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Clariant delivers solid Q2 with improved profitability and cash flow

Exceptional items including restructuring, impairment, and transaction-related costs decreased significantly to CHF 16 million compared to CHF 23 million in the second quarter of 2014. This was due to lower restructuring costs in the second quarter of 2015.

Net income from continuing operations amounted to CHF 56 million compared to CHF 83 million in the previous year. This decline was basically due to extraordinarily low tax expenses in the second quarter of 2014 that were driven by one-time events.

Operating cash flow improved to CHF 51 million versus CHF -62 million one year ago, on lower build-up of net working capital. This is a clear reflection on Clariant's priority to increase cash flow in 2015. Cash generation is expected to continue to increase in the second half of the year.

Net debt was CHF 1.347 billion compared to CHF 1.263 billion recorded at year-end 2014. The gearing, reflecting net financial debt in relation to total equity rose to 58% from 46% at the end of 2014.

Separate subsidiary for Business Area Plastics & Coatings to be established

Clariant intends to establish a subsidiary for the Business Area Plastics & Coatings comprised of the Business Units Masterbatches, Additives and Pigments, in order to fully leverage their value creation potential for the company. This will enable Plastics & Coatings to be steered towards higher absolute profitability and cash generation. The new subsidiaries across the world will be fully owned by Clariant and will start operating as of 1 January 2016.

"In the last few years our Business Units Masterbatches, Pigments and Additives have established themselves as leaders in their respective markets in terms of profitability and market share. The new Plastics & Coatings subsidiary will further enable differentiated business steering with a clear focus on absolute profitability and cash generation to further safeguard and improve competiveness in already mature markets. This set up will further increase value creation for the Group. That is why, the entity will remain a vital part of the Group," said CEO Hariolf Kottmann. "This step will also enable us to make appropriate investments in our growth areas", he added.

The existing business unit structure with Masterbatches, Additives and Pigments, will be maintained with all approximately 7,000 employees, all assets and liabilities. Sales of the Business Area Plastics & Coatings were CHF 2.6 billion in 2014; the reported EBITDA margin before exceptional items was 14.0%.

Outlook 2015 confirmed – Further progress in sales, profitability and cash

Clariant expects the challenging environment characterized by an increased volatility in commodity prices and currencies, to continue.

In emerging markets, the economic environment is expected to remain favorable, but at a lower level and with increased volatility. Moderate growth should continue in the United States. However, growth in Europe is expected to remain weak.

The combined effect of the appreciation of the Swiss franc with the weakening of the euro will impact Clariant's sales and profitability in absolute terms, but it will continue to be fairly neutral in terms of relative margins.

In 2015, Clariant is continuing to improve its operational efficiency by implementing a lean service organization; it is further improving its marketing excellence and continues to launch innovations that generate value for its customers.

For 2015, Clariant expects low to mid-single digit sales growth in local currencies. The company will further increase its EBITDA margin before exceptional items above full-year 2014 and increase cash flow generation.

Clariant confirms its mid-term target to achieve a position in the top tier of the specialty chemicals industry. This corresponds to an EBITDA margin before exceptional items in the range of 16% to 19% and a return on invested capital (ROIC) above the peer group average.


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Clariant AG

Global leader in the field of specialty chemicals