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Clariant significantly improves cash flow for FY 2007
Feb '08
Clariant posted sales growth of 4% in local currencies (5% in Swiss Francs) for Full-Year 2007. Sales in 2007 amounted to CHF 8.533 billion compared to CHF 8.100 billion in the previous year. Although sales in the second half of the year were not as strong as in the first half, sales in the fourth quarter recovered after a slower third quarter.

In 2007 Clariant was able to raise its prices by more than 1%, with increasing momentum towards year-end. However, higher selling prices were not sufficient to offset a 5% rise in raw material costs. Consequently, the gross margin decreased to 29.2% from 30.7% in 2006.

Clariant's focus on cost reduction delivered results. Sales, General & Administrative (SG&A) costs expressed as a percentage of sales improved to 20.8 % in 2007 from 21.3% in 2006, partly mitigating the decline in gross margin. Furthermore, unfavorable currency effects adversely impacted Clariant's profitability by CHF 68 million, which led to an operating income before exceptionals of CHF 539 million compared to CHF 592 million in 2006.

Operating margin decreased to 6.3%. from 7.3% in 2006. Net income (after exceptional items) increased to CHF 5 million from CHF -78 million in 2006, also due to lower taxes and improved financial results.

During 2007 Clariant benefited from the stabilization of the supply chain and its strong focus on net working capital reduction. Cash flow from operations rose substantially to CHF 540 million compared to CHF 328 million in 2006, mainly driven by inventory reduction and lower trade receivables.

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