Media Release - Clariant

Clariant International Ltd
Rothausstrasse 61
CH-4132 Muttenz 1, Switzerland
Media Release
Clariant – Results for first nine months of 2003
Clariant reports sales growth and
positive net income in third quarter
Cellulose Ethers business unit sold
Muttenz, Switzerland, November 4, 2003 – Clariant increased sales in local
currencies by 1% in the first nine months of 2003 over the same period a
year earlier. Operating profit for the first nine months improved by 2% to
CHF 482 million. The net loss year-to-date fell to CHF 11 million thanks to a
net profit of CHF 38 million posted in the third quarter of 2003.
The active management of Clariant's working capital had a positive impact
on operating cash flow, which reached CHF 217 million in the third quarter.
Operating Cash flow after nine months increased to CHF 164 million.
Clariant also announced the sale of the Cellulose Ethers business unit to
Shin-Etsu Chemical Co., Ltd. for the price of EUR 241 million (around CHF
370 million).
Sales Increase
Thanks to a strong September, Clariant lifted sales in local currencies over the first
nine months by 1% versus the year-earlier period. Four divisions reported higher
revenues, and only the Life Science & Electronic Chemicals Division (LSE)
recorded a decline in sales in local currencies. This can be explained mainly by the
ongoing decrease in sales volume in agrochemicals. Consolidated sales in Swiss
francs fell by 5% to CHF 6.402 billion because of the strong appreciation of the
Swiss franc against most major currencies. Clariant CEO Roland Lösser said:
"Despite the continuing difficult market environment, we managed to raise our sales
in local currencies slightly. We're particularly pleased by the growth in Asia,
especially China, where we increased revenues by 20%."
Results improved by cost savings
On a comparable basis, operating profit (EBIT) before restructuring came to CHF
482 million after nine months, a 2% advance on the year-earlier period (CHF 471
million 1 ). The EBIT margin rose from 7.0% to 7.5% on the back of lower
1 Pro forma 2002
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amortization charges and the cost-savings measures the company initiated in the
second quarter. In addition to the restructuring charges of CHF 142 million
reported in the half-year results, further restructuring charges of CHF 43 million
were incurred in the third quarter for the closure of four agrochemical plants (Life
Science & Electronic Chemicals Division) and one production facility for
hydrosulfite (Textile, Leather & Paper Chemicals Division). After restructuring
charges, EBIT amounted to CHF 297 million.
The net loss year-to-date fell to CHF 11 million because of a net profit of CHF 38
million delivered in the third quarter of 2003.
Positive cash flow trend
Operating cash flow increased by CHF 217 million in the third quarter because of a
reduction in current assets. Following negative operating cash flow of CHF 53
million after six months, operating cash flow was positive after nine months, at CHF
164 million. As a result, Clariant was able to reduce its net debt to below CHF 3.5
billion. Equity remained virtually unchanged compared with June 30, 2003 at CHF
1.015 billion.
CEO Roland Lösser said: "The cash flow and EBIT trends are the first signs that
the measures we have taken are beginning to take effect. The earnings situation
makes it clear, though, that the cost-cutting measures announced as part of the
Transformation Program are absolutely necessary."
Transformation drive on course
As Clariant reported yesterday, the sale of Cellulose Ethers marks a first milestone
in the disposal program it had previously announced. The projects in the first phase
of the Clariant Performance Improvement Program have started up. The aim is to
achieve cost savings in the coming year of at least CHF 100 million. "The
transformation drive is making good progress,” Mr. Lösser said. “We can confirm
our target of reducing net debt by Spring to below CHF 2.5 billion and improving
EBIT by CHF 400 million in the next three to four years. We will thus raise our
return on capital to over 12%."
Cautious outlook
Given the uncertain economic situation, Clariant confirms the cautious outlook for
fiscal 2003. CEO Roland Lösser stated the following guidance: "We expect that our
sales in 2003 will be at about the same level as the previous year in local currencies
and we are projecting a net profit for fiscal 2003."
You can find detailed information on the quarterly result and the divisions, including
tables, on the Internet at www.clariant.com/investors.
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KEY FINANCIAL GROUP FIGURES (in million CHF)
9 months 2003 compared with 9 months 2002 (unaudited, numbers rounded off)
Nine months in
million CHF
2003 2002
reported
2002,
proforma*
Change in %
CHF LC
2003 reported compared
with 2002 pro-forma
Sales 6 402 7 121 6 727 -5 +1
Gross profit 2 062 2 391 2 263 -9 -5
EBITDA 696 893 835 -17 -13
EBIT before
restructuring and
impairment
482 513 471 +2 —
EBIT 297 513 471 -37 -37
Net income / -loss -11 184 142 — —
3 rd quarter 2003 compared with 3 rd quarter 2002 (unaudited, numbers rounded off)
3 rd quarter 2003 in
million CHF
2003 2002
reported
2002,
proforma*
Change in %
CHF
2003 reported compared
with 2002 pro-forma
Sales 2 129 2 282 2 143 -1
Gross profit 650 740 698 -7
EBITDA 183 260 243 -25
EBIT before
restructuring and
impairment
127 139 128 -1
EBIT 84 139 128 -34
Net income / -loss 38 39 — —
* The numbers for 2002 were restated to account for the disposals of business activities in 2002.
Disposals in 2002: Emulsion Business of Division Textile, Leather & Paper
Hydrosulfite North America of Division Textile, Leather & Paper
Emulsion Business Portugal of Division Textile, Leather & Paper
All activities were sold effective as per the end of 2002
as per September
2003
June
2003
March
2003
Net debt 3 487 3 686 3 665
Equity 1 015 1 061 947
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Calendar of Corporate Events
February 24, 2004 2003 results
April 2, 2004 Annual General Meeting
Your contacts at Clariant
Media Relations
Christoph Hafner Tel. +41 61 469 67 46
Rainer Weihofen Tel. +41 61 469 67 42
Fax +41 61 469 69 99
Investor Relations Tel. +41 61 469 67 48
Fax +41 61 469 67 67
Iris Welten Tel. +41 61 469 67 47
Holger Schimanke Tel. +41 61 469 67 45
Daniel Leuthardt Tel. +41 61 469 67 49
Clariant - Exactly your chemistry.
Based at Muttenz near Basel, Switzerland, Clariant is a global leader in the field of
fine and specialty chemicals. Some 28 000 employees in more than 100 group
companies on five continents generate annual sales of over CHF 9 billion.
Clariant is divided into five Divisions: Textile, Leather & Paper Chemicals,
Pigments & Additives, Masterbatches, Functional Chemicals, Life Science &
Electronic Chemicals.
Clariant’s innovative products play a decisive role in the customers’ manufacturing
and treatment processes or add value to their end-products. The company’s
success is based on the know-how of its staff, and on their ability to identify new
customer needs at an early stage and to work together with customers to find
innovative, efficient solutions.
Clariant is committed to sustainable growth springing from its own innovative
strength. Our objective is to achieve 30% of sales with products and services that
are no more than five years old.
www.clariant.com
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