02.29.24
Clariant, a sustainability-focused specialty chemical company, today announced fourth quarter 2023 sales of CHF 1.062 billion, down 10 % organically in local currency1 and 14% including scope in local currency (20 % in Swiss francs) versus Q4 2022. Pricing decreased by 4 % year-on-year and volumes by 6%. Changes in scope had a net negative impact of 4% due to the divestments of the North American Land Oil and Quats businesses, partially offset by the acquisition of the U.S. Attapulgite business. The net impact from hyperinflation in Argentina and Türkiye was – 1%. On a sequential basis, sales in Q4 2023 increased by 4 % in local currency compared to Q3 2023. Volumes improved by 5% organically at the Group level, compensating for slightly lower pricing.
Care Chemicals sales decreased by 17% in local currency (9% related to scope) versus Q4 2022. Sales in Mining Solutions and Oil Services grew organically, while the seasonal aviation business declined, due to less favorable weather and lower formula-based prices. Catalysts sales declined 10% in local currency against the very strong comparable base of last year, while Specialties sales were stable. Adsorbents & Additives sales decreased by 11% in local currency due to continued challenges in key end markets for Additives.
In the fourth quarter, local currency sales were down 13% (2 % related to scope) versus Q4 2022 in Europe, Middle East, and Africa as Catalysts growth in the Middle East only partially offset lower sales in both Care Chemicals (partly attributable to the divestment of the Quats business) and Adsorbents & Additives. Sales in the Americas decreased by 21% (10% related to scope), predominantly due to the net negative impact of the divestment of the North America Land Oil business and despite the acquisition of the US Attapulgite business. Sales in Asia-Pacific were down 9% (2 % related to scope), including a 22 % decline in China, as Catalysts sales in Propylene and Ethylene were below the very strong comparison base of last year.
Group EBITDA decreased by 31 % to CHF 106 million, and the corresponding 10.0 % margin was below the 11.6 % reported in the fourth quarter of 2022. The Group incurred a total CHF 53 million negative impact from the decision to shut down sunliquid® bioethanol production in Podari, Romania, and to downsize related activities of the Business Segment Biofuels & Derivatives in Germany (Straubing, Planegg, and Munich). Restructuring expenses totaled CHF 43 million (of which CHF 35 million related to sunliquid®). Lower volumes also negatively affected production utilization in certain businesses. However, cost savings from performance programs of approximately CHF 14 million addressed remnant costs from divested businesses and contributed positively to offset inflation. Underlying profitability, as reflected by EBITDA before exceptional items, decreased sequentially by 4 % to CHF 158 million, representing an underlying margin of 14.9 % compared to 15.3 % in the prior year.
Full Year 2023 Group Discussion
In the full year 2023, sales were CHF 4.377 billion, down 7 % organically in local currency1 and 10 % including scope in local currency (16 % in Swiss francs). Pricing was stable for the year while volumes decreased by 7 %. Changes in scope had a net negative impact of 3 % with the divestments of the North America Land Oil and Quats businesses, partially offset by the acquisition of the US Attapulgite business. Hyperinflation countries1 had a net – 1 % impact.
Care Chemicals sales decreased by 9 % organically and 15 % including scope in local currency in the full year 2023 versus a strong 2022 comparison base, as the prolonged destocking cycle impacted demand in key end markets, particularly in the first half of the year. In Catalysts, sales grew by 9 % in local currency due to strong growth in Propylene and Syngas & Fuels. Adsorbents & Additives sales decreased by 13 % in local currency due to weaker end market demand for Additives, against a strong full year 2022.
In the full year 2023, sales decreased in all geographic regions. Both Europe, Middle East, and Africa and the Americas decreased by 12 % in local currency (2 % and 5 % related to scope, respectively). Sales in Asia-Pacific declined by 6 % (1 % related to scope).
Group EBITDA decreased by 25 % to CHF 607 million, as profitability was negatively impacted by lower volumes and CHF 103 million of operational losses and costs related to the decision to shut down the sunliquid® bioethanol production in Podari, Romania, and to downsize related activities of the Business Segment Biofuels & Derivatives in Germany (Straubing, Planegg, and Munich). Other negative factors included the CHF 11 million fair value adjustment of the Heubach Group participation in the first quarter and restructuring charges of CHF 64 million (of which CHF 42 million related to sunliquid®). The disposal of the Quats business in Care Chemicals contributed a CHF 61 million gain, while pricing effects overall were flat. Raw material costs decreased by 11 %, and the execution of performance improvement programs resulted in additional cost savings of CHF 50 million in the full year 2023. Overall EBITDA margin decreased to 13.9 % from 15.6 % in 2022.
Group EBIT for the full year 2023 increased to CHF 282 million from CHF 72 million in the previous year. This was the result of impairments of CHF 89 million in 2023, mainly related to the sunliquid® shutdown, versus CHF 462 million of impairments in 2022.
In the full year 2023, the total Group net result was CHF 179 million versus CHF 116 million in the previous year. The result improved due to lower impairment charges and taxes, while discontinued operations showed a negative result of CHF 34 million related to a loss on disposal.
Net cash generated from operating activities for the total Group amounted to CHF 421 million versus CHF 502 million in the full year 2022 as a result of lower earnings, which were not fully offset by an improvement in Net Working Capital. Free cash flow of CHF 216 million, compared to CHF 293 million in 2022, resulted in a free cash flow conversion rate of 36 % for full year 2023, flat versus a year ago.
Net debt for the Group of CHF 755 million was stable against the CHF 750 million recorded at the end of 2022.
The Board of Directors recommends a regular distribution of CHF 0.42 per share to the Annual General Meeting (AGM) on 9 April 2024 based on Clariant’s performance in 2023. This distribution is proposed to be made through a capital reduction by way of a par value reduction.
The Board of Directors proposes the reelection of Günter von Au as Chairman. The Board of Directors thanks Naveena Shastri for her contribution to Clariant as she decided not to stand for reelection. All other members stand for reelection, and the Board of Directors proposes to newly elect Jens Lohmann to the Clariant Board.
ESG Update – Leading in sustainability and safety
Clariant’s Scope 1 and 2 total greenhouse gas emissions fell to 0.54 million tons in 2023, a decline of 13 % from 0.62 million tons in the full year 2022. The businesses were able to reduce their emissions more than the volume decline in Care Chemicals and Adsorbent & Additives, while more than offsetting a volume increase in Catalysts in full year 2023. Clariant has numerous measures in place to reduce Scope 1 and 2 emissions. In 2023, a site in Bonthapally, India, became the first production site to reach net zero. This was largely driven by purchasing 100 % green electricity and switching to sustainable biomass derived from agricultural waste instead of coal for its steam generation, while at the same time improving steam efficiency at the site through improvements and training measures. Across the Group, coal consumption, as well as corresponding greenhouse gas emissions in 2023, have fallen by almost 80 % compared to peak consumption in 2020.
The total indirect greenhouse gas emissions for purchased goods and services (Scope 3.1) decreased by 12 %, from 2.58 million tons in the full year 2022 to 2.28 million tons in 2023. These results are to an extent attributable to the lower sales volumes in 2023, while also demonstrating continued progress toward reaching the Group’s 2030 emissions reduction targets. Approximately 40 % of the net reduction in Scope 3.1 emissions in 2023 versus 2022 was achieved through focus projects advancing the decarbonization of raw materials. Clariant continues to adopt the use of fossil alternatives (e.g., bio-based) and secondary raw materials (e.g., recycled).
In 2023, Clariant introduced its new operating model, aiming for better customer orientation, better and faster decision-making, greater empowerment, more accountability, and improved transparency. The success of the implementation became visible in significant improvements in non-financial KPIs, such as customer satisfaction, employee engagement, and safety.
Clariant customers globally provided their view on the company’s operational, commercial, and innovation performance in the Customer Satisfaction Survey for 2023. Clariant’s overall Customer Net Promoter Score (NPS) improved from 42 to 45, placing the company eight points above the chemical and gas industry average. Moreover, 44 % of respondents stated that their general perception of Clariant improved in the last 12 months.
In January 2024, Clariant invited all employees to participate in an engagement survey. The participation rate increased to 83 %, compared to 75 % in 2023. Meaningful progress and continuous improvement have been achieved in the Employee Net Promoter Score (eNPS), increasing from + 3 in 2023 to + 25 in 2024, moving Clariant from the third to the second quartile, compared to relevant industry peers.
Clariant aims to achieve a zero-accidents culture and be a leader in safety in the chemical industry. In 2023, the company made significant progress reducing the DART (Days Away, Restricted, or Transferred) rate from 0.39 in 2022 to 0.21. This reduction of over 46 % reflects high awareness, safety trainings, and accountability, and places Clariant in the top quartile of the chemical industry.
For further details please download the pdf version of the press release.
1) All references to local currency growth, pricing, volumes, and scope exclude the impact from hyperinflation countries Argentina and Türkiye. All references to currency include a net impact from hyperinflation countries Argentina and Türkiye.
2) Vara Consensus as of 22 January 2024
Care Chemicals sales decreased by 17% in local currency (9% related to scope) versus Q4 2022. Sales in Mining Solutions and Oil Services grew organically, while the seasonal aviation business declined, due to less favorable weather and lower formula-based prices. Catalysts sales declined 10% in local currency against the very strong comparable base of last year, while Specialties sales were stable. Adsorbents & Additives sales decreased by 11% in local currency due to continued challenges in key end markets for Additives.
In the fourth quarter, local currency sales were down 13% (2 % related to scope) versus Q4 2022 in Europe, Middle East, and Africa as Catalysts growth in the Middle East only partially offset lower sales in both Care Chemicals (partly attributable to the divestment of the Quats business) and Adsorbents & Additives. Sales in the Americas decreased by 21% (10% related to scope), predominantly due to the net negative impact of the divestment of the North America Land Oil business and despite the acquisition of the US Attapulgite business. Sales in Asia-Pacific were down 9% (2 % related to scope), including a 22 % decline in China, as Catalysts sales in Propylene and Ethylene were below the very strong comparison base of last year.
Group EBITDA decreased by 31 % to CHF 106 million, and the corresponding 10.0 % margin was below the 11.6 % reported in the fourth quarter of 2022. The Group incurred a total CHF 53 million negative impact from the decision to shut down sunliquid® bioethanol production in Podari, Romania, and to downsize related activities of the Business Segment Biofuels & Derivatives in Germany (Straubing, Planegg, and Munich). Restructuring expenses totaled CHF 43 million (of which CHF 35 million related to sunliquid®). Lower volumes also negatively affected production utilization in certain businesses. However, cost savings from performance programs of approximately CHF 14 million addressed remnant costs from divested businesses and contributed positively to offset inflation. Underlying profitability, as reflected by EBITDA before exceptional items, decreased sequentially by 4 % to CHF 158 million, representing an underlying margin of 14.9 % compared to 15.3 % in the prior year.
Full Year 2023 Group Discussion
In the full year 2023, sales were CHF 4.377 billion, down 7 % organically in local currency1 and 10 % including scope in local currency (16 % in Swiss francs). Pricing was stable for the year while volumes decreased by 7 %. Changes in scope had a net negative impact of 3 % with the divestments of the North America Land Oil and Quats businesses, partially offset by the acquisition of the US Attapulgite business. Hyperinflation countries1 had a net – 1 % impact.
Care Chemicals sales decreased by 9 % organically and 15 % including scope in local currency in the full year 2023 versus a strong 2022 comparison base, as the prolonged destocking cycle impacted demand in key end markets, particularly in the first half of the year. In Catalysts, sales grew by 9 % in local currency due to strong growth in Propylene and Syngas & Fuels. Adsorbents & Additives sales decreased by 13 % in local currency due to weaker end market demand for Additives, against a strong full year 2022.
In the full year 2023, sales decreased in all geographic regions. Both Europe, Middle East, and Africa and the Americas decreased by 12 % in local currency (2 % and 5 % related to scope, respectively). Sales in Asia-Pacific declined by 6 % (1 % related to scope).
Group EBITDA decreased by 25 % to CHF 607 million, as profitability was negatively impacted by lower volumes and CHF 103 million of operational losses and costs related to the decision to shut down the sunliquid® bioethanol production in Podari, Romania, and to downsize related activities of the Business Segment Biofuels & Derivatives in Germany (Straubing, Planegg, and Munich). Other negative factors included the CHF 11 million fair value adjustment of the Heubach Group participation in the first quarter and restructuring charges of CHF 64 million (of which CHF 42 million related to sunliquid®). The disposal of the Quats business in Care Chemicals contributed a CHF 61 million gain, while pricing effects overall were flat. Raw material costs decreased by 11 %, and the execution of performance improvement programs resulted in additional cost savings of CHF 50 million in the full year 2023. Overall EBITDA margin decreased to 13.9 % from 15.6 % in 2022.
Group EBIT for the full year 2023 increased to CHF 282 million from CHF 72 million in the previous year. This was the result of impairments of CHF 89 million in 2023, mainly related to the sunliquid® shutdown, versus CHF 462 million of impairments in 2022.
In the full year 2023, the total Group net result was CHF 179 million versus CHF 116 million in the previous year. The result improved due to lower impairment charges and taxes, while discontinued operations showed a negative result of CHF 34 million related to a loss on disposal.
Net cash generated from operating activities for the total Group amounted to CHF 421 million versus CHF 502 million in the full year 2022 as a result of lower earnings, which were not fully offset by an improvement in Net Working Capital. Free cash flow of CHF 216 million, compared to CHF 293 million in 2022, resulted in a free cash flow conversion rate of 36 % for full year 2023, flat versus a year ago.
Net debt for the Group of CHF 755 million was stable against the CHF 750 million recorded at the end of 2022.
The Board of Directors recommends a regular distribution of CHF 0.42 per share to the Annual General Meeting (AGM) on 9 April 2024 based on Clariant’s performance in 2023. This distribution is proposed to be made through a capital reduction by way of a par value reduction.
The Board of Directors proposes the reelection of Günter von Au as Chairman. The Board of Directors thanks Naveena Shastri for her contribution to Clariant as she decided not to stand for reelection. All other members stand for reelection, and the Board of Directors proposes to newly elect Jens Lohmann to the Clariant Board.
ESG Update – Leading in sustainability and safety
Clariant’s Scope 1 and 2 total greenhouse gas emissions fell to 0.54 million tons in 2023, a decline of 13 % from 0.62 million tons in the full year 2022. The businesses were able to reduce their emissions more than the volume decline in Care Chemicals and Adsorbent & Additives, while more than offsetting a volume increase in Catalysts in full year 2023. Clariant has numerous measures in place to reduce Scope 1 and 2 emissions. In 2023, a site in Bonthapally, India, became the first production site to reach net zero. This was largely driven by purchasing 100 % green electricity and switching to sustainable biomass derived from agricultural waste instead of coal for its steam generation, while at the same time improving steam efficiency at the site through improvements and training measures. Across the Group, coal consumption, as well as corresponding greenhouse gas emissions in 2023, have fallen by almost 80 % compared to peak consumption in 2020.
The total indirect greenhouse gas emissions for purchased goods and services (Scope 3.1) decreased by 12 %, from 2.58 million tons in the full year 2022 to 2.28 million tons in 2023. These results are to an extent attributable to the lower sales volumes in 2023, while also demonstrating continued progress toward reaching the Group’s 2030 emissions reduction targets. Approximately 40 % of the net reduction in Scope 3.1 emissions in 2023 versus 2022 was achieved through focus projects advancing the decarbonization of raw materials. Clariant continues to adopt the use of fossil alternatives (e.g., bio-based) and secondary raw materials (e.g., recycled).
In 2023, Clariant introduced its new operating model, aiming for better customer orientation, better and faster decision-making, greater empowerment, more accountability, and improved transparency. The success of the implementation became visible in significant improvements in non-financial KPIs, such as customer satisfaction, employee engagement, and safety.
Clariant customers globally provided their view on the company’s operational, commercial, and innovation performance in the Customer Satisfaction Survey for 2023. Clariant’s overall Customer Net Promoter Score (NPS) improved from 42 to 45, placing the company eight points above the chemical and gas industry average. Moreover, 44 % of respondents stated that their general perception of Clariant improved in the last 12 months.
In January 2024, Clariant invited all employees to participate in an engagement survey. The participation rate increased to 83 %, compared to 75 % in 2023. Meaningful progress and continuous improvement have been achieved in the Employee Net Promoter Score (eNPS), increasing from + 3 in 2023 to + 25 in 2024, moving Clariant from the third to the second quartile, compared to relevant industry peers.
Clariant aims to achieve a zero-accidents culture and be a leader in safety in the chemical industry. In 2023, the company made significant progress reducing the DART (Days Away, Restricted, or Transferred) rate from 0.39 in 2022 to 0.21. This reduction of over 46 % reflects high awareness, safety trainings, and accountability, and places Clariant in the top quartile of the chemical industry.
For further details please download the pdf version of the press release.
1) All references to local currency growth, pricing, volumes, and scope exclude the impact from hyperinflation countries Argentina and Türkiye. All references to currency include a net impact from hyperinflation countries Argentina and Türkiye.
2) Vara Consensus as of 22 January 2024