Clariant Reports Lower Sales in 2009
February 21, 2010
MUTTENZ, Switzerland – Clariant has announced sales of CHF 6.614 billion in the full-year 2009, compared to CHF 8.071 billion in 2008. This represents a decline of 18 percent in Swiss francs or 14 percent in local currency.
The drop in sales reflected the severe economic crisis that affected all businesses across all regions. At the beginning of the year, sales were severely impacted by lower demand levels, resulting in significant capacity underutilization and leading to a depressed gross margin in the first quarter. As the year progressed, capacity utilizations rose as sales volumes improved quarter by quarter, reducing capacity underutilization costs. In addition, the company took measures to address production overcapacity such as temporary shutdowns, short-time work or involuntary vacation. Through strong price management, Clariant was able to maintain sales prices at 2008 levels, while raw material prices were lower. As a result, the gross margin for the full year was 28.2 percent, only slightly lower compared to the 2008 margin of 28.7 percent.
In 2009, Clariant focused on the reduction of sales, general and administration (SG&A) costs. In absolute terms, SG&A costs decreased to CHF 1.47 billion from CHF 1.64 billion in the previous year. The SG&A cost in percentage of sales increased to 22.2 percent from 20.3 percent as a result of lower sales. Consequently the operating income (EBIT) before exceptional items reached CHF 270 million compared to CHF 530 million in the previous year leading to an EBIT margin of 4.1 percent compared to 6.6 percent in 2008. Throughout 2009 the operating income before exceptional items improved quarter by quarter.
All divisions saw a slight recovery in demand in the second half of the year, although to varying degrees. Based on restructuring and cost cutting measures, all contributed positively to the operational income before exceptional items.
Clariant reported sales of CHF 1,710 million in the fourth quarter compared to CHF 1,744 million a year ago. All businesses continued to stabilize. At the regional level, Asia showed double-digit growth while all other regions remained at the depressed levels of the previous-year period.
In local currencies, fourth-quarter sales rose two percent compared to a weak quarter in the previous year. While volumes increased eight percent, sales prices fell six percent and raw-material costs were 14 percent lower. The underutilization costs were also lower than in the previous-year quarter as a consequence of higher-capacity utilization rates. As a result, the gross margin for the quarter reached 29.6 percent compared to 25.2 percent a year ago. The EBIT margin before exceptional items also improved to 6.3 percent from 2.4 percent in the fourth quarter of 2008.
Looking forward, the company does not foresee a sustainable recovery of the global economy. Asia, in particular China, and Latin America will continue to provide positive impulses for the world economy; although it is unlikely that these impulses will be strong enough to significantly mitigate a flat or even negative development in Europe and the United States.
Clariant expects 2010 sales growth in local currencies in the low single-digit range. The continued restructuring measures will improve the company’s cost position, resulting in a positive impact on the operating result.