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Clariant Posts Positive Results for First Nine Months

Published on 2005-11-08. Author : SpecialChem

MUTTENZ, Switzerland -- Clariant posted positive results for the first nine months of the year, including a modest rise in sales, higher net income and a substantial increase in operating cash flow in the Third Quarter.

Gross profit, meanwhile, declined to CHF 1.831 billion, from CHF 1.959 billion during the same period in 2004, on a like-for-like basis, leading to a decline in operating income before exceptional items and amortization of goodwill to CHF 427 million, compared with CHF 494 million.

"We are pleased with the good results achieved in the areas of cash flow, net income and the improvement in margins in the Third Quarter," said Chief Executive Roland Loesser. "Nevertheless market conditions were difficult over the last three months of the period, with negative effects felt from the continued high levels of raw material prices. In addition, the impact of hurricane damage in the U.S. created a sluggish business climate overall."

Sales on a like-for-like basis were CHF 6.094 billion during the period, up 1% in both Swiss franc and local currency terms. Net income rose 37% to CHF 222 million, from CHF 162 million. Operating cash flow increased to CHF 195 million, compared with a negative CHF 43 million after the first six months of the year.

Prices were on average 1% to 2% higher during the period compared to a year earlier. "We are confident that customers understand that our increased costs mean prices need to be raised further and we expect that further increases will be put through over the coming months," Mr. Loesser said.

Significant Costs Savings From Performance Improvements

The Clariant Transformation Program progressed well during the period. The program, launched two years ago, includes a wide-ranging series of performance improvements as well as a strategic shift toward businesses where Clariant has a competitive advantage in service and innovation. Approximately CHF 100 million in cost savings were delivered during the Third Quarter as underlined by the improvement in the operating margin before exceptional items and the amortization of goodwill, which rose to 7.2% from 7.0% a year earlier. These savings were achieved despite significantly higher costs in raw materials, energy and transportation.

Clariant Announces Key Leadership Appointments

As announced last week, the Board of Directors made three key leadership appointments, including designating Mr. Loesser as new chairman and Jan Secher as new chief executive. Mr. Loesser will assume his new role following the Annual General Meeting (AGM) on April 7, 2006, taking over from the current chairman, Robert Raeber, who will reach the statutory retirement age at that time. Mr. Secher will join Clariant’s Management Board on January 1, 2006 and become chief executive after the AGM.

Furthermore, Professor Dieter Seebach will retire as Member of the Board of Directors. The Board will propose Dr. Peter Chen, chemistry professor at the Swiss Federal Institute of Technology (ETH) in Zurich to replace Professor Seebach.

Commenting on the appointment of the new CEO-designate, Mr. Loesser said: "I very much look forward to working with Jan Secher. I am certain that he and the strong management team already in place will successfully complete the Transformation Program and ensure that we achieve our goal of making Clariant a leading company in the specialty chemicals sector."

Full-Year Outlook

The uncertain business climate - overshadowed by hurricane damage in the U.S. and sustained increases in the cost of raw materials, energy and transportation - is expected to continue affecting the short-term outlook. Nevertheless, higher costs will compel Clariant to raise prices to its customers over the coming months. As a result, Clariant should post modest full-year growth in sales in local currency terms and stable operating margins before exceptional items, around last year’s levels.

Clariant expects to reduce its cost base by some CHF 300 million this year compared to 2004. All factors considered, the company anticipates higher net income in 2005. "Despite a challenging climate, we will continue making excellent progress in creating a significantly more efficient company." Mr. Loesser said.

Source: Clariant


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