Clariant Q2 Results Reflect Strong Swiss Franc
Clariant saw a dip in its Q2 2011 sales, posting CHF 1.870 billion, down from CHF 1.894 the same period one year ago. The number includes Süd-Chemie sales of CHF 216 million for May and June. In local currencies, sales growth amounted to 14%. Due to the strength of the Swiss franc against most major currencies, sales were 1% lower in Swiss francs year-on-year.
The softening demand compared to the previous year and the unusually high comparable basis of the second quarter 2010 is reflected in a 5% decrease in volumes. Local currency sales saw double-digit growth in the Business Units Additives, Industrial & Consumer Specialties and Oil & Mining Services. At the regional level, a mixed performance was achieved with double-digit sales growth in local currencies in Asia, Europe, North America and Middle East & Africa but slightly lower sales growth in Latin America.
The company's gross margin fell to 27.5% from 28.9% a year ago, something the company attributes to lower volumes and an unfavorable currency development.
Clariant said in a statement that its second quarter was marked by weakness in demand in April and rather solid demand in the rest of the quarter, although first signs of a slowdown in demand have been observed in some businesses. The sovereign debt crisis in Europe, the slow economic recovery in the United States, higher inflation rates in the emerging markets and the ongoing unrests in North Africa and the Middle East have led to a certain market caution.
The acquisition of Süd-Chemie led to an increase in net debt to CHF 1,791 million from CHF 126 million at year-end, resulting in a gearing (net debt divided by equity) of 62% at the end of the second quarter of 2011. With the issuance of two Swiss franc bonds totaling CHF 250 million, the debt maturity profile has been extended at favorable conditions until 2015/17. The size of the bond issue has been increased by another CHF 50 million in July.
In the second quarter, the consolidation of Süd-Chemie for two months contributed CHF 216 million in sales, CHF 34 million in EBITDA and CHF 17 million in EBIT before exceptional items.
