement in the chemicals cycle before pursuing its ambitious acquisitions plans. Domestic rival Bayer AG has recently put three un…

Germany“s Celanese AG said on March 11 that it would wait for an improvement in the chemicals cycle before pursuing its ambitious acquisitions plans. Domestic rival Bayer AG has recently put three units on the block, and Celanese has said it wants to double its sales by 2005, partly through acquisitions, but chief executive Claudio Sonder said that his company had no targets in mind. “We are not interested in the assets that Bayer has up for sale at this time,” he said. But the mid-cap company“s current restructuring would help prepare it for acquisitions once the chemical cycle turned, he added. The group, based in Kronberg near Frankfurt, wants to improve its margin at the core profit level – earnings before interest, tax, depreciation and amortization (EBITDA) – to an average of 15-20% across the cycle. That figure, excluding special charges, was 8.2% in 2001, a year when when restructuring, sinking demand and weak prices caused a net loss of EUR 385 million. The company“s plan for annual cost savings of EUR 150 million from next year – achieved in part through recent plant closures – will also raise profitability, he said. “This will certainly have an influence on the market capitalisation of this company, and as this evolves we“ll have a currency and the flexibility to achieve our vision, which is a 10-billion-euro company (in terms of annual sales),” Sonder said. Celanese shares are also listed in the US – about 29% of its stock is held in North America. Among its peers in the US are Eastman Chemical Co., Georgia Gulf Corp., Lyondell Chemical Co. and Millennium Chemicals Inc. The stock was down around six percent since it reiterated that it expects EBITDA excluding special charges in this year“s first half to be little different from its weak showing of around EUR 150 million in the second half of 2001. Celanese said it aimed to lift its market value about five-fold over the next few years from the current one billion euros to keep up with consolidation in the industry.

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