Celanese Q4 2025 Earnings Call Transcript

AlphaStreet
Provided by AlphaStreet
February 19, 2025
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Operator

Greetings, and welcome to the Q4 2024 Earnings Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduceBill Cunningham, Vice-President of Investor Relations. Thank you. You may begin.

Bill Cunningham
Investor Relations at Celanese

Thanks, Daryl. Welcome to the Corporation 4th-Quarter 2024 earnings conference Call. My name is Bill Cunningham, Vice-President of Investor Relations. With me today on the call are Scott Richardson, President and Chief Executive Officer; and Chuck Kirrish, Chief Financial Officer. Selenes distributed its 4th-quarter earnings release via BusinessWire and posted prepared comments and a summary presentation of key 2025 actions on our Investor Relations website yesterday afternoon.

As a reminder, we'll discuss non-GAAP financial measures today. You can find definitions of these measures as well as reconciliations to the comparable GAAP measures on our website. Today's presentation will also include forward-looking statements. Please review the cautionary language regarding forward-looking statements, which can be found at the end of both the press release and the prepared comments. Form 8-K reports containing all of these materials have also been submitted to the SEC.Before we open it up for questions, I'd like to turn the call over to Scott Richardson for some opening remarks.

Scott Richardson
Chief Executive Officer and President at Celanese

Thanks, Bill, and good morning, everyone. I strongly believe is a company that has cash generation, productivity and cost-reduction in its DNA. These core competencies have driven shareholder value over our 20 years as a public company. We are keenly focused on invigorating and capitalizing on these foundational capabilities in how we lead and drive business every day-to improve performance and drive value-creation.

My first two months as CEO have been about prioritizing and driving action. Decisive steps we have taken to date include the following. We have executed on over $75 million worth of cost action that we outlined in our Q3 earnings call. We have reduced our 2025 capital plan to $300 million to $350 million, which is about $100 million reduction versus our spend last year.

We have added a new leader to the Engineered Materials business in Todd Elliott to bring a fresh perspective and new energy to reducing complexity and driving improved results. We have added Chris and Scott Sutton to our Board of Directors to bring additional finance and operational expertise to our Boardroom, given the prioritization of cash generation, margin expansion, productivity and deleveraging. And we have added a finance and business review committee to the Board of Directors, which Scott Sutton and I will jointly chair.

This committee will help evaluate all options to improve the company's operating model performance, drive cash generation and review our portfolio. We are taking the right steps to accelerate shareholder value-creation and restore our performance at top-decile levels in the industry. We are moving forward with intensity and aggressiveness and are not hesitating to make bold changes to generate cash and deleverage the balance sheet.

We know the journey in front of us is not an easy one, but we are energized by the opportunity ahead. We will share wins no matter the size as we progress in the coming months and I look-forward to reporting on our progress as we advance our plans to improve performance and drive value-creation.

Thank you. And now, Daryl, let's open the line for questions.

Skip to Participants
Operator

Thank you. We will now be conducting a question-and-answer Session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick-up your handset before pressing the star keys. One moment please for the first question.Our first questions come from the line of David Begleiter with Deutsche Bank. Please proceed with your question.

David Begleiter
Analyst at Deutsche Bank Research

Thank you and good morning. Scott, you mentioned some divestitures in the prepared comments. Could you get some sense of potentially the size of these divestitures and when they might occur?

Scott Richardson
Chief Executive Officer and President at Celanese

Yeah. Thanks, David. Look, we've been working aggressively on divestitures for some time now. And we did a transaction a few years ago with the Food ingredients business. And I would look at most of what we're looking at is kind of around that size, some smaller, some maybe slightly a little bit bigger than that. But that's kind of the right range to look at kind of the opportunities that we have.

David Begleiter
Analyst at Deutsche Bank Research

And one more thing, I know equity raise is not your first choice, but given this -- where the balance sheet is today, what are your thoughts on potentially raising equity at some point to help delever the balance sheet?

Scott Richardson
Chief Executive Officer and President at Celanese

Look, our capital structure is to fund our acquisitions with debt. In addition, we're unlocking cash from actions we've taken on the dividend, reduction of capex, reducing working capital, and we're aggressively working divestitures as I just talked about. Look, equity is extremely dilutive and we don't believe that's a step that's necessary given the strength of the debt market.

Bill Cunningham
Investor Relations at Celanese

Yeah, David, hey, I can add to that. Look, as Scott's -- as Scott mentioned, we're taking numerous actions to reduce leverage. But what you're also going to see us continue to do in the meantime is be proactive in reducing the risk in our debt maturities. We have a plan and we've prepared to access the debt markets quickly and opportunistically and credit markets are very strong right now. The principles around that are going to be to extend a portion of our more near-term maturities, aligning what remains with our cash generation and we'll make sure and do that at a prudent and reasonable cost.

Chuck Kyrish
Senior Vice President and Chief Financial Officer at Celanese

Thank you very much.

Operator

Thank you. Our next questions come from the line of Frank Mitch with Fermium Research. Please proceed with your questions.

Frank J. Mitsch
Analyst at Fermium Research

Hey, good morning. I want to dive into your outlook for the first-half of the year. As you talked about the second-quarter, you indicated that it wouldn't have the $100 million of non-repeating items that are impacting the first-quarter. And yet, if I look at the dollar increase expected versus the first-quarter, that only implies like $20 million or so of improvement from volumes and SG&A, et-cetera, which frankly, looking at 2Q versus 1Q, that really doesn't seem like that much. Can you help explain the kind some of the thinking there?

Scott Richardson
Chief Executive Officer and President at Celanese

Yeah. Thanks, Frank. Look, we're getting some of that here at the end-of-the first-quarter in that number, not a lot, lot, but a little bit. And so that incremental in the second-quarter is about that rate range you talked about. There's most of -- we'll be on the run-rate in the second-quarter, certainly to get to the full kind of $80 million that we called out. And we're continuing to work additional actions. So look, it's really important that we look at what we see right in front of us and be transparent with that. We are working a number of other actions to list not just the back-half of the year, but also work -- we can get more in Q1, we're going to do it, and we're going to do everything we can to make that Q2 number bigger than that dollar you called out.

Frank J. Mitsch
Analyst at Fermium Research

Got you. Thank you. And then the other thing in the prepared remarks was a comment that free-cash flow for 2025 is expected to be higher than 2024. And I'm curious if you can kind of go through kind of order of magnitude that the Street should be thinking about and how do you get there?

Scott Richardson
Chief Executive Officer and President at Celanese

Well, Frank, you know, we haven't given the guide for earnings at this point in time for the year. But what I wanted to lay out are components and free-cash flow below the EBITDA line that we do expect to improve significantly year-over-year, right? So working capital was a use of cash last year, expected to be a source of cash. Cash tax will be significantly lower. We've lowered capex roughly $100 million, right?

So those -- before giving a guide for earnings as we're kind of working through several things, I just wanted to lay out areas in free-cash flow that will improve year-over-year below EBITDA.

Frank J. Mitsch
Analyst at Fermium Research

Thank you.

Operator

Thank you. Our next questions come from the line of Jeff Zakakis with JPMorgan. Please proceed with your questions.

Jeffrey J. Zekauskas
Analyst at JP Morgan Cazenove

Thanks very much. Scott Sutton has been brought in to the board of Selenes. I was wondering, Scott, if you played a role in bringing him in or what role you played in Scott coming to the Board.

Unidentified Speaker
at Celanese

Look, Scott and I have known each other for a long-time, and I'm thrilled that Scott has agreed to join the Board. I think we have been on a path as a Board that's been very deliberate in how we refresh. The Board with capabilities, they're going to help us navigate the landscape that we're in. And Scott is the latest ad in that. And he brings unique capabilities and has a track-record of accelerating cash generation, deleveraging, value-creation and I'm really excited that he is going to help us in this journey.

Jeffrey J. Zekauskas
Analyst at JP Morgan Cazenove

Okay. Second question is, in your prepared remarks, what you said was that over-time you reduced costs associated with the M&M acquisition by about $250 million. And then later in the script, what you say is that there's been competitive dynamics in your largest product lines like nylon, which offset year-over-year improvements made to the cost position and as well as lower raw materials and manufacturing footprint cost-reduction. So when you look at the M&M business from the time that you acquired it, like where do we stand now? Is the EBITDA really no different because price degradation has offset all of the cost-improvement or -- or you know, can you give us like a -- where did we start and where are we now with the M&M acquisition?

Scott Richardson
Chief Executive Officer and President at Celanese

Yeah. We have increased the EBITDA from M&M. When you look at the synergies versus where it was when we closed the transaction, Jeff. And we have seen margin degradation in some product lines within the M&M portfolio. We've also seen some margin degradation in some of the product lines in the historical sellings portfolio. We've also seen several product lines that have expanded margins. And this is a critical area of focus for us this year.

Reversing this margin compression that we've seen broadly across the standard part of the EM portfolio is a critical action for us that we need to deliver on to kind of lift the second-half of the year.

Jeffrey J. Zekauskas
Analyst at JP Morgan Cazenove

Great. Thanks so much.

Operator

Thank you. Our next questions come from the line of Michael Sassan with Wells Fargo. Please proceed with your questions.

Michael J. Sison
Analyst at Wells Fargo & Company

Hey guys, good morning. I maybe a follow-up on M&M. Could you maybe just give us your thoughts on, yes, is this a good business for Selenes longer-term? I mean, what do you think the potential is here and how do you sort of get it there? And I suspect there's some macro help that you'll need there, but just what is the potential for M&M now going-forward?

Scott Richardson
Chief Executive Officer and President at Celanese

Yeah. Thanks, Mike. I mean, we've seen some challenges, but we've also seen some strength in several of the businesses. I mean, our nylon portfolio that we acquired with the business has been a nice source of growth for us in electric vehicle applications. With things like superior thermal shock characteristics in certain application areas.

And we have also seen kind of the products that we acquired have been -- have given us kind of a new growth platform in athletic apparel and footwear that we didn't have before. So there are really nice pockets of opportunity for us and we've got to go really aggressively work that from a project pipeline standpoint.

And then there are good parts of the Nylon portfolio as well. And so we've got to keep kind of keeping this machine moving from a pipeline standpoint and we've also got to make sure that we aggressively work the cost side of the equation, just given where the fundamental macro is at.

Michael J. Sison
Analyst at Wells Fargo & Company

Got it. And then most folks haven't given an outlook for the full-year '25, I understand that. But should EBITDA be better in the second-half versus the first-half? And maybe if you don't have specifics, what should be better or could be better in the second-half in terms of the walk for a better EBITDA? And then can you just give us your general thoughts on what the economic backdrop we should think about in '25 for?

Scott Richardson
Chief Executive Officer and President at Celanese

Our focus is on moving Moving with urgency, Mike, to take decisive actions be able to drive wins. The actions that we're taking, we believe will be unique for us to drive value in the out quarters here. We talked about the complexity reduction, $50 million to $100 million of opportunity in EM. We need to make sure that we're fully leveraging the Acetyls optionality model, which was challenging in the second-half of last year. Historically, we've been able to drive good value by flexing up-and-down the value chain there. And the third is getting back to this point I just talked about on reversing margin compression in both the standard parts of the Engineered Materials portfolio, but also in the acetyls business.

Michael J. Sison
Analyst at Wells Fargo & Company

Thank you.

Operator

Thank you. Our next questions come from the line of Ghansham Panjabi with Baird. Please proceed with your questions.

Ghansham Panjabi
Analyst at Robert W. Baird

Thank you. Good morning, guys. Scott, first-off, congrats on your new role and best wishes with everything. I guess going back to the EM segment and the new leadership there, just curious as to how we should expect strategy to sort of evolve versus what you have been doing? And then relatedly, can you just comment on your view in terms of channel inventory levels downstream to that segment, the customer level, et-cetera?

Scott Richardson
Chief Executive Officer and President at Celanese

Yeah. Look, Todd Elliott already is bringing intensity and focus around everything that we do, looking at-cost and opportunities, whether it be footprint, warehousing, distribution costs, SG&A, et-cetera, but also on the customer side, as you talked about. And it really is about looking at the pockets of opportunity that are out there and accelerating in some of those higher-growth segments like medical, like electric vehicles in China, future connectivity.

And so really getting to that customer segment level, defending the base is going to be important, but then also accelerating growth and driving project wins, no matter the side?

Ghansham Panjabi
Analyst at Robert W. Baird

Got it. And then obviously, Scott, we've been in a two-year global manufacturing slum. You've been pulling levers on the cost side and working capital the best you can. But what are some of the other contingencies you have at your disposable in the scenario that the current paradigm continues for another year or longer in context of your debt load? Thanks.

Scott Richardson
Chief Executive Officer and President at Celanese

I believe there's always more that can be done, Ghansham. And I think we've shown that with cost given where the demand landscape is at, we are looking at really all elements of the business. And I just kind of highlighted on the Engineered Materials side of things with those action steps that we're taking to reduce complexity. We have some of the similar things on the acetyl side of the house as well. And so it's really about kind of taking a no-stone unturned approach to everything that we're doing and also then looking at really almost every single customer interaction on how we can drive incremental opportunities and then also make sure we're really extracting full value on the margin side.

Ghansham Panjabi
Analyst at Robert W. Baird

Okay. Thank you.

Operator

Thank you. Our next questions come from the line of Josh Spector with UBS. Please proceed with your questions.

Unidentified Participant
at Celanese

Hey, guys. This is James Cannon on for Josh. Thanks for taking my question. I just wanted to ask on the earnings power of the business. I think previously you said 2024 was a typical run-rate for the near-term. I think if I think about the contract resets, that would be an incremental, Call-IT, $40 million, $50 million headwind this year. Is that the right ballpark? Or is there something to offset that gets us back to the 1.1.

Scott Richardson
Chief Executive Officer and President at Celanese

Look, I'll echo what I just said, James, there's always opportunity for us to drive margins. And we had some contract resets. The team is working really hard to offset those. That's been hard in Asia with where the supply-demand landscape is at, but we're looking for ways at which to kind of leverage our optionality model there and flex up-and-down the value chain to be able to offset that and get back to those levels that we were at in the first-half of last year.

Operator

Thank you. Our next questions come from the line of Vincent Andrews with Morgan Stanley. Please proceed with your question.

Vincent Andrews
Analyst at Morgan Stanley

Thank you. Has anything changed, Scott, about the scope of assets that you might consider divesting? And I just asked that because you mentioned in the prior answer that the size would probably be similar to the divestiture that was done with the food ingredients. And my recollection was that in the past, more recently, we've been talking about maybe multiple smaller divestitures rather than the opportunity to sell a few things or one thing at a larger cost. Are you looking wider or deeper or anything changed in terms of what you're willing to divest?

Scott Richardson
Chief Executive Officer and President at Celanese

Yeah. We're looking at everything that has -- that's not critical to kind of our core operating models, Vincent. And that's really this engineered thermoplastics, thermoplastic elastomers portfolio in the Engineered Materials business and our optionality model that starts with methanol and acetic acid and goes all the way through redispersable powders. And if it's not in those operating models, we're taking a look at it.

But it needs to facilitate deleveraging. And so that size I talked about was kind of in that range, but I also said plus/minus. So there is a series of smaller ones that would get you that when added up or in that range and then there's -- there's some opportunities that are a little larger.

Vincent Andrews
Analyst at Morgan Stanley

Okay. And then in the prepared remarks, you talked about the dissolution of the JV with on the Mylar. Is there anything else about your asset footprint that you're looking at, maybe areas where you're not as advantaged or places where it might make sense to take capacity out-of-the market?

Scott Richardson
Chief Executive Officer and President at Celanese

We believe in having an efficient footprint, Vincent, and ensuring that we fully leverage the strong technical capabilities that we have in-house here at. And I think we have a long-term history of reducing our footprint, but yet adding capacity at our Advantage sites. And that -- that principle -- that core principle of manufacturing is what we're leveraging to these M&M assets as well. By doing that, you get much greater leverage on fixed costs. And so we're consistently looking at opportunities to do that. We've taken action.

We've reduced our footprint by eight sites since we did the acquisition, and we're continuing to look for opportunities to be as efficient as possible well.

Operator

Thank you. Our next question comes from the line of Arun with RBC Capital Markets. Please proceed with your question.

Arun Viswanathan
Analyst at RBC Capital Markets

Great. Thanks for taking my question. Hope you guys are well. And congrats on the new roles there. So I guess two questions. So first-off, I know that you've taken actions on eight sites there and evaluating some more options as well and divesting of other assets. But is it also the case that there has been some structural weakness in the auto market and you guys are potentially overexposed to underperforming regions such as Europe.

Do you think -- because we've seen this inventory overhang now for two or 3/4 and then I think you guys have taken decisive action in Q3 and Q4 as well, but it doesn't seem like that's been enough to really clear out the inventory. So do you think the actions in Q1 will result in that inventory reduction or will they linger beyond into Q2 and Q3?

Scott Richardson
Chief Executive Officer and President at Celanese

The value chain had too much inventory. We talked about that on our last earnings call and we are working to match our inventory levels with where the fundamental demand is at. Demand has held pretty stable here in the first-quarter, but the value chain is rebalancing the inventory footprint and that's our channel partners, it's the tiers, the moulders and the end-customers. And so the line-of-sight that we have today based upon our outlook is that we would see that come to a close here in the first-quarter.

Arun Viswanathan
Analyst at RBC Capital Markets

Okay, great. And then if I can follow-up, just on the guidance, it looks like the Q1 guidance, again, is in the $400 million or so EBITDA range, maybe slightly below that. Do you expect that to kind of lift up through the year, maybe into the $1.5 billion to $2. billion range on an annualized basis?

And again, that would be more second-half weighted. Is it mostly those cost and productivity actions that would get you there or does it require some recovery and volume growth as well? Thanks.

Scott Richardson
Chief Executive Officer and President at Celanese

Look, our focus is on the decisive actions that we're taking right now. We can't control what happens in the macro, but we can focus on where we spend money, how we drive a level of efficiency, how we interact and access our customers to drive opportunities. And one of the things we called out is a focus on smaller projects in Engineered Materials. One of the great things about smaller projects is they tend to be able to be commercialized in six to 12 months. And so it is -- it's very important that we continue to work that with a level of aggressiveness To be able to improve kind of that outlook in the second-half.

Arun Viswanathan
Analyst at RBC Capital Markets

Thanks.

Operator

Thank you. Our next questions come from the line of Patrick Cunningham with Citi. Please proceed with your question.

Patrick Cunningham
Analyst at Smith Barney Citigroup

Hi, good morning. Thanks for taking my questions. So some estimates we see on acetic capacity upwards of 3 million tons in 2025, maybe a little less on the VAM side, but still meaningful capacity in the next few years. What gives you confidence that there will not be significant incremental impact from near-term capacity? And what does -- what does this capacity mean for the utilization rates of your own network.

Scott Richardson
Chief Executive Officer and President at Celanese

We don't see a big change coming in the supply-demand landscape, Patrick. And where things are today is the SPL industry is operating below the cost curve. And that's not sustainable. It's not been historically sustainable. And we haven't seen things degrade further even though we've seen new capacity come into the marketplace from a margin perspective.

And so we continue to look at where are those pockets of opportunity up-and-down the value chain and acetyls where we can pit it. And the team was successful last year growing, for example, our redispersable powders business. You're largely outside of China and other parts of Asia like India and Southeast Asia, where there was a strong pull-in growth for some unique applications such as compositive composite insulation systems, large-style adhesives. And so it's things like that are going to be critical, where we're partnering with our customers to get the full pull-through of that value chain where we have unique technology.

Patrick Cunningham
Analyst at Smith Barney Citigroup

Got it. Understood. And how should we think about incremental benefits from Clear Lake into 2025. I mean, are volumes any sort of offset to contract resets here? Is there any reason why run-rate utilization should get worse than where you exited the year, whether it's raw-material availability or depressed demand levels? Just trying to understand the US operating footprint here.

Scott Richardson
Chief Executive Officer and President at Celanese

Look, we're seeing the full run-rate of the expansion as we exit 2024 and we've seen some obviously some slight offset from some of those contract resets, which is why we're working other opportunities to offset that. We've got some natural gas headwind in the US to start the year that has -- we've seen higher costs, but we do expect that, that will wane and come off as the weather improves and we move into the second-quarter.

Patrick Cunningham
Analyst at Smith Barney Citigroup

Thank you.

Operator

Thank you. Our next questions come from the line of Alexi with KeyBanc Capital Markets. Please proceed with your questions.

Aleksey Yefremov
Analyst at KeyBanc Capital Markets

Thanks. Good morning, everyone. So it sounds like you're deliberately reducing inventory in AM in Q1. Is it possible to size it in terms of EBITDA so that we can understand how much could potentially come back-in the second-quarter from this deliberate action?

Scott Richardson
Chief Executive Officer and President at Celanese

It's really not that substantial, Alexi. I wouldn't say it's kind of material like we saw in the 4th-quarter.

Aleksey Yefremov
Analyst at KeyBanc Capital Markets

Okay. And a follow-up on EM as well. It looks like pricing came down maybe low-single digit for the segment in Q4. What do you expect from price in Q1 and potentially Q2? Another step-down or a stabilization.

Scott Richardson
Chief Executive Officer and President at Celanese

What we are seeing right now is stabilization for the most part. We're having to be competitive in certain standard grade applications, but the team is also working tenaciously on offsets. I mean, this has been a headwind. But again, in these standard grade applications, where margins are at for the industry are really at unsustainable levels. And so we are working on opportunities to be able to turn that. The best way to do that is improving mix. And that's the criticality of working the pipeline and continuing to be successful in some of these more unique higher-growth, higher-margin segments.

Aleksey Yefremov
Analyst at KeyBanc Capital Markets

Thanks,.

Operator

Thank you. Our next question comes from the line of Kevin McCarthy with Vertical Research Partners. Please proceed with your question.

Kevin W. McCarthy
Analyst at Vertical Research Partners

Yes, thank you, and good morning. Scott, are you essentially running today to maximize cash-flow as opposed to maximizing earnings? Or is that not the case and you're really trying to strike a balance between the two?

Scott Richardson
Chief Executive Officer and President at Celanese

Yeah. Look, cash is the priority, Kevin. Given where our debt is at, we are looking to do everything that we can to unlock cash. And I think some of the actions that we have taken or whether it'd be the dividend, the reduction of capital, the reduction in working capital and a tenacious focus there as well as aggressively working on the divestiture side, it is a focus on cash first.

Kevin W. McCarthy
Analyst at Vertical Research Partners

Yeah. Okay. And then if I may, want to follow-up on assets heels. I think you idled some capacity temporarily in Singapore and Frankfurt as you discussed in the prepared remarks last night. Do you do that because they go temporarily cash negative or perhaps for a different reason? And wondering if you could talk about your specific operating rate at Clear Lake in the 4th-quarter and how you expect that to trend in the first-quarter?

Scott Richardson
Chief Executive Officer and President at Celanese

The team wakes up every day, Kevin, and looks at the landscape that it's in and it pivots. And it pivots up-and-down the chain, it pivots geographically where it sells. And then we match operating rates to the needs to maximize margin and EBITDA across the landscape and to meet our customers' needs. And that's -- that is a model that team will continue to operate on, and we'll continue to focus on striking that right balance between volume and margins.

Kevin W. McCarthy
Analyst at Vertical Research Partners

Thank you.

Operator

Thank you. Our next questions come from the line of Hassan Ahmed with Alembic Global. Please proceed with your question.

Hassan Ahmed
Analyst at Alembic Global Advisors

Good morning, Scott. First of all, congratulations on the new role and also congratulations on bringing Scott Sutton on-board. Big fan. First question on the guidance. You guys talked about $0.25 to $0.50 in Q1 EPS and $1.25 to $1.50 as demand recovers in Q2. Now, I mean, if there is no change in the macro in the back-half of the year, should we consider $1.25 to $1.50 as the run-rate.

Scott Richardson
Chief Executive Officer and President at Celanese

We're doing everything that we can to drive our run-rate much higher than that, Hassan, and it's the actions that we talked about. And our focus on not giving a guide in the second-half is because we have multiple actions that are underway. I mean, I talked about the complexity reduction in Engineered Materials, driving our acetyl optionality model to a level that was -- that performed better than we saw at the end of last year and then this margin compression component.

In addition to everything else that we're doing broadly across the cost side in SG&A and the manufacturing footprint. So we believe that there are decisive opportunities and actions that we can take here at Selenes to lift the run-rate performance even if we don't see a change in the macro.

Hassan Ahmed
Analyst at Alembic Global Advisors

Understood. And in the presentation, you know, one of the things that you guys talked about was, well, I guess you gave six reasons to own shares today. And one of them was the strong earnings leverage as obviously demand recovers. So my question to you is, you know, as you take a look at the geographic footprint you guys have as well as the end-markets you guys are exposed to. Is the leverage the same today as it was in prior years, particularly as you look at the sort of changing sort of dynamics globally with tariffs out there, with your exposure to EVs and you guys yourself flagged, you know the higher exposure to EVs that China today has and how that today is a lower-margin business than it was historically.

Scott Richardson
Chief Executive Officer and President at Celanese

We have a core principle that we believe in having a very efficient manufacturing footprint. When we acquired the M&M business, their footprint was not as efficient as what we had historically here at Seleny. As a combined organization, we are looking at what is the right efficiency profile that we need and we're overlaying what we believe and where things are at from a demand perspective geographically. And it's that matching that's really critically important. And as a corporation, we are pretty evenly split between Americas, Europe and Asia in terms of where our revenue comes from, but Asia is growing and Europe is declining. And so it's going to be very critical That we continue to drive that intersection point to a level that allows us to enjoy kind of that operating leverage that we historically have.

Frank J. Mitsch
Analyst at Fermium Research

Very helpful.

Operator

Thank you. Our next question comes from the line of John McNulsey with BMO Capital Markets. Please proceed with your questions.

John P. McNulty
Analyst at BMO Capital Markets

Yeah, good morning. Thanks for taking my question. So Scott, when you think about the acetyl capacity that's coming on in Asia, have you seen any offsets where you're seeing closures assets coming down permanently? It looks like there's a significant amount of more capacity still to come. So just wondering how that gets placed and where if it's just going to have to be where we wait for demand to absorb at all.

Scott Richardson
Chief Executive Officer and President at Celanese

We haven't seen, I'd say, permanent capacity reductions. We definitely have seen the industry operating at lower rates. And I think what's a little bit different about this cycle on capacity adds versus what we saw 15 years ago, 15 years ago, it was almost all new players to the marketplace.

This is about 50-50 existing players adding capacity and some new players. And so obviously, for those with existing capacity, they're kind of flexing their networks up-and-down based upon what they need. So we have definitely seen probably a little bit more kind of down to match where demand is at

John P. McNulty
Analyst at BMO Capital Markets

Okay, fair enough. And then I guess, do you see there being any risk that, that capacity makes its way more meaningfully into other markets or does it really kind of stay-in the markets that it's been over the last whatever the last few years.

Scott Richardson
Chief Executive Officer and President at Celanese

That arbitrage window is not open and it's kind of stayed right at or below kind of what it cost to move product. And look, shipping is expensive and complex and shortage is complex as well right now in other markets. And so just given transit times, et-cetera, we have not seen a lot of that material move-out of the region.

John P. McNulty
Analyst at BMO Capital Markets

Got it. Thanks very much for the color.

Operator

Thank you. Our next questions come from the line of Lawrence Alexander with Jefferies. Please proceed with your question.

Laurence Alexander
Analyst at Jefferies Financial Group

Good morning. So first on the divestitures, are these assets that you've decided you just don't fit-in the portfolio and you will exit even if things get better or as things get better, would you keep them focus on deleveraging through other means?

And secondly, with Acetyls, can you elaborate a little bit on kind of the execution issues in the back-half of last year and to the extent that they've been changed or fixed, should we see the improvement this summer regardless of the environment or do you need a better level of aggregate demand in order to also fix the execution issues that you've identified.

Scott Richardson
Chief Executive Officer and President at Celanese

Yeah, let me hit your second question first. I wouldn't call them necessarily execution issues. I think it was just a length in supply-demand, really driven by kind of where demand declined at the end-of-the year. And look, the team is doing everything we can to really flex that model up-and-down the value chain and look for pockets of opportunity.

On your first question around divestitures, look, I think we have identified pieces that are not critical to kind of those core operating models and we're looking at and having a lot of conversations. I mean, it has been a tough M&A market for the last several years. And we are very principled and I've heard from a lot of investors that are concerned about us fire selling assets. We're not in the business of fire selling assets.

Our focus is on divestitures to drive deleveraging and it's going to be important that we continue to stick with that principle and be aggressive about doing deals as they present themselves to us.

Laurence Alexander
Analyst at Jefferies Financial Group

Thank you.

Operator

Thank you. Our next questions come from the line of John Roberts with Mizuho. Please proceed with your questions. John, could you check if you're muted, please

Scott Richardson
Chief Executive Officer and President at Celanese

Okay, well, Daryl, it seems like John might be muted. Let's go-ahead and make the next now.

Operator

We got Harry now, John.

John Roberts
Analyst at Mizuho Group

Yeah. Sorry. Yeah, congrats, Scott, and welcome back, Todd. It's got something. Could you talk about the new JV rules in China? We have other companies with China JVs and I don't recall hearing anything about that. Is it all JVs in China or something specific to the side of JVs?

Scott Richardson
Chief Executive Officer and President at Celanese

Yeah. Look, I think some JVs have gone through some of this and some haven't. It's really related to the rules that govern certain JVs. And really what changed here is that there's a rule that requires an audit to be completed before dividends can be paid. And so that audit gets completed here in the first part of the year. And so we should see dividends starting in Q2. So that's a rule change that at least our JVs are now subject to.

Okay. Well, Daryl, thanks. Let's make the next question, the last one.

Operator

Thank you. You got it. Our last questions will come from the line of Salvador Tiana with Bank of America. Please proceed with your questions.

Salvator Tiano
Analyst at Bank of America

Yes, thank you. So firstly, I want to ask a little bit about as you're thinking here about the -- if you can talk a little bit about the buckets of cost-savings, I know you mentioned obviously the EUR50 million there -- sorry, the EUR50 million to EUR100 million from complexity and EUR80 million SG&A. But I think last quarter, we're talking about some of the M&M cost synergies not being realized in 2024 and thus being pushed in 2025. And Clear Lake, obviously, the EUR100 million also not fully realized last year in-part due to the Forge. So are these part of these package you already gave or is there upside from this, especially on the Clear Lake side?

Scott Richardson
Chief Executive Officer and President at Celanese

Look, we achieved $250 million in of synergies as we exited last year, Sal. And we still have more that are in our plan to be realized here this year. Clear we're on the run-rate as we talked about, there's been some offsets from margin compression and that's why I really talked about that as a critical element of focus for us on really reversing that trend as we go-forward. So we get the full value of these actions that have already been executed on.

We are looking at driving productivity every single day, looking at every dollar that goes outside of the company and where we can save and where we can prioritize. And this is a focus on cash. And so that tenacity will continue. Everything is on the table.

Salvator Tiano
Analyst at Bank of America

Perfect. And I want to go back to your -- to your ultra exposure to China, you got a number of questions. I'm just wondering, how are things different in China versus Europe and the US when it comes to the OEMs? And a big tailwind for and others has been obviously lightweighting and replacing metal hood and other components with plastic. And is there a bigger or a smaller opportunity right now in Chinese autos versus what you had in the Western Hemisphere over the past couple of decades?

Scott Richardson
Chief Executive Officer and President at Celanese

Look, there's still a huge opportunity for us in China, and it's why we're continuing to put a heavy focus there. I think one of the things that's really important is that the technical requirements of electric vehicles, particularly from a powertrain standpoint, are becoming a lot more demanding. And there's also a lot of other applications where China is moving up this technical requirement curve, this requires materials with higher-performance requirements.

And we have really, we believe the best portfolio to match that. And where our KPV KPBs sit in China, we're about half of where we are in the Western Hemisphere, and that's moved up substantially the last several years. But it is critical that we maintain that focus. Just really since the beginning of the year, we've had two sizable technical exchanges with two of the top-five Chinese OEMs as a way to accelerate and drive business.

Great thing about China auto is that commercialization time tends to be much shorter, kind of more like six to 12 months as opposed to 24 months in the Western Hemisphere.

Salvator Tiano
Analyst at Bank of America

Thank you very much.

Scott Richardson
Chief Executive Officer and President at Celanese

And thank you. Thank you, everyone. We'd like to thank everyone for listening today. As always, we're available after the call for any follow-up questions. Darryl, please go-ahead and close-out the call.

Operator

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day

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    Investor Relations
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    Chief Executive Officer and President
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