塞拉尼斯 (CE) 2009 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth quarter 2009 Celanese Corporation earnings conference call. My name is Josh and I will be your coordinator for today. (Operator Instructions).

I would now like to turn the presentation over to our host for today's call, Vice President Investor Relations and Public Affairs, Mark Oberle. You may proceed, sir.

Thank you, and welcome to the Celanese Corporation fourth quarter 2009 financial results conference call.

My name is Mark Oberle, and on the call today are David Weidman, Chairman and Chief Executive Officer; and Steven Sterin, Senior Vice President and Chief Financial Officer.

The Celanese Corporation fourth quarter 2009 earnings release was distributed via Business Wire this morning and is posted on our website, Celanese.com. The power points slides referenced during this call are also posted on our website.

During this call, Management may make forward-looking statements concerning, for example, Celanese Corporation's future objectives and results, which will be made under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. The limitations inherent in such forward-looking statements are detailed on slide two of the PowerPoint slides referenced during the call.

Celanese Corporation's fourth quarter 2009 earnings release references the performance measures operating EBITDA, affiliated EBITDA, adjusted earnings per share, net debt and adjusted free cash flow as non-US GAAP measures. For the most directly comparable financial measures presented in accordance with US GAAP and our financial statements and for a reconciliation of our non-US GAAP measures to US GAAP figures, please see the accompanying schedules to our earnings release, also posted on our website.

This morning, Dave Weidman will review the performance of the Company, and Steven Sterin will provide an overview of the business results for each segment and the financials. We'll have a question-and-answer period following the prepared remarks.

Now I would like to turn the call over to Dave Weidman. Dave?

Mark, thanks, and welcome everyone to today's call.

As we wrap up the challenging 2009, I am delighted to discuss the good performance for the quarter, and, more importantly, our continued confidence in our ability to significantly grow earnings at Celanese in 2010 and beyond. Steven will then provide more detail and color around each of our businesses' performance, and our outlook for the first quarter of 2010.

We saw continued relative strength throughout the fourth quarter, with sales around $1.4 billion, adjusted EPS of $0.50, and operating EBITDA at $227 million. I say "continued relative strength" because while fourth quarter demand and performance was maintained sequentially from the third quarter and up significantly from last year, overall demand was still 10% to 15% below our high water marks established in the first half of 2008.

Although 2009 will be remembered as a very challenging year for global economies, I am extremely proud of the strategic progress that the Celanese team made during the year. At our Investor Day in May, we outlined our plan to achieve $1.6 billion to $1.8 billion in operating EBITDA by mid-cycle. Since that meeting, we have announced several key accomplishments that clearly and immediately support these objectives.

The launch of an innovative impact modified Palm technology, a memo of understanding with our acetate joint venture in China to expand plate and tow capacities at our joint venture facility in Nan Tong; our acquisition of the Long Fiber Reinforced Thermoplastics Business of FACT in Germany, the closure of our acetic acid and VAM production facility in Pardies, France; the successful expansion of our acetic acid capacity at our integrated chemical complex in Nanjing, China; and our plan to expand vinyl acetate ethylene emulsion capacity again at our Nanjing facility by 2011.

All of these actions support continued earnings growth across all of our businesses, and provide increased confidence that our plan will result in earnings of $1.6 billion to $1.8 billion. I look forward to updating you on future strategic steps in the months ahead.

We remain very confident in our ability to grow 2010 EBITDA by around $200 million above 2009 levels. This EBITDA expansion will come from two key areas.

First is volume growth. Though we expect only a modest improvement in global demand above second half 2009 levels, this economic condition will still result in significant year-over-year volume growth, primarily driven by an improved first half.

The second stimulus to growth is productivity. We're on track with all productivity initiatives, and most actions have been completed. These initiatives will result in an additional $100 million of bottom line sustainable cost reductions versus 2009. And as you might recall, in 2009 we already reduced our cost base by $150 million. This $100 million is above and beyond reductions already achieved in 2009. This achievement is another example that Celanese is a Company committed to continuous, not just periodic, improvements.

Now, on top of these EBITDA improvements, we now expect our adjusted tax rate to be in the low 20% range, and our D&A expense to be about $30 million more than last year. The lower tax rate and D&A expense are both associated with last year's significant manufacturing and corporate restructuring activities.

So bottom line, without an economic recovery catalyst in the short-term, our growth plans will deliver substantially higher earnings in 2010, and position us for sustained growth as the economy recovers.

Now, lastly I want to briefly comment on our recent announcement naming Doug Madden Chief Operating Officer and Mark Oberle Senior Vice President Corporate Affairs. Those that know Doug share my enthusiasm for his talent and energy and are confident in his ability to help accelerate actions to drive innovation, productivity and geographic growth. Over the next several months Doug will join Steve, Mark, and me in telling the Celanese story.

And while Mark will still be heavily involved in investor relations, his new role will allow him to have more impact on Celanese growth strategies and global communications efforts.

I look forward to increased contributions from both Doug and Mark.

With that I will now turn the call over to Steven. Steve?

Thanks, Dave.

I will begin with the fourth quarter performance and outlook for each of our businesses, starting with Advanced Engineered Materials on page eight of the PowerPoint presentation.

Net sales were $239 million, up $44 million from last year's results. As the global economy began to recover, we saw a continued increase in demand for our applications across most of our end markets, particularly in auto and electronics, as well as improved performance in all three major geographies. Volumes were up 22%, and the higher volumes, one with positive currency effects, offset the lower average pricing in the quarter, primarily due to product mix.

We would normally expect a seasonally softer fourth quarter. However, this quarter was actually the strongest quarter in 2009 for this business. Operating EBITDA increased to $50 million in the quarter, from a loss of $3 million last year, and higher volumes, lower raw material and energy costs and benefits from our fixed-spending reduction efforts.

You may recall in the fourth quarter of 2008 our businesses were impacted by inventory accounting due to the significant destocking that was taking place with the economic downturn. AEM's fourth quarter 2008 results included $23 million in inventory accounting impacts. So on a like-to-like basis, operating EBITDA increased from approximately $20 million to $50 million; very strong performance. Earnings from our equity affiliates were $4 million lower than last year, impacted by a planned turnaround at one of the affiliates in the quarter.

Looking ahead to the first quarter of 2010, we obviously expect increased demand year-over-year in autos and electronics, but we also expect modest sequential improvement from the fourth quarter. We should also see an improvement in our equity affiliates' performance as well, as it tracks with recovery trends and the absence of the impact from the Q4 turnaround.

Turning now to Consumer Specialties on page nine, these late cycle businesses continue to deliver strong earnings performance and sustained margins. Net sales were $267 million, $19 million lower than last year. The increased pricing and positive currency impacts were not able to completely offset lower volumes as we continued on see soft consumer demand and inventory destocking by our customers for the Acetate Tow and Sweetener businesses. Operating EBITDA was $65 million compared to last year.

Looking back as far as our 2006 Investor Day, we highlighted our expectations for the revitalization of these businesses, particularly our Acetate business. Our objective was to increase the earnings power of Consumer Specialties from around $150 million a year of EBITDA to over $300 million. Last year we increased the projected amount to approximately $350 million by 2013. The businesses delivered record earnings performance in 2009, nearly $350 million already, and with the strategies in place, are on-track to exceed those previous objectives.

As we look ahead to the first quarter of 2010, we expect to see some modest destocking in the end markets. However, we expect to see sustained earnings reflecting the continued impact of our fixed-spending reduction efforts.

Let's now turn to Industrial Specialties on page ten. Net sales were $229 million versus last year's $277 million. Keep in mind that last year's results included $54 million of sales from the PVOH business we divested on July 1 of 2009. If you were to exclude the PVOH sales, our volumes were actually up due to growth in China and recovery in our Emulsions and and EVA Performance Polymers businesses. The higher volumes offset lower pricing, primarily resulting from lower raw material costs. Operating profit includes $10 million of insurance-related recoveries. Operating EBITDA, which excludes these recoveries, rose to $19 million, $11 million higher than last year, driven by our fixed-spending reduction efforts and the absence of inventory accounting impacts we saw last year.

For the first quarter of 2010, we expect increased volumes due to normal seasonality. As you know, these businesses consume vinyl acetate monomer as a key feedstock, and margins tend to behave counter-cyclical to the our Acetyl Intermediates business.

Turning now to the Acetyl Intermediates results on page 11. Net sales were $743 million versus $656 million last year. We experienced higher volumes as demand improved globally year-over-year, for acetic acid acetyl derivatives products. Our significant volume improvement was supported by our successful expansion of acetic acid capacity at our Integrated Chemical Complex in Nanjing. This quarter's results also included two months of production from our Pardies, France facility, which ceased production in December of 2009.

Pricing was down 18% for the quarter, primarily due to the fact that October 2008 still had high pricing before the economic recession began. The cost curve on acetic acid continues to hold, and reflects the difference in acetyl technology between Celanese and the rest of the industry. Before-industry operating rates were in the low 80% rage. Operating EBITDA was $128 million, compared with last year's $21 million, driven by it higher volumes, lower raw material costs and positive impacts from our fixed-spending reduction efforts. Keep in mind that we had approximately $63 million of inventory accounting impact in the fourth quarter of 2008.

Dividends from our Ibn Sina cost affiliates in the quarter were $12 million lower than last year, due to the lower earnings in methanol and MCD.

As we look forward to the first quarter of 2010, we expect volumes to be relatively stable. On the margin side, we expect to see modestly higher raw material and energy costs, as well as productivity from the shutdown of our Pardies, France facility. These two factors should generally offset each other in Q1.

Let's now turn to our Equity and Cost Affiliates performance on page 12. On the left side of the chart, you will see the earnings impact from our affiliate performance was $21 million, down $15 million below last year's results, primarily driven by lower dividends from our Ibn Sina cost affiliate. As the economy recovers, and with the expectation of higher raw material costs, we would expect our costs and affiliate performance to improve, primarily due to the fact that Ibn Sina has the effect of a natural hedge for some of our raw material exposure, we should see continued earnings growth in our acetate joint ventures.

During 2009, we continued to generate solid cash flows, as highlighted on page 13. We delivered $410 million of adjusted free cash flow for the full year, aided by favorable trade working capital, as well as lower cash taxes, interest expense, and capital expenditures. So if you take that strong cash generation, you will see on the left side of slide 14 that we ended the year with approximately $800 million of cash available for strategic purposes.

On the right side, you will see our cash flow expectations for 2010, also the EBITDA base that totaled between $695 million and $775 million of adjusted free cash outflows. To complete the picture, keep in mind that we entered 2010 with approximately $150 million of net proceeds already received and committed for the Kelsterbach relocation project. We expect to have a total of $300 million of cash outflows for that project during the year. The final project reimbursement of EUR110 million is expected in 2011.

As a result of our focus on continuous productivity, fiscal discipline, and cash management, Celanese continues to drive strong free cash flow yields even in the current economic environment.

Turning now to slide 15, last week we announced the call for redemption of the 9.6 million shares of our outstanding 4.25% convertible perpetual preferred stock for common shares. The redemption date for the preferred stock in February 22 and holders of the preferred stock may exercise the right to convert the shares of preferred stock into shares of common stock prior to the redemption date. We'll benefit by saving approximately $8 million a year in cash dividends. This redemption will not impact earnings per share performance, as the impact is already included in our diluted share count.

Our priorities for uses of cash are unchanged. We're actively pursuing a number of highly synergistic opportunities that we look forward to sharing with you in the coming months. We will continue to use the same fiscal discipline that we always have, and we will also look for opportunities to return cash to shareholders, if we're not able to identify value creating projects within the Company.

I will now turn the call over to Mark for Q&A.

Thanks. Josh, if we could get some Q&A instructions and we'll begin the process.

Certainly, sir.

(Operator Instructions).

Our first question comes from the line of David Begleiter from Deutsche Bank. David, you may proceed.

Thank you, good morning.

Good morning.

Dave, can you discuss in China volume and pricing trends in your core Acetic Acid and VAM businesses? Thank you.

Dave, I will start off and Steve will add a little more detail.

We continue to make good profitability in our Acetic Acid business on the basis of really superior technology, cost positions that we have, and our facilities are operating essentially at full capacity because of the advantage that we have. We see that sustained into the future.

Steve, do you want to add a little more detail?

Yes. As you look at what's happening with pricing in China for acetic acid today performing as we've expected. Cost curves holding up, same marginal producers that have set costs for the last nine to 12 months. We continue to set prices even with the new capacity that's come online. We expect that to continue as we move forward on a sustainable basis, so that puts pricing at $350 to $400 range we talked about before.

And, Steven and Dave, what on the BP Nanjing and the Sopo capacity additions in 2010? When do they come on and when do we see them in the marketplace?

Dave, the Sipcam capacity out in the Middle East is in the market. They're up operating, selling, have been in the market now for several months, and the market impact has been as we predicted, not an awful lot of change.

We expect sometime in the first half, BP will start their facility up with essentially the same impact as the Sipcam startup. Not an awful lot on an ongoing, maybe or bump or two here or there as it starts up, but nothing that would impact things materially over an extended period, or even short-term.

And Sopo, same thoughts?

Sopo's -- no change in Sopo. Their expansion -- a lot of the expansions, Dave, that got announced were vapor announcements. They have just -- either investments have been made, or when they were made, the units haven't started up. Sopo, their expansion and their investment isn't having a material impact, so we judge from that that either they chose not to make the investment or the investment was made and they're not running.

Thank you.

Our next question comes from the line of Kevin McCarthy of Bank of America. Kevin, you may proceed.

Yes, good morning.

Mark, congratulations on the promotion.

Thank you.

Dave, your profit in Acetyl Intermediates improved quite a bit sequentially, and just a follow-up on the prior question. As we look at some of the benchmark pricing numbering for acetic out of Asia, it looked like it was fairly flat in 4Q versus 3Q, so my question is, would you agree with that benchmark assessment and if so, how would you characterize the sequential profit improvement in terms of cost reduction versus volume improvement?

Good morning, Kevin. It is Steven.

Yes, prices were relatively flat. There was a little bit of a spike up there for a short period of time. There was some competitive outages. Again, not much different than the range I just talked about a moment ago.

If you look at the fourth quarter, one of the things we benefited from, as we mentioned, is we got the full quarter basically of the Nanjing capacity expansion, the additional 600,000 tonnes, and we also had our Pardies, France unit running for the first couple months of the quarter, it shut down in December. So we got a bit of additional volume from that in the fourth quarter, but overall, good results and continue to be sustainable as we move forward, and in particular as we get the productivity impact from the Pardies shutdown really starting to hit in the first quarter of 2010.

Okay.

And to switch gears to Advanced Engineered Materials, I think of your auto exposure there as being fairly diverse. But I was wondering if you could comment on the Toyota headlines and whether or not you would expect any impact, from that either positive or negative, when you take into account your customer mix as 2010 progresses?

Kevin, your characterization is accurate. We are very diverse in the models that we're on and the makes that we're on. Our key focus is people buying cars, and as global demand continues to increase on a sequential basis, we continue to see increased demand. To a large degree on the margin we're indifferent as to whether someone buys a Ford or a Toyota as long as they're out buying.

Okay. Understood. Thank you very much.

Thanks, Kevin.

Our next question comes from the line of Frank Mitcsh of BB&T Capital Markets. Frank,. you may proceed.

Thank you, and I echo the congratulations to Mark as well.

Thanks, Frank.

Dave, you did a good job of talking about the impact of the new capacity. I was wondering, you mentioned low 80% operating rates in the fourth quarter on acetic acid. What were your expectations of average operating rates in 2010?

Our expectation with the new capacity coming in was somewhere in the mid-70s, mid-to high 70s. So you have a Pardies facility that came down in the fourth quarter, plus our capacity that came up, so you're basically neutral there on capacity, and then you have a couple of new facilities that will come up and likely operate and with that, a modest amount of demand from where we were at in the second half of the year, and here somewhere in the mid-to high 70% range.

Which is consistent with what we have been expecting as we looked at these capacity additions, so again the same marginal producers that are setting the price levels today even at those utilization rates would be the where the cost curve would intersect.

And Celanese would be as close to 100% as practicable?

Yes, on acetic acid.

Our downstream businesses, vinyl acetate and ( indiscernible - technical difficulties) that we manufacturer, the operating rates there are down because the markets are down. So as with the economy recovers, we should see some uplift in demand in those markets, volume should increase there, but we should some see ongoing margin expansion due to economic recovery.

Okay, great.

And you mentioned when talking about Ticona, that you had a planned turnaround that had an impact in the quarter. Can you size what that impact was? Yes, I think about around $5 million. All right. Terrific. Thank you.

(Operator Instructions).

Our next question comes from the line of Sergey Vasnetsov of Barclays Capital. Sergey, you may proceed.

Good morning.

Good morning.

On intermediate sales, how much of 27% volume growth was due to the new plant start-up, of course, upset by France shutdown, and also, how much was market driven?

So think about the Pardies -- the Nanjing expansion about 600,000 tonnes, and think about Pardies, on average 400,000 to 450,000 tonnes, so you get a little bit of additional capacity there, and Nanjing ran for most of the quarter, Pardies ran about two months of the quarter. That should give you a sense for the overall impact. Think about global market around 10 million tonnes.

And keep in mind, Sergey, on a year-over-year base as we said in the fourth quarter of 2008, we weren't running nearly at the rates we were running in the fourth quarter of 2009. So if offline we need to do a little math there to figure out which was our overall run rates versus what was impact of the specific facility, we can do that, but I think if you would look at it, the majority is going to come from running our rates near full out, running our plants near full out, versus the incremental capacity that was available.

Okay.

Secondly, what's your outlook for equity earnings this year?

Yes. So they should be higher sequentially from 2009 to 2010, really following the pattern of our business. They were relatively low in the first half, so second half, they approach more normal levels when you adjust turnarounds and those types of things, and obviously you look at our Ibn Sina joint venture, and that will fluctuate a bit with raw materials because we think about that as being a natural hedge to raw material positions, so you see high methyl and TBD, you could see higher earnings out of that.

The ADM affiliates should track with our AEM business, so in general following sequential volume improvements and higher earnings year-over-year in those businesses.

Lastly, maybe Dave, your results of 10%, 15% below first half of 2008. When do you expect the gain to come back to normal cycle conditions? Is it 11, 12, how should we think?

Yes, Sergey, it is a really good question. If I were to say anything, it would be pure speculation.

We're relatively confident that we'll be able to deliver the earnings that we have projected, the improvements, based on volume improvement from first half of 2009, and also based on productivity programs within our own control.

If we look at our numbers, Sergey, though, we're seeing some areas where there are bright spots in demand, AEM if you look at the order books on AEM, they seem to be improving fairly well. When we look at China, as an example, there is two or three things we look at in China that gives us relative confidence in China. Our customers are not saying their demand is trimmed at all. We're seeing the normal downturn as you head into Chinese New Year, and maybe more significantly, as we look at inventory levels through the chain, we're not seeing an awful lot of inventory or inventory stacking up or being built out there.

So overall, we're cautiously optimistic about a recovery, but we're certainly not basing the business performance upon -- solely upon a recovery.

Okay. Thank you.

Thanks Sergey.

Our next question comes from the line of John McNulty of Credit Suisse. John, you may proceed.

Good morning.

Hi, John.

Just a couple of questions. With regard to the $100 million of productivity improvements, can you give us some clarity as to how we should be thinking about that on a divisional basis and where it is coming from?

Yes. So if you think about the $100 million, probably the single largest component is the Pardies, France productivity that will come out, so we have said think about that as about $90 million to $100 million cash investment. We typically target around two-year payback, so see a big chunk will be in the A I business. There is also some additional product activity in AI, so I would say two-thirds or more would be in AI, and the rest will be pretty spread equally across the rest of the businesses.

Okay. Great.

And with regard to the huge cash horde that seems to be building up on your balance sheet, and it looking like you're going to get another, call it $200-plus million in 2010 in terms of free cash, can you give us a little bit more color as to what you view as strategic purposes? Is it really all for M&A, can we be thinking about share repurchases at this point now that things have calmed down a little? How should we think about use of cash going forward?

John, great question. I will take part of it, and Steve maybe can walk through some of the numbers for 2010.

As we have shared over the last several quarters, there are an awful lot of M&A opportunities in the market. They are in each of the businesses, and they're in Europe and in North America and in Asia. We did announce a small transaction this last quarter with FACT. We also were delighted to be able to announce that we're expanding our joint venture in acetate in China.

In the pipeline, though, there is other opportunities that we continue to pursue, and our M&A guys are incredibly busy. Most of these are businesses with within companies rather than companies themselves. In fact, all of them are. And we will continue to maintain the same type of fiscal discipline that we have in the past to make sure that they're accretive and bought on a good multiple, but the synergies applied to them, bring the multiples into very attractive position.

As we look at it now, not all of these deals will be completed, but if they were completed, it would burn through this cash plus some, and we'll continue to look -- as we go through and M&A opportunities are not there or business development opportunities are not there, we'll do the same type of of things we have in the past to return cash to shareholders, share buyback, look at dividends and so on.

If you look at our slide 14 in our PowerPoint presentation, you can see our expected cash outflows for 2010, also EBITDA base will take your assumptions for EBITDA and get to free cash flow, see the major elements there.

Also keep in mind, we've got our Kelsterbach relocation. At the end of 2009 we had about $150 million of cash already on our balance sheet received from the Airport Authority that's earmarked for that project, and we'll spend about $300 million this year on a reimbursement coming in 2011, about EUR110 million, so that should give you all the components of the major components of cash.

Okay. Perfect. Thank a lot.

Thanks, John.

Our next question comes from the line of Edlain Rodriguez with Broadpoint. Edlain, you may proceed.

Thank you. Good morning, guys.

Edlain, good to talk to you again.

Same here.

Quick question. There have been some concerns recently about economic deceleration in China. Can you talk about what you seeing there, and also what your assessment of North America and Europe going into the year?

Yes. Edlain, when we look at China, as I shared before, there are three things that we looked at in the last month or so, and an increasingly deeper look or more scrutiny on it in the last few days.

First, when we talked with our customers in every space we operate in, they're not signaling slowdown in demand. Second, the pattern we saw in demand leading into Chinese New Year was no different than what we saw in the 2007 or 2008 period of time. Also, as we have examined inventory levels downstream from us, there does not seem to be a back up in inventory.

So all of that together gives us confidence that it is not going to be a collapse. Could there be a shift from infrastructure into consumer spending, stimulus and consumer spending? That could occur, but for us, we're very broad in our applications, relatively indifferent as to where demand comes from, but we just don't see big signs saying that there is huge problems.

What about North America and Europe?

Well, North America, the recovery continues here. I think, we're seeing, particularly on the business side, demand picking up to some degree. Our Advanced Engineered Materials business, their order books are relatively robust and continue to increase both in North America and Europe, and that signals best at least the sectors we're seeing it in, confidence in the business space and purchasing and buying there.

Europe is kind of a mixed story. I think there is some concern in Europe around the southern European and eastern European economies. They're relatively small in our book of business. Overall though, we see stability and modest improvement.

Okay. Thank you.

Our next question comes from the line of Bob Koort of Goldman Sachs. Bob, you may proceed.

Hi. Good morning. This is David Howard sitting in for Bob.

Hey, David.

I was wondering -- one of your Chinese competitors recently increased acetic acid capacity plus announced a much more substantial amount of capacity slated for 2012. You have been really reasonable and very vocal about your expectation for capacity coming online, but just wondering how your view mate change, if at all, if we see of the competitors follow suit and bring on additional acetic acid capacity above their initial plans.

Well, David, I appreciate the question. Good question.

But we go back to some fundamentals. If I were to take you back three years ago, we saw an awful lot of announcements getting into the market in a very short period of time. Most of those announcements -- many of those announcements didn't result in new capacity. Most of them where construction did occur are not operating today because their costs are well below today's prices.

So I am familiar with the announcement that's out there. As we look at it, the technology that we think they would likely use would be so disadvantaged that it would be unlikely they would be able to get financing for it.

Okay. Understood.

And just one quick follow-up. If we switch over to the Consumer Specialty segment, you guys said that some of the late cycle businesses within that segment tends to drive the volume erosion there. Was just wondering which businesses those were.

Both the businesses in there are late cycle, are high-intensity sweetener business, Nutrinova, goes into beverages ,as well as our acetate business, which goes into tobacco. Late cycle, we think those businesses have bottomed, the demand has bottomed on that, and we're seeing signs that -- of stability, and some hope at least for volumes to recover.

Do you expect some improvement then going into 2010?

We tend to be cautious in our views on recovery and space like that. We would be delighted if it occurred, but we're not counting on it.

Okay. Thanks a lot.

Thank you, David.

Our next question comes from the line of (inaudible). You may proceed.

Thanks a lot. My questions were on China and they have been answered. Thank you very much.

Thanks, Bob.

Our next question comes from p the line of Lindsay Drogin of SMBC group. Lindsay, you may proceed.

Thank you. My question about cash was already answered, and congratulations on the quarter and year.

Thank you, Lindsay.

Our next question comes from the line of Clifford Sosin of UBS. Clifford, you may proceed.

Hi, guys.

What was the EBITDA as a benefit or negative impact from operating Pardies for two months during the quarter? And then I have a couple of others, if you don't mind.

Cliff, this is Mark.

It would have been fairly minimal. As you know, part of the challenges with Pardies was the economic structure there, so it had some impact on the volume but on an operating EBITDA basis it would have been fairly minimum.

So shutting it down then would have minimal impact on a sequential basis?

What you will see is the impact is on the net productivity of having Nanjing expanded and Pardies out, and that is the two-year simple cash payback that Steven talked about based on the $90 million to $100 million of investment, the net impact would have both the Nanjing impact as well as the Pardies impact.

And then SG&A was meaningfully higher sequentially, and the other segment was also higher sequentially. Can you just give me some color as to what drove that?

There is just a little bit of lumpiness in terms of timing you see there. If you look at SG&A on a full-year basis, we're down about $70 million in our SG&A numbers, about 15%. That's part of the productivity programs that we saw this year so we expect that to be sustainable reductions as we move forward and BU (inaudible), it is really the same thing, a component of SG&A. Think about that typically in kind of the $25 million to $30 million range a quarter, sometimes a little less, sometimes a little bit more just based on timing of programs and spending.

And what drove the lumpiness, catch-up accruals on bonuses or other stuff?

No, just timing of what we have certain programs take place, and we also said in the third quarter that we were running a little below our levels and expected to see -- by the end of the year to be back in the range of where we expect which is around $100 million.

Okay. And lastly I think Rhodia said they increased pricing in their fibers business by, I think, 8.5%. Do you have any color as to whether you think you will be able to get that sort of price increase in your consumer business, or do you have any color on where the price negotiations are this year?

Mark, do you want to answer that?

I can take it. Cliff, the announced price increase, obviously we can't comment on their success. What we're seeing is continued support for our business with our customers. We wouldn't expect to see an awful lot of positive pricing beyond where the levels that we saw in 2009. So as we continue to finalize those negotiations, our expectation would be for more stability, and again on whether Rhodia was successful or not, we'll have to wait for them to report.

Thanks. And congratulations, Mark, on your promotion.

Thanks, Cliff.

At this time we're showing no further questions available.

Mark Oberle, you may proceed.

Great.

Thanks, everyone, and, as always, feel free to give me a call. More than happy to answer any further questions you have.

Talk to you soon.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect.

Have a great day.