Clariant FY Results: Good Sales Growth and Subs...
-- Sales up 4% in local currency and 5% in Swiss Francs, with prices up 1%
-- Operating cash flow significantly improved to CHF 540 million (2006: CHF
328 million)
-- Operating income before exceptional items reached CHF 539 million
-- Net income of CHF 5 million (2006: loss of CHF 78 million)
-- Outlook - Improved operating margins before exceptionals and continued
strong cash generation
Clariant
Clariant International Ltd (SWX:CLN):
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Key Financial Group Figures
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Full Year Fourth Quarter
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Continuing
operations: 2007 2006 2007 2006
----------------------------------------------------------------------
CHF % of CHF % of CHF % of CHF % of
mn sales mn sales mn sales mn sales
----------------------------------------------------------------------
Sales 8533 100.0 8100 100.0 2086 100.0 2010 100.0
----------------------------------------------------------------------
----------------------------------------------------------------------
Local currency growth
(LC): 4% 3%
----------------------------------------------------------------------
Organic growth 3% 2%
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Acquisitions/
Divestitures 1% 1%
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Currencies 1% 1%
----------------------------------------------------------------------
----------------------------------------------------------------------
Gross profit 2488 29.2 2486 30.7 580 27.8 585 29.1
----------------------------------------------------------------------
EBITDA before
exceptionals 812 9.5 855 10.6 194 9.3 202 10.0
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EBITDA 628 7.4 798 9.9 90 4.3 182 9.1
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Operating income
before exceptionals 539 6.3 592 7.3 122 5.8 134 6.7
----------------------------------------------------------------------
Operating income 278 3.3 385 4.8 7 0.3 112 5.6
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Net income from
continuing
operations 108 1.3 131 1.6 -21 1.0 23 1.1
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Operating cash flow
(total operations) 540 328 220 155
----------------------------------------------------------------------
----------------------------------------------------------------------
Discontinued
operations:
----------------------------------------------------------------------
Sales 82 325 1 55
----------------------------------------------------------------------
Net loss from
discontinued
operations -103 -209 4 -24
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----------------------------------------------------------------------
31. 31.
Dez Dez
Other key figures: 07 06
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Net debt 1361 1556
----------------------------------------------------------------------
Equity (including
minorities) 2372 2433
----------------------------------------------------------------------
Gearing 57% 64%
----------------------------------------------------------------------
Return on invested
capital (ROIC) 7.80% 8.30%
----------------------------------------------------------------------
Number of employees 20931 21748
----------------------------------------------------------------------
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Jan Secher, CEO of Clariant, commented:
'We have progressed in building momentum in operational performance and we have
significantly improved our cash flow, although profitability was impacted by
higher raw material and energy costs as well as unfavorable currency movements.
We expect our continuing initiatives in increasing prices and striving for cost
leadership to deliver improved profitability in 2008. Moving ahead, we will
focus on businesses where we can optimize value through leveraging strong market
positions and selectively participate in the consolidation of these market
segments. This will result in a period of active portfolio re-shaping.'
Clariant posted sales growth of 4% in local currencies (5% in Swiss Francs) for
Full-Year 2007. Sales in 2007 amounted to CHF 8.533 billion compared to CHF
8.100 billion in the previous year. Although sales in the second half of the
year were not as strong as in the first half, sales in the fourth quarter
recovered after a slower third quarter.
In 2007 Clariant was able to raise its prices by more than 1%, with increasing
momentum towards year-end. However, higher selling prices were not sufficient to
offset a 5% rise in raw material costs. Consequently, the gross margin decreased
to 29.2% from 30.7% in 2006.
Clariant's focus on cost reduction delivered results. Sales, General &
Administrative (SG&A) costs expressed as a percentage of sales improved to 20.8
% in 2007 from 21.3% in 2006, partly mitigating the decline in gross margin.
Furthermore, unfavorable currency effects adversely impacted Clariant's
profitability by CHF 68 million, which led to an operating income before
exceptionals of CHF 539 million compared to CHF 592 million in 2006. Operating
margin decreased to 6.3%. from 7.3% in 2006. Net income (after exceptional
items) increased to CHF 5 million from CHF -78 million in 2006, also due to
lower taxes and improved financial results.
During 2007 Clariant benefited from the stabilization of the supply chain and
its strong focus on net working capital reduction. Cash flow from operations
rose substantially to CHF 540 million compared to CHF 328 million in 2006,
mainly driven by inventory reduction and lower trade receivables.
Restructuring efforts progressing
Restructuring efforts progressed in line with Clariant's 2010 goals, with
restructuring costs reaching CHF 262 million in 2007. Nine smaller sites have
been closed and three larger ones have been announced for closure. Approximately
800 job positions have been reduced and a further 600 have been announced. This
totals more than half of the previously announced reduction of 2,200 job
positions. In addition, more than 20% of the product portfolio has been pruned
in order to reduce complexity, and has thus nearly reached the 2010 target of
25%.
The company implemented a number of senior management changes during 2007 with
the objective of driving a performance-oriented culture at Clariant. These
external appointments and internal promotions are already having an impact
across the group and the company expects to see the benefits of this fresh
approach through the coming years.
Profitable growth in service-driven businesses and strong focus on pricing
improvements across all divisions
Overall, the service-driven businesses at Clariant saw profitable growth. For
example, the Oil Service Business increased sales and profitability, benefiting
from strong demand for crude oil. The Coatings Business was able to offset
weakening market development in Europe by good sales and profitability growth in
Asia and Latin America. Masterbatches also performed well in 2007. The Leather
Business, on the other hand, suffered from declining demand and overcapacity.
Within the product-driven businesses, the Detergents and Specialty Intermediates
Business had a difficult year due to increasing raw material costs.
The efforts on price increases have started to pay off in all divisions, with
increasing momentum towards the end of the year. The Pigments and Additives
Division, as well as Textile, Leather and Paper Chemicals, reversed the negative
trend of declining prices of recent years and achieved higher selling prices
towards the end of the year. Price increases in the Functional Chemicals
Division also mitigated the margin squeeze towards year-end. The Masterbatches
Division was able to fully compensate the rising raw material and energy costs
by price increases.
Strong growth in Asia and Latin America
Asian markets saw the strongest growth for Clariant in 2007, with growth of 9%
in local currencies. Decreasing momentum in the third quarter was partially
counterbalanced by increased growth in the fourth quarter. China remained the
strongest growth contributor in Asia, while growth in India was affected by a
slowdown in the export-driven industries.
A 4% rise (local currencies) in sales in the Americas was mainly driven by
strong growth in Latin America (+9%). Sales in the US remained firm at +1%, with
a strong fourth quarter that offset weak demand amongst some of Clariant's
customer industries in the first nine months.
European sales were up 1%, positively influenced by the good economic
development in Germany that compensated for the weaker demand development in
Southern Europe.
Annual General Meeting 2008
Based on the reported full-year results, at the 13th Annual General Meeting on
April 10, 2008 Clariant's Board of Directors will propose a payout of CHF 0.25
per share by reducing nominal value from CHF 4.25 to CHF 4.00. The proposed
payout remains unchanged from the previous year.
Roland Losser, Chairman of the Board of Directors, has decided for personal
reasons not to stand for re-election as Board member at the Annual General
Meeting. The Board of Directors plans to appoint Jurg Witmer as Chairman
following the Annual General Meeting on April 10. Jurg Witmer joined the Board
in April 2007.
Outlook: Improved operating margins before exceptional items and continued
strong cash generation
Against a backdrop of an increasingly uncertain global macro-economic outlook,
Clariant's focus during the coming year will be on the continuing implementation
of price increases and cost leadership which will help offset expected further
increases in raw material and energy costs. With the benefits of the operational
performance improvements already underway, Clariant expects to an improved
operating margin before exceptional items and continuing strong cash flow from
operations in 2008.
Going forward, the company will focus on businesses where it will be able to
leverage strong market positions in attractive markets, and thus proactively
manage its portfolio.
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 21,000 people. Headquartered in Muttenz near Basel, Switzerland,
it generated sales of CHF 8.5 billion in 2007. 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 knowhow 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
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Clariant International Ltd
Media Relations
Arnd Wagner, +41 61 469 61 58
or
Investor Relations
Ulrich Steiner, +41 61 469 67 45
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