Clariant improves profitability in last year

15 Feb '12

6 min read

The acquisition of Süd-Chemie led to an increase in net debt to CHF 1.740 billion compared to CHF 126 million at year-end 2010. Net debt has been reduced from 1.812 billion at the end of the third quarter, leading to a gearing (net debt divided by equity) of 58% at year-end 2011. The cash position was strong with CHF 1.199 billion in cash and cash equivalents on 31 December 2011. The extension of the maturity profile has been successfully addressed with the issuance of bonds totaling CHF 300 million in the Swiss francs market since May 2011 and another EUR 365 million in certificates of indebtedness with terms of three years and four and a half years. After the reporting period, another EUR 500 million with maturity in 2017 have been raised in the Eurobond market.

Clariant reported 21% sales growth in local currencies in the fourth quarter. In Swiss francs, sales were 13% higher, at CHF 1.918 billion compared to CHF 1.700 billion a year ago. Sales prices increased 9% year-on-year, while volumes were 12% lower and raw material costs rose 10%. Sequentially, sales prices rose slightly while raw material costs fell 1%. Catalysis & Energy had an excellent quarter, leading the good performance of the non-cyclical businesses. Masterbatches and Pigments were negatively affected by the softening demand from the plastics industry and the related destocking activities. The structurally challenged mature businesses Textile Chemicals, Leather Services, and Paper Specialties continued to suffer from the poor business conditions in their respective endmarkets. Organic sales growth in North and Latin America was double-digit, while sales in Asia/Pacific decreased. Europe suffered from the debt crisis, with a double-digit decrease in sales. Including acquisitions, all regions showed double-digit sales growth.

The two new Süd-Chemie Business Units – Catalysis & Energy and Functional Materials – have performed above target in the first eight months of consolidation. Catalysis & Energy reported an EBITDA before exceptionals of CHF 107 million (margin 21.8%), and Functional Materials CHF 59 million (margin 12.9%). Catalysis & Energy showed the expected strong development in the third and especially the fourth quarter.

Clariant will continue to systematically implement the next steps in its transformation process with a focus on the integration of Süd-Chemie, on completing the restructuring measures initiated in 2009-2010, and on portfolio management. In this context, Clariant is evaluating strategic options for the Business Units Textile Chemicals, Paper Specialties, and Emulsions, Detergents & Intermediates, with the goal of realization in the mid- to long-term.

An accurate forecast for 2012 is difficult given the current level of economic uncertainty. Raw material costs are expected to rise in the mid-single-digit range while exchange rates should remain stable compared to the beginning of the year. In its base case scenario, Clariant expects that after a weak start to 2012, the global economy will progressively strengthen in the course of the year.

Therefore, results for the first half-year are expected to be lower compared to the high base of the first half of 2011, with an improvement in the second half-year 2012. For full-year 2012, Clariant expects further sales growth in local currencies and sustained profitability.

In the last three years, the restructuring program as well as portfolio management measures have brought Clariant's operating performance to a sustainably higher level. The Board of Directors will therefore propose to the AGM a payout of CHF 0.30 per share through a reduction of the nominal value of the shares to CHF 3.70 from CHF 4.00.

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