Clariant improve but demand remains weak4 November 2009
Clariant, the worldwide specialty chemicals maker, announced on November 4, sales of CHF 1.69 billion ($1.65 billion) in the third quarter, compared to CHF 2.09 billion ($2.05 billion) during the same period in the previous year. This represents a 19% decline in Swiss Francs, and 14% in local currency.
Sales stabilised during the third quarter. Although there was a modest pick up in some businesses and regions, overall demand remained at low levels with no signs of a sustainable upward trend. Volumes declined by 11% and prices were 3% lower compared to the third quarter 2008.
All divisions contributed to the recovery in operating income before exceptional items over the last three quarters. The stringent focus on restructuring as well as a slight recovery in demand - in particular in the Textiles and Leather businesses - led to an improved profitability of the Textiles, Leather & Paper Chemicals Division.
During the quarter the company continued to invest in restructuring efforts. Overall 1,917 job positions have already been made redundant and a further 800 have been identified. The total headcount of the company by year-end is expected to be below 18,000 compared to 20,102 at the end of 2008.
Clariant ceo, Hariolf Kottmann commented: ‘The focus on improving cash flow, decreasing costs and reducing complexity continued to have a positive impact on our results. Sales declines of more than 20% in some businesses indicate that despite a stabilisation in demand we are still far from a sustainable recovery. In this environment, our cost savings have not yet been sufficient to fully compensate for the demand weakness. As we need to close the performance gap to our peers and as we don’t see a sustainable recovery in our industry in the next quarters, we will continue to implement additional restructuring and cost saving measures.’
For the full year 2009, Clariant expects sales in local currencies to decrease 16-20% compared to 2008. Cash flow is expected to remain strong as a result of ongoing stringent net working capital management. In the traditionally weak fourth quarter, Clariant expects an improved operating income before exceptional items compared to the fourth quarter of 2008
Going forward Clariant will continue its restructuring efforts with estimated restructuring costs of CHF 200-300 million ($196-294 million) in 2009 and further job reductions in 2009 and 2010.