Clariant Improves Profitability and Cash Flow
April 30, 2010
MUTTENZ, Switzerland – Clariant, a world leader in specialty chemicals, announced sales of CHF 1.817 billion in the first quarter 2010, compared to CHF 1.604 billion in the previous year, an improvement of 13 percent in Swiss francs and 16 percent in local currency. However, sales were still clearly behind pre-crisis levels.
Sales improved significantly compared to the low base a year ago and also strengthened on a quarter-on-quarter basis. In the Pigments, Additives, Leather and Masterbatches business units, sales growth was above the average group level. At the regional level, growth in Asia, and particularly in China with local currency sales growth of +65 percent, outperformed the other regions compared to the first quarter of 2009. Europe and North America showed double-digit sales growth while Latin America remained slightly behind, as the region had shown resilience against the downturn in the previous year.
The gross margin improved to 28.7 percent from 18.9 percent a year ago. This positive development was a result of mainly three effects: first, 20 percent higher sales volumes that led to improved capacity utilization rates and therefore significantly lower idle facility costs; second, a favorable business/product mix with higher margin businesses recovering from trough levels seen in the previous year; and third, the absence of any material inventory de- or revaluation effects. While sales prices dropped 4 percent, raw material costs fell 1 percent compared to the first quarter of 2009, resulting in a negative squeeze at the gross margin level. However, sales prices increased from the fourth quarter of 2009, as a result of the stringent focus on managing the gross margin by adapting sales prices where appropriate. Clariant will continue to increase sales prices in order to react to higher raw material costs.
Looking forward, the company expects that, in spite of a better than expected economic environment in the first quarter, the global economy will recover only slowly. Based on this scenario, and giving reference to the fact that the second half of the year is normally weaker than the first half, Clariant expects mid-single-digit sales growth compared to 2009. Operating cash flow will remain strong.
CEO Hariolf Kottmann commented, “We have made good progress in our restructuring efforts and continued to deliver solid results on the back of lower costs, higher capacity utilization and an improved demand due to an economic environment that developed more favorably than expected. Going forward, we expect the economic recovery to remain fragile and raw material costs to further rise heading into the seasonally weaker second half of the year. Consequently, we do not anticipate an operating performance at the same strong level of the first quarter. As we have stated previously, 2009 and 2010 are restructuring years, and our goal is to close the performance gap to our peers. Hence we will decisively focus on managing our margins and vigorously continue our restructuring efforts in 2010. Under the current business conditions, the EBIT margin before exceptional items for the full-year is expected to be above the 6.6 percent achieved in 2008.”