Clariant with Improved Operating Profitability and Cash Flow on 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 Q3 down 14% in local currency and 19% in CHF * Operating income before exceptional items decreased to CHF 107 million from CHF 178 million in the third quarter 2008, but improved from CHF 69 million in the second quarter 2009 * Cash flow from operations improved to CHF 193 million from CHF 147 million in the previous-year period * Net debt reduced to CHF 751 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. In the traditionally weak fourth quarter, Clariant expects an improved operating income before exceptional items compared to the fourth quarter of 2008CEO Hariolf Kottmann commented: "The focus on improving cash flow,decreasing costs and reducing complexity continued to have a positiveimpact on our results. Sales declines of more than 20% in somebusinesses indicate that despite a stabilization in demand we arestill far from a sustainable recovery. In this environment, our costsavings have not yet been sufficient to fully compensate for thedemand weakness. As we need to close the performance gap to our peersand as we don't see a sustainable recovery in our industry in thenext quarters, we will continue to implement additional restructuringand cost saving measures."Key Financial Data+-------------------------------------------------------------------+| | Third quarter | Nine months ||-------------+--------------------------+--------------------------|| in CHF | 2009 | 2008 | % | % | 2009 | 2008 | % | % || million | | | CHF | LC | | | CHF | LC ||-------------+------+-------+-----+-----+------+-------+-----+-----|| Sales | 1 | 2 094 | -19 | -14 | 4 | 6 327 | -22 | -18 || | 691 | | | | 904 | | | ||-------------+------+-------+-----+-----+------+-------+-----+-----|| EBITDA | | | | | | | | || before | 163 | 242 | -33 | -28 | 331 | 679 | -51 | -46 || exceptional | | | | | | | | || items | | | | | | | | ||-------------+------+-------+-----+-----+------+-------+-----+-----|| - margin | 9.6% | 11.6% | | | 6.7% | 10.7% | | ||-------------+------+-------+-----+-----+------+-------+-----+-----|| EBIT before | | | | | | | | || exceptional | 107 | 178 | -40 | -35 | 163 | 488 | -67 | -61 || items | | | | | | | | ||-------------+------+-------+-----+-----+------+-------+-----+-----|| - margin | 6.3% | 8.5% | | | 3.3% | 7.7% | | ||-------------+------+-------+-----+-----+------+-------+-----+-----|| EBIT | 71 | 119 | -40 | -35 | 3 | 377 | -99 | -94 ||-------------+------+-------+-----+-----+------+-------+-----+-----|| Net loss / | 25 | 78 | - | - | -127 | 170 | - | - || income | | | | | | | | ||-------------+------+-------+-----+-----+------+-------+-----+-----|| Operating | 193 | 147 | | | 533 | 174 | | || cash flow | | | | | | | | ||-------------+------+-------+-----+-----+------+-------+-----+-----|| Number of | | | | | 18 | 20 | | || employees | | | | | 185* | 102** | | |+-------------------------------------------------------------------+* as of 30 September 2009 ** as of 31 December2008Clariant Q3, 2009 PerformanceMuttenz, November 4, 2009 - Clariant, a world leader in specialtychemicals, today announced sales of CHF 1.691 billion in the thirdquarter, compared to CHF 2.094 billion during the same period in theprevious year. This represents a 19% decline in Swiss Francs, and 14%in local currency.Sales stabilized during the third quarter. Although there was amodest pick up in some businesses and regions, overall demandremained at low levels with no signs of a sustainable upward trend.Volumes declined by 11% and prices were 3% lower compared to thethird quarter 2008. Raw material costs were 16% lower compared to thesame period a year ago, but 1% higher compared to the second quarter2009. The costs of capacity underutilization were lower than in thetwo previous quarters as a consequence of higher utilization rates,the shutting down of plants and a reduction in workforce - eithertemporarily or permanently.Despite the pressure on volumes, Clariant maintained a stringentfocus on managing its gross margin which increased to 30.1% from29.4% in the previous-year period.CFO Patrick Jany commented: "While we have mitigated the impact ofthe economic crisis on our gross profit, the risk of possible grossmargin erosions in the months to come has risen due to increasing rawmaterial costs. We will closely observe this unfavorable developmentand defend our margin. If necessary, we are ready to deal withpotential volume impacts by further reducing production capacities."Sales, General & Administration (SG&A) costs decreased to CHF 373million from CHF 404 million a year ago, basically as restructuringefforts began to show a positive impact on the P&L. As a percentageof sales, SG&A remains high at 22% compared to 19.3% in the previousyear period. Despite an improvement in SG&A costs, the lower grossprofit led to an operating income before exceptional items of CHF 107million compared to CHF 178 million in the previous year period.Compared to the second quarter 2009, the operating income beforeexceptional items further improved from CHF 69 million.All Divisions contributed to the recovery in operating income beforeexceptional items over the last three quarters. The MasterbatchesDivision benefited from a demand recovery that was stronger than inthe other Divisions. The Pigments & Additives Division alsoexperienced some recovery of order intake but from an extremely lowlevel in both the first and the second quarter. The stringent focuson restructuring as well as a slight recovery in demand - inparticular in the Textiles and Leather businesses - led to animproved profitability of the Textiles, Leather & Paper ChemicalsDivision. The Functional Chemicals Division benefited from asatisfactory development in its Industrial & Consumer Care and OilServices businesses.During the quarter the company continued to invest in restructuringefforts. Overall 1,917 job positions have already been made redundantand a further 800 have been identified. The total headcount of thecompany by year-end is expected to be below 18,000 compared to 20,102at the end of 2008.Restructuring and impairment costs in the third quarter amounted toCHF 38 million and are expected to increase substantially in theremainder of the year. The net income was CHF 25 million, compared toa loss of CHF -61 million in the second quarter. Net income in thethird quarter of 2008 was CHF 78 million.Operating cash flow reached CHF 193 million up from CHF 147 million ayear ago. The operating cash flow, accumulated for the first ninemonths, reached CHF 533 million compared to CHF 174 million in thesame period last year. On the one hand, the company's strong cashflow resulted from a continuing focus on decreasing net workingcapital, mainly through tight inventory management. On the other handthe improvement of the operating income has increasingly contributedto cash generation and will help to make the achievements moresustainable.Clariant has further strengthened its balance sheet by increasing itscash position to CHF 995 million, which includes the proceeds of theCHF 300 million convertible bond that was launched in July. Net debtwas further reduced to CHF 751 million from CHF 1 209 million at theend of 2008. The company's gearing - net debt divided by equity - wasat 38% at the end of the third quarter and vastly improved comparedto the end of the year 2008 (61%).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 operationalperformance, which will then also increasingly contribute to cashgeneration. In the traditionally weak fourth quarter, Clariantexpects an improved operating income before exceptional itemscompared to the fourth quarter of 2008Going 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 18 000 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/1352369/327130.pdfhttp://hugin.info/100166/R/1352369/327133.pdfhttp://hugin.info/100166/R/1352369/327134.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: 04.11.2009 - 07:00 Uhr
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