Annual Report 2000 - Clariant

Growth was driven by two
factors: for one thing, sales
momentum picked up again as
volumes increased; for another,
expansion was driven by
acquisitions along with
favorable exchange rates.
With its strong position in electronic
materials and fine
chemicals, Clariant is now well
placed in two future-oriented
markets with considerable
growth potential.
A message from the Chairman
Seizing change as an opportunity
Clariant has had an eventful year, scoring a number of
successes but also suffering some disappointments. On
the one hand, with the successful takeover of the British
company BTP we reached a strategic milestone in the
promising area of fine chemicals; this step has made us
into a leading partner for the pharmaceutical and agrochemical
industries. On the other hand, though, the price
of our share plummeted as the stock market turned its
back on traditional industrial stocks. Fortunately, our
employees have not allowed themselves to be distracted
by the vagaries of the market and have persistently
focused on strengthening the company's performance
and growth potential. I would like to take this opportunity
to thank all of you for this achievement.
Divisional sales in 2000 climbed by +16% from CHF
9,158 million to CHF 10,583 million. This growth was
driven by two factors: for one thing, sales momentum
picked up again as sales volumes increased; for another,
expansion was driven by acquisitions along with favorable
exchange rates. Operating profit before goodwill
amortization rose CHF 53 million to CHF 1,135 million
from the year-back figure of CHF 1,082 million. Adjusted
for one-off revenues in the previous year, the improvement
comes to CHF 118 million or +12%. The steep
increase in the price of raw materials (the bill swelled by
some CHF 200 million) could only be partially offset by
passing on higher prices to customers, and then only
with a time lag. Clariant met this reduction in earnings
head on by initiating measures to cut costs and increase
efficiency, and the impact of these moves will be felt in
future too. Net income after minorities fell by –14% from
CHF 587 million to CHF 505 million, owing in particular to
additional acquisition-related goodwill amortization and
higher financing costs connected with the takeover of
BTP. Earnings per share accordingly declined from CHF
41.13 to CHF 34.14. However, earnings per share before
goodwill amortization (“cash earnings”) increased from
CHF 42.39 to CHF 42.61. Given the positive outlook for
the future, the Board of Directors will propose to the
company's shareholders to raise the dividend by +10%
from CHF 10 to CHF 11 per share.
The stock market turned its back on the specialty
chemical sector, pushing down share prices for the
industry as a whole and for Clariant in particular. The
reasons investors gave for this trend – which we do not
understand – are according to their opinion the more
attractive investment opportunities to be found in other
industries, the slowdown in the chemical sector and the
steep rise in commodity prices. However, we were never
forced to issue a profit warning because our business is
broad-based and we are able to respond to business
challenges swiftly. Nonetheless, over the year the share
price fell to a 12-month low of CHF 461, though it did
rally to finish at CHF 581.
As regards strategy, we forged ahead with the implementation
of the Strategic Plan that was adopted in
1999. The takeover of BTP in the spring marked a major
step in this direction. The product ranges, the know-how
in chemical technology and the two management teams
are all a perfect fit. We are confident that the pharmaceutical
and agrochemical industries will increasingly
turn to specialist fine chemical manufacturers for the
production of their intermediates and active ingredients.
With its strong position in electronic materials, Clariant
is now well placed in two future-oriented markets with
considerable growth potential. At the same time as we
expand in our strategic growth areas, we will continue to
dispose of semispecialty and specialty activities this
year in order to streamline our business portfolio. The
areas affected are those with insufficient growth and
earnings potential as well as businesses that are of little
strategic interest to Clariant despite their good performance
and that would flourish better in a more suitable
environment.
At the operational level, the strong performance by
the divisions and local Group companies makes confident
about the future: production plants were further
optimized and adapted to meet market needs and, we
are very pleased by the increased share of new and innovative
products. This success, however, should not blind
us to the fact that 2001 will be yet another very challenging
year. The chemical industry is still in flux, and we
are bound to see further changes in the environment. Our
Exactly your chemistry.
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