Clariant announced second quarter 2015 sales from continuing operations of CHF 1.406 billion compared to CHF 1.531 billion in the second quarter of 2014. This corresponds to a flat growth in local currencies, influenced by 1% lower volumes and 1% higher prices.
"Clariant continued the strong development of the first into the second quarter," said CEO Hariolf Kottmann. "We have significantly improved our operating profitability and our cash flow. This is in-line with our objectives for 2015 and we expect cash generation to continue to increase in the second half of the year. Clariant is well on track to achieve its growth and profitability targets, despite a continued mixed economic environment particularly in Asia and very volatile currencies."
Given the continuing strong volatility of currencies in the second quarter of 2015, in particular the year-on-year weaknesses of the euro, Brazilian real, and the Japanese yen, the flat sales development in local currencies translated into an 8 % sales reduction in Swiss francs.
Growth was focused in the Americas with Clariant posting strong local currency sales growth of 16% in Latin America and 7% in North America, the latter led by strong demand in Catalysis as well as continued growth in Oil & Mining Services. Europe was 2% lower in local currencies but basically continued to be flat if the reduction of the exposure to the low-margin base products business is taken into account.
The lower growth was mostly due to the regions Asia/Pacific and Middle East & Africa. In Asia/Pacific sales in local currencies decreased by 5%. The decline was due to weak demand in China and to a high base in the Catalyst business, where in addition second quarter orders were shifted into the first quarter of 2015. The strong development in smaller economies in Asia could not compensate for this base effect. In the Middle East & Africa region, sales were 21% lower year-on-year in local currencies, because of a higher basis in the second quarter of 2014, which still included sales from the Water Treatment business, which was divested in July 2014.
The three high margin Business Areas, Care Chemicals, Catalysis, and Natural Resources experienced strong underlying demand and are all on track to reach their respective yearly guidance.
Care Chemicals recorded a like-for-like growth of 9%. Reported growth was 3%, exclusively due to the reduction of exposure to the low-margin base products in 2014. Sales in Catalysis decreased by 9% in local currencies as expected, due to a high base in the second quarter of 2014 and the shift of orders from the second into the first quarter of 2015. Natural Resources revenues increased by 1% with an underlying growth of 6% in local currencies when accounting for the sale of the Water Treatment business. Growth continued to be driven by Oil & Mining Services. In Plastics & Coatings, however, sales remained flat, as stable growth in the Masterbatches business could not compensate for the weakness in Pigments.
At 30.7%, the gross margin was above previous year's level (29.5%) benefitting from higher pricing. The increased gross margin was the main driver for the strong EBITDA margin before exceptional items improvement.
The EBITDA before exceptional items from continuing operations rose 9% in local currencies and reached CHF 211 million, compared to CHF 214 million recorded in the previous year. The corresponding EBITDA margin of 15.0% was clearly above the previous year's level of 14.0%.
Care Chemicals, Natural Resources, as well as Plastics & Coatings substantially improved EBITDA margins in the second quarter of 2015 in comparison to the previous year. Catalysis delivered a solid 23.9% EBITDA margin, which was lower than in the previous year, when the comparable base was uncommonly high due to portfolio mix effects.
Clariant delivers solid Q2 with improved profitability and cash flow