Clariant to Restructure and Cut Jobs
After downsizing operations through divestments over the past year, Swiss specialty chemicals producer Clariant now plans to restructure its corporate organization to reflect the present leaner status and shift the emphasis of its portfolio to higher value-added products.
To help steer the plans financially, the group will take a charge of 70 million Swiss francs against discontinued operations in its reporting on the current fourth quarter. It also has announced plans to shed around 1,000 jobs in certain regions and services. Roughly a third of the staff reductions will be due to divestment transfers, and natural fluctuation will also help to trim the total.
Under an efficiency scheme launched earlier, Clariant said it planned to cut staff by 600 up to the end of 2021 and achieve 50 million Swiss francs in cost-base savings on its continuing businesses
Commenting on the latest decision, Hariolf Kottmann, executive chairman and interim CEO, pointed to the need to strengthen the specialty chemical producer’s core businesses. By avoiding remnant cost and reducing complexity while at the same time focusing on innovation, sustainability and operational excellence, he said Clariant will be in a better position to deliver above-market growth, higher profitability and stronger cash generation.
The “right-sizing,” as management calls the restructuring, follows the divestment of the healthcare packaging business to private equity investor Arsenal Capital Partners for 308 million Swiss francs, in a deal that closed in the 2020 third quarter. It also sold its market-leading masterbatch unit for $1.44 billion to Avient (formerly known as PolyOne).
Clariant also has recently sold parts of its 3D printing business to Dutch chemical producer DSM as well as an electronic materials unit to imaging specialist Agfa. The group has now confirmed that it will relaunch plans to divest its pigments unit. It put the transaction on ice last spring due to concerns about obtaining a suitable price at the height of the coronavirus pandemic.
In the immediate future, at least, Clariant’s business activity will rest on three segments that had sales close to 3 billion Swiss francs in the first nine months of 2020. Care Chemicals consists of lubricants, food additives, coolants and detergents, the Catalysis segment manufactures catalysts and Natural Resources produces specialty oilfield, mining and manufacturing chemicals.
Analysts are now speculating on whether and where the Swiss group plans to make acquisitions in future to add substance to its remaining core activity. After a peak of around 6 billion Swiss francs in 2015, annual revenue fell to around 4 billion francs in 2019.
The specialties player, originally pieced together from assets shed by the former Ciba-Geigy, Sandoz and Hoechst, has been struggling after a planned merger with Huntsman of the US was thwarted by US activist investor White Tale, and the cooperation in plastics with Saudi Arabia’s SABIC floundered after that company’s takeover by compatriot Saudi Aramco.
Sabic weighing ipo for engineering plastics?
Separately, citing “people with knowledge of the matter,” news agency Bloomberg reported last week that SABIC is considering an initial public offering of its engineering plastics business acquired from GE in 2007.
Author: Dede Williams, Freelance Journalist
