Final Results
17 Fevereiro 2009 - 3:01AM
UK Regulatory
TIDM0H9V
Clariant Improves Operational Performance and Strengthens Focus on
Cash Generation and Cost Reduction
* Sales of CHF 8.1 billion in 2008, up 1% in local currencies
* Price increase of 7% compensates for a 15% increase in raw
material costs
* Volume erosion in most businesses in Q4
* Operating income margin before exceptionals up to 6.6% from
6.3% in 2007
* SG&A costs down to 20.3% from 20.8% of sales
* Net loss of CHF 37 million due to CHF 180 million
impairment in Textile and Leather Businesses
* Operating cash flow at CHF 391 million
* Net debt reduced to CHF 1.21 billion from CHF 1.36 billion;
solid maturity profile
* Outlook: Clariant addresses challenging economic
environment by further restructuring and focusing on cash
generation and cost reduction
CEO Hariolf Kottmann commented: "Our company achieved an improved
operating margin and a solid cash flow from operations in 2008
against the backdrop of a steep decline in demand in the last
quarter. We will adjust for declining demand in our markets. At the
same time, we need to accelerate our restructuring efforts in order
to catch up with our competitors. On the foundation of a sustainable
operational performance we will manage the company for profitable
growth in 2011 and beyond."
Muttenz, February 17, 2009 - Clariant, a world leader in specialty
chemicals, today announced sales of CHF 8.1 billion for the Full Year
2008 compared to CHF 8.5 billion in 2007. This translates into a 1%
growth in local currency and a 5% decline in CHF.
Clariant went through two distinct phases during fiscal year 2008. In
the first nine months, the company continued to benefit from a stable
demand and could cope with rising raw material costs and adverse
currency movements by substantially increasing sales prices. In the
fourth quarter, Clariant was significantly impacted by an
unprecedented decline in global economic activity that led to a
weaker demand from customer industries such as textile, leather,
automotive and construction. Other markets such as agrochemicals, oil
services or de-icing showed resilience against the downturn. Clariant
countered the unfavorable demand development in Q4 by reducing
temporary employees and overtime as well as extended plant shutdowns
over Christmas.
The company could offset a 15% increase in raw materials costs in
2008 by sales price increases of 7%. Due to low capacity utilization
in the fourth quarter the gross margin was slightly down to 28.7%
from last year's 29.2%. Because of Clariant's strong focus on SG&A
costs reduction, the operating margin before exceptional items
improved to 6.6 % from 6.3 % in the previous year. The operating
income before exceptionals reached CHF 530 million compared to CHF
539 million in 2007.
As a result of the deterioration of the leather and textile markets
and their uncertain evolution in 2009, Clariant revised the business
plans for these two businesses, which led to an impairment of CHF 180
million.
By the end of 2008, Clariant had reduced roughly 1 650 job positions
out of the reduction target of approximately 2 200 that was announced
in 2006. The activities to reduce SG&A costs as well as the
production site closures that were announced previously - namely in
Horsforth, Coventry, Selby and Naucalpan - proceeded as planned.
Restructuring and impairment costs related to those activities
amounted to CHF 141 million. Total restructuring and impairment costs
were at CHF 321 million. The Group recorded a net loss of CHF 37
million.
The operating cash flow remained solid in 2008 and reached CHF 391
million despite a negative impact from inventories buildup in the
first nine months. This compares to an operating cash flow of CHF 540
million in the previous year.
The balance sheet of the company remains solid. Clariant was able to
reduce its net debt by 11% to CHF 1.21 billion from CHF 1.36 billion.
The interest expenses also developed favourably, falling to CHF 85
million from CHF 107 million in 2007. The company will not face
maturities in capital markets for almost three years as all mid- and
long-term debt was refinanced under favorable conditions between
April 2006 and July 2008. Therefore the liquidity of the Clariant
Group is strong and the company is prepared for a potential further
economic downturn.
Divisional Overview
Pigments & Additives Division significantly improves operating income
Sales in the Pigments & Additives Division remained stable in local
currency while sales in CHF declined 6%. Solid growth in the first
nine months could not compensate for the dramatic decline in demand
from key customer industries such as automotive and plastics in the
fourth quarter. Only the division's Specialties Business could offset
the unfavorable demand development in Q4; Full Year sales in the
Coatings and Plastics businesses declined.
The division's gross margin remained stable compared to the previous
year despite significant underutilization costs in the last quarter,
whereas the operating margin significantly increased. The negative
impact of currency effects on EBIT was more than offset by the
systematic implementation of the restructuring measures and the focus
on cost leadership.
In order to streamline its portfolio and contribute to the
consolidation of the wax markets, the division sold its
Netherlands-based affiliate Dick Peters B.V. to the German specialty
chemicals group Altana. The transaction was worth EUR 18 million.
Textile, Leather & Paper Chemicals Division facing deteriorating
markets
Clariant's Textile, Leather & Paper Chemicals Division was
significantly impacted by the deterioration of the leather and
textile markets that commenced already in early 2008 and continued
with increasing momentum after the Olympic Games, when the demand
decline reached the markets in Asia. Divisional sales decreased 6% in
local currencies and 13% in CHF. The Paper Business held up
relatively well in the economic downturn.
The gross margin as well as the operating margin of the division
declined significantly. The gross margin was impacted by weak top
line growth in the Leather and Textile businesses, the resulting
capacity underutilization towards the end of the year and by a supply
shortage resulting in escalating raw material costs in the Paper
Business. At the operating margin level, restructuring efforts and
cost-cutting measures, in particular in SG&A, proceeded as planned
but were not sufficient to compensate for the capacity
underutilization that worsened the gross margin.
Masterbatches Division strongly affected by declining demand in key
customer segments
Demand for the products of the Masterbatches Division declined with
increasing momentum during the year. Weak market environments in the
United States, e.g., in the automotive and housing sectors spilled
over to Europe and - in the last quarter - also to the other regions.
Consequently sales declined 1% in local currencies and 7% in CHF.
The weakening demand caused underutilization of capacities in the
last quarter - countered by extended plant shutdowns - which
negatively impacted the gross margin. The division's decisive
approach on reducing temporary employees and overtime mitigated the
impact on operating profitability but could not totally offset it. As
a result, the operating margin of the division declined compared to
2007.
The division strengthened its position as world leader in the
masterbatch business by the acquisition and integration of US-based
Rite Systems / Ricon Colors in July 2008, which positively
contributed to the results of the division.
Functional Chemicals Division with solid top and bottom line growth
Sales in the Functional Chemicals Division grew 9% in local
currencies or 3% in CHF. Volumes showed resilience against the
macroeconomic downturn in the first nine months. In particular the
Agro Chemicals Business, the Oil and Mining Services and - in the
last quarter - also the de-icing business 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 United States by market share gains.
Due to the consequent implementation of cost-cutting measures, in
particular in SG&A, as well as a consistent price-over-volume
approach, the division could increase both the gross margin and the
operating margin before exceptionals.
Outlook
Currently there is no evidence that the global economy will recover
soon from the depressed levels seen in recent months. However, a
differentiated development among Clariant's market segments as
already observed in 2008 can be expected as parts of the company's
portfolio are less exposed to economic developments than others.
In this challenging environment, Clariant will accelerate several
actions to address both the unsatisfactory performance and the
economic slowdown. Cash generation through significantly decreasing
net working capital and spending discipline will be the prevailing
priority for 2009 in order to create the financial headroom for
decisive restructuring.
Following this approach, Clariant will rapidly and forcefully
implement the announced significant decrease in personnel costs by
reducing 1 000 job positions in addition to the 2 200 announced in
2006. Also, Clariant will simplify its organization in order to
unwind additional cash generation and cost savings potential - in
particular in the SG&A area. Restructuring costs in 2009 will amount
to approximately CHF 200 to 300 million.
Reflecting the current uncertainties in the economic environment, the
Board of Directors will recommend to Clariant's 14th General Assembly
on April 2 to suspend dividends, grants or payouts to shareholders
for 2008.
For 2010, Clariant confirms its target of an above industry average
return on invested capital (ROIC).
- end -
Contacts
Media Relations
Arnd Wagner Phone +41 61 469 61 58
Investor Relations
Ulrich Steiner Phone +41 61 469 67 45
+-----------------------------------------------------------------------------------------------------+
|Key Financial Group Figures |
|-----------------------------------------------------------------------------------------------------|
| | Full Year| Fourth Quarter|
|---------------------------+-----------------------------------------+-------------------------------|
|Continuing operations: | 2008| 2007| 2008| 2007|
|---------------------------+--------------------+--------------------+---------------+---------------|
| | CHF mn| % of| CHF mn| % of| CHF mn| % of| CHF mn| % of|
| | | sales| | sales| | sales| | sales|
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
|Sales | 8'071| 100.0| 8'533| 100.0| 1'744| 100.0| 2'086| 100.0|
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
| | | | | | | | | |
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
|Local currency growth (LC):| 1%| | | | -9%| | | |
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
| Organic growth1 | 1%| | | | -9%| | | |
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
| | | | | | | | | |
|Acquisitions/Divestitures | 0%| | | | 0%| | | |
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
| Currencies | -6%| | | | -7%| | | |
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
| | | | | | | | | |
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
|Gross profit | 2'314| 28.7| 2'488| 29.2| 440| 25.2| 580| 27.8|
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
|EBITDA before exceptionals | 783| 9.7| 812| 9.5| 104| 6.0| 194| 9.3|
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
|EBITDA | 691| 8.6| 628| 7.4| 102| 5.8| 90| 4.3|
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
|Operating income before | | | | | | | | |
|exceptionals | 530| 6.6| 539| 6.3| 42| 2.4| 122| 5.8|
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
|Operating income | 229| 2.8| 278| 3.3| -148| 8.5| 7| 0.3|
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
|Net income from continuing | | | | | | | | |
|operations | -28| 0.3| 108| 1.3| -199| 11.4| -21| 1.0|
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
|Net income | -37| 0.5| 5| 0.1| -207| 11.9| -17| 0.8|
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
|Operating cash flow (total | | | | | | | | |
|operations) | 391| | 540| | 217| | 220| |
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
| | | | | | | | | |
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
|Discontinued operations: | | | | | | | | |
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
|Sales | 0| | 82| | 0| | 1| |
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
|Net loss from discontinued | | | | | | | | |
|operations | -9| | -103| | -8| | 4| |
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
| | | | | | | | | |
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
|Other key figures: | 31.12.2008| | 31.12.2007| | | | | |
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
|Net debt | 1'209| | 1'361| | | | | |
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
|Equity (including | | | | | | | | |
|minorities) | 1'987| | 2'372| | | | | |
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
|Gearing | 61%| | 57%| | | | | |
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
|Return on invested capital2| 9.0%| | 7.8%| | | | | |
|---------------------------+------------+-------+------------+-------+-------+-------+-------+-------|
|Number of employees | 20'102| | 20'931| | | | | |
+-----------------------------------------------------------------------------------------------------+
1Throughout this statement the term "organic growth" is being used.
It means volume and price effects excluding the impacts of changes in
FX rates and acquisitions/divestitures.
2 Clariant calculates ROIC by dividing NOPLAT before exceptional
items by the average net capital employed. NOPLAT is calculated by
taking the operating income before exceptional items adjusted by the
expected tax rate. Net capital employed also considers operating cash
and capitalized operating leases.
Clariant - Exactly your chemistry.
Clariant is a global leader in the field of specialty chemicals.
Strong business relationships, commitment to outstanding service and
wide-ranging application know-how make Clariant a preferred partner
for its customers.
Clariant, which is represented on five continents with over 100 group
companies, employs around 20 000 people. Headquartered in Muttenz
near Basel, Switzerland, it generated sales of CHF 8.1 billion in
2008. Clariant's businesses are organized in four divisions: Textile,
Leather & Paper Chemicals, Pigments & Additives, Masterbatches and
Functional Chemicals.
Clariant is committed to sustainable growth springing from its own
innovative strength. Clariant's innovative products play a key role
in its customers' manufacturing and treatment processes or else add
value to their end products. The company's success is based on the
know-how of its people and their ability to identify new customer
needs at an early stage and to work together with customers to
develop innovative, efficient solutions.
www.clariant.com
=--END OF MESSAGE---
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solely responsible for the content of this announcement.
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