Clariant Reports Strong Cash Flow Despite Continuing Weak Demand
(Thomson Reuters ONE) - Corporate news announcement processed and transmitted by Hugin AS.The issuer is solely responsible for the content of this announcement. ------------------------------------------------------------------------------------ * Sales in Q2 down 21% in local currencies and 24% in CHF * Operating income before exceptional items decreases to CHF 69 million from CHF 143 million in the second quarter 2008 but improved from CHF -13 million in the first quarter * Cash flow from operations improved to CHF 184 million, from CHF 33 million in the previous-year period * Net debt reduced to CHF 985 million from CHF 1 209 million at year-end 2008 * Outlook: For the full year 2009, Clariant expects sales in local currencies to decrease 16-20% compared to 2008. Cash flow is expected to remain strong as a result of ongoing stringent net working capital management and further improvement of the operating income before exceptional items compared to the first half of 2009CEO Hariolf Kottmann commented: "Our focus on generating cash,decreasing costs and reducing complexity has shown results, both interms of cash flow that remained strong and operating income.However, we are still challenged by unprecedented low demand anddon't expect a quick recovery. Hence, we are continuing with ourefforts to reduce costs, generate cash and simplify our operatingstructure in order to close the performance gap to our peers and gainfurther operational and strategic flexibility."Key Financial Data+-------------------------------------------------------------------+| | Second quarter | First half year ||-------------+--------------------------+--------------------------|| in CHF | 2009 | 2008 | % | % | 2009 | 2008 | % | % || million | | | CHF | LC | | | CHF | LC ||-------------+------+------+------+-----+------+-------+-----+-----|| Sales | 1 | 2 | -24 | -21 | 3 | 4 233 | -24 | -20 || | 609 | 121 | | | 213 | | | ||-------------+------+------+------+-----+------+-------+-----+-----|| EBITDA | | | | | | | | || before | 125 | 207 | -40 | -36 | 168 | 437 | -62 | -56 || exceptional | | | | | | | | || items | | | | | | | | ||-------------+------+------+------+-----+------+-------+-----+-----|| - margin | 7.8 | 9.8 | | | 5.2 | 10.3 | | ||-------------+------+------+------+-----+------+-------+-----+-----|| EBIT before | | | | | | | | || exceptional | 69 | 143 | -52 | -49 | 56 | 310 | -82 | -76 || items | | | | | | | | ||-------------+------+------+------+-----+------+-------+-----+-----|| - margin | 4.3 | 6.7 | | | 1.7 | 7.3 | | ||-------------+------+------+------+-----+------+-------+-----+-----|| EBIT | 0 | 118 | -100 | -98 | -68 | 258 | - | - ||-------------+------+------+------+-----+------+-------+-----+-----|| Net loss / | -61 | 51 | - | - | -152 | 92 | - | - || income | | | | | | | | ||-------------+------+------+------+-----+------+-------+-----+-----|| Operating | 184 | 33 | | | 340 | 27 | | || cash flow | | | | | | | | ||-------------+------+------+------+-----+------+-------+-----+-----|| Number of | | | | | 18 | 20 | | || employees | | | | | 679* | 102** | | |+-------------------------------------------------------------------+* as of 30 June 2009 ** as of 31December 2008Clariant Q2, 2009 PerformanceMuttenz, July 30, 2009 - Clariant, a world leader in specialtychemicals, today announced sales of CHF 1.609 billion in the secondquarter of 2009, compared to CHF 2.121 billion in the same period ofthe previous year. This represents a 24% decline in Swiss Francs, and21% in local currency.The second quarter was characterized by continuous weak demand inmost businesses. Although volumes came down 23% year-on-year, thegross margin increased to 29.3% from 28.9% in the previous-yearperiod as a result of successful margin management.Compared to the first quarter of 2009, the gross margin was 5.7percentage points higher as the measures to adjust capacity to lowerdemand levels have started to kick in. In addition, destocking alongthe value chains eased in some customer industries. As a consequence,Clariant has started to increase production output in some businesseswith the effect of reduced costs for underutilization of capacities.Also, the stabilization of raw material costs has led to lessdevaluation of inventories.The company's efforts on cost savings favorably impacted Sales,General & Administration (SG&A) costs, which decreased in absoluteterms to CHF 371 million from CHF 434 million. However, due to thedrop in sales, the SG&A ratio increased to 23.1% from 20.5%.Based on higher capacity utilization, ongoing cost savings and astabilizing raw material cost environment the operating income beforeexceptional items reached CHF 69 million in the second quarter,compared to CHF 143 million in the previous-year period. However theoperating income before exceptional items improved from CHF -13million in the first quarter.All divisions contributed positively to operating income beforeexceptional items. The decisive cost-saving measures in the Textile,Leather & Paper Chemicals Division positively impacted theprofitability of all three businesses. The Pigments & AdditivesDivision significantly reduced its costs for the underutilization ofcapacity due to the fact that destocking had eased and order intakehad stabilized. The Functional Chemicals Division continued to be themost resilient against the decline in demand. The MasterbatchesDivision further lowered its break-even point.Net income remained negative (CHF -61 million) in the reportingperiod mainly due to the restructuring and impairment costs of CHF 74million but also resulting from the weak operating income.The previously announced reduction of 1350 job positions was alreadycompleted with 1423 job positions reduced. An additional 500 jobpositions to be made redundant in 2009 were identified andimplementation has begun. Further reductions in 2009 and 2010 willfollow in line with the company's goal to close the performance gapto its peers and to adjust the company's structure to the globalrecession.Operating cash flow reached CHF 184 million in the second quarter of2009, compared to CHF 33 million in the comparable previous-yearperiod. This substantial increase has been achieved through astringent reduction in net working capital, in particular due totight inventory management. The cash position in the group improvedto CHF 545 million from CHF 438 million at the end of the firstquarter of 2009.In addition, Clariant's cash position and debt maturity profile havebeen further improved by launching a CHF 300-million Convertible Bondshortly after the closing of the second quarter. The availablefinancial headroom remains at more than CHF 2 billion. The Bond has acoupon of 3% and matures on 7 July 2014. The conversion price was setat CHF 8.55 per share, a premium of 30% to the prevailing share priceon the date of issuance. The bond will be booked in the third quarterof 2009.The company has further strengthened its balance sheet by reducingnet debt by CHF 224 million to CHF 985 million compared to year-end2008. The gearing - net debt divided by equity - was at 51% on 30June 2009.In line with Clariant's focus on cash generation as well as cost andcomplexity reduction, the company intends to simplify its operationalstructure effective January 1, 2010. The divisional management layerwill be removed. 10 Business Units will have full profit and lossresponsibility including ownership of their assets. The new structurewill create more operational and strategic flexibility. This movewill not only foster entrepreneurship and accountability, but alsocreate a platform to improve Clariant's profitability Business Unitby Business Unit and - going forward - facilitate portfolio measureswhere applicable.OutlookClariant assumes that the global economy will only slowly recover.Consequently, Clariant sales in local currencies are predicted toremain weak until the end of the year, approximately in the range of16-20% below the previous year.The company will maintain its focus on cash generation by decreasingits net working capital. At the same time, the cost-saving andrestructuring measures will continue to favorably impact theoperational result, which will then also increasingly contribute tocash generation. Based on this scenario, Clariant anticipates afurther improved operating income before exceptional items for thefull year compared to the first half of 2009.Going forward Clariant will continue its restructuring efforts withestimated restructuring costs of CHF 200-300 million in 2009 andfurther job reductions in 2009 and 2010.For 2010, Clariant confirms its target of a sustainable aboveindustry average return on invested capital (ROIC). - end -ContactsMedia RelationsMark Hengel Phone: +41 61 469 66 53 E-Mail: mark.hengel(at)clariant.comArnd Wagner Phone: +41 61 469 61 58 E-Mail: arnd.wagner(at)clariant.comInvestor RelationsUlrich Steiner Phone: +41 61 469 67 45 E-Mail: ulrich.steiner(at)clariant.comClariant - Exactly your chemistry.Clariant is a global leader in the field of specialty chemicals.Strong business relationships, commitment to outstanding service andwide-ranging application know-how make Clariant a preferred partnerfor its customers.Clariant, which is represented on five continents with over 100 groupcompanies, employs around 20 000 people. Headquartered in Muttenznear Basel, Switzerland, it generated sales of CHF 8.1 billion in2008. Clariant's businesses are organized in four divisions: Textile,Leather & Paper Chemicals, Pigments & Additives, Masterbatches andFunctional Chemicals.Clariant is committed to sustainable growth springing from its owninnovative strength. Clariant's innovative products play a key rolein its customers' manufacturing and treatment processes or else addvalue to their end products. The company's success is based on theknow-how of its people and their ability to identify new customerneeds at an early stage and to work together with customers todevelop innovative, efficient solutions.www.clariant.comhttp://hugin.info/100166/R/1331531/315082.pdfhttp://hugin.info/100166/R/1331531/315104.pdfhttp://hugin.info/100166/R/1331531/315106.pdf --- End of Message ---Clariant AGRothausstrasse 61 Muttenz 1 SwitzerlandISIN: CH0012142631; Index: SMI, SMIEXP, SPI, Swiss All Share Index;Listed: Main Market in SIX Swiss Exchange, SWX Local Caps in SIX Swiss Exchange;
Datum: 30.07.2009 - 07:00 Uhr
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