Swiss Clariant sets ambitious bid to achieve pre-pandemic margins in 2021

Author: Morgan Condon

2021/04/29

LONDON (ICIS)--Clariant is anticipating a return to pre-pandemic margins in 2021 as the Swiss producer’s first-quarter results on Thursday showed a return to growth.

Earnings before interest, tax, amortisation and depreciation (EBITDA) margins were stronger than in the same period a year prior, and Clariant hopes to continue this in the second quarter, its CEO Conrad Keijzer said to ICIS.

“We are pleased with our profitability, particularly considering the inflation we saw on raw materials and logistics, which we managed to offset in all business units for the first quarter,” said Keijzer.

“We expect a continued recovery with moderate sales growth compared to last year and see EBITDA margins above pre-covid levels.”

Clariant’s ongoing cost savings programme helped to support the company’s growth, the CEO added, while at the same time compound the Swiss producer’s position as a specialty player.

“We are divesting one third of our portfolio, which are mature businesses. This helps us to focus on catalysts, care chemicals and natural resources, which are pure specialty,” said Clariant CFO Stephan Lynen.

“This transformation sharpens the portfolio from a trading perspective, helping us get away from commodity chemicals into specialty valuation,” he added.

Although streamlining remains a key strategy, acquisitions are not off the table, but there are currently no concrete deals.

“We would love to make value creation in core business, there is pipeline lists of companies in all three business areas, but you need buyer and seller,” said Keijzer.

Despite turbulent macroeconomic conditions in the first quarter, improvement in the aviation sector in Europe helped Clariant mark a return to growth.

Seasonal demand for Clariant’s de-icing products used on airplanes helped sales in Europe rise by 17% in local currency in spite of the restrictions put on air traffic to contain the spread of the pandemic.

The aviation industry is facing challenges not only in the short term, but while the longer term industry may be shaped by environmental concerns, Keijzer believes that it will be resilient.

“Aviation will be there, it is a matter how can we make it more sustainable, but aviation is not an industry that will disappear,” he said.

Strength in Europe is welcomed, but Clariant’s attentions lie in other regions.

“Certainly, China is very important market for chemicals, as it already represents 40% of the global chemical market. For us, it is 10% of our sales, so there is a big growth opportunity,” said Keijzer.

“India is not the size of China for chemicals, but it is an important growth market, particularly for surfactants, and we were very pleased in Q1 with [newly established joint venture] India Glycols, makes us one of the country’s leading surfactants players right away.”

Interview article by Morgan Condon

Thumbnail picture source: Clariant