Celanese shares plunged on Tuesday after the chemicals manufacturer issued a weaker-than-expected forecast for the third quarter, warning of softening demand across most of its end markets.
The cautionary guidance overshadowed a second-quarter performance that topped Wall Street estimates.
The stock dropped as much as 20% to $37.81 in early trading before recovering some losses to trade down 13% at $40.65 by mid-morning in New York.
The S&P 500 was 0.6% higher.
Earnings top estimates, but guidance disappoints as demand remains low
For the quarter ended June 30, Celanese posted adjusted earnings of $1.44 per share, above analyst expectations of $1.40, according to FactSet.
Revenue rose 6% from a year earlier to $2.53 billion, matching consensus estimates.
“We are also pleased that the deliberate actions we took drove earnings results for us this quarter … However, the demand environment does not seem to be improving,” Chief Executive Scott Richardson said.
For the third quarter, Celanese projected earnings between $1.10 and $1.40 per share, with the midpoint well below the $1.68 analysts had been expecting.
The company reaffirmed its 2025 free cash flow guidance of between $700 million and $800 million.
Industry challenges weigh on outlook
Celanese said it expects weaker demand across most major markets in the second half of 2025, citing continued pressure in construction, industrial, and automotive sectors.
A sequential $25 million hit from inventory reduction measures is also expected to dent third-quarter results.
The broader chemicals industry has faced headwinds this year, including elevated energy costs and sluggish European demand.
Celanese shares are down 31% year-to-date, compared with an 8.4% rise for the S&P 500.
“In this low-demand environment that remains uncertain, we will continue to emphasize cash flow,” Richardson said.
The company plans to maintain operational flexibility to match production with available demand.
Micromax divestiture plans move forward
Celanese is progressing with plans to sell its Micromax electronics division, which produces specialty inks and pastes for high-performance applications in navigation, defense, medical monitoring, and circuit boards.
The company said it has moved into the second round of the divestiture process, attracting interest from multiple potential buyers.
The planned sale, first announced in May, is part of a broader strategy to reduce debt and strengthen liquidity.
Analysts see limited upside until 2026
RBC Capital Markets, which rates the stock “sector perform” with a $63 price target, said it does not expect meaningful earnings upside in the next year due to persistent sector headwinds.
“CE did mention auto destocking in Europe has eased and continued alleviation of inventory actions could result in an uplift in 2026,” RBC said.
Baird, which rates Celanese “outperform” with a $67 target, said the weaker guidance is likely to weigh on sentiment despite management’s proactive cost cuts, asset sales, and cash flow focus.
“In our opinion, while the management team of Celanese is pulling on the right self-improvement levers (cost-outs/asset sales/maximizing cash flow) … end-market volumes remain at a low point – with 3Q earnings partly impacted by inventory reduction initiatives,” it said.
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