Clariant Q2 income up 3% amid low margins

02 August 2007 11:04  [Source: ICIS news]

LONDON (ICIS news)--Clariant saw a 3% improvement in second quarter operating income before exceptionals to Swiss francs (Swfr) 142m ($118m) amid continuing low margins, it said on Thursday.

 

Sales improved by 7% to Swfr2.18bn driven by continued strong demand across all divisions, said the Swiss specialty chemicals group.

 

In the first half of 2007 the gross margin dropped to 29.9% from 31.5% due to an increased energy costs and a 4% rise in raw material prices.

 

“We achieved strong top-line growth with increased prices, but profitability clearly remains disappointing” said Clariant CEO Jan Secher.

 

Clariant confirmed its 2007 outlook, expecting higher sales and operating income before exceptionals from continuing operations, although margins were forecasted to remain stable.

 

The textile, leather and paper chemicals division reported an 11% rise in operating income before exceptionals (income) in the second quarter to Swfr49m underpinned by operations in Asia, Latin America and emerging markets.

 

Income in the pigments and additives division dropped 40% to Swfr39m, hit by high raw material costs, unfavourable currency effects and anticipated lower capacity utilisation.

 

The masterbatches division increased income by 21% to Swfr35m, although margins dropped due to the related costs of integrating the Ciba masterbatches business.

 

Functional chemicals reported a slight drop in second quarter income at Swfr39m. Clariant said it was able to offset higher raw material costs through price increases, although margins fell to 7.2% from 7.8% in the first half.

 

Clariant’s share price dropped 5.5% mid-morning to Swfr17.80 from the last close.

 

($1 = Swfr1.20)

By: Mark Watts
+44 20 8652 3214

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