The specialty chemicals company Clariant today reported first quarter sales 2013 from continuing operations of CHF 1.526 billion compared to CHF 1.513 billion in the previous-year period, an increase of 2% in local currencies and 1% in Swiss francs. Organic growth of 2% was primarily the result of higher volumes. The negative currency effect of 1% was mainly attributable to the double-digit percentage depreciation of the Brazilian real and the Japanese yen against the Swiss franc compared to the same period one year ago.

The business environment remained basically unchanged compared to the final quarter of 2012. As in the previous quarter, sales trends were therefore not uniform across regions and businesses.

At the regional level, Latin America exhibited the highest growth with a 10% increase in local currency sales. Year-on-year, sales in Asia Pacific and EMEA were unchanged, with the latter posting 2% growth in Europe and a 10% sales decline in Middle East & Africa. Sales in North America grew 5%.

Business Areas

As expected, the Care Chemicals and Natural Resources Business Areas continued to grow, with local currency sales increases of 13% and 4% respectively. Care Chemicals benefitted from the low sensitivity of the consumer-oriented businesses to the general economic cycle and favorable weather conditions for its European and North American de-icing business. In 2013, the de-icing season extended into late March on both sides of the Atlantic. Natural Resources was driven by double-digit local currency sales growth in Oil & Mining Services while the Functional Minerals business was weak, recording a mid-single-digit decline in local currencies year-on-year. Catalysis & Energy experienced a single-digit sales decline due to a slow start in Syngas and Specialty Catalyst, reflecting the usual high volatility in the first two quarters of the year. Plastics & Coatings, on the other hand, stabilized at low levels, with the slightly lower sales figures mainly attributable to the early Easter break and therefore fewer billing days this year compared to the previous-year period.

The gross margin was close to the level achieved one year ago, at 29.2% compared to 29.3% in the first quarter 2012. The negligible decline was due to higher costs of underutilized production capacities. Year-on-year, sales prices increased marginally while raw material costs rose 1%. Compared to the fourth quarter 2012, sales prices and raw material costs remained stable.

EBITDA before exceptional items from continuing operations was flat in local currencies and 1% lower in Swiss francs year-on-year, reaching CHF 209 million compared to CHF 211 million. The respective EBITDA margin reached 13.7% compared to 13.9% for continuing operations in the previous-year period.

Discontinued operations

In 2012, Clariant announced it would be looking for strategic options for the five businesses Textile Chemicals, Paper Specialties, Emulsions, Detergents & Intermediates and Leather Services. In a first phase, Clariant announced on 27 December 2012 an agreement to sell its Textile Chemicals, Paper Specialties and Emulsions businesses to SK Capital, a US-based investment firm. The project to find buyers for the Business Units Leather Services and Detergents & Intermediates is pursued. Therefore, all five businesses are reported as "discontinued operations", starting from the 2012 full-year results.

Outlook 2013

The repositioning of the portfolio in 2011 and 2012 has brought Clariant to a sustainably higher level of profitability and net income.

For 2013, Clariant expects a persisting soft macroeconomic environment, characterized by high volatility. While solid growth in the emerging markets is most likely, no significant growth impulses are expected from the European and North American economies.

In this scenario, Clariant will focus on growing the seven core businesses and on continuous cost discipline. This will lead to further top-line growth in local currencies and improved profitability in 2013. For the mid-term, Clariant confirms its 2015 targets of an EBITDA margin of above 17% and a return on invested capital (ROIC) above the peer-group average.

Summary

• Well-balanced portfolio allows Clariant to grow in a challenging but stable business environment.

• Continuing operations achieved first quarter sales growth of 2% in local currencies and 1% in Swiss francs, to CHF 1.526 billion from CHF 1.513 billion in the previous-year period.

• EBITDA margin before exceptional items at 13.7% compared to 13.9% in Q1 2012.

• Net result from continuing operations of CHF 38 million compared to CHF 16 million in Q1 2012

• Net debt reduced to CHF 1.66 billion, down from CHF 1.79 billion at year-end 2013.

• For full-year 2013, Clariant expects further progress in sales and profitability compared to 2012 by focusing on growth and continuous cost efficiency.