塞拉尼斯 (CE) 2014 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the first-quarter 2014 Celanese Corporation 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, today's call is being recorded. I would now like to turn the conference over to Jon Puckett. Sir, you may begin.

Thank you, Shannon. Welcome to the Celanese Corporation first-quarter 2014 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 first-quarter 2014 earnings release was distributed via Business Wire on April 21, 2014 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 Relations section.

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 under Financial Information.

The earnings release, non-GAAP reconciliations, presentation and prepared comments have been submitted to the SEC in a current report on Form 8-K. This morning we will begin with introductory comments from Mark Rohr and then we will field your questions. I would now like to turn the call over to Mark.

Thanks, John, and good morning, everyone. We appreciate you joining the call today. Our prepared remarks were released with earnings so I will keep my comments brief and then open the line for your questions.

For the quarter we reported adjusted earnings of $1.33 per share, which is a record first quarter and one of the top earnings quarters in our history. Sales increased 6% year over year and 5.5% sequentially on 3% higher volumes for both periods. Segment income margin increased 260 basis points sequentially and 90 basis points year over year to 17.7%.

We generated operating cash flow of $164 million and deployed $53 million of cash this quarter to repurchase about 1 million shares ending the quarter with about $1 billion of cash on the balance sheet, well-positioned to pursue our growth initiatives and maintain our capital deployment strategy.

Every business performed at a very high level, expanding margins both sequentially and year over year driven by strong execution, innovative products and productivity. In Engineered Materials we introduced new products and applications that met customer needs driving strong volume growth in auto and medical segments.

In Consumer Specialties a number of initiatives came through helping us lower operating costs and improve operational reliability. In Industrial Specialties our proprietary technology drove strong demand in Europe and Asia. And in Acetyl Intermediates our strategic actions taken last year resulted and lower operating costs while day-to-day execution drove margin improvement.

While we are off to a great start for the year we still have a lot of work ahead of us to deliver on our commitments. For instance, in the second quarter we have a major turnaround going on at Clear Lake, the largest acetyls unit in the world. In our cellulose derivatives business we expect slightly lower earnings due to the timing impact of our production schedule as we prepare for outages later this year.

These two items alone represent headwinds of about $20 million sequentially. But despite hurdles like those mentioned, our ability to execute against our strategy provides line of sight to earnings growth of 12% to 14% for 2014. With that I will now turn it over to Jon for Q&A.

Thanks, Mark. In order to get through everybody's question we ask that you limit it to one question and one follow up. And with that, Shannon, I will turn it over to you for the Q&A instructions.

(Operator Instructions). David Begleiter, Deutsche Bank.

Mark, could you quantify the benefit from VAM in Q1 in terms of how much spot you sold and the likely benefit in Q2 from this spike in VAM prices?

Well, I would like to not break it down just by specific product. What we did see, as you know, David, we saw with a number of unscheduled outages as well as some structural changes that happened last year we saw some tightness in the VAM market manifest itself as we ended the quarter. Net-net we had pricing up offset a lot by raw materials probably to the tune of $20 million or something that rolled through relative to the quarter.

Very good. And just -- Mark, just on China. Can you talk about acetic acid pricing as well as the profitability of your acid unit in Nanjing?

Well, no, I won't talk specifically about the unit. What I will say is that acid remains very stable in China. We have seen some margin increase over the last several quarters, we are trending up in margins in China. Our view is, David, that we should have volume growth and margin growth slowly through the year based on what we are seeing over there.

Thank you very much.

Thank you, David. Shannon, let's move to the next question.

Duffy Fischer, Barclays.

Mark, I was wondering -- you have talked a little bit about changing strategy and pricing and I think pricing across AI in particular has been better than we would have forecast each of the last two quarters. Can you talk about that new level of either profitability or pricing that you have been able to get structurally changing the way you write your contracts?

Yes, Duffy. So I think most folks on the call know that if you look back historically we have been a Company that in the AI chain was largely fully contracted. And the contract pricing were all formula driven with a lot of restrictions on -- self-imposed restrictions on how rapidly we can move pricing based on the circumstance that we face.

And we looked at that in 2012 and really concluded that did not give us a degree (technical difficulty) make the kind of decisions you need to make to drive value. And so we started rewriting those contracts and moving away from indexes. We are not completed with that. In some businesses we are probably two-thirds of the way there. In other businesses we are more like half the way there, Duffy.

So what we are doing is we are just freeing ourselves to make a conscious decision every day on how we price these products. And so, that is what we are doing. We run it day to day to day. Because of that we have been able to make good business commercial decisions and we have seen hyperinflation rolled through and have been able to capture that and not be victimized by that. And equally when we see opportunities to push into new markets and areas we are able to respond very quickly to that.

Great. And then it just on the Clear Lake turn around, it is a relatively new unit, kind of the one that got punctured or whatever four or five years ago. Would you be able to expand the capacity in that unit in this turnaround?

Not directly, Duffy. That unit is -- after the last expansion we did is the largest acetyl chain in the world. And what we are doing though is we are expecting to be able to run longer between turnarounds because of some of the steps we're taking. So incrementally we will, instead of going down every other year for (inaudible), we try to go down every third to fourth year.

Terrific, thank you.

That will give us some capacity.

Okay, thanks Duffy. Shannon, let's move on to the next.

John McNulty, Credit Suisse.

So with regard to the consumer business, clearly it enjoyed a lot of lift and you gave some -- or you put out some statements regarding there were a number of kind of initiatives that were finally starting to kick in. Can you walk us through kind of what some of the major initiatives were that really moved the needle because it clearly was a pretty big pick up there.

Hey, John, it is Steven. First of all, if you look at the top-line in terms of what is going on there, we talked about our ability to continue to add value in the space and recognize higher pricing in our (inaudible) business. You will see that is a little offset by the step down in a contract like arrangement. So you are seeing growth coming from the top-line.

In terms of productivity, we have also been able to do some things with our raw material usages and approaches there that have yielded us some meaningful productivity. And finally, we had talked to you before about building a natural gas pipeline down in Mexico to get us off of crude-based derivatives for our energy and steam. And we have completed that project as well.

So we look at all those in combination, really strong performance. I would note that in Q1 if you look at Q1 versus the outgoing quarters I think we did about 128 or so in the first quarter. I would expect that to be more in the 115 to 120 range as we move out. We are going to have a turnaround in one of our major units and also you have the corresponding build to draw inventory associated with that. But that is in that $15 million to $20 million headwind that Mark talked about.

Okay, great. And then just as the follow-up. I know there has been some excess capacity put in place on the cellulosic fiber side. Have you seen the benefit of that on the raw materials yet? Is that part of some of the benefits that you have started to see yet or is that something still going to come for you?

You know, if you look at the headline prices for cellulosic, it is down, which is probably an industry-wide impact. So yes, there is some benefit from that that is out there but that is not a large part of what I just talked about.

And that is specific to the raws as well.

Right.

Yes.

Great, thanks very much.

Thanks, John. Let's move to the next question, Shannon.

PJ Juvekar, Citi.

Mark, the European recovery should be benefiting the AEM business. So can you just talk about geographically what are the margins in Europe? How much did they improve? And how would they compare sort of to North America?

Yes, in that business margins are virtually down on the other side of the Atlantic, PJ. There is no -- I mean there are certainly differences one product and one application, broadly speaking they are about the same. What we are seeking in Europe is pretty strong auto build activity over there. I think year over year we are up 4.7% globally and Europe is about 4.6% of that or so, with Germany about 7% if my memory serves me.

So you are seeing a real strong pull there and we continue to expand the applications of our products so we are seeing some real strong uptick in volume per vehicle. That is really pushing a lot of -- or pulling a lot of material for us.

But we are also seeing areas like medical do quite well, some of the industrial applications that have been a bit weak are starting to pick up again. So generally Europe is doing much better, PJ, than it was this time last year. And I think (inaudible) pretty good year there.

Thank you. And (inaudible) on methanol, your first plant is being built with a joint venture partner, now you are working on a second plant. So why bring the joint venture partner on the first plant, why not just build it yourself? Thank you.

Yes, these things are sequential. So we needed to get started in a hurry and there was a limit to how committed we wanted to be to one single project from ethanol, and so we did that and we get started with that project. And you saw the amount of time it took for us to get the permit complete, which has put us a bit in a bind as we try to get this operational next year.

At the time we had looked also at Bishop, and Bishop was certainly very doable at roughly the same economics. But it represented some different challenges for us that we wanted some time to sort through. And we sorted through those challenges so we are now starting the permit process there.

I think our construction of that project is going to be dependent on our attracting a suitable partner or partners to let us end up being balanced on methanol consumption versus demand.

Thank you.

Thanks, PJ. Shannon, let's move on to the next question.

Frank Mitsch, Wells Fargo.

Hi, this is actually Maggie on for Frank. So in consumer specialty you had mentioned that the higher pricing in tow was offset by the legacy contract in flake. So would you be able to size that offset and how long will this contract last for?

That contract goes through 2017 I think. And it's through 2017. And the pricing is not constant. So it is a bit tougher on us this year than it will be in the outlying years, Maggie. And I'd prefer not to get into actually the numerical offset there. But net-net I think we are up a few percent on price that is reflected in the numbers.

Okay. And then Celanese has a pretty healthy balance sheet and you have been spending a lot in terms of internal growth projects. What are your thoughts on M&A at this time?

Well, we are working this hard, Maggie. It is hard to buy things these days. But prices are very high and people tend to be reluctant to sell the kind of properties that we want to buy. Nonetheless, we are working very hard on that.

We have been building out our M&A team and I am real pleased with that group now. So what I will just say is stay tuned, and we are going to work hard to try to find some good properties to add to our portfolio. But anything we do there, Maggie, will make sense to you guys.

All right, thank you.

Thanks, Maggie. Shannon, let's move to the next question.

Kevin McCarthy, Bank of America-Merrill Lynch.

Good morning, this is [Alex Ufreva] for Kevin. Mark, could you offer us your view on the VAM market fundamentals? I think a couple quarters ago maybe you suggested that VAM probably doesn't have sort of -- will not see positive dynamics in that year market for the next couple of years. Has your view changed over the past couple of months given sort of the fly up in price?

Well, what I was referring to, Alex, is if you look back over the last decade that business hasn't really contributed in a meaningful way to the acetyl chain for anybody associated with it. And we were sitting, and I'm going to quote a number that is directionally right with capacity utilization of 60-some-percent arena. So very, very low.

And we in turn had a couple of sites in Europe that were stranded assets, excellent people, great sites, but a lot of regard but in a situation where logistically and from a size point of view they just couldn't make any money. So we took steps to sell and then ended up shutting down (inaudible).

At the same time any shutdown of a cracker or I mean a VAM plant in the UK. The net effect of that probably was a 5% or 6%- - I'm looking at my colleagues -- capacity elimination, right? So in theory you haven't really changed the dynamics very much in the world market. But what it did is it took what was a pretty sloppy Europe and made Europe pretty tight, so Europe is now a net importer of VAM.

The US is pretty tight. We have seen some demand growth in the US and we have seen demand growth in Europe and in Asia. So we have gotten it to a trade imbalance challenge that has driven pricing short-term and it will take some period of time for that to work itself out.

My gut feel though is that is we are seeing margins in that business like we are seeing margins in AI in general slowly expand and get to a healthier level. So I wouldn't expect that business to be the best business that is in our portfolio any time soon. But I think it is going to be a better business for us as we go out through this year and into next year than it has been historically.

Thank you very much. And then moving to AEM, the volumes were up 14%, do you think this kind of growth is sustainable on a year-over-year basis or maybe this quarter was particularly good for whatever reason?

Yes, if you look at Engineered Materials we've got strong sales increase, strong volume increase, that 13, 14 kind of percent. A lot of it has been driven by -- although we are -- the own goal we have internally is to sell at 2x kind of the growth in that business. And we have been able to do that.

So when you look at what we are expecting year over year, automobiles to be maybe 3%, 2.8% or something I think is the full-year forecasted growth. That would say we need to grow 6% or 7% or 8% and that is kind of the numbers that we kind of target.

When you get beyond auto the new applications we are introducing are starting to have traction. And it is always a point of caution, Alex, to introduce new things because people expect big revenue on day one and you just don't get that.

But when you go out and demonstrate new ways to support and insulate high voltage power lines and have a 10 kilometer high-voltage line in place in South Texas, you start making a difference. So we are excited about our ability to grow this business and we think it should be a multiple GDP kind of growth business.

Thank you.

Thanks, Alex. Shannon, let's move on to the next question.

Robert Koort, Goldman Sachs.

Mark, I was wondering if you could talk about what the hurdles are as you bring up the Clear Lake methanol plant. You mentioned a third-quarter 2015 start up, but trying to accelerate it. What are going to be the biggest roadblocks to getting that done faster?

Yes, Bob, we are just doing a lot of work in a short period of time. If you look at the chart we sort of gave you, you can see how steep that project completion start is. We have a number of months, I think five months we have about 10% completion on average across those five months. Those will spend the end of this year and early next year. So October through like February kind of timeframe, which is also a bad time of the year, Bob.

So we can be very susceptible to weather and events kind of out of our control. So we are trying to just start really strong, we are actually doubling chefs down there now as we speak to try to start making some inroads on the schedule early in the year to give us a little bit of (inaudible) later on.

We need to do that to have a chance of pulling this thing back. But right now I think the schedule we put out there, which is the September/October kind of timeline is fully consistent with the numbers that we gave last quarter in terms of the range of the kind of headwinds we face. And we are just going to do all we can to pull it up and we will keep you posted on our success with that.

And if I might ask a couple of raw material questions. One of your fellow methanol producers struck a natural gas contract, which appears to be based on a shared margin arrangement. Is there any chance you could do that at either Clear Lake or Bishop? And then also in the US, you guys used to have a favorable ethylene contract. Is that still there? And when might it expire if it is?

Yes, most of our ethylene and much of which ethylene contract -- most of our ethylene contract roll off in 2016. And we are starting some early negotiations on a few of those, so I'm not sure exactly which you are talking about now.

Maybe you are thinking back to a contract we had in the mid-2000's, Bob, that had a kind of virtual cracker type arrangement into it. That contract got wiped out in the industry bankruptcy. So we don't have that type of contract any more. So I think the contracts Mark is talking about would be really kind of continuous market roll over type contracts we will be negotiating.

So, as it relates to the net (inaudible) we have looked at what Methanex did and I think that made sense to them. We don't think that kind of contract relation will make sense to us. One of the interesting things about the gas market now is the futures market has not moved very much even with the tightness or the increase consumption after this winter.

So we are exploring options to buy forward some gas to run that unit. And as we get into looking at doing that, if we do that we will certainly share that with you guys going forward.

And, Mark, I know you would rather not talk about acetic and methanol. So let me ask you an AEM question. You guys, I would assume, have pretty long lead times in developmental work. From where you stand is the electric car revolution really going to occur? Are you doing a lot of work on those kind of applications beyond just sort of the standard light weighting that has been going on to make café standards? Is there more in the pipeline that we don't see from the outside?

Well, yes, Bob, it is -- I don't know if I am smart enough to forecast whether it is going to work or not. But what I will tell you is that light weighting is a precursor -- a prerequisite for that to happen. And the amount of energy in light weighting is just staggering. It is things beyond the conventional use of thermoplastics to thermostats.

We are seeing a lot of work on the electronic space to sort of eliminate dashboards and things like that and go to these almost a flat panel display for our vehicles. So you can start to imagine ways that you can get more the weight way down in these vehicles. And that makes some of the lithium ion technology really viable for electric cars to work.

So my gut is it is going to be a little bit like the energy business, there is going to be a lot of different solutions, but where we are going to play there a lot is going to be in the light weight and strengthening and thermoplastics are just killer in that regard. Because they are relatively inexpensive versus acetic carbon and then provide virtually the same characteristics.

Terrific, thanks.

Thanks, Bob. Shannon, let's move to the next question.

Laurence Alexander, Jefferies.

I guess two longer-term questions. First, on the Consumer Specialties segment, as you think about the longer-term trend for acetate tow to band to be able to sustain your kind of earnings CAGR longer-term do you need to start to see competitor shutting down capacity or do you expect demand to keep growing through the end of the decade?

No, I don't think there is -- I think the industry's kind of perspective on demand is that we are -- we are pretty close to the top on demand, and demand is going to start sliding down. I think I have told you I don't think that really matters as long as the industry kind of makes rational decisions with regard to capacity.

We have certainly taken steps to shut down and idle and -- our (inaudible) units and in case of doing that we actually gave up volume. So I think we saw a way to do that, it made economic sense for us. I will be kind of shocked if others independently don't have the same kind of opportunities in front of them.

And then secondly on the light weighting side, do you think there will be a point where the benefit for Celanese flattens out in the sense that as things move towards virtual dashboards, and so on, you just end up taking out more pieces of the car and that offsets the incremental light weighting opportunity for you.

Well, I -- yes, you know, it is just not absolute. We are only, from a penetration point of view, even though we had a good uptick this quarter we are still a few kilograms per vehicle in the world and we see the range in there from zero to eight, nine or 10.

So I think there is still so much upside there. It is hard for me to see, Laurence, a near-term fall-off with that. And what we are finding is that the desire to continue to substitute is really great. So just like steel is facing aluminum and aluminum facing carbon, they are also facing thermoplastics, like I commented on, and there is just a lot of room there.

Perfect, thank you.

Thanks, Lawrence. Shannon, let's move to the next.

Vincent Andrews, Morgan Stanley.

It sounds like from the release that you've got 80% of your cost all set there a Clear Lake, but on the Bishop facility how confident are you in the CapEx number you put out there just given all the inflation that others are seeing and that you are kind of -- bunch of other projects in that area or just in general ahead of you?

Yes, well, I think that is the big question on Bishop. If you look at the design and the basis, on a relative basis it is virtually the same cost as we think we will have at Clear Lake. Having said that, you talk about building this thing at a time when everybody and their brother is building a chemical plant on US Gulf Coast.

So there is going to be inflation and to be honest we haven't really quantified that yet. The good news about the permitting process is that we have a little bit of time to do that as we work with partners and the permitting will not be finished with this actually until our other plant is up and running. So I think we will have a good chance of nailing that -- nailing that cost and being very transparent with that at the time.

Okay. And as a follow-up, is it a reasonable assumption on our end that sort of the move to JV at Clear Lake and now maybe to do Bishop as a JV as well or just to do it at all is because you have freed up capital that should -- you sort of at one point I thought was going to go towards TCX and now that that's not moving as fast as you thought, you are just reallocating it?

No, I look at it a little bit differently. I think we are quite confident in our ability to build these plants and we are quite confident in the long-term competitive position of natural gas in the US. So we think the US-based methanol is going to be one of the most cost-effective methanols in the world, certainly the developed world, it will be the most cost-effective.

We have a sink for a million tons and we have satisfied about two-thirds of that, a little more than two-thirds of that. And so what we are exploring is can we satisfy the other third, which would represent an economic advantage to us in our Engineered Materials business. So, no, I think -- I wouldn't look at it that way; I think it is just we have gained confidence, we feel good about our cash flow going forward and we are willing to put it out there. But I want to emphasize we will need a partner; we have no interest in building this plant by ourselves.

Okay, thanks very much.

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

Hang on. Had a question embedded in there about TCX as well, maybe we could give you just an update on where we are with that.

Well, do you want to (inaudible), Steven?

Yes, I think in Indonesia we are making nice progress there in terms of identifying land. We see a parcel of land that we are interested in and the process is moving forward, but it is going to take a little bit more time, but we are making some forward progress there. In China, we are in the space now. We're actually engine testing with our product and moving forward on that. So those are kind of the [securities] update from our last call.

Okay, Shannon, let's move to the next question.

Hassan Ahmed, Alembic Global.

Decent margin expansion on the AI side of things in the quarter. Just trying to get a sense -- obviously it was a bit of a noisy quarter in terms of outages and higher methanol prices and the like. Obviously since then, methanol prices have rolled over. Just trying to get a sense that -- are these sort of Q1 margin levels in AI sustainable over the next couple of quarters?

Yes, I think so. I mean there will be ups and downs. We are most concerned about the outages in Clear Lake because not only are we going down for a long period of time, but some of our suppliers of raw materials are going down. So we have kind of baked in a fairly low operating utilization for the quarter there and that could have an impact of -- I think we will be okay, but if one of our suppliers does not get back up on time.

I think what you are seeing is you are seeing the industry slowly I won't say reset, but -- and Lord knows these margins are not moving that dramatically, but we are seeing margins kind of move towards a point of greater sustainability. And I think there is an interest -- there is an interest for that to happen. What I see in the world is people just making a little bit better decisions.

Got it, got it. Now a follow-up on the methanol side of things. Just curious about your views of the market near to medium term. A fair bit of capacity coming online be it Methanex or CIP. You obviously mentioned that you are very sort of confident and comfortable with the cost position within the US. But just in terms of supply/demand fundamentals over the next couple of years with all of this capacity coming online, are you in the camp that you expect call it effective utilization rates to remain tight for the next couple of years?

Well, I think there's others in this business could comment on that better than I can. What I will say is that we think we have seen prices pull down -- pull back in China a bit and move back to more reasonable range in the $400 kind of range. I would expect at some point prices in the US will move off where they are today and back closer to $500 or so.

And my kind of gut is that is the place that it is going to hunt for a while. And then we will bring out some of these additional plants and we will see what happens. But I think for the next couple years methanol is pretty close to where it is going to be.

Fair enough. And essentially you are saying that most of this new capacity that is expected to come online, demand is strong enough to digest this incremental supply?

I think so, yes.

Fair enough. Thank you so much, Mark.

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

James Sheehan, SunTrust.

Hi, Mark. What makes you comfortable that you can offset the negative impact of shifting towards internally produced methanol in late 2015?

Well, you don't get a chance to interact with the team I have here every day. If you did you'd know we would do it. We are looking at it every day and we are just stacking up the things that we need to do to offset it. And later this year we will share those things with you.

It is not really -- we are too early in this year to worry about it to be honest, but [I might share more]. But we have -- I have confidence, I'd just put it that way, we have confidence that we will find a way to offset that and that is our objective and Steven Sterin's office furniture is for sale right now. So whatever it takes.

Also on emulsion polymers, you noted that there were some beneficial effects in Europe and part of that may have been driven by the weather. I'm just wondering if you can comment on the sustainability on the strength you are seeing in that business?

Yes, I -- Europe is all paints and coatings and that business is strong. I think the good news this year, and you called it out, is the weather was a welcome surprise for us all in the year. We had a pretty wet start to 2013, it was a bit slow. This year the weather was much nicer and people jumped on projects early. We don't see it waning.

There is a lot of -- actually there is a lot of construction underway in Europe, if you get out and about there you will see it. It gives me pretty good confidence that we're going to see Europe remain strong. I would say the same thing for Asia and that business has been very strong and we don't see any signs of that letting up.

What we are less confident of is the US, which is not a train wreck or anything, but it is just kind of muddling along.

Thank you very much.

Okay, thanks, Jim. Let's move, Shannon, to the next question and we will have Nils be the final set of questions.

Nils Wallin, CLSA.

Back on the bishop plant since it is going to be similar scale as Clear Lake, but Clear Lake will account for about two-thirds of your current methanol needs. Does this mean that there's going to be a different JV structure or will you -- are you planning to actually grow into that methanol capacity in terms of downstream derivative growth?

No, we would like a different JV structure; we would like to be a minority consumer of the structure. And do we need more growth? We could have more growth there and stuff, but it is -- but I wouldn't build a methanol plant to satisfy it. So I think you should expect us to be a minority investor.

Understood, understood. And just back on industrial ethanol in China. Obviously for a while there it disconnected with the fuel ethanol and that kind of prevented the retrofit from having any meaningful earnings contribution. Has anything changed on the industrial ethanol pricing and there is any opportunity for the Nanjing retrofit to start adding to earnings?

No, I wish I could say there was. Right now the industrial and the solvent market for ethanol remain quite weak in China. We are occasionally moving some material offshore, getting a bit higher net back on that. But it is hard for me to see our way clear for that unit to be a material contributor certainly this year.

Thanks very much.

Thanks, Nils. And thanks everybody else for your time and interest in Celanese. We will be around later today for calls.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day.