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Clariant assumes global economy will only slowly recover
06 Nov '09
5 min read
During the quarter the company continued to invest in restructuring efforts. Overall 1,917 job positions have already been made redundant and a further 800 have been identified. The total headcount of the company by year-end is expected to be below 18,000 compared to 20,102 at the end of 2008.
Restructuring and impairment costs in the third quarter amounted to CHF 38 million and are expected to increase substantially in the remainder of the year. The net income was CHF 25 million, compared to a loss of CHF -61 million in the second quarter. Net income in the third quarter of 2008 was CHF 78 million.
Operating cash flow reached CHF 193 million up from CHF 147 million a year ago. The operating cash flow, accumulated for the first nine months, reached CHF 533 million compared to CHF 174 million in the same period last year. On the one hand, the company's strong cash flow resulted from a continuing focus on decreasing net working capital, mainly through tight inventory management. On the other hand the improvement of the operating income has increasingly contributed to cash generation and will help to make the achievements more sustainable.
Clariant has further strengthened its balance sheet by increasing its cash position to CHF 995 million, which includes the proceeds of the CHF 300 million convertible bond that was launched in July. Net debt was further reduced to CHF 751 million from CHF 1 209 million at the end of 2008. The company's gearing – net debt divided by equity – was at 38% at the end of the third quarter and vastly improved compared to the end of the year 2008 (61%).
Clariant assumes that the global economy will only slowly recover. Consequently, Clariant sales in local currencies are predicted to remain weak until the end of the year, approximately in the range of 16-20% below the previous year.
The company will maintain its focus on cash generation by decreasing its net working capital. At the same time, the cost-saving and restructuring measures will continue to favorably impact operational performance, which will then also increasingly contribute to cash generation. In the traditionally weak fourth quarter, Clariant expects an improved operating income before exceptional items compared to the fourth quarter of 2008.
Going forward Clariant will continue its restructuring efforts with estimated restructuring costs of CHF 200-300 million in 2009 and further job reductions in 2009 and 2010.
For 2010, Clariant confirms its target of a sustainable above industry average return on invested capital (ROIC).
Restructuring and impairment costs in the third quarter amounted to CHF 38 million and are expected to increase substantially in the remainder of the year. The net income was CHF 25 million, compared to a loss of CHF -61 million in the second quarter. Net income in the third quarter of 2008 was CHF 78 million.
Operating cash flow reached CHF 193 million up from CHF 147 million a year ago. The operating cash flow, accumulated for the first nine months, reached CHF 533 million compared to CHF 174 million in the same period last year. On the one hand, the company's strong cash flow resulted from a continuing focus on decreasing net working capital, mainly through tight inventory management. On the other hand the improvement of the operating income has increasingly contributed to cash generation and will help to make the achievements more sustainable.
Clariant has further strengthened its balance sheet by increasing its cash position to CHF 995 million, which includes the proceeds of the CHF 300 million convertible bond that was launched in July. Net debt was further reduced to CHF 751 million from CHF 1 209 million at the end of 2008. The company's gearing – net debt divided by equity – was at 38% at the end of the third quarter and vastly improved compared to the end of the year 2008 (61%).
Clariant assumes that the global economy will only slowly recover. Consequently, Clariant sales in local currencies are predicted to remain weak until the end of the year, approximately in the range of 16-20% below the previous year.
The company will maintain its focus on cash generation by decreasing its net working capital. At the same time, the cost-saving and restructuring measures will continue to favorably impact operational performance, which will then also increasingly contribute to cash generation. In the traditionally weak fourth quarter, Clariant expects an improved operating income before exceptional items compared to the fourth quarter of 2008.
Going forward Clariant will continue its restructuring efforts with estimated restructuring costs of CHF 200-300 million in 2009 and further job reductions in 2009 and 2010.
For 2010, Clariant confirms its target of a sustainable above industry average return on invested capital (ROIC).
Clariant
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