塞拉尼斯 (CE) 2010 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the second quarter 2010 Celanese Corporation earnings conference call. My name is Ann and I will be your coordinator for today's call. As a reminder, this conference is being recorded for replay purposes. (Operator Instructions). We will be facilitating a question-and-answer session following the presentation. I would now like to turn the presentation over to Mr. Mark Oberle. Please proceed, sir.

Thank you. And welcome to the Celanese Corporation second quarter 2010 financial results conference call. My name is Mark Oberle, Senior Vice President of corporate affairs. 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 second quarter 2010 earnings release was distributed via business wire this morning, and it's posted on our Web site, Celanese .com. The power point 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 power point slides referenced during this call. Celanese Corporation's second quarter 2010 earnings release references of performance measures operating EBITDA, business operating EBITDA, proportional affiliated EBITDA adjusted earnings per share net debt and adjusted free cash flow as non U.S. GAAP measures, for the most directly comparable financial measures presented in accordance with US GAAP and our financial statements and for a reconciliation of non U.S. GAAP measures to U.S. GAAP figures, please see the accompanying schedules to our earnings release posted on our Web site.

This morning David 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 with Dave and Steven following the prepared remarks. Now I would like to turn the call over to David Weidman. Dave?

Mark, thanks and welcome everyone to today's call. I'm pleased to have the opportunity, along with Steve, to share you with you results of another very strong quarter for Celanese. Today I'd like to accomplish four key things, first, review the results of the quarter. Second, reiterate the value that Celanese has its in strategic affiliates. Third, highlight some of the key actions we've recently taken that emphasizes the technology, leadership, and specialty materials focused at Celanese. And lastly, provide our perspective on current market conditions and talk about our outlook for the rest of the year. Let me start briefly by covering the details of the quarter. Net sales were $1.5 billion to compared to $1.2 billion last year, operating EBITDA was $332 million, versus last year's $248 million. And adjusted EPS doubled to $1.12 from $0.56 per share last year.

Our strong top to bottom line results and the expanded operating margins in this quarter reflect strong strategic positioning of our businesses, the improved global economic environment compared to last year, and the operating leverage from the sustainable improvements we've made in our fixed cost structure. Demand for our products was stronger in all regions, both year-over-year and sequentially. In considering Celanese financial results, I'd like to highlight the strong performance of our strategic affiliates. So these are primarily legacy relationships established you during periods when you needed a partner to access key regions of the world.

These ventures are strategic and valuable. In most affiliates, Celanese has always been the active technology partner in operational leader, contributing our skills in expertise. In May at investor day, we shared with you the enormous strategic value of these affiliates and their significant and sustainable contribution to our earnings performance. They represent a critical part of our strategy for growth. Over the last few years, these affiliates have contributed on average about 30% of our pre-tax operating income. And their growth has mirrored the growth of our direct businesses. When you examine only the proportional economic interest of these ventures over the last four quarters, you'll find that Celanese revenue would have moved from $5.6 billion to $7.2 billion, and operating EBITDA would have expanded from $1 billion to $1.4 billion.

I'd like to point out that these ventures currently operate with only $86 million of additional proportional debt. Now we're excited about the growth plans of our affiliates and are confident they'll increase the value of Celanese. In May, we also highlighted many of the successful steps we've taken over the past several quarters to transition Celanese from an undifferentiated chemical manufacturer to a technology and specialty materials company. And as we've demonstrated, these actions are accelerating.

We recently completed two exciting acquisitions within our AM segment. In fact, a long fiber reinforced thermal plastics business and the LCP and PCT product lines from Dupont. These actions, along with our agreement to invest in a new palm facility in Saudi Arabia through our (inaudible) affiliate, are strengthening our specialty materials portfolio. Whether through key strategic acquisition, such as those that we've made over the past year in our advanced engineer materials segment, or through continued advances in our industry leading process technology and acid peels or the echo friendly innovations being driven by our industrial specialties businesses, Celanese is performing as a technology and specialty materials company.

For our investors, this strategy means strong earnings growth, tremendous cash yields, and lower earnings volatility. Now much of the recent headline news, specifically around the capital markets, has highlighted concerns regarding a potential slowdown in the global economy. As you can tell from our strong performance, we continue to see demand strength in the second quarter and continue into the current quarter. I believe there's several reasons for this sustained performance. First, Celanese's overall balance in end markets and geographies.

We're located in regions of the world that continue to grow, and we are very diverse in the end market served. Second is the strength of our leading portfolio of businesses, driven by technology leadership in both products and processes. This technology leadership aligns our growth and financial performance with the growth of our customers and positions us to be a preferred partner. Third is Celanese's continued focus on productivity. We have relentlessly pursued and delivered on our commitments to improve the cost structure of the Company, while growing with our customers. While we remain cautious about the global economic environment in the second half, we're currently seeing sustained stable demand levels in all of our businesses.

Our second half is typically seasonally lower than the first half, but we believe the current strength and demand should help offset some of that seasonality, at least in the third quarter. So as we look forward to the second half of 2010, based on a cautious view of the global economy, the reasonable demand levels we're currently experiencing, and the strong performance in the first half of the year, we now expect to deliver adjusted earnings per share of at least $1.40 higher than last year's results of $1.71. That's an increase of $0.15 per share from our previous outlook. Additionally, we now expect operating EBITDA to be at least $260 million more than last year's results, $10 million higher than our previous outlook. With that, I'll now turn the call over to Steven.

Thanks, Dave. Before I begin with our second quarter performance and business outlook, I'd like to remind you of the accounting changes resulting from our expanded relationship with our affiliate. Including the planned construction of a new Palm facility in the Middle East. In order to reflect the business dynamics and growth opportunities for this strategic affiliate, beginning in the second quarter of 2010, our results are now reported in our advanced engineer materials segment, using the equity method of accounting. As may recall, you've seen our results for previously reported in our immediate segment using the cost method. All financial results presented for the current period and prior periods have been adjusted to reflect the new accounting method.

We'll also publish an updated affiliate white paper, which will include restated financials for AEM and Acetyl Intermediates , to help you better and the accounting and modeling indications. These document will be available on our Web site, but I've included a summary of the changes and their impact on Advanced Engineered Materials earnings on pages seven and 16 of the power point presentation. As you know, Evenstena (phoenetic) serves as a natural hedge for us. Particularly for AEM, because the AEM business model is based on value and use pricing, there's somewhat exposed to changes in their input costs. With Evenstena producing one of AEM's raw materials, methanol, the Evenstena results help offset significant changes of raw materials in that business. So with that being said, let's now go to our business of second quarter performance and outlook beginning Advanced Engineered Materials, on page eight of the power point presentation. This business delivered strong performance as the global economy continued to recover and also benefited from the innovation and commercialization of its new products and applications.

Net sales were $282 million, up $98 million from last year. Volumes were up 52% year-over-year as demand improved across all of our end-used industries and geographies with particular strength in automotive and electronics. We also continued to be very successful in commercializing new products and applications, and our pipeline remains robust. Also keep in mind that this quarter's results included sales from our Fact LFP business that we acquired in December of last year. We'll also begin to see the positive impact from our aqaird LPP and PCT businesses starting in the third quarter. Operating EBITDA was $98 million, $62 million improvement over last year. As I mentioned earlier, this quarter's results include equity earnings from our Evenstena affiliate which increased to $24 million from $8 million ad year ago.

The improved results were attributed to higher price in methanol and MTBE driven by increase global demand for these products. Our Asian affiliate performance for the segment also improved, delivering $15 million of equity earnings compared to $4 million in the same period last year. Looking towards Q3, we expect earnings and margins for our Specialty Engineered Materials to remain strong, and to see continued year-over-year earnings growth in our strategic affiliates. Historical seasonality typically results in more than earnings in the first half than the second, and we'd expect that to continue, but it may be a bit muted in the current environment. Let's now move to consumer specialities on page nine. Net sales in the quarter were $291 million, up $11 million from last year, driven by higher volumes.

Volumes were up primarily due to the increase availability of product compared to the first quarter volume loss, caused by the caused by the electrical disruption and resulting outage at our (inaudible) manufacturing facility in Narrows, Virginia during the first quarter. Operating EBITDA was $149 million, compared to $134 million a year ago. As expected, we received higher year-over-year dividends from our Acetex China ventures during the quarter, totaling $71 million, up $18 million over last year's results. With formal approvals finalized to expand flake and toe capacities at our venture facility in Nantong, we expected continued benefit from the increased value of these strategic ventures. Looking ahead to the second half of the year, we expect full-year earnings to be up when compared to 2009 levels, as volumes and margins are expected to remain relatively stable for the remainder of the year. Turning now to Industrial Specialties on page 10. Net sales were $269 million, up $50 million from last year. If you exclude the $48 million of sales and second quarter 2009, associated with our PVOH business that we divested in July of 2009.

Volumes were up 13% and pricing was up 9% year-over-year, helping to offset the decrease sales resulting from the PCOH divestiture. Demand recovery in our emulsions and EVA performance polymers business drove the increase in volumes, particularly in North America and Europe. We've also been successful in commercializing new applications in the Asia-Pacific region, where we've seen stable volumes as our BAE emulsion unit has already reached full production capacity. We expect this trend to continue as we bring more capacity to the region with our planned expansion next year. Operating EBITDA was $26 million, compared to $21 million last year, when you excluded the $14 million of EBITDA related to the PVOH business recorded in the second quarter of 2009. Looking ahead to the second half of 2010, we expect our innovation efforts to continue to fuel growth and margins should improve as raw material pressures ease.

Let's now turn to Acetyl Intermediates on page 11. Net sales were $782 million, up $160 million from last year. Volumes were up 14%, as we experienced demand recovery fro Acetyls products for the Americas, Europe and Asia. While industry utilization was holding steady in the 80% range, our operating units were running at significantly higher rate. Pricing was up 15% year-over-year for our major Acetyls derivative product lines, including VAM, driven by higher raw material costs. Operating EBITDA was $96 million, a $23 million improvement from last year, as higher volumes and increased pricing offset higher raw material costs, including ethylene. These results also reflect lower manufacturing costs due to the closure of our higher cost accedic acid and VAM operations in Pardies, France.

Looking ahead to the second half of the year, our bandage technology should continue to result in stable margins. Let's turn to the results of our strategic equity and cost investments on page 12. On the left side of this chart, you'll see the earnings impact of our affiliate performance. Results for this quarter were $117 million, a $29 million increase from last year, driven by the higher year-over-year dividends from our China ventures and improved performance by our Ticona affiliates in Asia and Evenstein (ph) in the Middle East. Improved results from our Evenstein affiliates were driven by stronger demand for methanol and MPVE, which drove higher pricing and profitability. You can find a more detailed breakdown of our affiliates' performance and our proportional share in table eight of our earnings release.

Dividend income, which is shown on the right side of the chart, is$107 million, up $40 million, reflecting the strong performance of these strategic ventures. As shown on slide 13, we expect to continue to generate positive cash flow throughout 2010. We currently have about $900 million of cash available to use for our strategic business activities. We also repurchased $20 million worth of stock in the quarter, and completed a $46 million strategic acquisition. Our estimated cash flow expectations, of an EBITDA base, are shown on the right side of the chart, reflecting our latest estimates. With that, I'll now turn the call over to Mark, and follow up with

Thanks, Steven. If you could provide some instructions. We'd ask that everyone start with one question and a follow-up. And we have further questions, we ask folks to get back into the queue. (Operator Instructions)

(Operator Instructions). And our first question comes from the line of John Mcnulty with Credit Suisse.

Yeah. Good morning. Thanks for Thank take taking my question. Quick question, with regard to the outlook and what you're seeing in China right now, given your large position. Can you give us some color as to what you're seeing in your various end marks there and what you're thinking about the outlook going into the second half.

Yeah, John, you know, we had a great second quarter. And we were above what we thought we would be. As we look at our order books now in the third quarter, they're strong, stable. And so on the basis of those two things, we've upped our outlook for the year. A little texture behind it. China is holding up well. We're seeing perhaps a little stability or flatness in growth in some of the local Chinese demand, but exports have picked up and we're seeing some movement in exports that we had not seen six months ago. Overall, though, we were just there, we took our Board of Directors to China this last year. Overall, though, the trend is very positive. Outlook is quite good, and we feel good about what you're seeing in China. Europe is kind of a positive story, where demand in Europe is stronger during the month of August than we might normally expect. As you're aware, Europe will a lot of times true-up inventory by extending vacations a little bit longer than normally planned. We're actually seeing several cases where vacation schedules are being shortened because demand of 5VW is calling back some of their workers and starting production there sooner than they had expected, sooner the vacation schedule frankly was in place. So overall third quarter seems to be holding pretty steady.

Okay. Great. And just as one, the follow-up question. On the consumer business, even kind of backing out the benefits that you got from the Virginia facility being down in the first quarter a little bit, the earnings looked more solid than I would have expected. Can you give us some color as to what might be driving that.

The business earnings profile is pretty strong. You back the dividend out, you take into account the improvement in demand or volume based on the plant outage and it was a good quarter. We had some -- you know the market -- I would say this is a late-cycle business for us. It fell into demand downturn, probably three or four quarters later than some of our early leading businesses. It's rebounding and coming out, three our four quarters later. And we saw some very nice demand in that business in the second quarter.

From a margin perspective, we'd expect to continue to see margins that are around these levels as we move into the second half.

Okay. Great. Thanks for the color.

Thanks, John.

Our next question comes from the line of David Begleiter from Deutsche Bank.

David, can you comment on what you're seeing today in acid prices, both in China and in the US and your expectation over the next quarter to two?

Sure. Dave, we're at a point where Steve said industrialization is somewhere in the 80% range plus, minus. Our capacity utilization is somewhat higher than that. We're running where we want to run. And pricing levels are moving in line with what would he see underline raw materials move. We're just under $400 a ton today. Margins are relatively stable in the business. So, no big change from where we were. Across the world it's kind of the same dynamic. Not a lot of difference between pricing dynamics in North America, Asia, or Europe.

And, Dave, you mentioned you're expecting flat margins in Acetyl Intermediates , given lower ethylene prices, could there be an upside to that

Steve can comment on this a little bit. But Acetyl Intermediates, as you point out, not only accedic acids, but some of the derivatives. In the first quarter we have margin pressure and some of the downstream businesses generally this takes a quarter or two for margins to recover, if you see price improvement in the underlying raw materials. So, yeah, in the third quarter we'd expect to see some margin expansion as there's stability in pricing in ethylene and downturn we could see a little bit more.

Thank you.

And our next question comes from the line of Edlain Rodriguez with Gleacher and Company. Please proceed.

Thank you very much. Good morning. Quick question, Dave. I mean in terms of when you were going back there, what kind of visibility do you have in terms of time, is it 45 days, 60 days? And what end market do you think are more at risk in we have, if we see a slowdown?

Yeah. It's a good question, Edlain. So our order books, if we were to just judge based on our order books, the best window that we have is our vast engineered materials business, our Ticona business. And there we can get a pretty accurate view, 30 to 60 days out, let's call it 45 days out. So, July was a good month for us. August is built out very well. As we see September, September is holding well. The other thing that we look at is trend patterns in some of the end markets. Automotive demand has tended to be a good indicator for us. That is holding up well. This August, lack of extended outages or vacations in August trends very, very well. Going back to 2008, when we start to see the downturn there, if you'll recall, we saw and started to feel some weakness in the July time frame, about right now. And we didn't see a substantial step back from demand until late October, early November. We just don't see that now. It feels nowhere close to what it was feeling like in 2008, not even remotely close to. I'd say that it feels like a market with relatively stable demand, not too hot, not too cold.

Okay. Thank you.

Thanks, Edwin.

And our next question comes from the line of P.J. Juvikar with Citi. Please proceed.

Good morning, Dave.

Hello, P.J.

So, there was propylene and acrylic shortages in North America. With that did you see any pick-up in your acid emulsions business because of that?

There was some shortage there, there was certainly some pricing actions that went into place. P.J., whatever we saw was not material. The outages were viewed as being short-term and didn't have a material change on our business.

Okay. Fair enough. And you mentioned that operating rates in Acetyls at about 80%. So who were the 20% guys who were shut down, are these mostly methanol based that are shut down in China?

Yeah. That's where the bulk of the high cost is in the industry. So you have a lot of the disadvantaged technology plants that are shut down. These plants that are 200 to 350,000 tons of capacity. You have guys that have been shut down for a long time that use ethylene or ethanol as their key raw materials. P.J., there's even a number of plants that had finished construction that haven't started up or started up and then partake in extended outages. You know, B.P. is an example. They haven't ever started up, they're out there now, we're in the month of August and we keep hearing rumors that they'll start up within the next month or two, but that's been the rumor in the market for the last year. They'll start up some day. We fully expect it to. It won't change the dynamic of the business as we see it, but there's a lot of high-cost production in Asia that's not running today.

Sure. Just quickly. Where do prices have to go for these plants to start up?

Yeah. Good question. The view is the next level, if you will, the next trawnch of capacity can run if margins, and I'd say you got to look at margins. But if margins were somewhere between $50 and $100 a ton higher, you get another trawnch of capacity that could operate. And then the next trawnch after that is $150 to $200 a ton. Higher margins than we have today.

Thank you.

Thanks, P.J.

Thanks, P.J.

And our next question comes from the line of Robert Koort with Goldman Sachs, please proceed.

Thanks, good morning. Dave, I'm just wondering if you can help me characterize. This may be a broader issue than focusing on the quarter. But what has changed from your competitive standpoint as the U.S. net gas has come in and maybe created some different differentials to raw material costs around the world to both you and your competitors?

Right. So, Bob, you know on the micro level, I don't know that we've seen an awful lot of change in the dynamics of our business. Certainly will make, broadly speaking, we'll make a little more money in North America than we had in the past. I think more on a macro level, though, it's good for industrial production. It's certainly good for the customers that we serve, some of the guys that are energy consumers, that would be a very positive thing. It has the ability, should it be sustained and should the spread between natural gas and oil continue to hold or even expand, you could see additions to North American industry again, whether it be in the chemical space or other space that is healthy.

And then second one again, more broad. It seemed like a couple of years ago when the business was humming and the world was a happy place, you guys were considering maybe more larger acquisitions, then we had the nasty recession. How would you characterise use your appetite on M&A going forward?

So the -- yeah, Bob, our view is if we would stick to the middle of the fairway type deals or acquisition. We've committed over $400 million of capital over the last six months, either through acquisitions or projects that we intend on doing. Think in terms of the Evensteina, more growth-type things. Acquisitions that would fall somewhere under a half a billion dollars in purchase value. Those are the types of things that we would focus on. And our acquisition team is still very, very active, out looking for opportunities and we'd expect to do more, Bob.

Okay. Thanks, Dave.

Thank you.

And our next question comes from the line of Frank Mitsch with BB&T Capital Markets, please proceed.

Hi, this is Sabina Chatterjee in for Frank. Just on Ticona, we expected somewhat of a sequential improvement there. I believe you mentioned about $5 million from a Japanese facility. And now with Evensteina in the results, we actually would have expected even stronger results. So can you just discuss briefly where the shortfall was, if actually there was one relative to your own estimates. And then just as a follow up, which I think you briefly addressed before, how do you see the auto market playing out for the rest of the year, like is the back half going to be up 5% to 10% in terms of auto bills relative to a year ago, just, you know, any color there would be great.

Sure. Sure. First of all, in the Ticona business, sequential earnings, approximately $5 million of timing benefit was actually favorable in the first quarter and wasn't going to repeat in the second quarter. So that's one of the reasons why sequentially we're down there. Also keep in mind, when you look at business at a segment level, a lot of business in Europe and that space, you get some translation effective EBITDA level. Total Company that's not really an issue for us, because you'll see our D&A interest costs were a lot lower than what they were running at, so it's not an EPS issue. When you look at that business at that level, those are the two factors that affected sequential development.

As far as auto production goes, we don't have any unique knowledge or views around auto production. We basically read and process what everyone else does. I will say, though, the auto industry is in the space of innovation and they are putting massive efforts in innovation that is incredibly beneficial for our advanced engineered materials business, the content per vehicle is going up. The new launch is in the future, uses, very significant amount of our advanced engineered materials products. Moving towards the new cafe standard is very encouraging, very positive. Electronic cars are very positive, hybrids are positive for us. So the auto space for us, it's important we look at the unit count, but more important is penetration. And when you look at, this is not just the northern American story or European story, it's an Asia story too. China produces more cars today than any country in the world does, yet the sophistication of the vehicles is a lot lower and we like sophisticated cars. The average car in China today has between 1/5 and 1/6 value, the content value of Ticona products that the North American Japanese or European cars have. And growth for our business there is very rapid with a lot of Chinese companies adapting rapidly and increasing their sophistication of their cars. So as a technology and specialty materials company, we're incredibly bullish on the automotive space, because of the innovation that's going on there.

All right. Great. Thank you.

Thank you.

Then our next question come from the line of Kevin McCarthy with Bank of America, please proceed.

Yes. Good morning, how are you?

Good.

Question on AEM. I believe one of your competitors had a polyacetyls outage not too long ago. Did that have any material impact on your earnings and is that facility back up and running to your knowledge?

Yeah. Good morning. Yes. In the first half there was an outage of competitor in Europe. We had a little bit of benefit from that. I think low single digits, millions. As far as we know, they've reported that they're resuming their operations, so wouldn't expect that to continue in the second half, but it wasn't a major impact on the earnings profile.

Okay. And then, Steve, with regard to the Evensienta accounting change, if I look at slide 16, am I correct in understanding that had zero net impact on your net earnings in the quarter?

You're talking about the this quarter that we just reported, correct. We reported it on the new methodology. So we've already converted over.

Okay. And then finally, if I may, what are your capital expenditure plans for this year and next?

We've got in our power point, you can see on slide 13, we've got some cash guidance on there. I think this year in the range of 240 to 260. What we said at investor day is long-term over the course of the cycle, think 250 to 300. Kind of a normal operating range, given the growth that we've got, the growth opportunities in this business.

Thanks very much.

Thanks, Kevin.

Thanks, Kevin.

And our next question is from the line of Sergey Vasnetsov with Barclays Capital. Please proceed.

Good morning.

Good morning.

A question on slide 13. I had some technical difficulties early on this. Slide paints a very robust cash flow generation picture and full cash balance picture, which many companies could be envious of. Just curious if you can comment on your share repurchase program is it (inaudible) solution or something more meaningful, and also what are your expectations for the M&A expense, ballpark range for you for the second part of the year.

Okay. Let me give you a broad view, Sergei, and let Steven talk about where we're dialed right now. We look at, we continue to evaluate how we spend shareholders' cash. Share buy back, acquisitions, investing in the businesses through growth, investing in the businesses through productivity, dividends, doing things with the balance sheet. Our last four, five years we've emphasized each of those things differently. We spent a bunch of money to upgrade the balance sheet here three, four years ago. We did some fairly significant share buy back programs a couple of years ago. Recently we upped the dividend 25%. So we'll take a look at it and not have a static view of things, but a more dynamic view of things. Steve, you want to talk about where we are now?

Yes. As we've always said, our principle, priority use of your shareholder cash, the high-return growth opportunities. Obviously that remains a priority. But also as we said at investor day, we want to continue to improve the credit profile of the Company, strength our balance sheet, but adding stability. We have one big maturity coming in 2013. So advance of that, taking steps to have a more stable balance sheet, a more diversified balance sheet, and improving overall credit profile of the balance sheet.

Sergey, this is Mark. As you pointed out, we did about $20 million of share repurchase here in the second quarter. As you know, there's a current authorization outstanding that would be just around $100 million left on that. So, no time commitments or stated kind of time targets for that. But what we've said is, we'll be opportunistic with that to at least stop that solution.

Okay. And as a follow-up, when you think about your position in China or in Asia, broadly speaking, it has certain ratio of upswing and downswing intergration which is pretty comparable to the rest of the world, what are your thoughts maybe taking (inaudible), are you going to keep the same ratio, so try to become more integrated with additional downswing capacity?

Yeah. Sergey, it's a good question. As we look at China in particular, we're finding that investments in businesses that are closer to customers, allows us to drive our technology forward faster. And so I think we'd be modestly biased towards investments in those activities that are closer to customers. I mean just to give you a great example. We have a wonderful business line in ethylene, it's a binder system and emulsion that has incredibly low VOC, in fact it qualifies with the no VOC system under some standards. It has huge market shares in northern Europe, because of history it has, frankly not very high standards on VOC's in North America. It has modest market share here. In Asia, though, because of the very good Celanese team, some investments that were made early on, some great technology development, our market share in that space in China is growing very, very rapidly. Business is growing rapidly and the market share is very high. So that's an example of where downstream investments allows to us build and grow markets, establish market standards, and benefit all of the business back towards the basic molecule, as well as down into the higher value-added molecule.

Okay. Thank you.

Thanks, Sergey.

Thanks, Sergey.

Ladies and gentlemen, with no further questions, this concludes today's question-and-answer session. I would now like to turn the call over to Mark Oberle for closing remarks.

Thanks, Ann. Thanks everyone again for taking the time to join us on the call. Look forward to answering any of your specific questions. As we move throughout the rest of today or tomorrow, feel free to give me a call. Otherwise we'll talk to you soon.

Ladies and gentlemen, we thank you for your participation in today's conference. This concludes the presentation and you may now disconnect. Have a good day.