Clariant performance defies sceptics - Citigroup

30 April 2008 12:15  [Source: ICIS news]

LONDON (ICIS news)--A strong first quarter financial performance from specialty chemicals maker Clariant had defied sceptics, Citigroup said on Wednesday.

The Switzerland-based group reported an adjusted operating income of Swfr167m ($161/€103m), sharply exceeding analysts’ consensus earnings estimates of Swfr141m.

Operating margins expanded to 7.9% from 7.1% as a combination of pricing and cost control offset raw materials and currency headwinds, the bank said in a note to clients.

Clariant’s share rose sharply on the results announcement and were up 15% at Swfr11.02 at 10:24 GMT.

Citi remained neutral on the stock, however, based on a low valuation and an uncertain demand outlook.

The consensus view for the full year had been a decline of 60 basis points in operating margins year-on-year although in its first quarter report Clariant management had retained guidance to improve margins. Based on the results alone margins would remain flat, Citi analysts said.

Clariant was able to raise prices by 4% in the first quarter, the highest increase in memory, Citi added. This was able to offset a 9% increase in raw material costs. Four hundred jobs were eliminated in the quarter and marketing costs cut by 10%.

($1 = €0.64/Swfr1.04)

By: Nigel Davis
+44 20 8652 3214

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