塞拉尼斯 (CE) 2013 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Celanese Corporation fourth-quarter 2013 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. (Operator Instructions). As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Mr. Jon Puckett. Please go ahead, sir.

Thanks, Kate. Welcome to the Celanese Corporation fourth-quarter 2013 conference call. My name is Jon Puckett, Vice President of Investor Relations. With me today are Mark Rohr, Chairman and Chief Executive Officer; and Steven Sterin, Senior Vice President and Chief Financial Officer.

The Celanese Corporation's fourth-quarter 2013 earnings release was distributed by business wire yesterday after market close. The slides for the call and our prepared comments for the quarter were also posted on our website, www.Celanese.com, in the investor section. All of these items have been submitted to the SEC in a current report on Form 8-K.

As a reminder, some of the matters discussed today and included in our presentations may include forward-looking statements concerning, for example, Celanese Corporation's future objectives and results. Please note the cautionary language contained in the posted slides.

Also some of the matters discussed and presented include references to non-GAAP financial measures. Explanations of these measures and reconciliations to the comparable GAAP measures are included on our website, www.Celanese.com, in the investor relations section as applicable.

This morning we will begin with introductory comments from Mark Rohr and then field your questions. I'd now like to turn the call over to Mark.

Thanks, Jon, and good morning, everyone. Our prepared remarks were released with earnings last night, so I'll keep my comments brief and then open the line for your questions. For the quarter, we reported adjusted earnings of $1.04 per share. That's a record fourth quarter for the Company. Segment income margins totaled 15.1%, an increase of 260 basis points year-over-year.

Strong earnings created operating cash flow of $154 million. We deployed $62 million of this this quarter to repurchase 1.1 million shares, and we ended the quarter with about $1 billion of cash on the balance sheet, well positioned to pursue our growth initiatives and our capital deployment strategy.

As we begin 2014, we are focused on a number of Celanese specific initiatives that we believe will fuel approximately $100 million of incremental EBIT. These initiatives combined with some improvement in our base business and some help from the market should deliver earnings growth consistent with what we achieved in 2013, although heavy turnaround activity in the second quarter will push a greater percentage of earnings into the second half of the year.

At a segment level, we expect each business to contribute to earnings growth this year. In Engineered Materials, our innovative application should continue to deepen relationships with customers and drive earnings growth in excess of end market growth. We also expect a slight increase in affiliate earnings.

In Consumer Specialties, earnings growth should continue to be driven by pricing as well as upstream efficiencies as we invest our plants.

In Industrial Specialties, broader acceptance of our innovative DAE solutions and targeted growth in the EVA polymers are expected to contribute. And in intermediate chemistry, efficiency actions we took at the end of 2013 and day-to-day management of the business should also help increase earnings this year.

With that, I'll turn it over to Jon for Q&A.

Thanks, Mark. I'd like to remind everybody let's have one question and one follow-up so we can get through as much as we can. Kate, go ahead and proceed with Q&A.

(Operator Instructions) David Begleiter, Deutsche Bank.

First on the methanol plant, is your thought that the plant is going to be potentially a month late or a quarter late or longer than that? And what is the, given the bridge supply agreement, what is the monthly impact of going from a low-cost, [sub-in] contract to basically perhaps a market-based price in the back half of 2015?

Great, great question, David so let me do the best I can to answer that. You know, right now even though we had the delay getting EPA to release a permit, we're still on track to end it and be operational when the contract expires the middle of next year. Having said all that, I think the likelihood of us slipping has certainly increased with this delay.

If you look at it on a full-year basis, the kind of number you should look at and by full-year I mean not the transition year period. There is, in simple terms, about $100 million headwind that's created, again, depending on the ethanol price or fuel price that we will need to work to overcome. So look at that as a 2016 kind of hurdle. In an ideal sense, you would have half of that next year.

Now if we slip then, you can pretty easily do the math. So if you slip a quarter, you'll have about three quarters of that would impact us in 2015.

I'll just make one other comment, David, if you wish to be mindful of, we are used to having headwinds in our businesses and so I don't have any anxiety about the impact of this, and I look forward beyond this whole transition. We will find ways to overcome that. But I think when you're going through the transition, clearly that's going to moderate our growth to some extent next year.

Very clear. And just on consumer specialties, Mark, how much pricing do we get in acetate total for 2014? And what will your raws be down year-over-year in that business as well?

Yes, I'm not going to get quite into that David. It's just a little bit too much there. We did -- I say we, I mean the industry as a whole has been pushing pricing, and we've had a little bit of uptick in pricing this year versus last year. And I think I reminded you guys last quarter that we have a swap arrangement with a partner, volume swap arrangements that will moderate that to some extent as we get into the year.

Thank you very much.

Thanks, David. Kate, let's move to the next question.

Duffy Fischer, Barclays.

Just wondered if you could flesh out a little bit more on the affiliates particularly around AEM. You know the run rate had kind of been $168 million, $192 million, $242 million, and then we dropped to $180 million this year largely on turnarounds. But then you're only calling for a small uptick in 2014. Why wouldn't that bounce back up above $200 million to that trend line that it was on before 2013?

Duffy, let me start this and maybe Steven can fill in some commentary. There's two things to consider there. One is the base polymer businesses that we have partnered with and the other is of course our affiliate, methanol affiliate, in Saudi Arabia (inaudible). There in that one, we expect it to bounce back to where it was. That was really a turnaround impact in that. What we are seeing with our other affiliates is to be very honest they have not advanced their technology as much as we have and some others have. So, they were struggling a bit in the marketplace. So, we think it's going to take them a while to dig out of that and get that slope back up to where it was. So, we're not expecting tremendous growth from those folks year-over-year.

So, we're using the term slight uptick. I'm not sure really quite I'd call that. If you wanted to split the difference between where it used to be and where it is today, that may be a reasonable place to go with your estimate.

Okay, thank you. And then just on the balance sheet with cash, $1 billion today, best estimate you know is we get done with this year, what would that be sitting on the balance sheet at the end of this year?

I think pretty close. Maybe a little bit less. We're spending more capital and depending on what we do with some of the other uses of cash, I think could be just a little bit less. But roughly, I'm looking at Steven (multiple speakers). Roughly flat.

Yes, I'd say roughly flat, maybe a little (inaudible).

Okay, great, thank you guys.

Thanks, Duffy. Kate, let's move to the next.

Laurence Alexander, Jefferies.

Can you talk a little bit about how you are seeing the cadence of the self-help initiative? That is can you maintain this pace of productivity, and if not, what other things you can pull forward to offset or partially offset the methanol headwind in 2015, 2016? And secondly, can you give an update on the pension -- the net pension and turnaround headwinds that you're facing in 2014?

Yes, I'll do the former and may be Steven you can take the latter as we go forward. You know when I look at the pace of our self-directed, David, I don't see that moderating over the next several years. In other words, the mix may shift around a little bit, but as an organization, we really are focused in making sure that we can have as much control of our destiny as possible. And the way to do that is really to take ownership of really everything from the structured costs associated with the unit in raw materials efficiency all the way through how we tackle commerce and our rate of new product introduction, our ability to lever that or translate that. We see ourselves being the primary player in all of those things. And so, I can't tell you where will be next year, but my view is that that level for some period of time should be relatively consistent.

When we talked about long-term growth objectives for the Corporation, those have not changed for us even with methanol transition to [south there]. But I think what we also talked about in that was there is some need for base business to show some real improvement. Maybe we're going to start that this year, we hope. But I think we can still generate that kind of year-over-year performance for some period of time.

Steven, do you want to tackle the balance sheet?

Yes, when -- you asked about the headwinds next year. When I'm looking across kind of the total Company, I see somewhere in the neighborhood of $50 million. A large part of that we talked about before in benefits and pension.

One thing I want to call out to you is a lot of those costs show up [BU] other. And so, we talked about the need to drive both commercial economic growth and productivity across the businesses and in our corporate structure, but I wanted to point out this from a segment perspective we see a lot of that in the [BU] other.

Thank you.

Thank you, Laurence.

Thanks, Laurence. Let's move to the next question.

John McNulty, Credit Suisse.

Just with regard to the acetic acid platform and I guess what we've been hearing that Singapore may be up and running. Can you comment as to what you're seeing kind of in the markets right now at this point? And if Singapore is up and running, what has gotten things good enough so that it's actually profitable this point?

Yes, so let's back up a little bit. I think out abroad basis, the market has not changed a whole lot. We are still in the 70% utilization rate. Somewhere in the 70s capacity utilization for that industry as a whole. We have seen maybe the -- and maybe this is wishful thinking on my part -- but we are seeing us folks in sort of the fringe businesses struggle with the lower margin that's been in place for long period of time. So we are seeing some of the fringe players weaken a bit, so there has been a trend I think for pricing to ease up a little bit, margins to improve a little bit.

Methanol prices really kicked up in Asia a lot, and it's kicked up everywhere but Asia, it's been a very rapid uptick, which push pricing there. That started to fall off. And pricing has fallen off but maybe not as steeply as it was, let's say, a year ago when those things roll through.

When I look at Singapore, we're running Singapore as we have been running it for a while, and we're kind of running it to balance the needs that we have in that part of the world. And that plant services, through our derivatives facility and through a little bit of other uses that are local. That's how we're running them. So no real change there that you should be -- that you should concern yourself with.

Okay, great. And then just maybe as a follow-up it was noted and I guess your slides from last night that your industrial ethanol sales were -- that was one of the things that kind of kicked up volumes in acetyl intermediates. Can you walk us through whether they were profitable or that was a profitable platform in the fourth quarter and how we should be thinking about that as it progresses throughout 2014?

Yes, John, I'd love to tell you we are making a ton of money on that, but the reality is it is just not contributing. It's at a -- ethanol prices moved up in the 800s; they've now moved back. They've slid back to, I believe we are currently back in the 700s, high 700s there. And when you back all the way through it puts us in a awkward position to make money in industrial fuel market. So we're not counting any contribution for ethanol at all this year. We'll keep working to try to change that, but right now that's our view.

Great, thanks very much for the color.

Kate, let's move to the next question.

Frank Mitsch, Wells Fargo Securities.

Mark, on the $81 million write-down, part of that was attributed to the Singapore acetic acid facility. But you also mentioned two other smaller plants. What percent of that write-down was related to Singapore and can you more further detail how your outlook for that facility has changed to necessitate the write-down?

Frank, I'll have Steven take you through that.

About $45 million that was related to the Singapore acid unit. As we look out the future profitability of that unit, the supply and accounting rules just resulted in us needing to make that impairment.

From a strategic perspective in terms of what's going on in the market, as Mark said, I don't think there's anything to note there. But when we take that long-term outlook and apply the rules, you took about $45 million write-down.

Okay, terrific. And then obviously 2013 was a solid year due to internal Celanese actions. Can you quantify what the cost cuts actually were for the full year of 2013?

On a net basis, I think the primary fee is in our SG&A area. We're down about $30 million or $40 million. I would say we overcome more than that, those headwinds across the business inflation that we had to overcome. We've got cost pressures in our manufacturing sites that we overcome as well. So, I'd say on a net basis that would be a good number to use.

Thank you so much.

Thanks, Frank. Kate, let's move to the next question.

Kevin McCarthy, Bank of America Merrill Lynch.

A question for Steve on the tax rate. I think you'd indicated in the script last night you were looking at 22% to 23% for this year. As you look further out, it sounds like you have $100 million on a run rate basis coming out of North America. And my question is, will that help to drive your tax rate back down in the out years as your geographic mix reverts or are there other factors that you think might keep it in the 22% to 23% range?

If you look across all the growth as well as that impacting the US you highlighted, I'd say we're probably going to be in that range for at least the next couple of years. I mean there's certainly upward pressure on the rates just given the marginal rates around the world, particularly the US [are higher], but you're right we'll get a little bit of help on that from methanol. [$100 million] (multiple speakers) low to mid-20s over the next several years.

Great and then as a second question I guess for Mark. Does the volatility in ethanol pricing or the level of ethanol pricing have any bearing on the projects you are looking at in Indonesia and China? Perhaps you can kind of give us an update on the thinking and the next mile post for those.

Yes, that's great question, Kevin. The answer is no. How do I say it? On a small scale in that part of the world in Asia, fermented ethanol can contribute. These guys are looking for world-scale operations, and they're looking for ways to upgrade basically stranded fuel, be that in the case of Indonesia and China, it's very low-grade coal.

So, we're moving ahead in Indonesia very aggressively, but it's just a very long process. You know we actually secure property only to get into it, to uncover -- there were 32 documented owners that weren't -- no one was aware of it as we get started with that, so we had to back up a bit. We've now got to properties we're pursuing aggressively and will start to negotiate with shortly. So I hope within a few months we've secured one of those properties and can be in a position to go to the next phase of the project which is more public tender process really to sort out the full cost.

In China we're -- a slightly different approach. Obviously, land is not a problem. What we're looking at there is how we make sure we can get the government to endorse coal-based ethanol. And so, we are getting ready to begin engine testing which necessarily part of that. There's a another series of testing where we will actually take some coal, ethanol, convert to fuel grade and start to use it in test vehicles in a number of locations.

In China, is all about health, so again, there is a big push for that. So we still remain optimistic about those projects. But I just want to caution everybody listening in, they are not near-term projects. They'll be (inaudible) this decade.

Thanks, Kevin. Kate, let's move to the next question.

Robert Koort, Goldman Sachs.

This is actually Brian Maguire on for Bob today. I was hoping you could spend a minute just commenting a little bit more on the strength in AEM. You've strung together a couple of nice quarters here with 8%, 9% year-over-year growth. And I think in the slides you mentioned that there was pretty impressive growth in the base business, 53% for some of the end markets there. I was hoping you could talk more about what kind of new applications you might have picked up or been penetrated into to drive that kind of growth.

Yes, when you think about these will -- Brian, when you think about these engineered materials, each of which is branded by all the different producers of them, they all have superior properties and unique properties so they fit in certain applications different. And what we've been doing is going back and modifying the polymer backbone in the way that we dramatically shift those physical properties. So you're almost creating a new polymer.

We are able to go into applications that we had not gone into before. That's actually how you should look at it. So the uptick is really strong I mean these new platforms I think six were introduced at [K Fair]. I believe is nine total that we have out the marketplace. All have a lot of traction; all are generating good business for us. And it is open the doors to some of the things that we can still do. So we think we can take these base businesses that are very good and translate into many more uses for these products and that's a big part of what we're doing this year. Part of the money we called out, the $100 million, is to do just that.

And just as a follow-up, I think in the prepared remarks you did noted is that the consumer businesses are now contributing about 75% of segment income and they can get pro forma for losing the southern contract that might up to 85% or something like that? But compared to what it was about two years ago, it's probably only about one third or so. But just looking at your multiple over the last two years, doesn't seem like it's really gone really anywhere to reflect the change in the composition of those earnings. So it seems like the market is either treating them with -- capitalizing them at the same rate or maybe not paying attention to the mix shift that's going on. So just wondering your thoughts on that assuming they should be capitalized at a higher rate. Is there anything you guys think that you could do to kind of change that perception?

Well yes, it's a great question. When you look at our performance historically, if I want to be critical about it we have had a high degree of volatility, and so, there's been a lack of predictability. And I really think at the end of the day that's the curse of commodity kind of businesses in terms of multiples. So we're working really hard to demonstrate that we can be reproducible with our earnings and very predictable. And so, that's been our focus for the last year or so. You've seen -- I think you guys seen that. You have certainly commented on it. And to be honest, our stock has moved because of that.

So, we believe that if we continue to focus on that driving greater and greater predictability, greater understanding on the part of our shareholders that we'll see the valuation start to change for this Corporation.

Great, thanks very much.

Thanks, Brian. Let's move to the next question.

Vincent Andrews, Morgan Stanley.

Thanks, two questions. In the quarter in acetyls you called out the higher VAM volumes due to timing. How much of an impact was that in the quarter from a margin perspective and should we presume that that reverses out in 1Q?

Yes, it was single-digit. In that sense pretty -- we're always happy to call out when things get better. But it wasn't a huge contributor.

Okay, and as we think about the $100 million in 2014, what should the cadence of that be through the year?

Well it's -- I think generally speaking if you look at the net net impact of that we need to average something like $1.25 of earnings through that. And I will talk about it that way. And we have a huge turnaround in our acetyl business in second quarter. So broadly speaking, you're going to see for us to hit those numbers [through the years], it's a bit backend loaded. So we've got that more performance coming through in the backend.

So the way I look at it is that those things you could look at that we shared in the script that are productivity rated, those of been pretty ratable through the year. Raw material positions, energy positions, the impact of course of shutdowns that occurred. Those things are ratable through the year. And the innovation and the other value add is going to be more back half of the year.

Okay, thanks very much.

Thanks, Vincent. Let's move to the next, Kate.

Jeff Zekauskas, JPMorgan.

I think in your earlier remarks, Mark, you said the possible hit to earnings from the expiration of the methanol contract is about $100 million. I would have thought that on an annual basis that would've been $200 million or $300 million because I think you buy something like 270 million gallons at roughly $0.50 and the price of methanol per gallon depending on where you want to put it is something in excess of $1.50 a gallon. So I was wondering how you got the $100 million number?

Well, that's the operating state after we are running our own facility, Jeff.

Ah. So it's not for when you are in that transition period before you (multiple speakers).

Yes, in the transition period and, again, depending on -- you are doing the math -- we can all argue what the absolute number is, but directionally if you're doing the math correctly there's a big step up in base to some closer-to-market price as opposed to producer price. But we are building a very, very efficient unit, and where won't be exactly the price, it's pretty close. So, the net impact in the full year going from a southern situation to our own venture, joint venture methanol situation is the $100 million.

I see. And then as my follow-up, I'm a little puzzled as to whether you have issued earnings guidance or you haven't in that you said this $100 million in costs that -- your $100 million benefit that you can accrue which is about $0.50 a share and you said you taxes will hurt you by about $0.25. So are you basically saying that all things being equal, you'll earn $475 million next year? Or are you saying that's what will earn exclusive of whatever benefits we get from the economy? And so in a way, it's not really our earnings guidance; it's just a couple of components that people should keep in mind when they think about our earnings.

It may be the latter. I really don't give guidance in there, but I think what we try to say -- maybe using the term adjusted earnings that I used in some of my script is confusing. What we try to say in that is that the things that were really focused on we're expecting to contribute $100 million.

I am also saying I expect base business in some areas to improve. I didn't elaborate on where that was, and I probably don't really want to do that. I don't want to imply that we're not out working our (expletive) off to get it. But unlike last year where we didn't -- we went out of our way to say there was no base business improvement, which was largely true.

We're expecting a little bit this year, and I then said, I need that because we're expecting -- more of those profits are shifting to higher tax jurisdictions and so there's a net of that. So the taxes, you roll all that up, I think I was pretty clear in saying we would expect our earnings to improve in 2014 as they improved in 2013. So, I don't know if that's guidance or not. I'm not going to college guidance but I think it's pretty clear what we're saying, where we think we're going to be.

Okay great, thank you very much.

Thanks a lot, Jeff, appreciate it.

Thanks, Jeff. Kate, let's move to the next question.

Hassan Ahmed, Alembic Global.

Obviously, we saw some margin expansion within the AI segment quarter over quarter. I was a bit surprised by that, keeping in mind it seemed pricing only went up a percent, and we saw this huge sort of surge in methanol prices through the course of the quarter. So what I'm trying to understand is there some sort of a lag between methanol prices going up and you guys feeling the impact of that?

I'm going to let Steven take that and start with that [anyway].

Yes, margins were up a bit. A little bit higher volumes and also our ability to, as Mark said, the industry tended to move price up with methanol. But keep in mind, one of the key drivers is that we had a couple of months of benefit from our plant shutdowns in Europe that we talked about. So I'd say it's more structural in what we've done with our cost but that's also part of getting a full-year benefit next year as part of the growth of the business.

And the comment I'd make to that is more of a directional comment is that we have changed our ability to engage in the market a little bit as we have gone where we can away from formula-based contracts to full freedom to price our product. And that has helped us in periods of inflation. I think next year that we're not getting beat up by raw material inflation.

Fair enough. And I would imagine obviously with methanol going up particularly in the US, the southern methanol contract with obviously looking more attractive through the course of the quarter. But if one were to sort of let's say split the AI segment into the non-US part in the US part, did the non-US part also experience margin expansion?

Yes.

It did, okay. Thank you so much.

Thanks, Hassan. Kate, let's move on to the next question.

James Sheehan, SunTrust.

Just wondering what you're seeing in your European end markets and how large a contributor to 2014 could Europe be.

Jim, you are talking about downstream and --

Downstream, yes.

Downstream AI business. Yes, we've seen a little bit more contribution start to come out of that business. And so, we would expect there to be some incremental contribution in that business next year. I don't know if it will be at double digits on it, but I would expect were going to get $0.02, $0.03, $0.04, $0.05 out of that if we're good.

We've been growing about in the auto segment which is a nice 40% to 50% of that business.

I was talking just about Europe.

(multiple speakers) penetration in Europe, yes. I think the current forecast in the industry for auto growth is about 3.5% in Europe next year.

Okay, great and then --

Jim, I may have misunderstood your question. So make sure Steve and I aren't confusing you. So I was talking about specifically downstream acetic acid derivatives. We are expecting -- that industry seems to be tightening up a little bit, so we think there should be some contribution from that.

Steven's point in materials, Europe is certainly learning how to deal with its debt and it seems to be in a better situation and shape. There's a view we'll have 1.1%, 1.2% GDP growth in Europe. Germany is expected to be better, and that's going to translate in increased auto sales, as Steven said. And you get different numbers. I mean some numbers are as high as 8%. You know 3%, 4% is more of an average in there. So we should expect improvement as well and contribution from AEM growth in Europe also.

Terrific and then just on the benefits you are seeing from plant operations, you specifically targeted this $15 million to $20 million level of additional benefits. And I'm just wondering if that is related to more plant closures in the business or if you could just give us a little more color on what exactly that means.

No, Jim, we don't have any -- we don't have any closures planned that we are focusing on right now. What I would say is we operate our units, we are finding that -- how do I say this -- there's more we can do to better operate these units. And the team is working very, very hard on that. We're having some tremendous success in some areas; some other areas, we are still struggling with that.

So we're expecting to net net produce more out of just better operations this year than we did last year. That also represents a risk to us. If we can't do that, then we'll struggle and have to find money some other place.

Thank you very much.

Thanks, Jim.

Thanks, Kate, let's move to the next.

John Roberts, UBS.

Steven, in the 19% underlying tax rate for 2013, what was the percent of income from the US and could you at least give us a range for 2014 that puts with your higher tax rate?

We haven't shared that level of detail. When we put out the 10-K, you'll get a lot more specificity on kind of how the rate walks forward. But the US is clearly more than 60% of our pretax income. It doesn't take much to move up 19% to the low 20s because you've got growth that we talked about today that is occurring not only in the US, which is part of it, but also in Europe, which is a higher marginal rate, and even Asia is higher than our current rate as well.

So it's not big swings, but it's continued growth in the US as well as other high tax jurisdictions.

And then in -- Mark, in engineering plastics do we have an update on the vitality index or percent of sales from products new in the past five years?

I didn't do the math on that unfortunately. No, John, I don't have it on the tip of my tongue. We are -- the slope is positive. We're seeing good success there. I just can't quote an exact number.

Okay, thanks, John. Kate, let's move on to the next.

Mike Ritzenthaler, Piper Jaffray.

The innovation pipeline has some important expectations in 2014. Just a follow up on John's question there, maybe ask a little bit differently. What were the N plus 1 earnings in 2013? Is that something that is quantifiable, maybe in sales instead of earnings? Just trying to gauge the size of that $30 million incremental earnings.

Yes, I don't have it in front of me. But what I'll say is that all when we really looked at -- (inaudible) presentation notes.

I think the way to think about it is when you look at AEM were a big percentage of bids. When you exclude affiliates, we had about $40 million of earnings growth in that segment. So, I would say that's a good reflection of both auto penetration as well as commercialization of the new product platforms in the material space.

Yes so, we'll do a better job getting it out to you. Here's what we know. When we look at in the auto space, talk about that, we are up 6% year-over-year in our penetration, and that's measured globally across all vehicles in the world. So we continue to be able to drive into new applications in that space. If you look at it in even businesses like EVA, food ingredients, cellulose, acetate, we're having traction on our new product introductions that keeps us very encouraged, but I'll also say that most of those are N plus 1. Going out N plus 2, N plus3, the reality is it just takes longer, so we're not seeing as much uptick on the near-term even though we're working some very good projects there.

One as Steve mentioned is CelFX, which is a new filter process for cigarettes in markets like China where everything is about the harm index and how you reduce the harm index. So I know I'm not answering your question directly, but we'll do a better job in the future calls (multiple speakers).

I think you did. I mean what Steve said about 2013 for some of these N plus 1 earnings, I think that puts us in the right context for us.

And then just the last question here on the rationale for plant closures being in France. I realize they weren't vertically integrated but could you speak a little bit about those volume shifts to other plants, maybe in Germany and other places and whether there's any timing with the work councils or anything that still has yet to be worked out with those closures?

No, no. We went through that process in a very proper fashion with the works council completely throughout the process. So, no, we've completed all of those negotiations, and the plants are currently not running. And we're going through process now of decommissioning completely. So, no, that's over.

What I'll say is, yes, in the case of the French plant, that product is being produced elsewhere, and pretty much it is the case in the plant in Spain as well.

All right, excellent. Thanks guys.

Thanks, Mike. Kate, let's move to the next, and let's have this be the final question.

Nils Wallin, CLSA.

Thanks, just got in under the wire there. One kind of a broad macro question, at one point Celanese was kind of thought of as the top-line grower of GDP plus 100 to 200 basis points. Has that changed at all? I know, obviously, you are focused more on innovation, but what I'm trying to understand is if we did 3% do 4% global growth next year, should we see Celanese just on the base business ex-innovation grow 4%, or 4% to 6% top line?

That's a really great question. I have a hard time seeing our base business grow 4% or 6% volumetrically through the year. But what I'll also say is that the quantity of chemistry needed to drive GDP is changing. If you look at a place like China where we're still seeing 7% GDP growth. I don't think you'll find any multinational chemical company itself that's over there saying their business is growing 7% or 8%, which was the case a few years ago. So, I think all of us are seeing a little disconnect between chemistry and GDP as it relates to base business.

As it relates to specialty business, there's no doubt we're multiples of GDP. So if you look at AEM business, we've had multiples of GDP in that business. We think we can get there in a slow-growing business like acetate over time going forward. And you look at our smaller businesses like EVA and [cores], they've had some base business deterioration that's offset the growth they are getting there. So I don't know quite how I would characterize the next year, but I wouldn't put us at a multiple of GDP next year. If we are up 3% in the US, I would think we can get 3% of our business in the US. If you are up 1% in Europe -- I don't think you'll see it in China; it's probably pretty flat.

So our growth next year is going to be more driven by new products being introduced and innovative things that we do than just meet base GDP.

Got it. That's really helpful. And then just a housekeeping question, Consumer Specialties volume was, I believe, down year-on-year slightly, but my understanding was you would have lapped the Spondon closure right now. So is there some vestiges of Spondon in their or is it just a mix issue?

No, it's all Spondon. And we have kind of lapped it, so it should be pretty -- comps should be pretty good. I'm looking at Steven. Going forward, comps are pretty good year-over-year.

Great, thank you very much.

Thanks a lot, I appreciate it.

Thanks, Nils. And thanks everybody for listening today. We'll be around today for calls afterwards. Thanks for your time this morning.

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