UBS upgrades Clariant to ‘neutral’ from 'sell'

31 August 2010 12:02  [Source: ICIS news]

LONDON (ICIS)--UBS has upgraded its share rating for Switzerland-based specialty chemicals maker Clariant to “neutral” from “sell” based on expectations of improved trading in Germany and Latin America, the investment bank said on Monday.

UBS also raised Clariant’s price target to Swiss franc (Swfr) 14.0 ($13.60, €10.85) from Swfr13.0 amid expectations of benefits from the company's restructuring initiative known as global asset network optimisation (GANO).

So far, Clariant is two-thirds of the way through its restructuring programme and was expected to announce the final raft of plant closures by the end of this year.

In its second-quarter financial report released in July, Clariant revealed a further two plant closures: in Onsan, South Korea, and Tianjin, China, both for powder pigment production. This has taken the number of closures announced since November 2009 to 12.

UBS added that Clariant would also benefit from margin expansion.

For pigments, UBS said Clariant's earnings before interest and taxation (EBIT) margins have climbed to around 18.5% in the first half of 2010, “and successful price management against a backdrop of rising raw materials likely means margins will not fall of a cliff any time soon”.

At 11:16 GMT, Clariant’s shares were trading on the Swiss Stock Exchange at Swfr13.03, down 0.69% from the previous closing price.

The company posted a second-quarter net profit of Swfr 25m, compared with loss of Swfr61m in the same period last year, as a result of strong sales.

(€1 = Swfr1.29/$1 = Swfr1.03)

For more on Clariant visit ICIS company intelligence
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By: Franco Capaldo
+44 (0)20 8652 3214

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