Swiss Clariant Q1 sales rise by 1% on higher volumes

LONDON (ICIS)–Clariant’s first-quarter sales rose by 1% year on year to Swiss francs (Swfr) 1.48bn (€1.35bn) on the back of higher volumes, the Swiss specialty chemicals firm said on Thursday.

The company’s earnings before interest, tax, depreciation and amortisation (EBITDA) before exceptional items rose by 11% year on year to Swfr229m in the first quarter, it said in a statement.

Its EBITDA margin rose to 15.5% in the first quarter of this year from 14.1% in the same period of 2015, it added.

In local currencies, the company’s sales were up by 3% year on year in the first quarter while EBITDA rose by 16%, it added.

“For 2016, in spite of the increasingly challenging economic environment, Clariant is confident to achieve growth in local currencies, as well as progression in operating cash flow and EBITDA margin before exceptional items,” the company said.

“Clariant confirms its mid-term target of reaching a position in the top tier of the specialty chemicals industry. This corresponds to an EBITDA margin before exceptional items in the range of 16 % to 19 %,” it added.

The company’s largest division, Plastics & Coatings, increased sales during the first quarter by 3% year on year to Swfr639m, while EBITDA before exceptional items jumped 25% to Swfr105m, with Pigments and Masterbatches’ sales up and those of Additives flat.

“In Pigments, sales grew across all regions, with Asia driven by a stable business in China and very strong growth in India. In addition, the growth in coatings and in special applications year on year contributed to the positive development,” said the company.

Within Masterbatches, Clariant said it had registered healthy growth in the areas of packaging, consumer goods and medical specialties, but Additives’ sales stood flat on the back of weak sales in China for electronics as well as “market weakness” for flame retardants, which could not be offset by healthy sales of polymer additives and waxes.

“This [25% increase in EBITDA] was the result of a better mix effect as well as the effect of the differentiated business steering in Plastics & Coatings since the beginning of January 2016,” said Clariant.

The Swiss producer carved out its three divisions into three separate legal entities on 1 January, a move seen by chemical analysts as the step for a potential divestment of the Plastics & Coatings division following financial results in which it had struggled to return healthy profitability.  

The company’s CEO Hariolf Kottmann, however, denied in February such a possibility and argued the carve-out would add “strategic flexibility” towards the division.

Care Chemicals’ sales rose 5% in the first quarter year on year to Swfr411m, while EBITDA before exceptionals increased 7% during the period to Swfr75m, supported by “strong double-digit” growth in Latin America, Asia and the Middle East and Africa, although the mild winter in North America weighed on its de-icing business and caused a decrease in revenue in that region, the firm said.

“Future growth is anticipated to be accompanied by new capacity such as in Clearlake, US, with ethoxylation, which came on stream in the first quarter of 2016. Additionally, Care Chemicals will invest in markets where it is underrepresented,” it added.

Natural Resources suffered a fall in sales of 8% during the first quarter, year on year, to Swfr292m on the back of weakness at the Oil and Mining Services business units. EBITDA before exceptionals, however, rose 2% to Swfr52m.

Sales at the Catalysis division were 1% lower in the first quarter, year on year, at Swfr136m on the back of weakness in the Chinese industrial sectors, it said, but EBITDA before exceptionals rose during the quarter by 4% to Swfr26m.

“The decline in the first quarter of 2016 was driven by a very weak demand in China as some refill business and several new projects were delayed due to the economic environment as already seen in the last three quarters,” said Clariant.

Additional reporting by Nurluqman Suratman

(adds divisional performance from paragraph 7)

(€1 = Swfr1.10)