Clariant has announced its results for 3Q16, boasting positive signs of growth in profitability and sales.
Clariant, a leader in specialty chemicals, has announced its nine months 2016 sales of CHF 4.299 billion compared to CHF 4.281 billion in 2015. Corresponding to a 2% growth in local currency driven by higher volumes. Growth was strongest in Latin America, where sales grew by 7% in local currency. In the Middle East & Africa, year on year sales were up 3% in local currency. North America saw a decline of 3% stemming from a lower demand in catalysis and natural resources, while Asia grew at 4% supported by a pick up in China and Europe at a stable 1% driven by volume increases.
The improved business performance in the first nine months primarily stemmed from higher growth in care chemicals and plastics and coatings. In care chemicals, sales in local currency increased by 5% to CHF 1 087 million. Sales in catalysis declined by 8% in local currency reaching CHF 442 million, due to a lower demand, particularly in North America, which had a high comparable base against the previous year as well as due to continued soft demand in Asia.
Sales in natural resources were stable in local currency and amounted to CHF 839 million despite the very difficult industry environment. There was a slight decline in oil and mining services, whereas functional minerals continued to grow. In plastics and coatings, sales in local currency grew by 5% to CHF 1.931 billion. The good sales performance in plastics and coatings was seen across all regions.
The EBITDA before exceptional items rose by 5% in local currency and reached CHF 652 million, compared to CHF 624 million in the previous year. The major contributor to the profitability improvement was plastics and coatings.
The corresponding EBITDA margin before exceptional items of 15.2% was significantly above the previous year’s level of 14.6%. Plastics and coatings and natural resources substantially improved EBITDA margins before exceptional items year on year. Catalysis was below the previous year’s level largely due to a weaker demand as some customers further delayed certain projects as well as portfolio mix effects.
Third quarter 2016 (3Q16)– maintained progress in margin expansion
In the 3Q16, sales grew by 2% in local currency to CHF 1.400 billion and volumes were up by 3% compared to the same period last year. On a regional level, sales growth was led by Asia, which recorded an increase of 8% in local currency reflecting the improvement in China. Latin America grew 2% in local currency. In the Middle East & Africa, sales declined by 4% in local currency year on year and in North America by 5%, stemming from the challenging business environment in catalysis and natural resources. Europe grew at a stable 1%, driven by volume increases.
Care chemicals delivered sales of CHF 337 million with a local currency sales growth of 4%. In plastics and coatings, sales rose by 3% in local currency to CHF 624 million, reflecting the good sales performance in each of the three businesses, masterbatches, pigments and additives. Sales in natural resources were CHF 282 million up 1% in local currency. Catalysis sales were lower by 8% in local currency at CHF 157 million primarily due to a lower demand in North America.
EBITDA before exceptional items was CHF 208 million versus CHF 207 million in the same time period last year. The EBITDA margin before exceptional items increased by 20 basis points to 14.9% in the 3Q16 primarily driven by plastics and coatings, which continued to see the positive impact from the differentiated business steering.
“Clariant continues to grow both, sales and profitability in the first nine month of 2016,” said CEO Hariolf Kottmann. “The good performance reflects our excellent execution of our strategy in all our businesses to foster growth and improve returns despite the continued challenging economic environment. The advancement in the current year results from our focus on innovation by delivering more added value to our customers as well as continued cost discipline. The differentiated business steering in plastics and coatings continued to positively impact the profitability improvement. We are therefore on track to achieve our targets for the full year 2016.”
Outlook – remains unchanged
Clariant expects the uncertain environment, characterised by a high volatility in commodity prices and currencies, to continue. In emerging markets, we anticipate the economic environment to remain challenging and with increased volatility; we expect moderate growth in the US, while growth in Europe is expected to remain stable but weak.
For 2016, in spite of the increasingly challenging economic environment, Clariant is confident to achieve growth in local currency, as well as progression in operating cash flow and EBITDA margin before exceptional items. Clariant confirms its mid-term target of reaching a position in the top tier of the speciality chemicals industry. This corresponds to an EBITDA margin before exceptional items in the range of 16 - 19 % and a return on invested capital (ROIC) above the peer group average.
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