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Clariant announces second quarter results

Hydrocarbon Engineering,

Clariant has announced second quarter 2014 (Q2) results, emphasing robust sales growth.

Sales from continuing operations were CHF 1.631 billion compared to CHF 1.544 billion in the second quarter of 2013. This is equivalent to sales growth of 6%. Organic sales growth of 6% was the result og 5% higher volumes and average sales price increases of 1%.

However, robust sales growth of 6% in local currencies was heavily impacted by unfavourable development of the US dollar and Japanese yen, as well as important emerging market currencies – most significantly the Brazilian real and the Indian rupee. The negative effect from these currencies translated into sales growth of -1% in Swiss francs.

Clariant achieved local currency growth in all regions, led by Latin America with 13% higher sales due to robust development in all four business areas and despite a weakening trend in Brazil. Asia Pacific gained 9% in local currencies, driven by sales increases of 16% in China and 15% in India. Sales growth in North America amounted to 6% in local currencies. Europe, Middle East and Africa (EMEA) returned to growth in Q2, adding 2%.

Within EMEA, the Middle East and Africa developed in line with other emerging markets and added 15%, while Europe dragged down sales growth, decreasing 1%. According to Clariant, Europe lost steam in the second quarter, indicating that the recovery of the European economy remains fragile.

All business areas achieved mid to single digit sales growth in local currencies for Q2. Care Chemicals reported 3% growth in local currencies on the back of solid growth in both Consumer Care and Industrial Applications. Catalysis and Energy continued to growth, with 5% higher sales, also due to an improvement in the Energy Storage business. In Natural Resources, both the Oil and Mining Services and Functional Minerals businesses contributed to a 9% sales increase. The Plastics and Coatings business area experienced solid growth in Additives, Masterbatches and Pigments, resulting in sales growth of 6% in local currencies.

The gross margin slightly improved to 29.5% compared to 29.3% in 2013. Better capacity utilisation and 1% higher sales prices more than offset a negative currency impact.

Earnings before interest, tax, depreciation and amortization (EBITDA) before exceptional items from continuing operations rose 9% in local currencies to CHF 214 million. This compares to CHF 211 million in the second quarter 2013. The corresponding EBITDA margin improved to 14% versus 13.7%. The increase in margin resulted from a higher gross margin and lower selling, general and administrative costs that more than compensated for a 1.5% negative impact from unfavourable exchange rate developments. Exceptional items decreased to CHF 23 million from CHF 33 million in 2013.

Net income from continuing operations of CHF 83 million was recorded, compared to CHF 71 million in 2013. Operating cash flow was negative at CHF -62 million versus CHF -41 million in the second quarter of 2013. Operating cash flow is expected to gradually improve over the course of the year.

Net debt stood at CHF 1.619 billion, higher than the year end 2013 figure of CHF 1.500 billion. Gearing, reflecting net financial debt in relation to equity, rose to 61% from 54% at the end of 2013.

Adapted from a press release by Emma McAleavey.

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