MUTTENZ, Switzerland – Clariant has reported a 4-percent increase in sales in local currency for the first half of 2008, equivalent to a decrease of 2 percent in Swiss francs as a result of strong adverse currency effects. Total sales amounted to CHF 4.233 billion.  

CEO Jan Secher commented, “Clariant had a solid first-half year despite an increasingly difficult environment. We were able to compensate for an unprecedented 11-percent hike in raw material costs with price increases and to improve our operating margin. Looking forward we expect an even more difficult environment marked by an unbroken trend of raw material cost increases, a weakening macro economic environment and unfavorable foreign exchange rates. Based on our achievements, the momentum we have gained on improving operational excellence and further efforts, we leave our full-year outlook unchanged.”  

The dynamics in the raw material markets as well as supply shortages of some chemical feedstock have led to an 11 percent increase in raw material costs. At the same time, Clariant’s price-over-volume approach in all divisions led to a 5 percent price increase that compensated for the raw material cost hike. While the reported gross margin remained stable at 29.7 percent (29.9 percent in H1 2007), it has improved on a year-on-year basis for four quarters in a row despite the steep increase in raw material costs in the same period. This led to an improvement of 0.5 percentage points compared to full-year 2007 gross margin.  

Operating income before exceptionals amounted to CHF 310 million. On the back of a decline in Sales, General and Administrative (SG&A) costs to 20.6 percent from 20.9 percent, the operating margin improved to 7.3 percent from last year’s 6.8 percent. Net income rose to CHF 92 million from CHF 73 mil-lion year on year. The results were strongly affected by adverse currency dynamics that accounted for a negative impact of CHF 59 million on operating income, translating into 1.4 percent of sales, and an additional CHF 48 million on the net income line.  

The Pigments & Additives Division grew 7 percent in local currency (1 percent in Swiss francs) and the Functional Chemicals Division showed strong growth in terms of both price and volume, with sales growth in local currency at 10 percent (4 percent in Swiss francs).   The implementation of the previously announced restructuring measures has resulted in a reduction of 750 job positions in the first half of 2008. Restructuring and impairment expenses amounted to CHF 53 million. Since November 2006, Clariant has reduced about 1,800 out of the 2,200 job positions that were planned for reduction in the Clariant 2010 strategy.  

Against a backdrop of an uncertain global macro-economic outlook, Clariant’s focus during the remainder of the year will be on the continuing implementation of price increases and cost leadership, which will further help offset expected continuing increases in raw material and energy costs. With the benefits of the operational performance improvements already underway, Clariant expects an improved operating margin before exceptional items and continuing strong cash flow from operations in 2008.