塞拉尼斯 (CE) 2011 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Celanese First Quarter 2011 earnings conference call. My name is Maria, and I will be your operator today. At this time, all participants are in listen-only mode. Later, we will conduct a Q&A session. (Operator Instructions). As a reminder, this conference will be recorded for replay purposes.

I would now like to turn the conference over to Mr. Mark Oberle, Senior Vice President of Corporate Affairs. Please proceed.

Thank you, Maria. And welcome everyone to the Celanese Corporation First Quarter 2011 Financial Results Conference call. My name is Mark Oberle, Senior Vice President of Corporate Affairs. On the call today are Dave Weidman, Chairman and Chief Executive Officer; Steven Sterin, Chief Financial Officer; and also in the room today is Doug Madden, our Chief Operating Officer.

The Celanese Corporation First Quarter 2011 Earnings Release was distributed via Business Wire this morning and is posted on our website, celanese.com. The PowerPoint 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 page five of the earnings release referenced during this call.

Celanese Corporation First Quarter 2011 Earnings Release references the performance measures operating EBITDA, business operating EBITDA, affiliate EBITDA, and proportional affiliate EBITDA, adjusted earnings per share and net debt as non-U.S. GAAP measures. For the most directly comparable financial measures presented in accordance with U.S. GAAP in our financial statements and for a reconciliation of our non-U.S. GAAP measures to U.S. GAAP figures, please see the accompanying schedules to our earnings release 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 will have a question-and-answer period with Dave, Steven and Doug following the prepared remarks.

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

Thanks, Mark. And welcome, everyone, to today's call. I'm delighted to have the opportunity to discuss another outstanding quarter performance for Celanese and answer your questions. Steve Sterin, as Mark indicated, will provide additional financial information, and Doug Madden is also here to help answer questions.

And with our Investor Day coming up, I will keep my comments relatively brief. As a reminder, this year's Celanese Investor Meeting will be in New York on May 10th, and will focus on outlining strategies for continuing to deliver outstanding ongoing earnings growth from our existing businesses, of at least 10% to 15% per year, with lower volatility, higher margins, and returns on invested capital, which significantly exceed our weighted average cost of capital. In addition to that, we will also provide more details on our breakthrough ethanol production technology. We will also discuss our commercial strategies for the industrial and fuel ethanol market, which we expect to help accelerate growth of shareholder value.

Now, focusing on first quarter results, performance across our businesses continued to be very, very strong. Net sales were $1.6 billion. Operating EBITDA was $304 million. And adjusted EPS was $0.96 per share. Steven will provide more details on each segment's results in just a moment.

But let me summarize our view of the first quarter environment. We saw healthy demand across all segments in Asia, Europe, and the Americas. And particularly, we saw strong growth in Asia. And on a relative basis, robust demand in northern Europe. The tragedy in Japan did not materially impact our direct business or our ventures facilities in Japan.

Consistent with our business model, innovative new products and processes aided our strong performance. Additionally, the Celanese model demonstrated again resilience in raw material inflation and energy costs. Through structural hedges, advantaged raw material contracts, raw material pass-through clauses in many of our sales contracts, and market dynamics which are aligned with key raw materials, our total Company bottom line results were not materially affected by raw material inflation and reflected the strength of our portfolio of leading global businesses and technology positions.

Now, based on strong first quarter performance, and our expectations for continued robust demand across all of our segments, we are increasing our outlook for the full year. We now expect 2011 adjusted EPS to be at least $0.85 per share higher and operating EBITDA to be at least $200 million higher than 2010 full year's results. This reflects year-over-year growth of adjusted EPS of at least 25%, and nearly 20% growth in operating EBITDA, consistent with our objectives for sustained earnings growth, which provides significant returns to our shareholders. And though we will provide detailed plans at our Investor Day on May 10th, we are very confident in our ability to deliver $1.6 billion to $1.8 billion of operating EBITDA, or approximately $5.50 to $6.50 in adjusted EPS by 2013.

With that I will now turn the call over to Steven and then be back for questions. Steven?

Thanks, Dave. Before I move into the business results, I would like to make a few general remarks. Strong Q1 performance across our businesses, highlighted by margins at or above last year's levels in all of our segments. And as Dave said, in an environment of rapidly rising raw material costs, our business model continued to demonstrate its resiliency. Higher input costs base shift earnings from one segment to another or from one geography to another, and in extreme cases from one quarter to another, we do not expect material impacts to our bottom line over the midterm.

Let's now review the first quarter performance and outlook for each of our businesses, beginning with Advanced Engineered Materials on page seven of the earnings presentation. Continued strong global demand for our high performance polymers led to solid results for this business. Net sales were $328 million, up $46 million from last year, as 8% average higher value and use pricing, and a 6% improvement in volumes drove the increase. With strong demand in automotive and other industrial applications, the improved volumes were mainly seen in our GUR and LFT product lines. As we have discussed previously, we are continuing to build inventory at POM to support our customer's needs, as we prepare for our planned European capacity expansion.

Operating EBITDA was $104 million, $3 million lower than last year's results, as the higher volumes and improved pricing more than offset increases in raw material costs. However, earnings from our strategic affiliates were down $10 million from last year. The higher volumes in our Asian affiliates were also offset by higher raw material costs, and saw the timing of certain expenses. As Dave mentioned, our strategic venture facilities in Japan did not incur any material impact as a result of the natural disaster in the region.

Looking ahead to the second quarter, we expect continued sustained margins in this business, and robust demand. Although there have been recent supply challenges in Japan, we don't expect these conditions to have a material financial impact on our results. In the second half, we expect volumes to be higher, year-over-year, following the POM expansion in Europe.

Let's now turn to Consumer Specialties on page eight. These businesses once again delivered a strong performance, as global demand continued to improve. Net sales were $266 million in the quarter, up $28 million from last year, primarily due to higher volumes and favorable pricing. The 10% volume increase was driven by a modest improvement in global demand and additional supply availability versus last year. You may recall that first quarter 2010 results were temporarily impacted by a production outage at our Narrows, Virginia facility.

Operating EBITDA was $68 million, a $7 million increase over last year. Again in this business, the volumes and pricing more than offset increases in raw material and energy costs.

Looking forward, we expect sustained demand and margins in the second quarter. Dividends from our Acetate China ventures, which are typically received in the second quarter, are expected to be modestly higher than last year's results. Additionally, we are considering alternatives with regard to our previously announced Spondon realignment given the current environment, but this is not expected to impact our 2013 earnings targets.

Industrial Specialties results are found on page nine. This business experienced expanded margins on continued growth in its traditional and non-traditional applications. Net sales rose to $290 million from $242 million last year. Pricing, including product mix, was up 13% year-over-year, due to recent actions and current strong demand. Additionally, we have had increased sales and higher value-added applications, such as sales to the solar and medical segments, which have improved the overall product mix. The net sales increase was also attributed to an 8% volume improvement, as this business benefited from stronger demand for EVA performance polymers, as well as growth in vinyl emulsion applications, where our innovative solutions are creating new demand for products historically served by other competing systems.

Operating EBITDA rose to $35 million, up $13 million from last year, as pricing and volumes more than offset raw material costs. Looking ahead, we expect strong volumes and margins and a seasonally stronger second quarter. The previously announced expansion of our VAE unit in Nanjing is also expected to come online during the second half of the year to meet demand growth in China. And our EVA expansion should positively contribute to earnings towards the end of 2011.

Let's now turn to Acetyl Intermediates on page ten. Net sales rose just $813 million from $724 million last year, driven by continued demand strength in our acetic acid and downstream derivatives businesses. Pricing was up 12% year-over-year, as a result of planned and unplanned inventory outages among multiple acetyl producers, as well as higher raw material costs compared to last year. The technology differentiated cost curve for acetic acid remains intact, as we have seen what we believe to be a temporary step-up in industry margins in the last few weeks of the first quarter and into Q2.

Operating EBITDA increased to $122 million from $78 million last year, as pricing more than offset higher raw material costs. Our outlook for this business continues to be strong, as we expect continued margin expansion through mid-year as the economy continues to recover and due to the temporarily high industry utilization rates. We also have plans for a turnaround at our Nanjing acetyls complex, which will modestly limit our production capacity during the second quarter of 2011.

On page 11, we have highlighted the results of our strategic equity and cost investments. The left side of the chart shows the earnings impact of our affiliate performance. We reported $43 million of earnings compared with $49 million last year. As seen on the right side of the chart, our proportional affiliate EBITDA, in excess of our reported equity earnings, totaled $35 million in the quarter. As I mentioned earlier, we expect dividends from our China acetate ventures in the second quarter of 2011 to be at higher levels than 2010 results. You can find more detailed results on our affiliate performance and proportional share in table eight of our earnings release.

I won't go into further detail, but I will also refer you to pages 12 and 13 of the earnings presentation, where we have highlighted our Q1 2011 cash flow results and outlook for cash.

I would also like to point out for those that didn't see the press release, we recently announced that we will be increasing our dividend by 20%, and our share repurchase authorization has been increased by approximately $130 million, bringing it to a total of $200 million available remaining. Both of these actions are consistent with our balanced approach of using cash to create value for our shareholders.

Finally, as Dave indicated earlier, based on our strong performance and continued strong demand across our businesses, we have increased our outlook for operating EBITDA to be at least $200 million higher, and for adjusted EPS to be at least $0.85 higher than our 2010 results. This is based on the tax rate for adjusted EPS of 17%, and the same diluted share count as in the first quarter, 158.7 million shares.

With that, I would like to turn the call over to Mark for Q&A.

Great. Thank you, Steven. And Maria, to queue -- give instructions for Q&A, I would like to ask that everyone have one question and follow-up, and then if you have additional questions and time permits, we'll ask you to get back in the queue. Maria?

(Operator Instructions). Your first question comes from the line of Edlain Rodriguez with Gleacher & Co. Please proceed.

Good morning, guys.

Hi, Edlain.

Quick question, David. In the past, Advanced Engineered Materials used to be impacted by higher raw materials, but now you seem to be able to pass through costs to higher prices. Has something changed in the pricing structure of the business?

No, Edlain, I would point out two key things. First, within that business a lot of the product that we have is sold on value and use. But there is part of that business that is not value and use, where you have some pricing flexibility to -- with the increases in raw material, you do see prices going up in those areas. The aggregate number that you see is a reflection of some prices not going up, in the higher value and use and some prices actually going up in the lower cost segment.

The second thing that you see is there is some impact offset, probably through the year more than within the quarter, because we placed our Ibn Sina joint venture within that segment. Ibn Sina, as you recall, manufactures raw materials that are used within AEM, methanol principally. And as those raw material prices go up it's good for Ibn Sina, bad for Ticona, so you will see some margin offset. There's some timing issues, there are some plant turnarounds that are in the cards in the second quarter. Through the year, you will see some of those offsets.

Okay, that's good. Another question on Acetyl Intermediates; flat volume this quarter, was this mostly the impact of the Nanjing down time?

Well, we haven't -- we won't respond with anything regarding the operations of our facility, beyond saying that we do have a planned outage in the second quarter. But the facilities that we have in China throughout our system are operating essentially full. It was highlighted in Steven's remarks that there are some unplanned and planned outages in the first half of the year, the first -- late first quarter and into the second quarter that are affecting prices. Margins are moving, prices are moving exactly as we predict on the cost curve. So the business is in great shape and moving forward very, very well.

Okay, thank you.

Thank you, Edlain.

Your next question comes from the line of David Begleiter with Deutsche Bank. Please proceed.

Thank you, good morning.

Hey, Dave.

David, could you quantify the impact of the temporary step-up in margins in AI you mentioned during the call?

I'll let Steve talk to it a little bit. We actually had margin -- positive margin impact across all of the businesses. Each segment had margin expansion in it. So it was a very, very strong quarter across each business. And we continue to see a very healthy environment, out as far as we can see in the business. A lot more opportunities than we have seen in the last five or six years. But Steve, do you want to talk about AI?

Yes. As Dave said, margin expansion really across the portfolio. But in AI in particular, the outages and the run-up that we saw on the cost curve really didn't happen until the end of the first quarter, so only a modest impact on the first quarter. We should see some impact as we move forward to the second quarter. You could see some higher margins there. Keep in mind, though, we've got our plant turnaround that we have announced in Nanjing -- our plant shut down. Although Chinese New Year was in Q1, you've got to keep that in mind.

David, just on capacity, in Nanjing and Texas, you've mentioned the ability to raise it to 1.5 million tons at both sites, any plans to do that near term? Perhaps with the turnaround in Nanjing?

Yes, great question. So the way -- Dave, how we have characterized the business is exactly as you said, we do have the ability to take facilities in Clearlake, in Nanjing or in Singapore, and with our technology, move up from current operating rates to as high as 1.5 million tons. The decision on when to do it would be tied to our strategy of growing with the market, where to do it would be based on fundamental economics. A lot of the economics have less to do with our ability to invest capital efficiently and more to do with raw material costs. Generally, Dave, if they are -- what we would call modest [echokes] to the existing facilities, we would not be public with those announcements. We would be public, however, if economics of a greenfield facility were compelling, and we had plans to put a greenfield -- new greenfield facility in.

Thank you.

Thanks, Dave.

Your next question comes from the line of P.J. Juvekar with Citi. Please proceed.

Good morning. Until now, acetyl was one of the only commodities that had not moved up. Now you are saying that this move is temporary. Is that because your plants would come back and then [super] plants starts up? Can you give any timing on that?

And then, if acetyls are not tight, do you think derivatives are tight? And maybe potentially VAM? And could you see VAM margins going up at some point?

Yes, P.J., let me start answering the question, then I am going to Doug to step in here a little bit. You are exactly right in saying that we have said our [march to boards] 1.6 to 1.8, does not assume any margin expansion in our acetyl business, based on tightness in the market. We would have margin expansion, as we put lower cost technology in facilities or as some of our downstream business is filled up. We are seeing that. But our march to 1.6, 1.8 wouldn't include that. We are seeing a very healthy cost curve, as temporary -- what we view as temporary outages and we always give the benefit of the doubt to the market running. So we view these as being temporary outages. It moves effective capacity utilization into what we would think would be the mid 90% range right now, so you see margins and prices going up.

We have always said, P.J., there could be periods of time when capacity utilization would tighten to a point where you would get a margin kick. And we would think it would be healthy for the industry for that to occur for a few short quarters, not years, necessarily. When that would occur is a function of capacity utilization, supply and demand. We really have no pines on that. We haven't put a stake in the ground. So the cost curve is intact.

Doug, do you want to just add to that a little?

I think Dave answered it as well as I possibly could. This near term temporary, as both Dave and Steven said, has literally been driven by the outages. And late in the quarter, there's planned outages that are scheduled by many producers and announced out there into the second quarter. But assuming that we come back in the industry -- the industry comes back to those rates, we see, through the second half of this year -- we anticipate more normalized levels of operating capacity that were out there. Kind of around what you thought about last year we saw in the industry too, those normalized rates probably in the 80%s -- the low 80% rate is what we would expect. And then going forward, it's -- as Dave said, that's the way we still continue to think about AI in our 1.6 or our 1.8 targets for 2013.

There is, P.J., as you highlight, there is upside to that should capacity utilization industry rates move up into the mid to high 80% range.

And I think you commented that maybe there is tightness in derivatives. Can you comment on that? Because [inaudible] reaching from acrylics to acetyls, with propylene going up -- ?

Yes, P.J., thank you. Yes, one of the things I highlighted in my comments was the impact of our -- some of our new technologies on the quarter. We did see shifts in end use markets -- acrylics, styrene acrylics, styrenic systems, just based on simple economics, moved out of those products and moved into our vinyl systems. So we did see very healthy capacity utilizations in that spaced margin expansion. We would expect that to continue.

Thank you.

Thank you, P.J.

Your next question comes from the line of Frank Mitsch with BB&T Capital Markets. Please proceed.

Good morning, gentlemen.

Hey, Frank.

Dave, I was wondering if you might be able to size the Nanjing outage volume decline here in the second quarter? If you want to think about volumes in the AI business being at an index of 100 in the first quarter, and obviously you are going to have some down time here in the second quarter; what do you think volumes are going to be in the second quarter?

Yes, it is a good question. So margin per ton should be up for the second quarter, based on capacity utilization. But our tonnage would be down, and I think as you look at the quarter -- I don't know that we have characterized this or care to characterize this, but Steve, how would you think about that?

I think would about --- across our global system, volumes being about flat, Q1 to Q2. It normally would be up with Chinese New Year, but because of our planned turn around, you'd probably expect flat volumes versus Q1.

All right. So flat volumes, but margins higher in the second quarter versus the first quarter?

Yes.

Great. If I could follow up on Ticona, obviously you are going to be adding some more capacity later this year, but can you talk about the situation in Japan? You didn't suffer any significant issues right now in the first quarter. But there are some talks about auto builds perhaps being a bit lower than what the expectation was before. How do you view the AEM business possibly being impacted by the events in China?

Yes. I'll let Doug add to the end of this, but essentially our -- the ventures facilities were down because automotive production was down in Japan. But as we have looked at it, we think global production and global demand in the auto space may be off a little bit. But essentially, from what we are seeing from our end markets, it doesn't appear as though there's much end market change in demand. What we are seeing is consumer demand shifting from a Toyota to perhaps a US model or European model. The European models are just red hot, they are just flying off the line. They can't produce enough, there are shifts being put on frequently, just to get models out.

So the way that it impacts our business is not material. We see shifts between one region of the world to another region of the world. But we haven't seen nor do we contemplate that there is going to be a material impact based on Japan. We will watch it, but we don't think that -- right now, as we look at it, we don't see anything material.

Do you see yourselves selling out the new capacity in Europe the back half of this year?

Well, again, the -- we would -- the second half of the year is normally weak, from a seasonal standpoint. Having said that, there's a lot of demand that's built up in the market. And so we see our volumes in the second half of the year maybe not having the same type of seasonal dip that we have seen in the past. We are putting an additional 40,000 tons in, that's a fairly significant piece of capacity. It's unlikely that a capacity like that would fill up in a six month period. Doug, do you want to comment?

Yes. Frank, That's exactly it. We are seeing the stronger demand. We would expect that to be a little bit stronger, both seasonally and the second half. And our plans don't anticipate that that unit is sold out. They didn't. But clearly, we are well-positioned, as we expect the demand to continue, to go ahead and be able to capture the growth. So as Steven said in his comments, better -- stronger second half than the first half, but not necessarily sell out the unit.

Frank, as you look at -- historically that business is based on seasonality, 55% first half, 45% second, roughly. Last year it was a lot more skewed to the first half than that because we were volume constrained, principally driving that in the second half of last year. So you would expect a more normal trend this year.

Terrific. See you guys in a couple weeks.

Okay, thank you, Frank.

Your next question comes from the line of John McNulty with Credit Suisse. Please proceed.

Good morning. Just a couple of quick questions. There's been some concerns that we're going to -- we are starting to see some growth slowing in China, specifically. Given your presence there, can you comment on what you are seeing on the various big blocks of end markets that you have there? And if you are starting to see any slowing down?

Then just as a follow-up, with regard to some of the China power issues, which I know were a big issue I guess a quarter ago, but they do seem to be lingering at this point; how do you think about that going forward in terms of meeting your own power needs? And also, how you think about the competitive environment?

Yes, let me answer the first part of the question, and I will ask Doug to answer the second part around power. Demand in China is very robust. Now, part of that, frankly, is because we have products that are meeting higher-end applications. The Chinese consumer is becoming, as you know, very, very sophisticated, and their demand for contemporary products and technologies is growing more rapidly than the economy is. So with that, though there may be some modest decline in the Chinese growth rate, and I'm not sure who can see the difference between a 10% and an 8% growth in China, we frankly don't see it. We don't sense it at all. And I attribute that an awful lot -- as we look across different segments to technologies that are high-value added in use, and going into very desirable consumer applications, being supplied by Celanese. As an example, our low VOC product, we are starting that unit up and have very strong expectations that that unit will fill very rapidly, as Chinese consumers are after environmental quality, and health impacts that come with low VOC products.

So overall, I'd say China, not a concern at all. We keep watching and looking at the numbers but they continue to be pretty robust. Doug, do you want to talk about the energy -- ?

Yes, kind of following that same logic, we don't see any curtailments in productions around power or environmental emissions, which you alluded to was a quarter or two ago. We think at that point there was some environmental standard protocols that Chinese producers were trying to meet. Clearly, right now, we see production unlimited and you could see something like that later in this year again. But one is, we aren't certain about it; two is, we are not experiencing any of that today. Units are running to meet the demand.

Great, thanks for the color.

Thank you, John.

Your next question comes from the line of Bob Koort with Goldman Sachs. Please proceed.

Thanks, good morning. Do you guys have any customers currently on allocation in AI?

Bob, we don't comment on specific things going on within the business. But there is across the industry very tight capacity supply and demand balance, as there are both planned and unplanned outages. And we did highlight the fact that we have, in the second quarter, a turnaround.

And would we expect mid-single digit volume comparisons in the second half, when everything is running again?

You mean on a year-over-year basis?

Yes, sir.

Let me think -- yes, I think that's probably right. The second half last year was a pretty robust period of time. And I see that type of growth. We generally expect to see the industry growing at a 4% to 5% range. And our intent is to hold or keep the share. So yes, I would think that type of growth is what you would expect to see in the second half. Doug, do you want to --?

I agree completely. Bob, yes, we would expect the second half to be in line with those estimates.

And Steve, I couldn't quite follow on the AEM. You talked about some margin compression as you were building inventories. And maybe getting some new capacity lined out. Not sure why that would hurt the current period costs. But if there are costs that are stuffed into the first quarter, does that mean those costs are not there as that volume ramps up, so you will get more extraordinary incremental margins instead of decrimental margins going forward?

Just to clarify, there's no impact on margins. It was a volume constraint. So two key drivers to think about; one was in the second half of last year, we were building volumes for this capacity expansion. So we were limited on the volumes that we could sell into the market to prepare for that expansion. And as you look at the second half of this year, we expect to not be volume constrained. So on a year-over-year basis, you will see significantly higher volumes in the second half as a result of that. So it's not -- it will translate into margins, but it isn't a margin issue, it is a volume access issue.

Bob, you good?

I think I will have to follow-up, I'm still confused. But thank you.

Okay. Call me, Bob, and we will walk through the math.

Thanks, Bob.

Your next question comes from the line of Kevin McCarthy with Bank of America Merrill Lynch. Please proceed.

Good morning. First question relates to Consumer Specialties. I think you had made a comment in the prepared remarks that you are revisiting alternatives at Spondon in the UK. Would you elaborate on that?

Yes, there's -- I think with the earthquake in Japan and the resulting things that are going on with the nuclear power plants, producers are revisiting their raw material supply source. So we are being sensitive to customers and stepping back and evaluating the Spondon situation. We will achieve the earnings objectives that we have outlined for that business, and we will continue to do it through both productivity, as well as growth. But at this point in time, we are just stepping back and evaluating the options that we have in front of us, both from a location standpoint as well as a market demand.

Okay. And then as a follow-up, sticking with Consumer Specialties, I noticed you had a price contribution of 4% in the segment. I guess I was thinking it could come in a little bit higher than that, given the 7% to 10% you proposed last September, and the general course of inflation since that time. If -- well, first of all, is that number representative in your view of coming quarters? Do you feel it is enough to preserve margins? It looks like margins dipped versus the back half of the year.

Kevin, I would just highlight that Consumer Specialties includes not only the acetate business but also includes our new [inaudible] business. As we have highlighted historically in that business, we expect prices there to be on a downward trend as volumes increase. And so you are really looking at a price number there that is mixed.

As far as going forward, Steve, to you want to comment on that?

One thing to keep in mind is, you have to look at Q1 on a year-over-year basis versus Q3, Q4. You tend to see a stronger, seasonal, mid-year in second half in that business. Q1 tends to be the lightest on volume. Margins are actually up on a year-over-year basis. So I think that's a better comp to look at that. As we go forward, as Dave said, typically annual type contracts -- yes, you should expect margins to remain robust at these levels, with a bit more volume as you move into later in the year.

Okay, thank you very much.

Thanks, Kevin.

Your next question comes from the line of Duffy Fischer with Barclays Capital. Please proceed.

Good morning.

Hey, Duffy.

Question around Ticona. It seems like, in your business, you were more than able to offset the raw material cost push, but in the JVs, they weren't. Is the difference there Ibn Sina? And can you talk about that a little bit?

And then the follow-up would be, with the Ibn Sina announcement of a year ago, where do you stand? Is that still supposed to come online 2013? And are we still looking at [50 KP]?

Let me take the high level, then I will let Doug and Steve fill this in. We do structure the segment now, so that you have Ibn Sina within the segment because we view it as a natural hedge, that's why we have the venture. We do see the normal specialty-type pricing model within Ticona, where you don't move your price knee jerk every time a raw material goes up, you sell on a value and use. You do have spaces, as I indicated earlier, where you are able to get pricing, but that tends to be in the non-specialty part of it. So we did have some good recovery there, Ibn Sina was a little bit helpful on it. The ventures performed off somewhat, part of that was related to the events in Japan.

I will let Steve and Doug talk about --

Yes, also keep in mind the same profile of high value and use products that we have in our Ticona business, you see in our joint ventures. Although we have this natural hedge they've indicated with our Ibn Sina joint venture, you typically won't see immediate price movements across the entire portfolio of our joint ventures. So they tend to fall in value and use pricing as well. And there was just some timing of some costs on a year-over-year basis.

The only thing I would add to that, Duffy, is that, as we have seen before in these ventures that it tends to lag -- when you look at this coming out of our earnings, there tends to be a lag on this as well. As Steven has said, a good value and use, ensure the same pricing philosophy, sometimes a lag, but otherwise still a strong business, and strong growth in the joint venture.

Lag in Ibn Sina.

As far as Ibn Sina goes, those plans are still on track. No new news there.

And then just to clarify, your percent ownership of that jumps to the 32.5 the day the plant starts up? Or what's the trigger for that?

Let's see. Have we been public on what that is? Steve?

Yes, that is -- we have, that's correct.

Okay. Thank you.

Thanks, Duffy.

Thank you.

Your next question comes from the line of Wesley Brooks with Morgan Stanley. Please proceed.

Hey, Wes Brooks from Morgan Stanley, here.

Hey, Wes.

Just a question -- trying to understand -- firstly, on the tax rate. Am I correct that you were guiding to around a 20% tax rate when you announced Q4, now it is 17%?

Yes, 20% was the tax rate for 2010. And this year we expect it to be around 17%, as we look at our outlook, now, for profit by geography.

Okay.

You can count that at least through the end of 2011. And you are likely going to be in the high teens around this level, on an intermediate basis, assuming no changes in tax laws or major changes in our business.

Okay. And then going into next year, should we expect it to stay around similar levels?

Yes, I think in the high teens is a good assumption.

Okay, excellent. And then I was just trying to understand the $50 million increase in your EBITDA. If I just take that at a 17% tax rate, and then divide it by the number of shares, I'm just wondering if I would have expected a slightly higher increase, perhaps somewhere in the region of maybe $0.30 a share to $0.35 a share?

Probably a little bit closer to $0.30, but there's a couple other factors to keep in mind as you look in the -- our D&A will be a little bit higher this year as a result of the -- our timing for our start-up of our capacity expansion in Germany, as well as our interest costs as a result of the refinancing that took place last year. So when you take all of those into account, and look at the $200 million, you net down to about a $0.85 EPS increase.

Excellent, thank you very much.

Thank you.

Thanks.

Your next question comes from the line of Charles Neivert with Dahlman Rose. Please proceed.

Good morning, quick question on Nanjing, on the -- your maintenance turn; have you guys reserved or put away inventory? Or were you able to put away inventory during the first quarter in order to sell during your down time? Or are you just not going to have product for that period of time?

We usually don't comment at that level of granularity, but in general, we have said that in that business we typically run full, so there's not usually the ability to set aside inventories. So think of it as a pretty constant production level, so when you have a turnaround, you typically see these patterns.

Okay, so -- all right, so in that case, I guess customers have had to deal with it in whatever fashion? They know it was coming so they have dealt with it in their own manner, as opposed to having you reserve product for them or set aside product during that period?

We always do our best to make sure our customers are aware of our supply positions.

Okay, that's it. Thanks very much.

Your next question comes from the line of Hassan Ahmed with Alembic Global. Please proceed.

Good morning, Dave. Just wanted to actually raise a question around China again. Looking at Chinese trade data for the month of March, for a variety of petro-chemicals, in particular. It seems that Chinese imports have gone down substantially. And I think a bunch of people are sort of pointing towards that and saying maybe inventory levels are way too high, or maybe demand is slowing down. For the products that you sell in China, what are you seeing out there? The inventory side -- I know you addressed the demand side of things earlier, but just more specifically on the inventory side of things?

Yes, good question. Everything we see says that inventory levels are in decent shape. We aren't seeing any surpluses in inventory that would cause people heartburn. As you know, within our business, generally we make for China -- make in China for China, or make in Asia for Asia. So we haven't seen any disruptions in that pattern. Just a great example, we saw a few outages in the acetic acid space, and you saw prices move up relatively quickly on that. So I think as we look at it overall, we don't see any anecdotal information that there's unusual builds in inventory going on.

Fantastic. Thanks so much, Dave.

Thank you.

Your next question comes from the line of Bill Young with [Chemise]. Please proceed.

Good morning, gentlemen.

Hey, Bill.

Given the operating rates you were describing and some of the outages by your competitors in China, could you review with us briefly the range of market prices for acetic acid, say the last two or three quarters in the Asian region?

Yes, let me -- Steve can talk about prices, Bill, but let me just talk a little bit about margins. We generally expect when acetic acid capacity utilization is in the 80% to 85% range, maybe 88% range, the margins on it are very similar to what they have been over the last several quarters. Then from 88% up to -- or 85%, 88% up to someplace in the 90%s, maybe 90%, there's an extra $50 to $100 a ton of margin that gets baked into the pricing. And I'd just remind you that we have about three million tons of acetic acid across our system. And then if you go beyond that, you get even higher margin built in. So as indicated, we would expect over time -- though we haven't built it into the 1.6, 1.8 or the $5.50 to $6.50 a share, we would expect that there would be periods of time when the industry would run in that high 80%s to low 90% range and we would be beneficiaries of that margin. And we would think that if every plant was operating the way that you generally think it would be, that industry capacity utilization in today's world, without the outages, would be somewhere in the low 80% range.

So Steve, you want to -- ?

Just a little bit -- granularity on it. If you look at published data out there on prices, it gives you a directional indication of what took place in the quarter. Think about it -- there were two drivers of price in the quarter; raw materials did move up, for the industry and for the marginal producer, as well as what Dave talked about in terms of supply demand utilization. You see soft prices somewhere $500 to $600 on average across the quarter. Maybe a couple parcels that were above that, but that's an indication of what we saw in Asia.

And Doug, do you want to talk, historically, about pricing?

Yes, if you step back, Bill, a little bit to your question as you look at it, I think it follows exactly the explanation Dave was giving. Because you think about back in the end of last year, and rolling into this year, services were reporting pricing out there somewhere just under $400, but let's say somewhere ranging from $350 to $400. You step up on the curve, as you see through the quarters and currently today, that -- it's up there in that nominal range that Steven talked about, probably being recorded in the $550 to $600 range today, based upon high utilization.

Thanks, guys. That's a really thorough answer -- really good.

Thank you, Bill.

Your next question comes from the line of Laurence Jollon with Credit Suisse. Please proceed.

Hi, good morning. Just regarding your capital structure, I know you have about $1.9 billion of term loans outstanding, you have been successful in terming some of that out over the past six months. I was just curious if you were considering further staggering your maturities and potentially pushing out some more of that bank debt into longer-dated unsecured bonds?

What we have said is that as we think about the capital structure on the debt side, we do want to have longer term duration debt, moving from bank debt into unsecured or into the bond market, doing it opportunistically. So we are always looking at opportunities to do that. And also breaking maturities into more bite size -- or around one year, free cash flow type of piece. Steve can anticipate that we continue to evaluate those types of alternatives and we will move opportunistically to do that.

Great, thank you.

Your next question comes from the line of Andy Cash with UBS. Please proceed.

Hi, just a couple questions. As far as your outlook for the year, in terms of EPS of at least 422, what did you assume, in terms of price increases on acetyls for the full year? You had 12% year-over-year in the first quarter, just curious as to what you're thinking about the full year?

Again, we think more in margins than in price, but in the first half of the year, we expected margins -- as we indicated there wasn't a lot of margin inflation due to outages in the first quarter. In the second quarter, we would anticipate there would be some. That would be offset somewhat by the volume outages that we have, due to the turnaround. And then in the second half of the year, again, our standard approach is to assume there's a reversion to the cost curve. We can't predict outages. We can't predict operating conditions. We see healthy demand in the market place. We see nothing that will disrupt that. So the assumption is a reversion to the cost curve.

Thanks. And then second question, just from an accounting perspective, what was the reason for the accounting change at Ibn Sina?

Yes, there was a couple things. First, as we mentioned earlier on the call, we increased our ownership percentage -- or will increase our ownership percentage significantly, once we start up that new operation. So that moved it from a cost investment to an equity investment. Secondly, we announced the construction of a POM unit in that facility in -- given that we moved it under the Advanced Engineered Material segment, since that's where POM is located.

So the assumption is the increase in ownership kind of goes along with some more increased say-so over the business, and therefore that makes -- that's the reason for it?

In general terms, yes. That's correct.

Okay, thanks.

Thank you.

Maria, do we have any more calls?

There are no further questions in the queue.

Excellent. Thank you, again, everyone, for taking the time this morning with Celanese. We look forward to seeing everyone at our May 10 Investor Day. It will be in New York in the morning. Registration and more information can be found at our website at www.celanese.com. We look forward to seeing you on Tuesday, May 10th. Thank you.

Ladies and gentlemen, that concludes today's presentation, all parties may now disconnect. Good day.