Clariant AG / Clariant further improves profitability based on better demand and reduced
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Q2 sales up 20% in local currencies and 18% in CHF as global economic activity continued
to rebound year on year
Q2 operating income before exceptional items rose to CHF 211 million compared to CHF 69
million a year ago and CHF 183 million in the first quarter, mainly driven by higher
Q2 operating income margin before exceptional items reached 11.1% compared to 4.3% a
Q2 cash flow from operations amounted to CHF 33 million from CHF 184 million in the
previous year given a volume-related temporary increase in inventories and trade
Outlook: Against the backdrop of an anticipated softening of the global economy,
Clariant expects lower sales growth in the second half of the year with demand remaining
solid. Clariant guides for sales growth in the high-single digit percentage range and an
operating margin before exceptionals for the full-year above 8%.
CEO Hariolf Kottmann commented: “In the first half of 2010 the economic tailwind
leveraged the results of our restructuring program. Consequently we recorded a good
operating income before exceptionals and a strong cash flow. We maintained our good cost
position and further reduced our debt. For the second half of the year we predict a
softening in demand compared to the first half as a result of a weaker economy and the
traditional seasonal effects of our businesses. Until the end of the year we will
continue with our focus on restructuring with the expected impact of restructuring costs
on our net income. All in all we expect a satisfactory year 2010 for our company. ”
Key Financial Data
Second quarter First half year
in CHF million 2010 2009 % CHF % LC 2010 2009 % CHF % LC
Sales 1’894 1’609 18 20 3’711 3’213 15 18
EBITDA before exceptional items 264 125 111 121 499 168 197 206
– margin 13.9% 7.8% 13.4% 5.2%
EBIT before exceptional items 211 69 206 218 394 56 604 626
– margin 11.1% 4.3% 10.6% 1.7%
EBIT 124 0 – – 198 -68 – –
Net income / loss 25 -61 – – 35 -152 – –
Operating cash flow 33 184 192 340
Number of employees 17’2681 17’5362
1 as of 30 June 2010 2 as of 31 December 2009
Clariant Q2, 2010 Performance
Muttenz, July 29, 2010
-Clariant, a world leader in specialty chemicals, today announced sales of CHF 1.894
billion in the second quarter 2010, compared to CHF 1.609 billion in the previous year.
Sales increased 18% in Swiss Francs and 20% in local currency.
Volumes were up 20% over an extremely weak second quarter 2009, but remained
significantly below pre-crisis levels. On the back of a broad economic recovery,
Clariant reported sales growth across all businesses and regions. The Business Units
Pigments, Additives, Leather and Masterbatches benefited the most from the improved
economic environment and grew above group average.
Against the backdrop of the depreciation of the Euro against the USD and an increased
competitiveness, demand in Europe developed better than expected compared to the low
basis year on year, which resulted in a strong 22% sales growth for Clariant. Demand in
the regions Asia, Latin and North America increased as well, favorably affecting the
company’s sales volumes.
Clariant significantly improved the gross margin to 28.9% from 24.8% year on year, based
on good capacity utilization. Sequentially, the company increased sales prices by 1% in
order to respond to a 4% uptake in raw material costs. However these price increases
have not been sufficient yet to fully compensate for the feedstock markup and will be
intensified in the coming months in particular as raw material costs are predicted to
Despite the negative margin squeeze Clariant managed to keep the gross margin stable
sequentially also due to a favorable development of exchange rates and higher volumes.
As part of its Global Asset Network Optimization (GANO) efforts Clariant continued to
improve the structure of its production facilities and decided to relocate the Pigments
site in Tianjin (PR China) – as part of the consolidation of the Pigments activities in
China – and to close Pigments production in Onsan (South Korea). Both sites will have
stopped their operations in 2010/11. At the same time the investment in a new
ethoxylation plant in Dayabay (PR China) is proceeding as planned. The site will go on
stream in early 2011.
As a result of the ongoing focus on cost reduction, SG&A costs decreased to 16.3% of
sales, compared to 18.6% a year ago. In absolute terms, SG&A costs slightly increased to
CHF 309 million, from CHF 299 million year on year, due to one time costs resulting from
the restructuring projects and necessary IT upgrades. Personnel costs further decreased.
Consequently the operating income (EBIT) before exceptional items increased to CHF 211
million, compared to CHF 69 million a year ago and CHF 183 million in the first quarter
of 2010. The EBIT margin before exceptional items improved to 11.1% from 4.3% a year
Restructuring and impairment costs amounted to CHF 87 million. However, the favorable
development of the operating result could more than offset the restructuring costs.
Hence Clariant reported a net profit of CHF 25 million for the quarter, compared to a
net loss of CHF 61 million a year ago.
As a consequence of the pick-up in business activity, inventories and trade receivables
were significantly higher than in the second quarter of 2009 that had marked the peak of
the economic crisis. Nevertheless cash flow from operations remained positive at CHF 33
million compared to CHF 184 million in the second quarter of previous year based on
decisive net working capital management and good EBIT generation.
The company’s cash position – including an investment of CHF 382 million in short-term
deposits – remained strong at CHF 1’221 million.
Clariant continued to reduce its net debt to CHF 379 million from CHF 545 million at the
end of 2009. The gearing – net debt divided by equity – improved to 20%, compared to 29%
by year-end 2009 and remained stable compared to the end of the first quarter 2010.
Although demand will remain solid in the remainder of the year, Clariant expects a
weaker second half-year as the global economy is expected to soften and the normal
seasonality of its businesses returns in 2010. In addition, raw material costs are
expected to rise further.
In the second half-year, Clariant will continue to focus on generating cash, decreasing
costs and reducing complexity, which will result in an additional reduction of job
positions. The ongoing restructuring program will be finalized by the end of the year
and the company will be managed for profitable growth as of 2011. However some of the
measures – in particular related to the GANO activities – will not be completely
implemented before 2013.
Based on the good results in the first half of the year and the continuing restructuring
efforts, Clariant aims for a high single digit sales growth in local currency and an
EBIT margin before exceptionals of above 8% for the full year. The cash flow from
operations will remain strong.
Clariant confirms its target of a sustainable, above-industry-average return on invested
capital (ROIC) by the end of 2010.
Stefanie Nehlsen Phone: +41 61 469 67 42
Arnd Wagner Phone: +41 61 469 61 58
Ulrich Steiner Phone: +41 61 469 67 45
Clariant – Exactly your chemistry.
Clariant is a global leader in the field of specialty chemicals. Strong business
relationships, commitment to outstanding service and wide-ranging application know-how
make Clariant a preferred partner for its customers.
Clariant, which is represented on five continents with over 100 group companies, employs
around 17,300 people. Head-quartered in Muttenz near Basel, Switzerland, it generated
sales of CHF 6.6 billion in 2009. Clariant is organized into ten Business Units:
Additives; Detergents & Intermediates; Emulsions; Industrial & Consumer Specialties;
Leather Services; Masterbatches; Oil & Mining Services; Paper Specialties; Pigments; and
Clariant is committed to sustainable growth, which is derived from its own innovative
strength. Clariant’s world-class products and services play a key role in its customers’
manufacturing processes and add value to their end products. The company’s success is
based on the know-how of its people and their ability to identify new customer needs at
an early stage and to work together with customers to develop innovative, efficient
Financial Review Q2 2010 http://hugin.info/100166/R/1434582/380143.pdf
Media Release Deutsch http://hugin.info/100166/R/1434582/380142.pdf
Media Release English http://hugin.info/100166/R/1434582/380141.pdf
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