MUTTENZ, Switzerland – Clariant announced sales of CHF 1.717 billion for the first quarter of 2011 compared to CHF 1.817 billion in the previous-year period. Sales growth in local currencies amounted to five percent. Due to the appreciation of the Swiss franc against most major currencies, sales were six percent lower in Swiss francs year-on-year.
Overall trading conditions remained stable during the quarter with no restocking activities observed as in the first quarter of 2010. At the regional level, sales growth was quite uniform across all regions with growth rates of between four percent and seven percent. The impact from both the earthquake in Japan and the unrest in North Africa on the business was minimal so far.
In the first quarter, Clariant continued to consistently implement its profitable growth strategy. As a result of the focus on margin management, sales prices improved five percent year-on-year. While not fully compensating for higher raw material costs yet, sales prices increased two percent sequentially with dynamics picking up towards the end of the quarter. This successful price management, lower production costs and a high-capacity utilization drove the gross margin up to 29.8 percent from 28.7 percent in the same period a year ago.
Clariant further benefited from the positive impact of the implementation of its 2009/10 cost reduction initiatives. Selling, general and administrative (SG&A) costs as a percentage of sales decreased substantially to 15 percent from 16.9 percent in comparison to the prior-year period. The structurally lower cost base supported the margin development. As a consequence of a better gross margin and lower costs, the EBITDA before exceptional items increased to CHF 277 million, compared to CHF 235 million one year ago. The corresponding margin rose to 16.1 percent from 12.9 percent in the previous-year period. The operating profit (EBIT) margin before exceptional items improved to 13.4 percent from 10.1 percent in the same period one year ago.
Starting 2011, Clariant shifted its focus to continuous improvement and profitable growth following the completion of restructuring in 2010. While the continuous improvement initiative “Clariant Excellence” will make the lower cost basis sustainable, the company is now focusing on creating value by investing in future profitable growth.
Clariant expects global economic growth to continue in 2011 but at a slower pace than in 2010. Exchange rates for the major currencies are expected to remain volatile. Growth will mainly come from the emerging markets in Asia-Pacific and Latin America. Commodity prices are expected to continue to rise in 2011, leading to an increase in raw material costs in the mid-teens.