Clariant Reports Improved Operating Profitability and Cash Flow
November 4, 2009
MUTTENZ, Switzerland – Clariant has announced sales of CHF 1.691 billion in the third quarter, compared to CHF 2.094 billion during the same period in the previous year. This represents a 19 percent decline in Swiss Francs and 14 percent in local currency.
Sales stabilized during the third quarter. Although there was a modest pickup in some businesses and regions, overall demand remained at low levels with no signs of a sustainable upward trend. Volumes declined by 11 percent and prices were 3 percent lower compared to the third quarter of 2008. Raw material costs were 16 percent lower compared to the same period a year ago, but 1 percent higher compared to the second-quarter 2009. The costs of capacity underutilization were lower than in the two previous quarters as a consequence of higher utilization rates, the shutting down of plants and a reduction in workforce - either temporarily or permanently.
Despite the pressure on volumes, Clariant maintained a stringent focus on managing its gross margin, which increased to 30.1 percent from 29.4 percent in the previous-year period.
CFO Patrick Jany commented, "While we have mitigated the impact of the economic crisis on our gross profit, the risk of possible gross margin erosions in the months to come has risen due to increasing raw material costs. We will closely observe this unfavorable development and defend our margin. If necessary, we are ready to deal with potential volume impacts by further reducing production capacities."
All divisions contributed to the recovery in operating income before exceptional items over the last three quarters. The Masterbatches Division benefited from a demand recovery that was stronger than in the other divisions. The Pigments & Additives Division also experienced some recovery of order intake, but from an extremely low level in both the first and the second quarter. The stringent focus on restructuring as well as a slight recovery in demand - in particular in the textiles and leather businesses - led to an improved profitability of the Textiles, Leather & Paper Chemicals Division. The Functional Chemicals Division benefited from a satisfactory development in its industrial and consumer care and oil services businesses.