塞拉尼斯 (CE) 2015 Q2 法說會逐字稿

Hello, and welcome to the Celanese second-quarter 2015 earnings conference call.

(Operator Instructions)

Please note this event is being recorded. I would now like to turn the conference over to Jon Puckett. Please go ahead, sir.

Thanks, Keith. Welcome to the Celanese Corporation's second-quarter 2015 conference call. My name is Jon Puckett, Vice President of Investor Relations. With me today are Mark Rohr, Chairman and Chief Executive Officer; and Chris Jensen, Senior Vice President of Finance. The Celanese Corporation's second-quarter 2015 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 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 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 some introductory comments from Mark Rohr and then we'll field your questions. I would now like to turn the call over to Mark.

Thanks, Jon, and good morning, everyone. Our prepared remarks were released with earnings, so I'll keep my comments brief and then open the line for your questions. Our complementary value drivers, Materials Solutions and Acetyl Chain helped us deliver our eighth consecutive quarter of year-over-year earnings growth and our seventh consecutive quarterly earnings record.

During the quarter we continued to align along our two cores by appointing Scott Sutton as President of the Materials Solutions Group and Pat Quarles as President of the Acetyl Chain. I'm really pleased to have these two accomplished leaders in place who will enhance our commercial and operating discipline and help lead our growth initiatives.

Now let's move on to consolidated results. It's a pleasure to report second-quarter adjusted earnings of $1.58 per share, representing 7% growth year-over-year and 8% lower than the first quarter. For the Company as a whole, second quarter revenue was $1.5 billion, 2% higher than the first quarter on higher volumes in both cores, which was partially offset by slightly lower pricing. Consolidated adjusted EBIT was $325 million, realizing 22% margin, 340 basis points higher year over year. Sequentially, margin decreased 210 basis points. Second-quarter free cash flow was another quarterly record, at $176 million, driven by strong earnings and disciplined working capital management, putting us well on track to generate a second consecutive record for annual free cash flow. All in all, a great quarter.

As we look to the remainder of 2015, we are confident in our unique ability to drive value across both cores, continued success with productive initiatives and growing success in new product introductions. So we are increasing our outlook for earnings to a range of $5.70 to $6 per share for 2015. Before we move to Q&A, I want to let you know we are planning on hosting an investor day this fall and we'll get back to you with specific date and location shortly. With that, I'll now turn it over to Jon for Q&A.

Thanks, Mark. Keith, let's turn it over for Q&A. I just want to ask everyone to have one question and one follow-up and limit it to that so we can get to as many questions as possible. Go ahead, Keith.

(Operator Instructions)

Your first question comes from Duffy Fischer with Barclays.

Good morning, guys. Congrats on a nice quarter. Mark, I'm wondering if you can talk a little bit about the filter business. Obviously, we've gone through some destocking. Couple quarters ago, it was difficult for you to kind of see into what the inventory levels were like, particularly around China. One, obviously volumes feel like they are a little bit better now. But how do you see things playing out the rest of this year and in next year and do you feel better about your absolute ability to see what's happening in China today versus, say, six or nine months ago?

Duffy, thanks for the question. As we entered the year, we shared what we had picked up and learned from our partners over there. And since then, the business has performed as they have said it would. As we look to the rest of the year, to be perfectly honest, we don't have as much clarity exactly what those 300 million Chinese smokers are doing over there, on so the consumptive behaviors and what the impact is on inventory, I just can't say. What we expect is that when I look, kind of look through that, that the trends in smoking are not changing that much and we think that on a year-over-year basis we'll be able to drive earnings in this business. But regarding second half, just exactly what it looks like, I can't say.

Fair enough. And then on AEM, we're getting some early indications that there's Chinese auto production is slowing down. One, can you remind us how much leverage does AEM have to that Chinese auto business? And two, what have you guys seen or what would you expect the next couple quarters from the Chinese auto business for AEM?

It is -- the Chinese auto business clearly is slowing down. Our overall exposure to that segment, though, is pretty small. We've had great growth, but it's from pretty small base. As we look, as we look at what we've done over the last year, Duffy, I'll put it in perspective, we had just unbelievably great growth in that segment, in our penetration of autos. And we found ourselves growing at a multiple of that market, probably three times that market. We expect that to continue. And so I think subtle movements in the market in China, right now I think they are forecast to be down a million units. We don't think it's going to have a material impact on our business.

Terrific. Thanks, guys.

Thanks, Duffy. Keith, let's move to the next question.

Thank you, and that comes from John McNulty from Credit Suisse.

Good morning. Thanks for taking my question. So when we look at 2015, you had two kind of large hiccups coming in, the cigarette de-stock and the methanol kind of hole that you're in the process of filling. I guess it looks like maybe the methanol hold may have been a little less deep just because of pricing and maybe the fiber business, it seems like it maybe held up a little bit better than expected in the second quarter. So I guess when you think about the sequencing from 2015 to 2016, I think you had originally said $0.25 roughly or $0.25 to $0.30 for each of those holes, how has that changed as we're looking into 2016 now versus 2015?

Well, let's start with methanol, which is an easier one to talk about. We continue to find ways to push that project forward in spite of the impact that rains have had on us and the construction. We expect to be up online and running as we hit October of this year. Methanol prices come up a little bit and natural gas prices a little bit. I think every time we talk to you, we pull back a bit that annualized impact. For this year, that number is somewhere in the $50 million range. I don't think it will be lower than that, but I expect it would be lower than $60 million. And depending how you cut it, I think it's certainly lower than that next year. So I believe the numbers that we threw out last time are probably still appropriate. When you look at cellulose derivatives, we're quite confident we'll grow a profit year over year in that business. We're doing -- we're taking a number of steps that, to further improve our cost profile in that business and we're expecting volume growth in that business as well. So I think those numbers we put out earlier that you have quoted are pretty good.

Okay, great. Then just one last question. With regard to -- it looks like you had some continued raw material relief. There may have been some puts and takes. It seemed like the spread between, certainly at least back of the envelope, it seems like the spread between pricing versus some of the raw material moves seemed to be wider. It looks like your ability to maybe maintain price or hold price seems to be a little bit better than maybe we expected. Can you kind of walk us through what might be driving that at this point?

Well, in a broad sense, we have continued to work that, our pricing initiatives and programs across the entire portfolio. We've had good success in materials I think, also impacts there. We've had -- to be honest, we've actually had good success in the Acetyl Chain as well, although the impact of ethylene, rapid increase in China particular kind of smacked us in the face a bit this quarter. So I would say that without getting into each product and each line within each product, the team is really focused on making sure that we are not victimized by a negative swings in raw materials, and I think we've done a pretty good job of that and to the extent we can, we're driving margins even higher when raws fall in our businesses. So net-net, I would expect pricing to be a favorable tail wind for us as we enter the second half of the year.

Great. Thanks very much.

Let me just add a little bit to that down at the business level. The materials spaces are a really good job of holding that. If you go in and strip out the equity earnings from the base business and look at that trend, last year Q2, this year Q1, this year Q2, it's a very strong story on what they have been able to do there.

To elaborate on Mark's comment on acetyls, like we told you, this currency headwind year over year if you're looking at a full-year basis, is just massive. You combine that with that methanol challenge and combine it with the nice margins that were there in last year for various reasons and look at what that business is doing with price this year, they are doing a tremendous job of covering up a lot of these headwinds. So while year on year your gross -- or your kind of headline earnings number will be down in that business, when you peel that apart, it's very strong performance.

Thanks, John. Keith, let's move on to the next question.

Thank you. That comes from Vincent Andrews with Morgan Stanley.

Thanks. Good morning, everyone.

Good morning.

Could you talk a bit about what Scott and Pat will be doing differently or incremental to what you've had in place in the three years that you've been CEO, maybe -- just trying to get a sense of sort of where this is headed.

Vincent, we've talked a lot about the ability to lever throughout that chain. I think we have tried to share without giving absolute specifics that we've been constrained as a corporation in our ability to do that, vis-a-vis the contract positions that we had taken long-term in that business. And we're starting to unwind those contract positions to give us greater flexibility. That started with acetic acid and it's now moving through the other derivatives so we're simply in a broad sense, Vincent, getting the ability to price and move our products in the marketplace as it makes sense to get a return on capital that we think is warranted for these businesses.

What Pat and Scott will be doing, of course Scott Richardson has been doing that for a while, but what Pat brings is a broader global perspective, I think with different products that really helps us think through how we drive value in this chain and they are going to continue to do that. You could see some, some further steps to drop productivity in that business as we go forward, things like shutting down the pilot plant for ethanol, which is a good move, also benefits us from a productivity point of view there. So you'll see those guys working both the top line and the cost position of this business as we look to go forward and most importantly, driving pricing.

And then just as a follow-up, in your emulsion polymers business, and you talked about 6% volume growth sequentially. Could you talk about why it was so strong, that seems better than what I see the paint and coating guys doing, and how much was it up year over year and any context around that would be helpful.

Vincent, what was the last question on the year over year?

Oh, just how much was volume up year over year? You said 6% sequentially I believe in your comments. I'm just curious what that compares against in the year-ago period and sort of why that's so strong.

I'll get you the year-over-year, but Mark, do you want to just cover the -- okay. It's -- Vincent, what we've got with going on in engineered materials is really a deep focus on projects that are opportunities and are going to drive value for the business. And so one thing that Scott -- one thing that Scott Sutton has brought to that business is an increased focus on the opportunities in the pipeline that are true opportunities with a customer that is aligned with us on the value that we're creating. And that's something that he is really gotten the whole organization moving in one direction on. And we've talked a lot about launches in that business and needing to launch about a thousand new products or applications annually. And that launch means to have a purchase order from a customer. And that's the real focus that Scott has brought to the businesses. Lots just ideation and a lot more opportunity focus. So that's part of the reason why we've been able to drive such good results in that business. Mark, do you want to add anything to that?

I'm sorry, Vincent. At first I thought you were talking about Scott Richardson and Pat working together. The thing I'll talk about both these guys that really means a lot to me is that they are really focused on return on capital. And so we're really driving all of our business decisions to make sure that we're continuing to push, the ROIC of this corporation. And these guys bring a heightened sense of that so each incremental step, every decision we make, we're debating and discussing that. I think the power within that will show over time as we continue to drop returns and free cash flow out of this business.

And Vincent, on the volumes year-over-year, it's pretty consistent.

Okay. Thanks very much, guys.

Thanks.

You bet. Thanks. Keith, let's move to the next question.

Thank you. That comes from David Begleiter with Deutsche Bank.

Thank you. Good morning.

Good morning, David.

Mark, could you just walk us through globally, acetic acid and VAM fundamentals, how you see the back half developing, tightness or not tightness?

In general sense, I think the industry is operating as it has been for a while, David, in the high 70%, low 80% capacity utilization, depending on how you do the math. When you look at it from a consumptive point of view, a lot of the world's acetic acid produced is consumed within China, maybe as much as 50% in some ways. So that -- the capacity utilization is largely a function of what's going on within China, and we've seen in China really pretty weak fundamentals across all industrial chemicals through the year. We don't necessarily see that changing, David.

There's some trends that would indicate to me that volume is picking up in the coatings arena and some of the derivatives and we've seen benefit of that in our business. And we're seeing some benefits from a marginal point of view and in raws there. But we expect just on the acid basis for the global consumption to remain pretty much as it has been, which is pretty modest growth year over year, and we don't see anything fundamentally that's going to change that short-term.

On the VAM side, VAM can be impacted a lot by dramatic swings in ethylene. And we certainly saw that in China this last quarter, where the ethylene margins maybe four times normal in that region and that put a short-term slam into that business. That's already reversing itself. So I think VAM margins will be increasing as we go through the year and going forward.

Very good. And, Mark, just on AEM, in the base business you've had an exceptional first half of the year. This is just operating profit. Can that be sustained in terms of both margins and dollars in terms of the momentum in the back half of the year?

Well, I think if you look beyond -- you get some elements of seasonality in there, David. Classically, in the materials business you have a pretty weak fourth quarter, pretty weak November, December. So I think if I can't take that seasonality out, I'll say, yes, in a broad sense this business -- we're going through step changes of improvement in business. Jon mentioned the new product introductions. We have a machine that's really working and employees are energized and we put out a high water mark of 1,000 per year and we think we'll press that this year, which is not quite 2X, but virtually 2X what we've done in our past. Yes, I think the machine is changing. In this first half, again, with a little bit of seasonality thrown in the back half of the year is indicative of the kind of growth I would expect out of that business.

Very good. Thank you very much.

Thanks a lot.

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

And that is Frank Mitsch from Wells Fargo Securities.

Good morning, folks.

Good morning.

Mark, just wanted to say kudos on bringing Pat Quarles on board. Had an opportunity to work a fair amount with him in the past and a very solid individual.

Wanted to talk about use of cash. You highlighted in the release, I don't know if it was under your commentary or Chris' commentary. The lowest net debt in Company history. So that begs the question, you did mention some level of share buyback consistent 2015 with 2014. What else can we look to Celanese to do in terms of its cash position?

Well, we're trying to build, and we've been working this, as you know, Frank, for the last couple of years, really a commercial model that generates a lot of free cash flow and does that in a reproducible fashion. Celanese has been bit in the past for being dependent on China and other things like that. You can't look at our data today and say any of that is still true anymore. This machine, we can run it without regard for the subtle influxes or subtle movements in regional economies around the world.

Our priorities have stayed the same, which is to say we kind of march through from investments in the business to having a sustainable dividend program, to bolt-on kind of acquisitions to big acquisitions. We remain focused in trying to find the right bolt-on properties that are out there and do that in a way that is instantly accretive to all the returns that we all care about and I just want you to know that's real hard to do. So we're moving towards more of this being returned to shareholders and we mention that we'll be at least at the level we were last year this year, and I would expect later in the year we'll talk more about how on a longer-term basis we can be more aggressive returning that cash to shareholders.

All right. That's very helpful. Chris, in describing the foreign exchange headwind for 2015, you used the term massive. I think you were talking about $0.75 expectation after Q1. Is that still in line with what your thoughts were?

So for the back half of the year, assuming it kind of stays in the range that it is right now, the Euro, that's probably around $0.35. I think we said $0.30 to $0.40 in the materials.

Right. Yes.

All right. Terrific. Thanks so much.

Thanks, Frank. Keith, let's move on to the next.

Okay. That comes from Bob Koort with Goldman Sachs.

Good morning, guys. This is Brian Mcguire on for Bob.

Hi, Brian.

I think last quarter you maybe indicated the second-quarter earnings would be maybe $0.15 or so below where you came in at, but you raised full year by about a dime. Just wondering if there's any, anything that's changed to make you a little bit more conservative about the back half of the year, and I think you mentioned some slowdown in China maybe recently. How conservative is that and do you feel like anything is really changed against you since the first-quarter earnings call?

No, I think we, we just -- we're just tightening up the range a bit. I think that's the way you should look at it, that we put a pretty broad range out there when we started this and we're trying to signal a tightening of that, and an upward movement and what we think a normalized number would be. That's what we're doing. No, there's nothing -- we're not looking at the back half of the year as being -- as foretelling of anything negative that would -- anything negative.

Okay, great. Just on the CapEx outlook, could you provide an update for the year and maybe tied into that, how the methanol plant is coming in versus your original budget. And maybe kind of an early look at 2016 as some of that spending on methanol drops, any kind of early feel for where CapEx might shake out next year? Thanks.

I'll take the CapEx question and then Mark can give you an update on the project. We're $350 million to $400 million for this year, net of the contributions that our joint venture partner gives back to us. Just as a reminder when you're looking at our cash flow statement, you have to do that math. Since we consolidate that venture, the mid share shows up down in financing, so you need to remember to net that against the CapEx that you see. So that number is probably $350 million to $400 million.

Going into 2016, as we get closer, we'll update you with specifics, but it should go down. And I think generally what you can expect here with that is increasing levels of free cash flow generated by the business. That's why we'll be talking to you more and more about shareholder returns as well. Mark, do you want to talk about the project?

What's really been a fantastic project, if you look at the success we've had constructing this very large scale plan in a very short period of time has been just phenomenal. We have had major impacts from rain, pressing 90 days since the start of the project, and I was asked that day, how is that possible? We had planned in our project some rain delays and some efficiency gains. And so what we've seen is the project slide from what we really anticipate one time would be a July kind of completion more to end of August kind of completion. Of those three months, which probably cost us a month and a half or so on what our perfect schedule would have been. Nonetheless, we expect to be operating by the October 1 and the plant's essentially complete now in terms of big items of equipment. We're in the commissioning stages, early commissioning stages of the plant as we speak. I think it's gone pretty well.

Regarding costs, I think we'll be 15% over on the project, something like that. Could be a skosh higher or a skosh lower. It really boils down almost exclusive to construction efficiency. Part of that was the rain where we had to just increase staffing to manage those days and part of that was really in the pipe fitting and welding trades, which are pretty difficult for us. Everything else for us was actually very very efficient, as you would expect. So I think it's going to come in essentially 15% over, something like that.

Great. Thanks very much.

Thank you.

Thanks, Brian. Keith, let's go to the next.

Thank you. That comes from PJ Juvekar from Citi.

Yes, hi, good morning.

Hi, PJ.

Mark, you have announced several price increases in acetyls in the first half. You talked about sort of weak operating in China. Are these price increases part of your new contract structure that you have in place now that you're getting rid of all of these old index contracts?

And secondly on acetyls, you got a couple of moving parts on the raw materials side. You got ethylene costs that should come down with turnarounds coming to an end, and then you got this purchased to produce methanol thing. Can you talk about the raw materials side as well? Thank you.

Let me -- give me one second and we'll get actual numbers for you. But when you look at, when you look at the raw material front, we had a negative impact of ethylene that can be measured maybe in $20 million or so this quarter, that kind of headwind, PJ. And it's probably going to reverse itself next quarter. So those two things are kind of going to wash out over this two or three quarter period. And in a fundamental sense, I think that's what we've really done is have a contract arrangement, PJ, help running the business, is really minimize, if you will, the victimization of these out of cycle spikes in movements and price. We're not totally free of it. So many problems we had here, but we're getting to be largely free of big impacts relative to those things.

And PJ, the first question was what? I'm sorry.

Just talking about the price increases that you announced so far and the fact that things are still a little weak in China.

They are. A lot of these markets are -- if you look at the chain markets, they are much more regional. If you think of the acetic market, it's more international case. So what you're seeing is, we're trying to be very open and transparent what we're doing in the marketplace and we're pushing pricing hard. As Chris mentioned earlier, we've actually had great success overcoming what's been big stack of unbelievable headwinds as we go into this year with currency and with methanol, to name two of them. So I think they are just indicative of what we're doing and how aggressive we're being to draw value and see if we get a return on our invested capital in these businesses.

And just had a second question for Chris on all the write-downs that you had. Can you just talk through the logic of $39 million ethanol plant write-down which we know what it is, and then also $5 million on business optimization charge, and then $6 million on the fairway methanols?

Yes, so the fairway methanol and TDU really kind of -- the technology development unit, are really kind of the same thing. So that was -- the decision to write off some assets in that ethanol activity that at this point we really wouldn't need to further advance that technology if we decide to do that. So as you know, we've got the fully operational plant in Nanjing, that right now produces industrial ethanol. There's also a pilot plant, I believe at our clear lake facility, separate from the technology development unit on a smaller scale. And we can advance the technology if we need to with those assets. So we thought that meant it was the appropriate time to recognize that in our asset valuation. Oh, your other question was business optimization.

Yes.

That's mostly the project costs associated with our European headquarter transition that is almost complete at this point.

Okay, thank you.

Okay. Thanks, PJ. Keith, let's go to the next.

Thank you. That comes from Laurence Alexander with Jefferies.

Good morning. Two questions. Mark, can you give a sense for the structural improvement opportunities you have left over the next three to five years and will the annual tail wind start to diminish? I mean, is it going to get tougher to deliver the kind of cadence you've had the last couple of years?

And secondly, as you look at the portfolio, do you feel that you have the right alignment given the choppiness that you're seeing in the end markets, particularly in AEM, or is there any repositioning or some bolt-ons that you need specifically for that business?

So the first two are really kind of productivity questions I guess, Laurence. And what we see is that we've kind of set in our minds that we need to be at $100 million run rate in our businesses. We're clearly going to get that this year. I think we'll get that next year. So my gut is that if you look at it relative to this year's basis of $100 million, we should be able to press, based on those things we've done this year, $200 million next year. And I don't think that's over. In other words, I don't think that's one-and-done. I think as we look at it, as Chris looks at it and others, there are opportunities for us to continue to drive further and further efficiency in our business and in the business model. So my belief is that kind of run rate for us should be something that we, we can continue for a little while anyway.

If you're looking from a portfolio point of view, there are chemistries we like to have in our business. And I kind of don't necessarily want to call them out specifically, but we remain resolute in trying to find ways to bring them into our portfolio. They would involve acquisitions, primarily bolt-on acquisitions. It's just been very hard for us to do. So that's an area that we have a similar team working, much like we do on new product introductions. We want to get to a point we can be an M&A machine in bringing in small and bolt-on kind of properties to really enhance this model that we think is clearly differentiating us in the marketplace. But it's been a bit frustrating. We've not been able to -- which has turned out great for us, we've not been able to do as much of that as we want.

Then on a similar vein with the cellulosics, in the past there's been some discussion of repositioning some of those assets into other areas such as biopolymers. How long do you think that business has before you can say those experiments are working or not working?

Well, the experiments are working. We're having success with those biopolymers. It's just the uptake -- when you are trying to replace [toe] if that's a mindset that you have, it's going to take a lot of additional work for us to get to that point. We're pleased with some of the progress we're having, particularly in CelFX that we're having out there, but it's just getting started. Ways to go.

Okay, thanks. Thanks.

Thank you.

Thanks, Laurence. Keith, let's move to the next question.

And that's from Hassan Ahmed with Alembic Global.

Good morning, Mark. I wanted to revisit the AI side of things. Obviously a bunch of moving parts, like you rightly said earlier. On one side of things, obviously supply/demand fundamentals quite slack. Sudden contract was still alive and well in Q2, which obviously has expired now. So I guess you'll be contractless at least for Q3.

I'm just trying to figure out, you saw 420 basis points of sequential EBITDA margin declines. It seems the bulk of those come in the back of these higher ethylene prices. You mentioned $20 million there. I'm just trying to get a sense of, in today's relatively slack asset yield supply/demand environment, what is the sustainable EBITDA margin? Is it 15%? Is it 22% that you reported in Q1? Just trying to get a better sense of that.

15%. I'm looking -- I'm not looking through this next quarter.

No, no, surely. I'm just talking about let's say utilization rates remain within the low 80%s.

So pop over to next year, I would be surprised if it's not 15%, from a sustainable point of view. That's kind of a position that we've taken and we think that's -- that is on average sustained for a long period of time. We should have the ability on average to ratchet that up when we can do extraordinary things in the marketplace and take advantage of certain situations.

Seems the way you've structured the contracts you're trying to minimize the volatility there as well, that even on the upside you won't see huge spikes, neither will you on the downside.

Well, I'm okay for spikes that go up. I'm not trying to say those things, don't let that rumor get out.

Fair enough. Fair enough.

All we're trying to do is position ourselves to make sure -- we're not trying to -- we're trying to make sure we have the degrees of freedom to drive value and not subsidize customers over a long period of time, should the market move against us. And the position we're in, in prior life in many ways, we were increasing volatility to pushing customers to buy volume that they didn't need and just drive lower and lower pricing. Or the other way around, we were running ourselves to a situation where the market was totally -- tremendous flare-up in prices. We are trying to mute I think the industry volatility. But on a day-to-day basis, we're trying to maximize the net back to Celanese on the return. Chris, do you want to make a comment?

I wanted to clarify, I think your first question you said EBITDA margin.

EBITDA, yes.

I think we're talking about EBIT margins.

EBIT margins.

EBITDA would be a couple percentages higher than that.

Okay, so call it 17%, 18% EBITDA?

Yes, that's about right.

Fair enough. As a follow-up, obviously, clearly it seems to be on track despite the headwinds from the rains and the like, but any further decisions regarding a second methanol plant?

Yes, we're continuing to work with our partner. We've reached out to some other potential interested parties and people have been reaching out to us. So there's a sort of new consortium that's been formed to try to find the ideal way to bring this on, the ideal location. I wouldn't expect a decision on methanol this year, the second project. We do have permits in hand for Bishop, but we are certainly willing to and we are exploring some other options that could afford better economics for us now. We're continuing to look at it. Be mindful that our interests will be about a third of a new commercial unit and that will be kind of our max interest, which should balance us very well in the US. That means we need another partner for two-thirds. Or we need another two partners.

Fair enough.

We're working that and taking our time with it, but we think that probably a year from now we'll be in position to say we're going to do it or not.

Super. Thank you so much, Mark.

Thank you. Appreciate it.

Okay. Thanks, Hassan. Keith, let's move to the next two questions and have these be the last set.

Okay. Very good. The next question comes from the line of John Roberts with UBS.

Good morning.

Good morning, John.

I'm looking at slide 4 down at the bottom where it talks about the shared in integrated activities of the Company. On the outside all we can see is the interest segment sales. Is there any metrics you can help us with in terms of understanding how much sharing, how much integration there is?

This is Jon. I'll start on that. We are in a very tight chain when you think about where we participate. And when you go from essentially having 95% of our products that are coming off of methanol and ethylene, we sit in a very tight chain and we get a good benefit from that from a raw materials standpoint and the efficiencies that we get on raw material that goes into supply chain.

We also have large integrated facilities that also gives us a cost advantage in certain areas of the business and there's also shared technology and technology in innovation development that we use across the type chain that we participate in. That's what that's intended to capture, is the cross-company benefit that we get in being a very tight chain, where we take methanol and ethylene and produce acetic acid downstream products in VAM and then high-engineered plastics and other consumer products.

And you got a question earlier on currency. Is it still $0.03 to $0.04 to earnings for every Euro cent in the Euro exchange rate? Is there anything you're pursuing that might lower that leverage to the currency?

That's about right. Aside from financial hedges, which you can do, they always have a finite life, the only thing that we could really do to sort of permanently take that away would be to price all of our European contracts in dollars. And that's just probably not achievable. I mean, you've got to flow with the way business gets done there. There's some of that that we can and have done.

Okay. Thank you.

Okay. Thanks, John. Thanks to everybody on the line today. I'll be around for questions. Thanks for your interest in Celanese.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.