Clariant performance well on target after solid third quarter
Sales from continuing operations in Q3 2013 grew 2% in local currencies and were 3% lower in Swiss francs, at CHF 1.443 billion, down from CHF 1.489 billion in the same period last year.
EBITDA margin before exceptional items amounted to 14.1% compared to 12.0% in Q3 2012.
Net result from continuing operations rose to CHF 129 million from CHF 47 million in Q3 2012.
Operating cash flow improved to CHF 267 million from CHF 181 million in Q3 2012.
For full-year 2013, Clariant expects further progress in sales and profitability compared to 2012 by focusing on innovation, growth and continuous cost efficiency.
CEO Hariolf Kottmann: “Clariant achieved a solid performance in the first nine months of 2013 as most businesses developed favorably under continuing challenging economic conditions around the globe. Good progress has been made in the repositioning of the business portfolio, with the divestment of underperforming businesses nearing completion. This will leave Clariant with a well-balanced portfolio that has promising long-term growth prospects in many areas of the specialty chemicals industry.”
Third Quarter Performance
Muttenz, October 30 2013 - Clariant, a world leader in specialty chemicals, today announced third quarter 2013 sales from continuing operations of CHF 1.443 billion compared to CHF 1.489 billion in the prior-year period. This corresponds to a 2% sales growth in local currencies that was almost entirely the result of higher sales volumes. In Swiss francs, sales decreased 3%, due to the pronounced weakness of the Brazilian real, the Japanese yen and the Indian rupee against the Swiss franc.
The economic environment remained challenging and basically unchanged compared to the first six months. In this environment, all Business Areas with the exception of Catalysis & Energy achieved local currency sales growth in the low to mid single-digit range. Care Chemicals outperformed the other Business Areas, adding 5% in sales year-on-year, with all segments and regions contributing to growth. Natural Resources managed to increase sales by 3%. Good growth in Adsorbents, Mining Services and Refinery Services outweighed a weaker Water Treatment and a temporarily softer Oil Services business. In Catalysis & Energy, Catalysts experienced some delays in the realization of new customer projects, mainly in Asia. The situation is expected to gradually improve during the fourth quarter. The startup business Energy Storage did not improve compared to the previous quarters. Sales in Plastics & Coatings recovered from the weak prior-year period, achieving 4% growth.
On a regional basis, local currency sales growth in Latin America continued at a high level with an 11% increase year-on-year. A heterogeneous development has been observed in the other regions. North America and Europe grew 2% in local currencies while Asia/Pacific lost 2%. Robust growth of 2% in China was more than offset by weakness in India and Japan. Middle East & Africa continued at a low level.
The gross margin improved to 28.1% from 27.6% in the prior-year period. An improved volume/mix effect and a stable sales price development were the main causes for the higher gross margin. Compared to the third quarter of 2012, sales prices were unchanged while raw material costs were 1% higher. Sequentially, i.e. compared to the second quarter of 2013, sales prices were equally flat and raw material costs were 1% lower.
Year-on-year, the EBITDA before exceptional items from continuing operations improved 24% in local currencies and 14% in Swiss francs to CHF 203 million from CHF 178 million. Lower SG&A costs and a one-time gain related to the valuation of acquired assets over-compensated the currency impact on EBITDA. The EBITDA margin rose to 14.1% compared to 12.0% for the continuing operations in the previous-year period.
Exceptional items were positive at CHF 19 million mainly attributable to a one-time gain from the joint venture transaction with Wilmar. This compares to exceptional items of CHF -14 million one year ago. As a result of a higher EBITDA and a positive tax income of CHF 20 million, the net result from continuing operations significantly improved to CHF 129 million from CHF 47 million a year ago.
Operating cash flow was CHF 267 million versus CHF 181 million in Q3 2012. As expected, the cash outflow from the first two quarters 2013 has been for the most part reversed as the operating result improved and net working capital followed the normal seasonal pattern. For the remainder of the year, cash generation continues to be a priority of the Group with a further improvement in the fourth quarter expected.
Capital expenditure increased compared to the previous year, reaching CHF 92 million compared to CHF 67 million. The increase is related to investments into the new Clariant Innovation Center in Frankfurt, Germany, and expansion projects to drive profitable growth.
Net debt decreased to CHF 1.691 billion from CHF 1.945 billion at the end of the second quarter 2013. This was mainly due to a first cash inflow from proceeds of the disposal of Textile Chemicals, Paper Specialties and Emulsions that closed by the end of September. At year-end 2012, net debt was CHF 1.789 billion.
Gearing (net financial debt in relation to equity) improved and stood at 62% compared to 67% at year-end 2012.
The repositioning of the portfolio in 2011 and 2012 has lifted Clariant to a sustainably higher level of profitability, reflected in an increase in EBITDA margin in the first nine months of the year and the third quarter of 2013 compared to the corresponding previous-year periods.
The environment in which Clariant operates has not significantly changed over the past few months. Although a further stabilization has been observed in the mature markets, a broad-based economic recovery is not expected. In addition, uncertainties remain high in the emerging economies. Going into the fourth quarter, Clariant expects an overall stable but mixed business environment.
In this scenario, Clariant will focus on innovation, growth and cost efficiency. This will lead to further top-line growth in local currencies and an improved profitability in 2013. For the mid-term, Clariant confirms its 2015 targets of an EBITDA margin of above 17% and a return on invested capital (ROIC) above the peer-group