Currency appreciation dampens Clariant growth
27 July 2011Clariant, the specialty chemicals company, today announced sales of CHF 1.870 billion in the second quarter 2011, compared to CHF 1.894 billion in the previous year. This includes Süd-Chemie (SC) sales of CHF 216 million for May and June. In local currencies, sales growth amounted to 14%. Due to the massive appreciation of the Swiss franc against most major currencies, sales were 1% lower in Swiss francs year-on-year.
The softening demand compared to the previous year and the unusually high comparable basis of the second quarter 2010 is reflected in a 5% decrease in volumes. Local currency sales saw double-digit growth in the Business Units Additives, Industrial & Consumer Specialties and Oil & Mining Services. At the regional level, a mixed performance was achieved with double-digit sales growth in local currencies in Asia, Europe, North America and Middle East & Africa but slightly lower sales growth in Latin America.
Raw material costs increased by 14% compared to the previous-year period. A strict focus on margin management led to an improvement in sales prices of 7%, thereby fully compensating for the increased raw material costs. Sequentially, a 3% increase in sales prices therefore fully offset a 5% increase in raw material costs. Despite successful margin management, the gross margin fell to 27.5% from 28.9% a year ago. This is mainly due to lower volumes and an unfavorable currency development.
The second quarter was marked by weakness in demand in April and rather solid demand in the rest of the quarter, although first signs of a slowdown in demand have been observed in some businesses. The sovereign debt crisis in Europe, the slow economic recovery in the United States, higher inflation rates in the emerging markets and the ongoing unrests in North Africa and the Middle East have led to a certain market caution.
Outlook 2011
At the beginning of 2011, Clariant shifted its focus from restructuring to continuous improvement and profitable growth. The company is now focusing on creating value by investing in future profitable growth.
Clariant expect a more difficult but nevertheless solid business environment in the second of 2011, characterised by a softening demand. Exchange rates for the major currencies are expected to remain volatile. Commodity prices look set to continue to rise in the second half-year 2011, leading to an increase in raw material costs in the mid-teens compared to 2010.
For 2011, Clariant including eight months of consolidated Süd-Chemie figures, expect sales in the range of CHF 7.8 to 8.0 billion and an EBITDA margin before exceptional items of 13.5% to 14.5%.
