UpdateClariant to divest non-core businesses as part of growth strategy

22 June 2012 12:01  [Source: ICIS news]

(adds CEO, CFO comment and detail throughout)

By Franco Capaldo

Clariant headquartersMUNICH (ICIS)--Clariant will look to divest three of its non-core businesses before the end of 2013, as part of a strategy to improve its competitive position, the Swiss specialty chemicals maker said on Friday.

The company is looking to divest its Emulsions, Detergents and Intermediates, Paper Specialties, and Textile Chemicals business units.

“It is pure speculation today, how long it will take and who will buy it, we have a clear understanding that we should find a strategic option and that divestment could be the most likely option,” said CEO Hariolf Kottmann.

“And the 18 months [time period to divest the three business units] is on the safe side but you can be sure we are driving the entire process with high speed,” he added.

Kottmann was unable to say when the companies would be divested but did say that talks with third parties would begin in the next two to three weeks.

“It is impossible to give a time when we will close the divestment. For us it is important to find reliable interested strategic buyers,” he said.

CFO Patrick Jany said it would be premature to say how much the company was expecting to make from the divestments but said proceeds will be used to reduce debt.

“The priority is the safety of execution and the speed of execution,” he added.

Earlier on Friday, Clariant confirmed its plans to boost its earnings margin to above 17% in 2015, and is aiming to generate the bulk of its sales from “non-cyclical” businesses in the years ahead.

The company’s goal is to increase its earnings before interest, tax, depreciation, amortisation (EBITDA) margin from 13.2% last year to above 17% in 2015, the company said in a statement.

“The goal is, amongst others…to achieve a return on invested capital that is above peer group average,” it said.

The company said it will, in the future, generate more than 70% of its sales with core non-cyclical business units.

The CEO said the company will look, through bolt-on acquisitions, to strengthen its core business units, which include Additives, Catalysis & Energy, Functional Materials and Industrial and Consumer Specialties.

He added that the group will look to achieve 1-2% additional top-line growth through research and development and innovation, while also trying to improve EBITDA of its current business portfolio by 1-2% through organic growth.

Clariant also wants to increase its markets shares in emerging markets such as China, India and Brazil, Kottmann said.

"We will implement these portfolio management measures with the same speed and determination as that of our activities in the restructuring phase,” said Kottmann.

“They are an important pre-requisite for reaching our targets by 2015. At that point, a newly aligned Clariant will be even more profitable and will generate more than 70% of its sales from non-cyclical business units,” Kottmann added.

“The acquisition of Sud-Chemie was an important first step for Clariant,” he added.

With the integration of former Sud-Chemie businesses, Clariant expects an additional EBITDA improvement of Swiss francs (Swfr) 90m-115m ($94m-120m) until the end of 2013.

Clariant completed its 96.15% acquisition of Sud-Chemie on 21 April 2011.

“In addition, the transaction was fully refinanced within less than twelve months,” it added.

($1 = Swfr0.96)       

Additional reporting by Nurluqman Suratman


By: Franco Capaldo
+44 (0)20 8652 3214



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