UpdateGlobal slowdown impacts Clariant chems divisions Q3 EBITDA

31 October 2012 12:33  [Source: ICIS news]

(adds more financial detail throughout)

ClariantLONDON (ICIS)--The weakening global economic environment has resulted in year-on-year falls in EBITDA for many of Clariant’s chemicals business segments during the third quarter of the year, the Swiss specialty chemical company said on Wednesday.

Quarterly EBITDA (earnings before interest, taxes, depreciation and amortisation) was down year on year for Clariant’s industrial and consumer specialties, pigments and performance chemicals divisions, the company said.

The company reported a 40% year-on-year fall in group net profits during the quarter to Swiss francs (Swfr) 49m ($53m, €40m) as a result of the softening global economy. Sales rose by 3% year on year to Swfr1.92bn during the quarter, while EBITDA for before exceptional items fell by 7% to Swfr201m.

“Global economic activity further softened during the third quarter of 2012. The eurozone continued to be affected by the sovereign debt crisis. The US economy held up well due to the favourable monetary policy of the government,” Clariant said in a statement.

The low growth environment in advanced economies and dampened domestic demand have affected the economic activities in export-oriented emerging markets like India and China,” Clariant added.

EBITDA for Clariant’s industrial and consumer specialties division for the quarter fell by Swfr3m year on year to Swfr53m, despite a Swfr17m increase in sales during the period. Pigments EBITDA fell by 17% during the quarter to Swfr34m, while EBITDA for performance chemicals fell from Swfr35m in the third quarter of 2011 to Swfr30m in the third quarter of 2012.

Masterbatches performed better, with EBITDA growing by Swfr5m to Swfr33m, and Clariant’s textile chemicals division exhibited a slight recovery, with EBITDA growing to Swfr2m during the quarter from a flat performance in the third quarter of 2011.

Catalysis and energy, and functional materials – the business divisions of German chemicals company Sud-Chemie, acquired by Clariant in 2011 for €1.9bn ($1.5bn) – posted a 29% fall in EBITDA to Swfr29m and a 56% increase in EBITDA to Swfr28m, respectively.

The company’s EBITDA margin before exceptionals fell year on year to 10.5%, compared with 11.6% in the third quarter of 2011, which Clariant attributed to higher selling, general and administrative expenses related to the integration of Sud-Chemie into the business.

Clariant predicted a “flat sales growth in local currencies and an EBITDA margin before exceptionals slightly ahead of the level after nine months” for the full year 2012, a prognosis that indicates a downgrade in its full-year performance goals, according to UK investment bank J.P. Morgan Cazenove.

Previous guidance for ‘sustained profitability in 2012’ implied a flat year-on-year EBITDA margin of [around] 13.2%,” the firm said in an analyst note. Clariant’s EBITDA margin for the first nine months of the year stood at 11.5%.

J.P. Morgan Cazenove added that the company had undershot its forecast EBITDA for the quarter by 10%, which it attributed to rising fixed costs

Group net debt stood at Swfr1.93bn at the end of September this year, compared with Swfr1.74bn at the end of 2011.

($1 = Swfr0.93, €1 = Swfr1.21)


By: Tom Brown
+44 208 652 3214



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