<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
the Securities Exchange Act of 1934
For the month of November 1999
CELANESE AG
(Exact name of registrant as specified in its charter)
CELANESE CORPORATION
(Translation of registrant's name into English)
D-65926 Frankfurt am Main, Germany
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will
file annual reports under cover Form 20-F or Form 40-F
Form 20-F X Form 40-F ______
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes _______ No X
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-________.
Page 1
<PAGE> 2
CELANESE AG
On November 23, 1999 Celanese AG, a stock corporation organized under the laws
of the Federal Republic of Germany, issued a Press Release announcing its
results for the third quarter 1999, which Press Release is attached as Exhibit
99.1 hereto and incorporated by reference herein.
Page 2
<PAGE> 3
EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Exhibit
----------- -------
<S> <C>
99.1 Press Release dated November 23,
1999 announcing results for the
third quarter 1999
</TABLE>
Page 3
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CELANESE AG
(Registrant)
By: /s/ P. W. Premdas
Name : Perry W. Premdas
Title: Member of the Management Board
(Chief Financial Officer)
Date: November 23, 1999
Page 4
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit
----------- -------
<S> <C>
99.1 Press Release dated November 23,
1999 announcing results for the
third quarter 1999
</TABLE>
<PAGE> 1
Exhibit 99.1
PRESS RELEASE [CELANESE LOGO]
Celanese AG
Your contacts: Corporate Center
Building F 821
Dr. H.-B. Heier D-65926 Frankfurt am Main
Tel. +49(0)69 305-7112
Fax +49(0)69 305-84160
Phillip Elliott
Tel. +49(0)69 305-33480
Fax +49(0)69 305-17082
- -------------------------------------------------------------------------------
Third Quarter 1999
- - Intense competition restrains third-quarter results
- - Profit enhancement and restructuring programs proceeding rapidly
- - Additional special charges to burden full year
Dear Shareholder
The third quarter of 1999 was marked by preparations for the demerger of the
chemical activities of Hoechst to Celanese AG and the subsequent listings in
Frankfurt and New York. By becoming an independent, listed company, we have the
opportunity to enhance the value of our business and establish Celanese AG as
one of the leaders in the chemical industry. Our new status gives us the
necessary flexibility to refocus and to play an active role in the restructuring
of the sector. To be in the top quartile of chemical companies in terms of value
creation for shareholders is our main objective. Our strategic priorities are
to:
- - generate value-added solutions for our customers
- - strengthen our global presence
- - enhance our leading technology positions
- - achieve cost efficiencies through rationalization
- - optimize our portfolio of businesses
Celanese AG's start as a public company is taking place at a time of intense
global competition, excess capacity and considerable pressure on margins due to
higher raw material prices. As 1999 is a year of transition during which we lay
the groundwork for the future, our financial statements also show substantial
restructuring charges. However, the business scenario is looking friendlier.
North American growth remains robust, the European economy is picking up, and
Asia seems to have overcome the recession.
Despite these positive trends, we will continue to focus intensely on
improving our profitability and restructuring where necessary. In addition, we
will invest for growth in our most promising businesses. We believe that the
keys to success in our industry are focus, flexibility, speed and creativity.
Overview of Third Quarter
Net Sales
<TABLE>
<CAPTION>
in euro millions 1999 1998 Chg in %
- ----------------------------------------------------------
<S> <C> <C> <C>
1st half 2,178 2,485 -12
3rd quarter 1,135 1,063 7
Nine months 3,313 3,548 -7
</TABLE>
<PAGE> 2
After a weak first half, net sales in the third quarter rose 7 % to (euro)
1.14 billion, compared to the third quarter of 1998. In the segments, higher
volumes (+4 %) and currency movements (+3 %) were primarily responsible for the
better performance. In addition, cost-related selling price increases in Acetyl
Products and Chemical Intermediates almost offset declines elsewhere. Overall,
prices were 1 % lower.
EBITDA* (excluding special charges)
<TABLE>
<CAPTION>
in euro millions 1999 1998 Chg in %
- ------------------------------------------------------
<S> <C> <C> <C>
1st half 127 252 -50
3rd quarter 94 123 -24
Nine months 221 375 -41
</TABLE>
*Earnings before interest, taxes, depreciation and amortization
EBITDA is our key measure of financial performance as it closely reflects
our cash-flow management style. We are excluding special charges from EBITDA for
better comparability between periods.
As compared with the third quarter of 1998, we recorded a 24 % decrease in
EBITDA to (euro) 94 million, primarily due to a continued squeeze on margins
resulting from over-capacity and increased raw material costs in a number of our
businesses.
Operating Profit
<TABLE>
<CAPTION>
in euro millions 1999 1998 Chg in %
- ---------------------------------------------------------
<S> <C> <C> <C>
1st half (238) 80 n.m.
3rd quarter (34) 43 n.m.
Nine months (272) 123 n.m.
</TABLE>
The overall operating loss of (euro) 34 million in the third quarter
narrowed substantially from the first six months of the year. As previously
reported, significant special charges at Ticona and Nutrinova depressed
first-half earnings.
Earnings per Share from Continuing Operations
<TABLE>
<CAPTION>
in euro 1999 1998 Chg in %
- --------------------------------------------------------------
<S> <C> <C> <C>
1st half (4.54) (0.38) n.m.
3rd quarter (0.79) (0.05) n.m.
Nine months (5.33) (0.43) n.m.
</TABLE>
The net loss from continuing operations amounted to (euro) 44 million, or
(euro) 0.79 per share in the third quarter of 1999. This compares with a loss of
(euro) 3 million, or (euro) 0.05 per share for the same period last year.
Including discontinued operations, net income was (euro) 10 million, or (euro)
0.18 per share as compared to a profit of (euro) 3 million, or (euro) 0.05 per
share a year earlier. The per-share calculations are based on the number of
shares issued at the time of the demerger.
<PAGE> 3
Profit and Loss
Combined Income Statements
<TABLE>
<CAPTION>
Q 3 Q 3 Chg. 9 Mos. 9 Mos.
in euro millions 1999 1998 in % 1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales 1,135 1,063 7 3,313 3,548
Cost of sales (936) (847) 11 (2,802) (2,839)
Gross profit 199 216 -8 511 709
Selling, general & admin. exp (172) (133) 29 (469) (480)
Research & development exp (18) (22) -18 (55) (77)
Special charges (40) (12) >100 (245) (27)
Foreign exchange losses (5) (10) -50 (19) (18)
Gain on disposition of assets 2 4 -50 5 16
Operating profit (loss) (34) 43 n.m. (272) 123
Equity income 16 4 >100 31 16
Interest expense (31) (34) -9 (90) (100)
Interest & other income, net 6 13 -54 48 46
Profit (loss) before taxes
from continuing operations (43) 26 n.m. (283) 85
Income taxes 4 (26) n.m. (11) (83)
Minority interests 5 (3) n.m. 6 (26)
Extraordinary loss (10) 0 n.m. (10) 0
Net income (loss)
from continuing operations (44) (3) n.m. (298) (24)
Net income from discontinued operations 54 6 >100 36 18
Net income (loss) 10 3 >100 (262) (6)
Earnings per share
from continuing operations ((euro))* (0.79) (0.05) n.m. (5.33) (0.43)
Earnings per share from continuing
and discontinued operations ((euro))* 0.18 0.05 >100 (4.69) (0.11)
</TABLE>
*Earnings per share are fully diluted and are calculated by dividing net income
by the average number of shares outstanding.
Key figures
<TABLE>
<CAPTION>
Q 3 Q 3 Chg. 9 Mos. 9 Mos.
in euro millions 1999 1998 in % 1999 1998
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Depreciation & Amortization 88 68 29 248 225
Capital expenditures 60 97 -38 185 250
Average shares outstanding (thou) 55,915 55,915 0 55,915 55,915
</TABLE>
In the third quarter of 1999, net sales amounted to (euro) 1.14 billion, up
7 % from the third quarter of 1998. Sales increases in the Acetyl Products,
Chemical Intermediates and Ticona segments more than offset declines in sales of
Acetate Products and Performance Products. In the nine-month period, sales
decreased by 7 % to (euro) 3.31 billion.
Despite the increase in third-quarter net sales, gross profit declined 8 %
as a result of sharply higher raw material costs for several businesses. The 29
% increase in selling and administrative expenses was due primarily to costs
associated with the demerger process and the realignment of our businesses.
Special charges of (euro) 40 million in the third quarter relate largely to the
planned shutdown of the Celanese Canada head office in Montreal and to
restructuring measures at various plants.
Equity income increased to (euro) 16 million from (euro) 4 million, mainly
as a result of an improvement at the polypropylene manufacturer Targor. We have
recently agreed to sell our interests in the 50 %-owned joint venture Targor to
our partner BASF, and we have signed a letter of intent to sell our 46 % holding
in the fluoropolymer producer Dyneon to our partner 3M. In the third quarter,
profits at our 45 %-owned Polyplastics technical polymers joint venture in Japan
were moderately below the comparable period of 1998 but higher than in each of
the first two quarters because of an improving economy in the Asia-Pacific
region.
<PAGE> 4
In the quarter, we had only a modest tax credit of (euro) 4 million on a
pretax loss of (euro) 43 million, and in the first nine months, there was a tax
charge of (euro) 11 million on a pretax loss of (euro) 283 million. Tax expenses
have been affected by non-deductible goodwill amortization, limitations on
foreign tax credit utilization, losses for which no benefits were recognized,
increases in valuation reserves in Germany and new tax consolidation rules in
Mexico.
The extraordinary loss of (euro) 10 million in the third quarter represents
a part of the costs associated with the early retirement of North American
outstanding public debt necessitated by the demerger.
In September, we sold our 52 % interest in the generic pharmaceuticals
producer Copley Pharmaceuticals to Teva Pharmaceutical Industries, and agreed to
sell our U.S. ethylene oxide/ethylene glycol plant to Old World Industries Inc.
We are in talks with potential purchasers to divest the Millhaven polyester
facility and the Celgard separation products business.
As a result of these planned divestitures, we have reclassified Copley,
Celgard, Millhaven and EO/EG as discontinued operations and have shown their
results separately in these financial statements. Net income of discontinued
operations totaled (euro) 54 million in the third quarter, primarily reflecting
an after-tax gain on the sale of Copley.
The income statement for the nine months shows special charges of (euro) 245
million versus (euro) 27 million in 1998. The most significant single items were
the (euro) 128 million charge relating to the plumbing cases and (euro) 38
million additional accrual for the Nutrinova sorbates anti-trust case. Remaining
charges relate to restructuring activities and demerger costs throughout the
organization.
Combined Balance Sheets
<TABLE>
<CAPTION>
Sep 30 Dec 31
in euro millions 1999 1998
- ------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets
Cash and equivalents 49 0
Marketable securities 1 1
Receivables, net 1,342 1,129
Receivables from Hoechst 873 819
Inventories 586 606
Deferred income taxes 192 152
Other assets 42 60
Net assets of discontinued operations 192 245
Total current assets 3,277 3,012
Investments 664 600
Property, plant & equip., net 1,853 1,754
Deferred income taxes 281 225
Other assets 636 667
Intangible assets, net 1,455 1,210
Total assets 8,166 7,468
Liabilities and Combined Equity
Current liabilities
Short-term borrowings and current
portion of long-term debt 1,051 430
Accounts payable & accrued liabilities 1,789 1,366
Liabilities to Hoechst 100 83
Deferred income taxes 14 16
Income taxes payable 283 298
Total current liabilities 3,237 2,193
Long-term debt 838 1,079
Deferred income taxes 76 79
Other liabilities 1,376 1,224
Minority interests 26 157
Combined equity:
Combined equity 2,542 2,851
Accumulated other comprehensive
income (loss) 71 (115)
Total combined equity 2,613 2,736
Total liabilities and combined equity 8,166 7,468
</TABLE>
<PAGE> 5
From January through September, the balance sheet total increased by 9 %
primarily as a result of the stronger dollar.
In order to optimize and grow our core chemical activities in North America,
we acquired the minority interest in Celanese Canada in August which was the
main factor behind the increase in net intangible assets. Investments in
affiliates increased primarily because the stronger yen influenced the value of
our holding in Polyplastics. Although capital spending was less than
depreciation in the nine-month period, net property plant and equipment rose
modestly, mainly as a result of currency movements.
During the first nine months, total financial debt increased from (euro)
1,509 million to (euro) 1,889 million. After deducting cash and equivalents and
adjusting for the special receivables demerged from Hoechst, net financial debt
increased from (euro) 1,026 million to (euro) 1,232 million. The increase was
primarily because of currency effects and the cost of the Celanese Canada
minorities.
Accounts payable and accrued liabilities rose, mainly reflecting increased
insurance reserves in our captive insurance activity which led to a
corresponding increase in receivables from reinsurance companies. Minority
interests decreased substantially due to the acquisition of the outstanding
minorities in Celanese Canada.
<PAGE> 6
Combined Statements of Cash Flows
<TABLE>
<CAPTION>
9 Mos. 9 Mos.
in euro millions 1999 1998
- -----------------------------------------------------------------------------
<S> <C> <C>
Operating activities from continuing operations
Net income (loss) (262) (6)
(Gain) loss from operations of
discontinued operations 40 (18)
Special charges, net of amounts used 175 (22)
Depreciation & amortization 248 225
Change in equity of affiliates (11) (4)
Deferred income taxes (160) (3)
Gains on sales of assets, net (5) (16)
Gains on sales of businesses, net (21) 0
Changes in operating assets & liabilities:
Receivables, net (89) 32
Inventories 60 (20)
Accounts payable, accrued liabilities &
other liabilities 199 (82)
Income taxes payable (72) 40
Other, net 40 32
Net cash provided by operating activities 142 158
Investing activities from continuing operations
Capital expenditures on property,
plant & equipment (185) (250)
Capital expenditures on investments (303) (3)
Proceeds from sales of assets 27 29
Proceeds from sales of businesses 105 0
Purchases of marketable securities, net (8) (29)
Other, net (3) (6)
Net cash used in investing activities (367) (259)
Financing activities from continuing operations
Short-term borrowings from third
parties, net (101) 323
Long-term borrowings from third
parties, net (353) 46
Short-term borrowings from Hoechst, net 675 49
Other net activity with Hoechst 57 (282)
Other (5) (32)
Net cash provided by financing activities 273 104
Net cash provided by operations 48 3
Exchange rate effects on cash 1 (1)
Net increase (decrease) in cash & equivalents 49 2
Cash & equivalents at beginning of year 0 13
Cash & equivalents on September 30 49 15
Net cash provided (used) by discontinued operations
Operating activities 4 5
Investing activities (8) (10)
Financing activities (1) 3
</TABLE>
During the first three quarters, net cash provided by operating activities
declined to (euro) 142 million from (euro) 158 million. Capital expenditure of
(euro) 185 million plus investments of (euro) 303 million were only partially
offset by proceeds from divestitures of (euro) 105 million, resulting in net
cash used in investing activities of (euro) 367 million. Cash was supplemented
by increased short-term borrowing, mainly from Hoechst, to finance the
acquisition of the Celanese Canada minority and the early debt retirement
necessitated by the demerger. In the fourth quarter, much of this higher
borrowing is to be replaced by third-party debt and the settlement of some
Hoechst receivables.
<PAGE> 7
Segment Performance
Portfolio
Celanese AG processes chemical raw materials such as ethylene, propylene,
natural gas and wood pulp into value added chemicals linked through an
integrated value chain. Celanese is divided into five segments: Acetyl Products
(acetic acid, vinyl acetate monomer and acetyl derivatives), Chemical
Intermediates (acrylic acid, acrylates and oxo products), Acetate Products
(textiles and filter products), Ticona (technical polymers) and Performance
Products (Trespaphan oriented polypropylene films and Nutrinova food
ingredients).
Acetyl Products
The Acetyl Products segment consists of three businesses: methyls, acetyls
and acetyl derivatives. Net sales of Acetyl Products rose 13 % to (euro) 392
million in the third quarter of the year from (euro) 346 million in the same
period of the previous year. Although selling prices are still lagging behind
volume developments, it has recently been possible to pass on higher raw
material prices to customers to a limited degree. Before special charges, Acetyl
Products recorded EBITDA of (euro) 27 million, a decrease of 54 % from a year
earlier. Despite progress on the implementation of cost-cutting programs,
profits fell sharply due to a difficult competitive environment.
Methyls experienced a tight squeeze on margins as a result of a significant
increase in the price of methane. Business is expected to remain difficult in
the near future, as a number of new competing plants come on stream. Acetyls are
also facing tight margins due to a rise in the price of the raw material
ethylene. Compared with a year earlier, sales volumes of acetic acid and vinyl
acetate monomer gathered pace in the third quarter, but prices remain low. Sales
of acetyl derivatives increased mainly as a result of higher volumes.
In the first nine months of the year, net sales of Acetyl Products decreased
5 % to (euro) 1,119 million as compared to (euro) 1,180 million a year earlier.
EBITDA before special charges dropped 61 % to (euro) 65 million.
Segment Sales
<TABLE>
<CAPTION>
Q3 Q3 Chg. 9 Mos. 9 Mos.
in euro millions 1999 1998 in % 1999 1998
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Acetyl Products 392 346 13 1,119 1,180
Chemical Intermediates 203 169 20 620 681
Acetate Products 171 197 -13 527 633
Ticona 191 179 7 575 573
Performance Products 100 105 -5 295 317
Segment total 1,057 996 6 3,136 3,384
Other activities 95 84 13 251 267
Intersegment
eliminations (17) (17) 0 (74) (103)
Total net sales 1,135 1,063 7 3,313 3,548
</TABLE>
<PAGE> 8
Factors Affecting Segment Net Sales
in the 3rd Quarter of 1999
<TABLE>
<CAPTION>
Cur- Consol-
in percent Volume Price rency idation Total
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Acetyl Products 6 4 3 0 13
Chemical Intermediates 12 3 5 0 20
Acetate Products -15 -3 5 0 -13
Ticona 8 -2 1 0 7
Performance Products 6 -13 2 0 -5
Segment total 4 -1 3 0 6
</TABLE>
Chemical Intermediates
The Chemical Intermediates business segment consists of acrylates, oxo
products and specialties. In the third quarter, net sales for the segment
increased by 20 % to (euro) 203 million from (euro) 169 million in the third
quarter of 1998. Before special charges, EBITDA showed a loss of (euro) 1
million, as compared with a profit of (euro) 22 million a year earlier.
In acrylates, the effect of higher volumes on earnings was more than offset
by a squeeze on margins resulting from a significant increase in propylene raw
material prices. Costs also rose in the quarter due to a maintenance turnaround
at the main plant in Clear Lake, Texas. Oxo products showed a recovery in the
third quarter, as an increase in prices was effected. Production problems at the
Bay City plant, which influenced the first half of 1999, have been resolved, and
output is picking up. However, the business is traditionally very volatile and
continues to be plagued by significant industry over-capacity. During the course
of 1999, specialties sales have exhibited the usual seasonal pattern of strength
in the first and third quarters as a result of association with the agricultural
markets.
In the first nine months of the year, net sales of Chemical Intermediates
decreased 9 % to (euro) 620 million from (euro) 681 million in first three
quarters of last year. EBITDA before special charges fell 61 % to (euro) 29
million from (euro) 75 million.
Segment EBITDA* (excluding special charges)
<TABLE>
<CAPTION>
Q3 Q3 Chg. 9 Mos. 9 Mos.
in euro millions 1999 1998 in % 1999 1998
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Acetyl Products 27 59 -54 65 168
Chemical Intermediates (1) 22 n.m. 29 75
Acetate Products 24 27 -11 67 108
Ticona 32 21 52 87 85
Performance Products 25 18 39 45 47
Segment total 107 147 -27 293 483
Other activities (13) (24) n.m. (72) (108)
Total EBITDA 94 123 -24 221 375
</TABLE>
* Earnings before interest, taxes, depreciation and amortization
<PAGE> 9
Segment Operating Profit
<TABLE>
<CAPTION>
Q3 Q3 Chg. 9 Mos. 9 Mos.
in euro millions 1999 1998 in % 1999 1998
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Acetyl Products 4 43 -91 (27) 110
Chemical Intermediates (18) 6 n.m. (22) 28
Acetate Products 7 15 -53 18 66
Ticona 10 8 25 (92) 43
Performance Products 5 8 -38 (33) 19
Segment total 8 80 -90 (156) 266
Other activities (42) (37) n.m. (116) (143)
Total Operating Profit (34) 43 n.m. (272) 123
</TABLE>
Acetate Products
Net sales in the Acetate Products segment for the third quarter decreased by
13 % to (euro) 171 million from (euro) 197 million in the third quarter of 1998
as a result of volume decreases (-15 %) and lower prices (-3 %) which were
partially offset by favorable currency movements (5 %). Cellulose acetate
filament continues to experience significantly lower volumes and weaker pricing
as a result of declines in the demand for acetate filament driven by a shift in
fashion away from filament-based fabrics, the Asian economic crisis and
inter-fiber competition. In accordance with the usual seasonal pattern,
shipments of acetate tow were restrained in the third quarter but are expected
to increase in the fourth.
Before special charges, EBITDA fell 11 % to (euro) 24 million from (euro) 27
million in the third quarter of 1998. The Acetate Products business line
continues to experience the negative effects of industry over-capacity and is
therefore intensifying efforts to maximize efficiency. The first-quarter
announcement that 15,000 tonnes of acetate filament capacity would be
permanently shut down in Rock Hill, South Carolina, and the recent announcement
of the closure of the 15,000-tonne acetate filament site at Drummondville,
Canada, are major elements in this strategy. The Drummondville restructuring
will be reflected in fourth-quarter results.
In the first nine months of the year, net sales of Acetate Products
decreased 17 % to (euro) 527 million from (euro) 633 million. EBITDA before
special charges declined 38 % to (euro) 67 million from (euro) 108 million.
Ticona
Ticona provides value-added solutions for its customers by developing and
supplying a broad portfolio of high performance technical polymers. In the third
quarter, net sales climbed 7 % to (euro) 191 million. The favorable impacts of
volume growth (+8 %) and exchange rates (+1 %) were partially eroded by lower
prices (-2 %). The improvement in business was partly due to the continuing
strength of the U.S. economy, especially in the automotive sector, and dry
weather in the U.S. resulted in higher sales for irrigation products. In
addition, the commercialization of new automotive applications, such as window
frames and airbag systems, added to revenues. Last year's third quarter was
impacted by the General Motors strike.
In Europe, business improved in Germany and to a lesser extent in France and
Italy. We successfully commercialized new applications in telecommunications and
appliances. In the third quarter, prices stabilized in Europe due to recovering
Asian economies and the resulting decrease in over-capacity.
Sales of polyacetal, which account for about half of Ticona's sales, rose in
the third quarter, after a slight decline in the first two quarters of the year.
The European Celstran(R) long-strand fiber business benefited from new
applications in the automotive industry, such as the production of a new
dashboard system for a European auto manufacturer. Ticona also realized gains in
the telecommunications market which is a key segment for Vectra(R) liquid
crystal polymers.
Before special charges, EBITDA in the third quarter rose to (euro) 32
million from (euro) 21 million. Earnings improved as a result of higher volumes
in most product lines combined with benefits from cost control and profit
improvement programs.
In the first nine months of the year, net sales increased slightly to (euro)
575 million from (euro) 573 million in the first nine months of 1998. Ticona
sustained an operating loss of (euro) 92 million in the first three quarters,
after an operating profit of (euro) 43 million a year earlier. The loss was
mainly due to a special charge of (euro) 128 million in the second quarter
relating to the plumbing cases. Before special charges, EBITDA increased 2 % to
(euro) 87 million.
Performance Products
<PAGE> 10
The Performance Products business segment consists of the oriented
polypropylene or OPP films business of Trespaphan and the food ingredients
business conducted by Nutrinova.
Net sales for the Performance Products segment declined 5 % to (euro) 100
million in the third quarter of 1999. At Nutrinova, a strong rise in sales
volumes of both the high intensity sweetener Sunett(R) and sorbates was more
than offset by lower prices due to the intensely competitive business
environment. At Trespaphan, prices fell in most product lines because of
over-capacity in the industry. The expansion of the plant in Mexico made it
possible to achieve higher sales volumes in the Americas, but the resulting
sales increase was partly offset by lower volumes in Europe where the market
remains particularly weak.
Excluding special charges, EBITDA for the whole segment advanced 39 % to
(euro) 25 million in the third quarter as compared to (euro) 18 million a year
earlier. The improvement was mainly due to better performance at Nutrinova.
Operating profit includes a special charge of (euro) 6 million linked to the
closure of Trespaphan's plant in Swindon, UK, and further charges will be
recognized in the fourth quarter. The closure of the site represents a step away
from commodity OPP films towards a greater focus on specialty products.
In the first nine months of the year, net sales for Performance Products
slipped to (euro) 295 million from (euro) 317 million a year earlier. The
segment sustained an operating loss of (euro) 33 million after a profit of
(euro) 19 million in the first nine months of 1998. The weakness of the
operating result largely reflects a (euro) 38 million special charge at
Nutrinova relating to U.S. antitrust actions in the sorbates industry. Hoechst
has agreed to indemnify Celanese for 80 % of any costs relating to this matter.
Celgard's financial results are reported under discontinued operations.
Other activities
Other activities primarily include the inorganic chemical lines, other
ancillary businesses and general corporate functions including charges relating
to the demerger.
Outlook
Although we reported an improvement in underlying results in the third
quarter as compared with the first half, we remain quite cautious concerning the
outlook for the full year.
We have recently accelerated our broad-based restructuring activities. This
process has involved a detailed review of the profitability of our businesses
and facilities, as well as the analysis of the valuations of our assets. As a
result, we will incur special charges in the fourth quarter in excess of the
amount recorded in the first nine months. The successful implementation of our
divestiture program is also expected to generate significant book gains and cash
proceeds.
The economic background in our most important geographic markets seems to be
firming, and we believe that prospects for growth are improving as industrial
activity picks up. We anticipate further increases in raw material costs but
also selectively in selling prices. Over-capacity is expected to continue to be
a problem in many of our businesses next year. While pressure on margins should
remain, we expect this to ease slightly. The global consolidation of the
chemical industry is expected to continue, and our strategy is to improve the
efficiency of all of our businesses, while participating actively in this
process.
Frankfurt am Main, November 1999
Celanese AG
The Board of Management
Footnotes
Results unaudited: The foregoing quarterly results, together with the
adjustments made to present the results on a comparable basis, have not been
audited and are based on the internal financial data furnished to management.
Accordingly, the quarterly results should not be taken as an indication of the
results of operations to be reported by Celanese for any subsequent period or
for the full fiscal year.
Results adjusted for discontinued operations: The foregoing quarterly results
have been adjusted for Copley, Celgard, Millhaven and EO/EG, which have been or
are being discontinued. The results of these businesses are reflected in the
income statement, balance sheet and statement of cash flows as discontinued
operations.
Year 2000
Celanese AG has continued the year 2000 risk prevention projects initiated
by Hoechst. Operating responsibility for these projects lies with the individual
businesses. They have substantially completed their inventories, risk
assessments, remediation and testing of their operations. In addition, they have
identified and evaluated the contingency planning of important customers and
suppliers. In some cases, mostly in connection with embedded chips and highly
specialized software, remediation and testing is continuing. The costs of the
Y2K project are currently estimated to be in the order of (euro) 32 million,
excluding the costs of plant shutdowns and the stockpiling of critical
inventories. No projects material to the business or the financial results have
<PAGE> 11
been deferred or delayed as a result of the Y2K compliance programs.
Forward-looking statements: Any statements contained in this report that are not
historical facts are forward-looking statements as defined in the U.S. Private
Securities Litigation Reform Act of 1995. Words such as "believe", "estimate",
"intend", "may", "will", "expect", and "project" and similar expressions as they
relate to Celanese or its management are intended to identify such
forward-looking statements. Investors are cautioned that forward-looking
statements in this report are subject to various risks and uncertainties that
could cause actual results to differ materially from expectations. Important
factors include, among others, changes in general economic, business and
political conditions, fluctuating exchange rates, the length and depth of
product and industry business cycles, changes in the price and availability of
raw materials, actions which may be taken by competitors and by regulatory
authorities, changes in the degree of patent and other legal protection afforded
to Celanese's products, problems encountered in connection with the "Year 2000"
issue, potential disruption or interruption of production due to accidents or
other unforeseen events, delays in the construction of facilities, potential
liability for remedial actions under existing or future environmental
regulations and potential liability resulting from pending or future litigation,
and other factors discussed above. Many of the factors are macroeconomic in
nature and are therefore beyond the control of management. The factors that
could affect Celanese's future financial results are discussed more fully in its
filings with the U.S. Securities and Exchange Commission (the SEC), including
its Form F-1 Registration Statement filed with the SEC on October 25, 1999.
Celanese does not assume any obligation to update these forward-looking
statements, which speak only as of their dates.
Next Announcement
Results for the 4th quarter of 1999 will be announced on March 23, 2000.
