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Clariant Posts Strong 9-Month Results / Sales and Cash Flow Significantly Higher

Published on 2004-11-09. Author : SpecialChem

MUTTENZ, Switzerland -- Clariant reported strong results for the first nine months of the year, with sales on a like-for-like basis increasing 7% in local currency terms and operating margins before exceptional items improving to 7.9%, from 7.6%.

Growth was in evidence across all regions, especially in the Americas and in Asia, while signs of recovery were visible in Europe. Sales in the Third Quarter were particularly robust, up 9% in local currency terms. The company reported a better pricing climate for its products and said it will continue to increase prices.

Among the other financial highlights, operating income before exceptional items and amortization of goodwill improved to CHF 517 million from CHF 466 million over the same period in 2003, while operating cash flow surged to CHF 561 million, from CHF 164 million.

Sales in local currency terms on a like-for-like basis over the nine-month period totalled CHF 6.550 billion, up from CHF 6.159 billion a year earlier. Volume growth - at 10% - was again particularly strong. Sales growth on a continuing basis was strongest in the Americas region, up 11% in local currency terms, followed by Asia, Australia and Africa, at 9%, with European sales up 2%.

Gross profit rose by 6% to CHF 2.106 billion, from CHF 1.984 billion, while Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) grew 15%, to CHF 746 million, from CHF 648 million. Net debt dropped substantially during the period, to CHF 1.304 billion, from CHF 3.487 billion a year earlier.

Business Growing Well Amid Transformation Process

The company also reported good progress on its Transformation Program, which is creating efficiencies throughout the organization, cutting cost and enabling a sharper focus on businesses where it already has or is able to gain a competitive advantage.

"These results demonstrate what determination and hard work can achieve," said Clariant Chief Executive Roland Loesser. "We have been able to substantially grow the business while simultaneously driving costs down and creating a revitalized company with excellent long-term prospects. This is exactly what is demanded by the competitive marketplace we are in."

Strength Visible Across Nearly All Businesses

Growth was strong across most businesses units, particularly in service-driven areas. Businesses still under considerable pressure include Textile Dyes and Pharma Chemicals, where overcapacities in the industry prevent satisfactory performance.

Functional Chemicals reported a 13% increase in local currency terms, followed by Masterbatches, at 8%, Pigments & Additives at 6% and Textile, Leather & Paper Chemicals, at 4%. Only Life Science Chemicals posted negative numbers, with a 4% decline. EBITDA margins before exceptional items improved in every division, particularly in Pigments & Additives, where they rose to 16.4%, from 14.6% due to better capacity utilization, and in Masterbatches, where they climbed to 12.6%, from 11.3% because of stronger volumes.

Clariant's focus on innovative, service-driven business has begun to show results, with the company receiving good feedback on two new market-leading businesses it launched in the Third Quarter. Exolit OP®, a range of halogen-free flame retardants that conform to new European environmental directives, provides technical advantages and cost-effective solutions. The range is now being used in plastics for equipment made by major electronic manufacturers.

In addition, Licocene®, a range of metallocene waxes, is being used by numerous customers as a bonding and coupling agent in glass fiber reinforced polymers and as dispersion agent in pigment preparations and coatings. Their exceptional properties enable Clariant to provide tailor-made waxes according to individual customer specifications in the plastics, coatings and automotive industries. Response so far to both the Exolit OP® and Licocene® ranges has been very encouraging.

Clariant Holds Broadly Positive Outlook

Mr. Loesser issued a broadly positive outlook for the company for the remainder of the year, expecting continuing sales and operating income, excluding performance improvement costs, to be above 2003 levels. "We are very confident about our overall targets because we have already achieved substantial savings this year," he said. "In addition, the significant improvement of our cash flow is a clear indication that the program is taking hold."

Mr. Loesser confirmed the on-time achievement of the program's objectives, namely at least CHF 100 million in cost reductions this year and approx. another CHF 300 million in 2005. "We are moving into the intense implementation part of the program, and we are confident that this is when many of the long-term benefits will be generated."

"Clariant should continue to grow above the market amid a positive macro economic climate," Mr. Loesser said. "We expect good progress on our Transformation Program in the Fourth Quarter and beyond, which will sustainably improve our performance."

Source: Clariant


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