Results

Clariant AG

10/29/2020 | Press release | Distributed by Public on 10/29/2020 00:05

Clariant preserves profitability in first nine months of 2020 despite difficult economic environment

  • Sales from continuing operations decreased by 6 % in local currency to CHF 2.838 billion
  • Continuing operations EBITDA at CHF 419 million
  • EBITDA margin resilient at 14.8 % compared to an operational performance of 14.8 % in the first nine months of 2019
  • Outlook: in a continued difficult environment amid COVID-19 resurgence, focus on impact mitigation and performance improvement in 2020

'Over the first nine months of 2020, we successfully upheld the profitability of our continuing operations despite an exceedingly challenging environment. Although the COVID-19 pandemic had a significant negative impact on several of Clariant's key end markets in the third quarter, the performance resilience clearly validates the success of our strategic focus on the three core specialty Business Areas,' said Hariolf Kottmann, Executive Chairman ad interim of Clariant. 'The growth profile of our core portfolio remains intact despite the current economic environment and uncertain outlook. We will continue to focus on both mitigating the impact of this pandemic as well as executing our transformation program. We therefore continue to anticipate above-market growth, higher profitability and stronger cash generation.'

Key Financial Data

Continuing operations Third Quarter Nine Months
in CHF million 2020 2019 % CHF % LC 2020 2019 % CHF % LC
Sales 893 1 043 -14 -7 2 838 3 272 -13 -6
EBITDA 127 151 -16 419 253 (1) 66
- margin 14.2 % 14.5 % 14.8 % 7.7 %
EBITDA before exceptional items 137 169 -19 446 524 -15
- margin 15.3 % 16.2 % 15.7 % 16.0 %

(1) Including a provision of CHF 231 million for a competition law investigation by the European Commission

Excluding provision: EBITDA after exceptional items at CHF 484 million, EBITDA margin 14.8 %

Nine Months 2020 - Steady EBITDA margin development despite notably softer environment

Muttenz, October 29, 2020 - Clariant, a focused, sustainable and innovative specialty chemical company, today announced continuing operations sales of CHF 2.838 billion in the first nine months of 2020, compared to CHF 3.272 billion in the first nine months of 2019. This corresponds to a decrease of 6 % in local currency due to lower demand and 13 % in Swiss francs attributable to unfavorable currency developments.

As a result of the COVID-19 pandemic, the Group was confronted with a significantly lower demand environment in several segments in the first nine months of 2020. These buoyant profitability results are therefore noteworthy, as they clearly reflect the effectiveness of Clariant's business continuity programs, as well as cash and cost measures, which have been implemented to minimize the impact of this pandemic and improve the performance in the midterm.

In the first nine months, Asia remained resilient, with China and India reporting double-digit growth. Sales in Latin America increased in local currency, while sales in Europe, North America and the Middle East & Africa softened due to demand declines in most Business Areas.

In the first nine months of 2020, Care Chemicals sales declined by 5 % in local currency due to weather-related weak Aviation demand in the first quarter and lower Industrial Applications sales amid the COVID-19 pandemic in the second and third quarters, which could not be offset by the growth in Consumer Care. The Catalysis Business Area's top line declined by a modest 3 % in local currency due to both the strong comparison base as well as the subdued environment in the chemical industry. Natural Resources sales decreased by 8 % in local currency, impacted by the notably softer economic environment resulting from the decline in oil demand and the COVID-19 pandemic.

The nine months 2020 continuing operations EBITDA reached CHF 419 million and the Group successfully defended margins despite a weaker top-line development. The 14.8 % EBITDA margin remained unchanged versus 14.8 % (reported 7.7 %) in the previous year when excluding the one-off CHF 231 million provision, which was booked in the second quarter of 2019. Care Chemicals profitability improved due to growth in Consumer Care sales and stringent margin and cost management. The Catalysis EBITDA margin declined as a result of lower volumes, a less favorable product mix and the efficiency program provision. Excluding the efficiency program provision in Natural Resources in the second quarter, the underlying profitability remained largely unchanged, underpinned by stringent cost management in all three Business Units.

Third Quarter 2020 - Comparatively stable profitability despite weaker
top-line development

As expected, the third quarter 2020 saw the most pronounced sales decline of the first three quarters in 2020 with a 7 % decrease in local currency in continuing operations sales to CHF 893 million. This corresponds to a 14 % decline in Swiss francs due to unfavorable currency effects. The main driver was the sales decline in Natural Resources, where all three businesses were negatively impacted by the oversupply in the oil markets and the global COVID-19 pandemic, while sales in Care Chemicals and Catalysis softened only slightly.

On a regional basis, the positive development in Asia in local currency was underpinned by very strong sales growth in China and India in the third quarter of 2020. Sales in Latin America decreased slightly, while Europe declined in high single digits, followed by the Middle East & Africa. The more notable decrease in North America is ascribable to lower volumes in Natural Resources.

In the third quarter, Care Chemicals sales softened by a mere 1 % in local currency, supported by higher Consumer Care sales. Catalysis sales also slowed by 1 % compared to a particularly strong previous year. Natural Resources sales declined by 14 % in local currency primarily because Oil and Mining Services sales were hampered by the lower consumption of oil and oil-derived products.

The continuing operations EBITDA declined to CHF 127 million and a corresponding margin of 14.2 %, slightly below the 14.5 % in the previous year. The profitability advanced in both Care Chemicals and Catalysis due to more favorable product mixes, cost mitigation and efficiency improvement. In Natural Resources, the margin reduction is attributable to lower volumes in COVID-19-exposed segments such as automotive, textile and in particular oil, which could not be counterbalanced by internal performance measures.

Discontinued Operations

For the first nine months, sales in discontinued operations declined by 25 % in local currency and by 31 % in Swiss francs. However, on a like-for-like basis, excluding Healthcare Packaging sales from the first nine months of 2019 and Masterbatches from the third quarter of 2019, as these businesses were divested, sales weakened by only a slight 4 % in local currency and by 11 % in Swiss francs as a result of the weak economic environment.

In the first nine months of 2020, the discontinued operations EBITDA was positively impacted by the gain on the disposal of the Masterbatches business in the third quarter and negatively impacted by one-off costs for the efficiency program in Pigments in the second quarter as well as for the carve out of the discontinued operations.

Outlook - Continued COVID-19 impact anticipated in the fourth quarter 2020 with small improvement versus the third quarter, while performance measures lift portfolio to achieveabove-market growth, higher profitability and stronger cash generation in the mid-term

Clariant anticipates that the COVID-19 pandemic will have a continued, but slightly less negative impact on sales and profitability in the fourth quarter of 2020 compared to the third quarter.

The Group's task forces will continue to focus on the safety of our employees, support to our communities, business continuity to our customers and cash generation. Clariant's three core specialty Business Areas will continue to execute performance programs to generate resilient results during these times and to achieve above-market growth, higher profitability and stronger cash generation in the mid-term.

In addition, the Group is significantly reshaping its portfolio through the divestment of Healthcare Packaging in October 2019 and the sale of Masterbatches in July 2020. The Group is also progressing with the planned divestment of Pigments while preparing the rightsizing of the organization. The transformed Clariant will be a focused, sustainable and innovative specialty chemical company that aims to grow above the market to achieve higher profitability based on its three core specialty Business Areas.

Corporate Media Relations Investor Relations
Jochen Dubiel

Phone +41 61 469 63 63
[email protected]

Maria Ivek

Phone +41 61 469 63 73
[email protected]

Claudia Kamensky

Phone +41 61 469 63 63
[email protected]

Alexander Kamb

Phone +41 61 469 63 73
[email protected]

Thijs Bouwens

Phone +41 61 469 63 63
[email protected]

Follow us on Twitter, Facebook, LinkedIn, Instagram.

This media release contains certain statements that are neither reported financial results nor other historical information. This document also includes forward-looking statements. Because these forward-looking statements are subject to risks and uncertainties, actual future results may differ materially from those expressed in or implied by the statements. Many of these risks and uncertainties relate to factors that are beyond Clariant's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behavior of other market participants, the actions of governmental regulators and other risk factors such as: the timing and strength of new product offerings; pricing strategies of competitors; the Company's ability to continue to receive adequate products from its vendors on acceptable terms, or at all, and to continue to obtain sufficient financing to meet its liquidity needs; and changes in the political, social and regulatory framework in which the Company operates or in economic or technological trends or conditions, including currency fluctuations, inflation and consumer confidence, on a global, regional or national basis. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document. Clariant does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of these materials.

www.clariant.com

Clariant is a focused, sustainable and innovative specialty chemical company based in Muttenz, near Basel/Switzerland. On 31 December 2019, the company employed a total workforce of 17 223. In the financial year 2019, Clariant recorded sales of CHF 4.399 billion for its continuing businesses. The company reports in three business areas: Care Chemicals, Catalysis and Natural Resources. Clariant's corporate strategy is based on five pillars: focus on innovation and R&D, add value with sustainability, reposition portfolio,
intensify growth, and increase profitability.

9M 2020 Media Release EN