Quarterly Results Operationally on track, S
Quarterly Results Operationally on track, S
Quarterly Results Operationally on track, S
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www.clariant.com<br />
Clariant Internati<strong>on</strong>al Ltd<br />
Rothausstrasse 61<br />
4132 Muttenz 1<br />
Switzerland<br />
<str<strong>on</strong>g>Quarterly</str<strong>on</strong>g> <str<strong>on</strong>g>Results</str<strong>on</strong>g><br />
Third Quarter 2011, 31 October 2011<br />
<str<strong>on</strong>g>Operati<strong>on</strong>ally</str<strong>on</strong>g> <strong>on</strong> <strong>track</strong>, Süd-Chemie <strong>on</strong> target<br />
Solid operati<strong>on</strong>al performance with differentiated demand picture from business to business,<br />
str<strong>on</strong>g headwind from currencies; Catalysis & Energy with the expected pick-up in sales.<br />
Q3 sales up 25% in local currency and 9% in Swiss francs, driven by acquisiti<strong>on</strong>s and higher<br />
sales prices.<br />
Q3 EBITDA before excepti<strong>on</strong>al items at CHF 216 milli<strong>on</strong>, down from CHF 232 milli<strong>on</strong> in the<br />
previous-year period, negative currency impact of CHF 73 milli<strong>on</strong>.<br />
Q3 EBITDA margin before excepti<strong>on</strong>al items reached 11.6% compared to 13.6% a year ago;<br />
13.4% at c<strong>on</strong>stant currencies<br />
Q3 cash flow from operati<strong>on</strong>s turned positive at CHF 105 milli<strong>on</strong> compared to<br />
CHF –101 milli<strong>on</strong> in Q2 2011 and CHF 173 milli<strong>on</strong> in Q3 2010<br />
Outlook: Clariant expects a similar trading envir<strong>on</strong>ment to the third quarter until year-end<br />
2011, characterized by further softening demand, volatile currencies and stable raw material<br />
costs. For the full-year 2011, Clariant c<strong>on</strong>firms its guidance, with sales between CHF 7.0 and<br />
7.2 billi<strong>on</strong> and an EBITDA margin of 12.8% to 13.2%.<br />
CEO Hariolf Kottmann commented: “In the first nine m<strong>on</strong>ths of 2011, Clariant has further<br />
progressed in making the achievements of the last two years sustainable, despite str<strong>on</strong>g<br />
headwinds from currency markets and a softening global ec<strong>on</strong>omy. We have managed to<br />
improve underlying profitability by c<strong>on</strong>sistently applying strict performance management while<br />
at the same time shifting management focus toward profitable growth. From the solid base<br />
achieved – both operati<strong>on</strong>ally and financially – we will move forward in our strategy<br />
implementati<strong>on</strong> and c<strong>on</strong>tinue to transform Clariant in the coming years to achieve our<br />
ambitious 2015 targets.”
Clariant Internati<strong>on</strong>al Ltd<br />
<str<strong>on</strong>g>Quarterly</str<strong>on</strong>g> <str<strong>on</strong>g>Results</str<strong>on</strong>g><br />
31 October 2011<br />
Page 2 of 14<br />
Key Financial Data<br />
Third quarter Nine m<strong>on</strong>ths<br />
in CHF milli<strong>on</strong> 2011 a 2010 % CHF % LC 2011 b 2010 % CHF % LC<br />
Sales 1 865 1 709 9 25 5 452 5 420 1 15<br />
EBITDA before excepti<strong>on</strong>al items c 216 232 -7 16 734 731 0 17<br />
- margin 11.6% 13.6% 13.5% 13.5%<br />
EBIT before excepti<strong>on</strong>al items c 144 182 -21 2 552 576 -4 14<br />
- margin 7.7% 10.6% 10.1% 10.6%<br />
EBIT 110 137 -20 8 474 335 41 69<br />
Net income 81 109 - - 241 144 - -<br />
Operating cash flow 105 173 21 365<br />
Number of employees 22 217 1 16 176 2<br />
a including Süd-Chemie b 2011 includes Süd-Chemie figures c<strong>on</strong>solidated for five m<strong>on</strong>ths (May-Sept)<br />
c 2011 “excepti<strong>on</strong>al items” include an additi<strong>on</strong>al charge of CHF 11 mn as a result of the sale of Süd-Chemie inventories revalued to<br />
fair value less cost to sell<br />
1 as of 30 September 2011<br />
Clariant Q3, 2011 Performance<br />
2 as of 31 December 2010<br />
Muttenz, 31 October 2011 – Clariant, a world leader in specialty chemicals, today announced sales<br />
of CHF 1.865 billi<strong>on</strong> in the third quarter 2011, compared to CHF 1.709 billi<strong>on</strong> in the previous<br />
year. This includes Süd-Chemie (SC) sales of CHF 356 milli<strong>on</strong>. In local currencies, sales growth<br />
amounted to 25%. In Swiss francs, year-<strong>on</strong>-year sales were <strong>on</strong>ly 9% higher as the Swiss franc<br />
c<strong>on</strong>tinued to strengthen against most major currencies especially in the first half of the third<br />
quarter.<br />
Sales growth was driven by higher prices and the acquisiti<strong>on</strong> of Süd-Chemie. The less cyclical Business<br />
Units Additives, Catalysis & Energy, Functi<strong>on</strong>al Materials, Industrial & C<strong>on</strong>sumer Specialties and Oil &<br />
Mining Services – accounting for roughly 50% of group sales – showed the most dynamic growth. By<br />
c<strong>on</strong>trast, the slowdown in demand in the more cyclical businesses already observed in June has spread<br />
al<strong>on</strong>g the plastics value chain and into the coatings business. Regi<strong>on</strong>ally, the traditi<strong>on</strong>al markets of<br />
Europe and North America outpaced Asia/Pacific, Latin America and the Middle East & Africa. In the<br />
emerging markets a slow-down in the dynamic growth of the last few quarters has been observed.
Clariant Internati<strong>on</strong>al Ltd<br />
<str<strong>on</strong>g>Quarterly</str<strong>on</strong>g> <str<strong>on</strong>g>Results</str<strong>on</strong>g><br />
31 October 2011<br />
Page 3 of 14<br />
Excluding Süd-Chemie, sales increased by 5%, driven by a 9% increase in sales prices, while volumes<br />
decreased 4% compared to the previous-year period as a result of a combinati<strong>on</strong> of softening demand in<br />
some businesses and the deliberate loss of unprofitable c<strong>on</strong>tracts.<br />
The gross margin fell to 26.1% from 27.9% a year ago, mainly due to the negative currency impact<br />
and volume effects. In a slower global ec<strong>on</strong>omic growth envir<strong>on</strong>ment, commodity prices stabilized<br />
during the quarter. As a c<strong>on</strong>sequence, raw material costs remained flat compared to the sec<strong>on</strong>d<br />
quarter 2011, but were 13% higher than in the previous-year period. As expected, increased raw<br />
material costs were fully absorbed by higher sales prices, both year-<strong>on</strong>-year and sequentially.<br />
EBITDA before excepti<strong>on</strong>al items fell to CHF 216 milli<strong>on</strong> (margin 11.6%) from CHF 232 milli<strong>on</strong><br />
(margin 13.6%) a year ago. This was mainly the result of unfavorable currency developments<br />
which peaked in the third quarter. Operating profit (EBIT) before excepti<strong>on</strong>al items stood at CHF<br />
144 milli<strong>on</strong> (margin 7.7%) compared to CHF 182 milli<strong>on</strong> (margin 10.6%) in the third quarter of<br />
2010. Both EBITDA and EBIT before excepti<strong>on</strong>al items were negatively impacted by CHF 73<br />
milli<strong>on</strong> (EBITDA) and CHF 63 milli<strong>on</strong> (EBIT) respectively from currencies. Net income was CHF<br />
81 milli<strong>on</strong> compared to CHF 109 milli<strong>on</strong> in the previous-year period.<br />
Cash flow from operati<strong>on</strong>s improved to CHF 105 milli<strong>on</strong>, below last year’s CHF 173 milli<strong>on</strong>, but<br />
clearly above the CHF –101 milli<strong>on</strong> reported in the sec<strong>on</strong>d quarter of 2011. Due to lower sales,<br />
Net Working Capital as a percentage of sales increased to 21.3% compared to 19.7% in the<br />
previous-year period, but is <strong>on</strong> <strong>track</strong> to meet the year-end 2011 target of below 20% of sales.<br />
Due to the acquisiti<strong>on</strong> of Süd-Chemie, net debt increased to CHF 1 812 milli<strong>on</strong> from CHF 126<br />
milli<strong>on</strong> at year-end, resulting in a gearing (net debt divided by equity) of 62% at the end of the<br />
third quarter of 2011. The cash positi<strong>on</strong> was str<strong>on</strong>g with CHF 1.029 billi<strong>on</strong> in cash and cash<br />
equivalents at quarter-end. The extensi<strong>on</strong> of the maturity profile is underway with the issuance of<br />
b<strong>on</strong>ds totaling CHF 300 milli<strong>on</strong> in the Swiss francs market since May. After the reporting period,<br />
another EUR 365 milli<strong>on</strong> in certificates of indebtedness with terms of three years and four and a<br />
half years have been raised in October.
Clariant Internati<strong>on</strong>al Ltd<br />
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31 October 2011<br />
Page 4 of 14<br />
Süd-Chemie delivers, integrati<strong>on</strong> <strong>on</strong> <strong>track</strong><br />
In the first full quarter of c<strong>on</strong>solidati<strong>on</strong> into Clariant, the two new Süd-Chemie Business Units –<br />
Catalysis & Energy and Functi<strong>on</strong>al Materials – developed according to plan, with the Catalysts<br />
business picking-up in the third quarter as expected. Catalysis & Energy reported an EBITDA<br />
before excepti<strong>on</strong>als of CHF 41 milli<strong>on</strong> (margin 21.6%), and Functi<strong>on</strong>al Materials CHF 18 milli<strong>on</strong><br />
(margin 10.8%).<br />
The integrati<strong>on</strong> of Süd-Chemie is progressing as planned with all project teams fully operati<strong>on</strong>al.<br />
Based <strong>on</strong> current insights and integrati<strong>on</strong> experience, the anticipated EUR 75-95 milli<strong>on</strong> EBITDA<br />
improvements to 2013 are c<strong>on</strong>firmed. Integrati<strong>on</strong> synergies and functi<strong>on</strong>al excellence efforts are<br />
expected to lead to redundancy for some 700 FTE worldwide, primarily in G&A functi<strong>on</strong>s but also<br />
from improvement measures in producti<strong>on</strong>. The implementati<strong>on</strong> of the measures is expected in the<br />
timeframe from 2012 to 2014 with a focus <strong>on</strong> 2012/13 <strong>on</strong>ce the squeeze-out becomes effective.<br />
Going forward, the focus will be <strong>on</strong> the c<strong>on</strong>tinued delivery of the business objectives of Süd-<br />
Chemie while progressing with the integrati<strong>on</strong> and the squeeze-out process.<br />
Outlook 2011<br />
At the beginning of 2011, Clariant shifted its focus from restructuring to c<strong>on</strong>tinuous improvement<br />
and profitable growth. While the c<strong>on</strong>tinuous improvement initiative “Clariant Excellence” will<br />
make the competitive cost basis sustainable, the company is now focusing <strong>on</strong> creating value by<br />
investing in future profitable growth.<br />
In the fourth quarter, Clariant expects the general slow-down in ec<strong>on</strong>omic activity to c<strong>on</strong>tinue,<br />
with clear signs of further weakness in demand in some regi<strong>on</strong>s and industries, especially in<br />
Europe. Exchange rates for the major currencies are expected to remain volatile. Commodity<br />
prices look set to stabilize at the level of the third quarter, leading to an increase in raw material<br />
costs in the mid-teens in 2011 compared to 2010.<br />
For 2011, Clariant – including eight m<strong>on</strong>ths of c<strong>on</strong>solidated Süd-Chemie figures – expects sales in<br />
the range of CHF 7.0 to 7.2 billi<strong>on</strong> and an EBITDA margin before excepti<strong>on</strong>al items of 12.8% to<br />
13.2%.
Clariant Internati<strong>on</strong>al Ltd<br />
<str<strong>on</strong>g>Quarterly</str<strong>on</strong>g> <str<strong>on</strong>g>Results</str<strong>on</strong>g><br />
31 October 2011<br />
Page 5 of 14<br />
Business Discussi<strong>on</strong> Third Quarter<br />
BU Industrial & C<strong>on</strong>sumer Specialties<br />
Third quarter Nine M<strong>on</strong>ths<br />
in CHF milli<strong>on</strong> 2011 2010 % CHF % LC 2011 2010 % CHF % LC<br />
Sales 337 341 -1 16 1 090 1 128 -3 11<br />
EBITDA before excepti<strong>on</strong>al items 58 54 7 22 190 186 2 16<br />
- margin 17.2% 15.8% 17.4% 16.5%<br />
EBIT before excepti<strong>on</strong>al items 49 46 7 25 164 158 4 19<br />
- margin 14.5% 13.5% 15.0% 14.0%<br />
EBIT 46 33 39 61 161 138 17 33<br />
Sales in Industrial & C<strong>on</strong>sumer Specialties (ICS) rose 16% in local currencies but declined 1% in Swiss<br />
francs versus the same period in 2010. Demand for chemicals in the c<strong>on</strong>structi<strong>on</strong> and industrial lubricants<br />
industry was particularly str<strong>on</strong>g. All regi<strong>on</strong>s c<strong>on</strong>tributed to the good result with str<strong>on</strong>g double-digit sales<br />
growth in local currencies in Europe and Asia. Sales growth c<strong>on</strong>tinued to be very str<strong>on</strong>g in China where<br />
ICS has strengthened its market positi<strong>on</strong> with a new ethoxylati<strong>on</strong> plant in Dayabay (South of Guangzhou,<br />
China).<br />
The Business Unit was able to increase its EBITDA margin compared to the previous year’s level despite<br />
a substantial adverse currency effect. The margin increase was due to a positive c<strong>on</strong>tributi<strong>on</strong> from an<br />
improved mix effect, a better cost structure and higher sales prices that fully compensated for raw<br />
material costs. ICS already saw initial sales of de-icing fluids in the third quarter as airports increased<br />
their c<strong>on</strong>tingency inventories in order to prevent shortages of product in case of extreme weather<br />
c<strong>on</strong>diti<strong>on</strong>s.<br />
ICS will c<strong>on</strong>tinue to focus <strong>on</strong> innovative soluti<strong>on</strong>s and high value-added businesses. Of particular interest<br />
is the Pers<strong>on</strong>al Care industry where Clariant has launched an array of new pers<strong>on</strong>al care innovati<strong>on</strong>s. ICS<br />
will strengthen its positi<strong>on</strong> with an exclusive l<strong>on</strong>g-term partnership with KitoZyme, a leading edge<br />
manufacturer of bio-polymers that meet the needs of Pers<strong>on</strong>al Care customers worldwide looking for<br />
natural and sustainable ingredients.
Clariant Internati<strong>on</strong>al Ltd<br />
<str<strong>on</strong>g>Quarterly</str<strong>on</strong>g> <str<strong>on</strong>g>Results</str<strong>on</strong>g><br />
31 October 2011<br />
Page 6 of 14<br />
BU Masterbatches<br />
Third quarter Nine M<strong>on</strong>ths<br />
in CHF milli<strong>on</strong> 2011 2010 % CHF % LC 2011 2010 % CHF % LC<br />
Sales 266 315 -16 0 873 981 -11 3<br />
EBITDA before excepti<strong>on</strong>al items 28 39 -28 -12 106 125 -15 -1<br />
- margin 10.5% 12.4% 12.1% 12.7%<br />
EBIT before excepti<strong>on</strong>al items 21 32 -34 -16 86 102 -16 -1<br />
- margin 7.9% 10.2% 9.9% 10.4%<br />
EBIT 21 27 -22 -3 82 95 -14 2<br />
In the Masterbatches Business Unit, sales were flat in local currencies. In Swiss francs, sales were<br />
16% lower. Weaker underlying demand first experienced in the sec<strong>on</strong>d quarter c<strong>on</strong>tinued into the<br />
third quarter as plastic c<strong>on</strong>verters resp<strong>on</strong>ded to higher raw material costs and uncertain ec<strong>on</strong>omic<br />
c<strong>on</strong>diti<strong>on</strong>s by reducing or delaying orders for masterbatches.<br />
Sales growth was str<strong>on</strong>gest in the Middle East regi<strong>on</strong>, particularly in Saudi Arabia and Turkey.<br />
Additi<strong>on</strong>ally, China and Ind<strong>on</strong>esia c<strong>on</strong>tributed positively to growth in Asia. Sales were flat in<br />
North and Latin America, and were below the previous year’s level in Europe. The latter was<br />
particularly impacted by the weak ec<strong>on</strong>omic envir<strong>on</strong>ment in Southern Europe.<br />
The EBITDA margin declined in the third quarter compared to the same period of the previous<br />
year as higher sales prices and improved productivity were not enough to compensate for the<br />
negative currency impact and higher idle facility costs. Raw material costs for the business unit<br />
remained at a high level but were fully compensated for by higher sales prices.<br />
The Business Unit remains focused <strong>on</strong> growth opportunities in emerging markets. It will benefit<br />
from expansi<strong>on</strong> in the regi<strong>on</strong> Middle East with new producti<strong>on</strong> sites e.g. in Turkey as well as from<br />
the expansi<strong>on</strong> of existing sites (Saudi Arabia, Pakistan). Additi<strong>on</strong>ally, further capacity was added<br />
to serve customers in Asia Pacific (China) and Latin America (Brazil). In Europe, the focus of the<br />
Business Unit is <strong>on</strong> expanding into Eastern Europe and optimizing its existing producti<strong>on</strong> network<br />
in Western Europe. In North America, two plants were c<strong>on</strong>solidated to create a new state of the art<br />
manufacturing facility in Chicago that produces both liquid and granular masterbatches.
Clariant Internati<strong>on</strong>al Ltd<br />
<str<strong>on</strong>g>Quarterly</str<strong>on</strong>g> <str<strong>on</strong>g>Results</str<strong>on</strong>g><br />
31 October 2011<br />
Page 7 of 14<br />
BU Pigments<br />
Third quarter Nine M<strong>on</strong>ths<br />
in CHF milli<strong>on</strong> 2011 2010 % CHF % LC 2011 2010 % CHF % LC<br />
Sales 230 301 -24 -10 766 907 -16 -3<br />
EBITDA before excepti<strong>on</strong>al items 39 66 -41 -30 159 197 -19 -9<br />
- margin 17.0% 21.9% 20.8% 21.7%<br />
EBIT before excepti<strong>on</strong>al items 33 58 -43 -31 139 171 -19 -8<br />
- margin 14.3% 19.3% 18.1% 18.9%<br />
EBIT 38 56 -32 -19 127 132 -4 9<br />
Sales in Pigments were down 10% in local currencies and 24% lower in Swiss francs. In additi<strong>on</strong> to a<br />
high comparable base in Q3 2010 that was still boosted by the recovery in demand post 2009 recessi<strong>on</strong>,<br />
the decline is partly due to destocking activities as customers purchased higher quantities in the first<br />
half-year ahead of announced price increases and in order to secure supplies. Additi<strong>on</strong>ally, a softening<br />
in global demand has been seen as customers further adjusted their supply-chain during the summer<br />
seas<strong>on</strong> to the expected lower demand. Volumes were also impacted by the increased focus <strong>on</strong> high<br />
value-added businesses. At the regi<strong>on</strong>al level, sales declined in all regi<strong>on</strong>s.<br />
Most business lines were impacted by the softening demand, with a more pr<strong>on</strong>ounced decline in<br />
Printing where the Business Unit c<strong>on</strong>tinued to de-emphasize the commodity publicati<strong>on</strong> inks<br />
applicati<strong>on</strong>. In the high value-added markets such as n<strong>on</strong>-impact printing, customers reduced<br />
inventories. Sales in Coatings were down from a high comparable base in 2010 and also impacted by<br />
high levels of inventories held by customers.<br />
The EBITDA margin declined year-<strong>on</strong>-year, impacted by lower volumes and unfavorable currency<br />
effects, partially compensated by the substantially improved cost structure of the business. The<br />
Business Unit cost structure will be further improved by completing the exit from the Huningue site in<br />
France in 2012. In additi<strong>on</strong>, Pigments will c<strong>on</strong>tinue to improve its cost structure and competitiveness<br />
by implementing Clariant Excellence measures in its commercial and producti<strong>on</strong> processes.<br />
The integrati<strong>on</strong> of the Italtinto point of sales tinting business into the Coatings segment is progressing<br />
according to plan, allowing Pigments to execute its strategy to increase revenues downstream in the<br />
value chain. Initial market reacti<strong>on</strong>s and incoming orders were promising, with a high degree of<br />
interest from several customers in our tinting system technology.
Clariant Internati<strong>on</strong>al Ltd<br />
<str<strong>on</strong>g>Quarterly</str<strong>on</strong>g> <str<strong>on</strong>g>Results</str<strong>on</strong>g><br />
31 October 2011<br />
Page 8 of 14<br />
BU Textile Chemicals<br />
Third quarter Nine M<strong>on</strong>ths<br />
in CHF milli<strong>on</strong> 2011 2010 % CHF % LC 2011 2010 % CHF % LC<br />
Sales 152 199 -24 -8 518 634 -18 -5<br />
EBITDA before excepti<strong>on</strong>al items -1 19 - - 28 61 -54 -47<br />
- margin -0.7% 9.5% 5.4% 9.6%<br />
EBIT before excepti<strong>on</strong>al items -6 12 - - 12 43 -72 -66<br />
- margin -3.9% 6.0% 2.3% 6.8%<br />
EBIT -8 8 - - 5 -27 - -<br />
Sales in Textile Chemicals were 8% below last year’s level in local currencies. In Swiss francs,<br />
sales declined by 24%. Sales growth in local currencies was solid in North America and flat in<br />
Europe as demand for technical textiles remained robust. Sales in Latin America and China<br />
declined in the double-digit range as demand c<strong>on</strong>tinued to be impacted by the high volatility in<br />
cott<strong>on</strong> prices and softening demand in the apparel sector.<br />
Am<strong>on</strong>gst all Business Units, Textile Chemicals was by far the worst hit by the rapid appreciati<strong>on</strong><br />
of the Swiss franc as it still has a substantial asset base in Switzerland, with its producti<strong>on</strong> plant in<br />
Muttenz. Therefore, the Unit spent additi<strong>on</strong>al resources to accelerate the transfer of its producti<strong>on</strong><br />
to Asia. The Business Unit headquarters were transferred to Singapore in August 2011. The<br />
relocati<strong>on</strong> of the producti<strong>on</strong> plant to China and India will be accomplished in mid-2012, hence<br />
earlier than originally planned. This move will clearly increase the competitiveness of the Business<br />
Unit.<br />
The EBITDA margin in the third quarter was slightly negative as the massive currency impact and<br />
the decline in volumes could not be fully compensated by cost reducti<strong>on</strong>s. Higher sales prices<br />
were, however, able to compensate for higher raw material costs.<br />
Textile Chemicals will c<strong>on</strong>tinue to focus <strong>on</strong> products that generate value for its customers. More<br />
than twenty-five new products, processes and effect innovati<strong>on</strong>s were recently launched at the<br />
industry-leading trade fair ITMA 2011 in Barcel<strong>on</strong>a. Examples include a new durable,<br />
envir<strong>on</strong>mentally-friendly flame retardant finishing for technical textiles and innovative heavy<br />
metal-free acid dyes with high fastness properties, even in dark shades.
Clariant Internati<strong>on</strong>al Ltd<br />
<str<strong>on</strong>g>Quarterly</str<strong>on</strong>g> <str<strong>on</strong>g>Results</str<strong>on</strong>g><br />
31 October 2011<br />
Page 9 of 14<br />
BU Oil & Mining Services<br />
Third quarter Nine M<strong>on</strong>ths<br />
in CHF milli<strong>on</strong> 2011 2010 % CHF % LC 2011 2010 % CHF % LC<br />
Sales 154 142 8 29 443 438 1 17<br />
EBITDA before excepti<strong>on</strong>al items 19 16 19 34 48 53 -9 5<br />
- margin 12.3% 11.3% 10.8% 12.1%<br />
EBIT before excepti<strong>on</strong>al items 18 16 13 36 45 50 -10 5<br />
- margin 11.7% 11.3% 10.2% 11.4%<br />
EBIT 18 16 13 36 45 50 -10 5<br />
In the Oil & Mining Services (OMS) Business Unit, sales grew 29% in local currencies and 8% in<br />
Swiss francs. Sales growth was str<strong>on</strong>gest in the Middle East and North America, the latter<br />
supported by the acquisiti<strong>on</strong> of Prairie Petro-Chem, but all other regi<strong>on</strong>s also experienced double-<br />
digit sales growth. Latin America in particular improved as Brazil recovered from some weakness<br />
in the sec<strong>on</strong>d quarter.<br />
Sales growth was driven by the Oil Services business line (around two-thirds of total sales) which<br />
performed well in most regi<strong>on</strong>s with very str<strong>on</strong>g growth in Asia/Pacific, the Middle East and North<br />
America. In North America, Oil Services benefited from c<strong>on</strong>tinued investments in unc<strong>on</strong>venti<strong>on</strong>al<br />
oil and gas development projects. In September, the Business Unit signed a major new c<strong>on</strong>tract<br />
with Petrobras, helping OMS to strengthen its leading market positi<strong>on</strong> in Brazil.<br />
Mining Services was impacted by the softening in global demand for minerals. The Business Unit<br />
mitigated this effect by launching new products and technologies in collaborati<strong>on</strong> with mining<br />
companies.<br />
The EBITDA margin improved compared to the same period of previous year as higher volumes<br />
and higher sales prices were more than able to compensate for the adverse effects from currencies<br />
and from raw material costs that persisted at high levels.<br />
For the fourth quarter of 2011, Oil & Mining Services expects higher sales and profitability levels<br />
compared to the third quarter, resulting from new c<strong>on</strong>tracts w<strong>on</strong>, the start of the high seas<strong>on</strong> for<br />
the refinery business, and a decreasing adverse impact of currencies.
Clariant Internati<strong>on</strong>al Ltd<br />
<str<strong>on</strong>g>Quarterly</str<strong>on</strong>g> <str<strong>on</strong>g>Results</str<strong>on</strong>g><br />
31 October 2011<br />
Page 10 of 14<br />
BU Leather Services<br />
Third quarter Nine M<strong>on</strong>ths<br />
in CHF milli<strong>on</strong> 2011 2010 % CHF % LC 2011 2010 % CHF % LC<br />
Sales 63 76 -17 -1 208 251 -17 -3<br />
EBITDA before excepti<strong>on</strong>al items 6 10 -40 -28 22 34 -35 -25<br />
- margin 9.5% 13.2% 10.6% 13.5%<br />
EBIT before excepti<strong>on</strong>al items 5 9 -44 -31 19 30 -37 -28<br />
- margin 7.9% 11.8% 9.1% 12.0%<br />
EBIT 5 9 -44 -31 19 34 -44 -37<br />
Leather Services sales declined 1% in local currencies and 17% in Swiss francs compared to the<br />
previous-year period. Demand from the automotive and luxury goods industry remained robust.<br />
However, in the upholstery sector the trend for using alternative materials instead of leather<br />
c<strong>on</strong>tinued as raw hide costs remained high.<br />
From a regi<strong>on</strong>al standpoint, sales growth in local currencies was robust in Europe and slightly<br />
reduced in the Americas despite str<strong>on</strong>g growth in the main market, i.e. Brazil. Sales in Asia were<br />
down, still suffering from high raw hide prices. Sales to tanneries working for the Japanese<br />
automotive sector have recovered to close to pre-earthquake levels. Leather Services was<br />
successful in increasing sales prices and was able to compensate for higher raw material costs.<br />
However, the Business Unit c<strong>on</strong>tinues to be affected by adverse currency effects and lower<br />
volumes due to the impact of high raw hide prices. As a c<strong>on</strong>sequence, the EBITDA margin<br />
declined compared to the previous year’s level. For the fourth quarter, Leather Services expects<br />
demand to stabilize and a less negative impact from currency.<br />
The Business Unit will c<strong>on</strong>tinue to focus <strong>on</strong> high value segments and <strong>on</strong> the introducti<strong>on</strong> of new<br />
services and value-added products such as the new chromium-free tanning technology (Easy<br />
WhiteTan). In the future, Leather Service will focus its innovati<strong>on</strong> activities and broaden its<br />
product offering in this range of ecofriendly products in particular.
Clariant Internati<strong>on</strong>al Ltd<br />
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31 October 2011<br />
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Performance Chemicals - includes the Additives, Detergents & Intermediates, Emulsi<strong>on</strong>s and<br />
Paper Specialties Business Units<br />
Third quarter Nine M<strong>on</strong>ths<br />
in CHF milli<strong>on</strong> 2011 2010 % CHF % LC 2011 2010 % CHF % LC<br />
Sales 307 335 -8 8 982 1 081 -9 5<br />
EBITDA before excepti<strong>on</strong>al items 35 44 -20 3 144 160 -10 4<br />
- margin 11.4% 13.1% 14.7% 14.8%<br />
EBIT before excepti<strong>on</strong>al items 27 34 -21 4 118 129 -9 5<br />
- margin 8.8% 10.1% 12.0% 11.9%<br />
EBIT 27 29 -7 21 118 114 4 19<br />
Sales in Performance Chemicals were 8% higher in local currencies than in the previous-year<br />
period and 8% lower in Swiss francs. As in the previous quarters sales growth was driven by<br />
Additives, which c<strong>on</strong>tinued to c<strong>on</strong>tribute double-digit sales growth thanks to str<strong>on</strong>g demand for<br />
n<strong>on</strong>-halogenated flame retardants and waxes. Detergents & Intermediates and Emulsi<strong>on</strong>s<br />
c<strong>on</strong>tributed single-digit sales growth while sales in Paper Specialties were below previous-year<br />
levels. Additives, Detergents & Intermediates and Emulsi<strong>on</strong>s were successful in increasing their<br />
sales prices and fully compensating for higher raw material costs. Profitability in all four Business<br />
Units was again negatively impacted by the str<strong>on</strong>g appreciati<strong>on</strong> of the Swiss franc.<br />
The business envir<strong>on</strong>ment for Additives was good with particularly str<strong>on</strong>g growth in Asia/Pacific<br />
and North America. Demand for n<strong>on</strong>-halogenated flame-retardants c<strong>on</strong>tinued to be very str<strong>on</strong>g;<br />
future demand will be addressed with a new producti<strong>on</strong> plant that will come into operati<strong>on</strong> in mid-<br />
2012. Detergents & Intermediates experienced solid demand in its intermediates business for<br />
Agrochemicals and Pharmaceuticals, compensating for some softening in demand in Household<br />
and Cleaning. Demand in Paper Specialties was lower compared to the sec<strong>on</strong>d quarter of 2011 as<br />
customers have reduced their output due to lower paper c<strong>on</strong>sumpti<strong>on</strong>. Additi<strong>on</strong>ally, profitability<br />
was adversely affected by currency effects of the str<strong>on</strong>g Swiss franc as well as by the high cost<br />
base in Switzerland. Relocati<strong>on</strong> of producti<strong>on</strong> from Switzerland to Spain and the United States has<br />
therefore been accelerated and will be finalized by the end of 2011. Emulsi<strong>on</strong>s was able to<br />
compensate for high raw material prices. Sales growth was quite str<strong>on</strong>g in Latin America with<br />
recovering demand in Brazil, whereas demand in the Middle East was weaker.
Clariant Internati<strong>on</strong>al Ltd<br />
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31 October 2011<br />
Page 12 of 14<br />
BU Functi<strong>on</strong>al Materials<br />
Third quarter Nine M<strong>on</strong>ths<br />
in CHF milli<strong>on</strong> 2011 2010 % CHF % LC 2011* 2010 % CHF % LC<br />
Sales 166 - - - 289 - - -<br />
EBITDA before excepti<strong>on</strong>al items 18 - - - 43 - - -<br />
- margin 10.8% - 14.9% -<br />
EBIT before excepti<strong>on</strong>al items 9 - - - 27 - - -<br />
- margin 5.4% - 9.3% -<br />
EBIT 9 - - - 27 - - -<br />
* Süd-Chemie figures c<strong>on</strong>solidated for five m<strong>on</strong>ths (May-Sept)<br />
The Functi<strong>on</strong>al Materials Business Unit – the former Adsorbents and Additives business of Süd-<br />
Chemie – comprises the business lines Adsorbents and Additives, Foundry Products and Specialty<br />
Resins, Performance Packaging and Water Treatment. As of 1 July 2011, Functi<strong>on</strong>al Materials has<br />
been reorganized into the business lines Adsorbents, Performance Packaging and Water Treatment.<br />
Business discussi<strong>on</strong> for the first nine m<strong>on</strong>ths<br />
Functi<strong>on</strong>al Materials moderately increased revenues and EBITDA during the first nine m<strong>on</strong>ths of<br />
2011 compared to the previous-year period.<br />
Sales and EBITDA increased in Performance Packaging, driven by str<strong>on</strong>g demand in Diagnostic<br />
and Pharmaceuticals packaging. The EBITDA margin declined in Adsorbents as higher raw<br />
material prices and transportati<strong>on</strong> costs could not be fully compensated by higher sales prices.<br />
EBITDA also declined in Water Treatment due to an unfavorable mix effect and higher raw<br />
material costs. Functi<strong>on</strong>al Materials will c<strong>on</strong>tinue to increase sales prices, especially in the<br />
Adsorbents and Water Treatment businesses, to compensate for inflati<strong>on</strong> in raw material and<br />
transport costs.<br />
A thorough discussi<strong>on</strong> of the results for the first nine m<strong>on</strong>ths is available in the Interim Report for<br />
the first nine m<strong>on</strong>ths, published by Süd-Chemie AG <strong>on</strong> 31 October 2011.
Clariant Internati<strong>on</strong>al Ltd<br />
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31 October 2011<br />
Page 13 of 14<br />
BU Catalysis & Energy<br />
Third quarter Nine M<strong>on</strong>ths<br />
in CHF milli<strong>on</strong> 2011 2010 % CHF % LC 2011* 2010 % CHF % LC<br />
Sales 190 - - - 283 - - -<br />
EBITDA before excepti<strong>on</strong>al items 41 - - - 56 - - -<br />
- margin 21.6% - 19.8% -<br />
EBIT before excepti<strong>on</strong>al items 26 - - - 33 - - -<br />
- margin 13.7% - 11.7% -<br />
EBIT 26 - - - 33 - - -<br />
* Süd-Chemie figures c<strong>on</strong>solidated for five m<strong>on</strong>ths (May-Sept)<br />
The Catalysis & Energy Business Unit – the former Catalysts business of Süd-Chemie – comprises<br />
the business lines Catalytic Technologies and Energy & Envir<strong>on</strong>ment. As of<br />
1 July 2011, Catalysis & Energy has been reorganized into a mainly functi<strong>on</strong>al organizati<strong>on</strong>,<br />
comprising the Battery Materials business line and the three Catalysis & Energy functi<strong>on</strong>s Sales &<br />
Key Account Management, Operati<strong>on</strong>s and Research & Development.<br />
Business discussi<strong>on</strong> for the first nine m<strong>on</strong>ths<br />
Catalysis & Energy sales in euro were up 11% in the first nine m<strong>on</strong>ths of 2011 compared to the<br />
same period of the previous year; EBITDA for the first nine m<strong>on</strong>ths was up by 22%.<br />
As expected, sales picked up in the Catalysts business in the third quarter. Sales and EBITDA<br />
increased, order intake was str<strong>on</strong>g and most catalyst orders that had been postp<strong>on</strong>ed have been<br />
realized. It is expected that the fourth quarter will, as usual, be the str<strong>on</strong>gest for catalysts.<br />
Catalysis was driven by a c<strong>on</strong>tinuing str<strong>on</strong>g momentum in sales of catalysts for air purificati<strong>on</strong> and<br />
hydrogen producti<strong>on</strong> in fuel cells. Battery Materials also c<strong>on</strong>tributed to this marked business<br />
expansi<strong>on</strong>. To allow for an even accelerated market penetrati<strong>on</strong>, four sublicense agreements for the<br />
highly innovative cathode material LFP (Lithium ir<strong>on</strong> phosphate) have been signed. The new LFP<br />
plant in Candiac, Canada, is already in the ramp-up process and will produce the first LFP material<br />
according to schedule <strong>on</strong> 1 January 2012.<br />
A thorough discussi<strong>on</strong> of the results for the first nine m<strong>on</strong>ths is available in the Interim Report for<br />
the nine m<strong>on</strong>ths, published by Süd-Chemie AG <strong>on</strong> 31 October 2011.
Clariant Internati<strong>on</strong>al Ltd<br />
<str<strong>on</strong>g>Quarterly</str<strong>on</strong>g> <str<strong>on</strong>g>Results</str<strong>on</strong>g><br />
31 October 2011<br />
Page 14 of 14<br />
C<strong>on</strong>tacts<br />
Media Relati<strong>on</strong>s<br />
Ulrich Nies Ph<strong>on</strong>e: +41 61 469 61 58<br />
E-mail: ulrich.nies@clariant.com<br />
Investor Relati<strong>on</strong>s<br />
Ulrich Steiner Ph<strong>on</strong>e: +41 61 469 67 45<br />
E-mail: ulrich.steiner@clariant.com<br />
Siegfried Schwirzer Ph<strong>on</strong>e: +41 61 469 67 49<br />
E-mail: siegfried.schwirzer@clariant.com<br />
Clariant – Exactly your chemistry.<br />
Clariant is a global leader in the field of specialty chemicals. Str<strong>on</strong>g business relati<strong>on</strong>ships, commitment to<br />
outstanding service and wide-ranging applicati<strong>on</strong> know-how make Clariant a preferred partner for its<br />
customers.<br />
Clariant, which is represented <strong>on</strong> five c<strong>on</strong>tinents with over 100 group companies, employs around 16,200<br />
people as of year-end 2010. Head-quartered in Muttenz near Basel, Switzerland, it generated sales of<br />
CHF 7.1 billi<strong>on</strong> in 2010. Clariant is organized into 12 Business Units: Additives; Catalysis & Energy;<br />
Detergents & Intermediates; Emulsi<strong>on</strong>s; Functi<strong>on</strong>al Materials; Industrial & C<strong>on</strong>sumer Specialties; Leather<br />
Services; Masterbatches; Oil & Mining Services; Paper Specialties; Pigments; and Textile Chemicals.<br />
Clariant is committed to sustainable growth, which is derived from its own innovative strength. Clariant’s<br />
world-class products and services play a key role in its customers’ manufacturing processes and add value<br />
to their end products. The company’s success is based <strong>on</strong> the know-how of its people and their ability to<br />
identify new customer needs at an early stage and to work together with customers to develop innovative,<br />
efficient soluti<strong>on</strong>s.<br />
www.clariant.com