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Clariant improves operating margin

04 Nov '08
7 min read

The profitability of the Masterbatches Division benefited from its unique position as the global supplier of high-quality masterbatches, strengthened in July by the acquisition of US-based Rite Systems / Ricon Colors. The division compensated for the increase in raw material costs by selective price increases. Margins remained around previous year levels.

Strong profitable growth for Functional Chemicals Division
The Functional Chemicals Division grew 12% in local currencies (6% in CHF). Volumes showed resilience against the macroeconomic downturn in the first nine months. In particular the Agro Chemicals Business and Oil and Mining Services contributed to the favorable top-line development.

The Personal Care Business also developed very positively. The division was able to offset a declining demand in the US by market share gains.

Functional Chemicals was able to compensate for the rising raw material costs by price increases. Gross margin and operating profit could be increased on a year-on-year basis. The Detergents and Intermediates Business continued its turnaround.

The cash flow of the Division showed a negative trend towards the end of the period mainly due to inventory build up resulting from the anticipated shut down of a supplying ethylene cracker in Germany from late September to beginning of November.

Outlook for 2008 confirmed
Clariant's focus during the remainder of the year will be on continuous cash generation, cost reduction and price increases.

Despite an increasingly unfavorable macroeconomic environment, Clariant expects an improved operating margin before exceptional items of between 6.5% and 6.8% and a strong cash flow from operations.

“Going forward, we will accelerate our restructuring efforts and focus on operational excellence in order to significantly increase profitability and respond to expected negative market developments resulting from an extremely challenging macroeconomic environment”, said Hariolf Kottmann.

Clariant International Ltd

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