02.19.13
Clariant announced full-year sales 2012 from continuing operations of CHF 6.038 billion compared to CHF 5.571 billion in the previous-year period. This corresponds to an increase of 8% in local currencies and in Swiss francs. The 8% increase was driven by the acquisition of Süd-Chemie, while organic growth was flat with 2% higher prices offsetting lower volumes.
Sales development in 2012 was heterogeneous across all regions and businesses. From a regional perspective, all regions except Europe grew double-digit. Europe declined 2% while growth dynamics in Asia/Pacific remained robust during the year. The pronounced weakness in southern Europe has spread across the continent in the second half-year. However, with roughly two thirds of sales generated outside of Europe, the impact of the European crisis on Clariant was offset by growth in the other regions. In the fourth quarter no further deterioration of the business environment from third quarter levels has been observed.
In an overall demanding market environment, there was strength in the Catalysis & Energy and Oil & Mining Services Business Units (BU), both growing double-digit in a year-on-year comparison. Industrial & Consumer Specialties and Functional Materials held up well due to their limited exposure to the economic cycle. While Masterbatches managed to resist the weakness in Europe, the Pigments and Additives BUs were impacted by the severe downturn in some end-markets – mainly in Coatings, Printing and Electronics – and primarily in Europe.
At 28.9%, the gross margin improved from 27.5% recorded in the previous year. The improvement was the result of a positive volume/mix effect and a stringent margin management which over-compensated higher costs for the underutilization of production capacities. Year-on-year, prices increased by 2% while raw material costs remained stable.
The EBITDA before exceptional items from continuing operations was 4% lower year-on-year, contracting to CHF 802 million from CHF 835 million. EBITDA margin before exceptionals stood at 13.3% compared to 15.0% for the continuing operations in the previous-year period.
On the EBITDA line, exceptional items including restructuring and impairment costs were lower at CHF 127 million versus CHF 192 million in full-year 2011 and were mostly related to the integration of Süd-Chemie. Net result from continuing operations was 4% lower at CHF 211 million compared to CHF 220 million in the same period one year ago. Lower taxes could not fully offset the impact from a lower operating income and somewhat higher financing costs.
Full-year operating cash flow was strong with CHF 468 million compared to CHF 314 million one year ago, following the normal seasonality with a build-up in inventories in the first half of the year followed by a reduction in inventories and therefore cash flow generation in the second half-year.
Net debt stood at CHF 1.789 billion and was therefore lower compared to the CHF 1.934 billion recorded at the end of the third quarter 2012, but close to the CHF 1.740 billion reported at year-end 2011. Consequently, the gearing, reflecting net financial debt in relation to equity, improved to 59% from 64% at the end of the third quarter 2012, and was only marginally higher compared to the 58% recorded at year-end 2011.
Event Subsequent to FY 2012: Early Redemption of Convertible Bond
Clariant has decided on February 6, 2013, to early redeem the 3% Convertible Bond 2009-2014 of CHF 300 million with conversion rights into Clariant registered shares with a nominal value of CHF 3.70 based on the terms of the bond. As far as the conversion rights are exercised, Clariant will reduce its net debt and increase its equity.
Q4 2012 Performance
In the fourth quarter, Clariant reported 2% sales growth in local currencies on the back of 3% higher volumes and 1% lower prices. In Swiss francs, sales were 1% higher, at CHF 1.509 billion compared to CHF 1.491 billion a year ago. Compared to the third quarter of 2012, both sales prices and raw material costs decreased 1%. Sales growth in the fourth quarter was driven by strength in Oil & Mining Services and Catalysis & Energy with growth of 15% respectively 9%. While Functional Materials, Industrial & Consumer Specialties, Masterbatches and Pigments developed stable year-on-year, Additives was adversely impacted by the ongoing weakness in the electronics industry. At the regional level, Latin America grew double-digit in local currencies while North America and Asia/Pacific were slightly above previous-year’s level. EMEA was flat with good growth in the Middle East compensating for the weakness in Europe.
The gross margin was higher year-on-year, at 29.3% compared to 27.0%1 in the previous-year period. This was mainly due to stringent margin management and lower idle facility costs year-on-year. The EBITDA margin before exceptional items climbed to 14.9% from 14.3% in the fourth quarter of 2011 as a result of almost stable or better margins in five of the seven Business Units.
Operating cash flow picked-up significantly and amounted to CHF 284 million compared to CHF 200 million in the fourth quarter 2011.
Sales development in 2012 was heterogeneous across all regions and businesses. From a regional perspective, all regions except Europe grew double-digit. Europe declined 2% while growth dynamics in Asia/Pacific remained robust during the year. The pronounced weakness in southern Europe has spread across the continent in the second half-year. However, with roughly two thirds of sales generated outside of Europe, the impact of the European crisis on Clariant was offset by growth in the other regions. In the fourth quarter no further deterioration of the business environment from third quarter levels has been observed.
In an overall demanding market environment, there was strength in the Catalysis & Energy and Oil & Mining Services Business Units (BU), both growing double-digit in a year-on-year comparison. Industrial & Consumer Specialties and Functional Materials held up well due to their limited exposure to the economic cycle. While Masterbatches managed to resist the weakness in Europe, the Pigments and Additives BUs were impacted by the severe downturn in some end-markets – mainly in Coatings, Printing and Electronics – and primarily in Europe.
At 28.9%, the gross margin improved from 27.5% recorded in the previous year. The improvement was the result of a positive volume/mix effect and a stringent margin management which over-compensated higher costs for the underutilization of production capacities. Year-on-year, prices increased by 2% while raw material costs remained stable.
The EBITDA before exceptional items from continuing operations was 4% lower year-on-year, contracting to CHF 802 million from CHF 835 million. EBITDA margin before exceptionals stood at 13.3% compared to 15.0% for the continuing operations in the previous-year period.
On the EBITDA line, exceptional items including restructuring and impairment costs were lower at CHF 127 million versus CHF 192 million in full-year 2011 and were mostly related to the integration of Süd-Chemie. Net result from continuing operations was 4% lower at CHF 211 million compared to CHF 220 million in the same period one year ago. Lower taxes could not fully offset the impact from a lower operating income and somewhat higher financing costs.
Full-year operating cash flow was strong with CHF 468 million compared to CHF 314 million one year ago, following the normal seasonality with a build-up in inventories in the first half of the year followed by a reduction in inventories and therefore cash flow generation in the second half-year.
Net debt stood at CHF 1.789 billion and was therefore lower compared to the CHF 1.934 billion recorded at the end of the third quarter 2012, but close to the CHF 1.740 billion reported at year-end 2011. Consequently, the gearing, reflecting net financial debt in relation to equity, improved to 59% from 64% at the end of the third quarter 2012, and was only marginally higher compared to the 58% recorded at year-end 2011.
Event Subsequent to FY 2012: Early Redemption of Convertible Bond
Clariant has decided on February 6, 2013, to early redeem the 3% Convertible Bond 2009-2014 of CHF 300 million with conversion rights into Clariant registered shares with a nominal value of CHF 3.70 based on the terms of the bond. As far as the conversion rights are exercised, Clariant will reduce its net debt and increase its equity.
Q4 2012 Performance
In the fourth quarter, Clariant reported 2% sales growth in local currencies on the back of 3% higher volumes and 1% lower prices. In Swiss francs, sales were 1% higher, at CHF 1.509 billion compared to CHF 1.491 billion a year ago. Compared to the third quarter of 2012, both sales prices and raw material costs decreased 1%. Sales growth in the fourth quarter was driven by strength in Oil & Mining Services and Catalysis & Energy with growth of 15% respectively 9%. While Functional Materials, Industrial & Consumer Specialties, Masterbatches and Pigments developed stable year-on-year, Additives was adversely impacted by the ongoing weakness in the electronics industry. At the regional level, Latin America grew double-digit in local currencies while North America and Asia/Pacific were slightly above previous-year’s level. EMEA was flat with good growth in the Middle East compensating for the weakness in Europe.
The gross margin was higher year-on-year, at 29.3% compared to 27.0%1 in the previous-year period. This was mainly due to stringent margin management and lower idle facility costs year-on-year. The EBITDA margin before exceptional items climbed to 14.9% from 14.3% in the fourth quarter of 2011 as a result of almost stable or better margins in five of the seven Business Units.
Operating cash flow picked-up significantly and amounted to CHF 284 million compared to CHF 200 million in the fourth quarter 2011.
