“Clariant had a good start into the year with solid sales growth and profitability improvement,” said CEO Hariolf Kottmann. “All our business areas performed well in the current mixed global economic environment and significantly expanded their EBITDA margins. This positive development in all business areas was achieved by a positive mix effect in our higher margin Business Areas as well as the first impact of the differentiated business steering in Plastics & Coatings. For 2016, we are on track to achieve our targets despite the continued challenging economic environment.”
First quarter 2016 – further improvement in profitability
Clariant, a world leader in specialty chemicals, today announced first quarter 2016 sales from continuing operations of CHF 1.478 billion compared to CHF 1.465 billion in the first quarter of 2015. This corresponds to an increase of 3 % in local currencies. The sales growth was driven by higher volumes.
Growth in the Americas was good, with sales in local currencies up 11 % in Latin America and 4 % in North America. Europe was up 1 % in local currencies. Sales in the Middle East & Africa grew by 5 % in local currencies.
Lower growth came from the region of Asia. Sales decreased by 1 % in local currencies and were affected by a weak demand in China, which could not be compensated by the stronger demand of smaller economies in Asia.
The improved sales came primarily from higher growth in the Business Areas Care Chemicals and Plastics & Coatings.
In Care Chemicals sales in local currencies were up 7%, reaching CHF 411 million driven by strong growth especially in Latin America, Asia and the Middle East & Africa. North America was behind the previous year’s level due to a weak de-icing business following a mild winter season. Overall, growth in Care Chemicals primarily stemmed from Consumer Care Products.
Sales in Catalysis declined by 4 % in local currencies to CHF 136 million primarily due to a decline in Asia (mainly in China) and Europe, which could not be compensated by good growth in North America and the Middle East & Africa. Adjusted for the Energy Storage business, which was sold in February 2015, sales in Catalysis were stable year-on-year.
Sales in Natural Resources declined by 2% in local currencies to CHF 292 million. There was good growth in Latin America and Asia. Nevertheless, this could not offset the decline in the other regions. There was a decline in Oil and Mining Services whereas Functional Minerals continued to grow.
In Plastics & Coatings, sales in local currencies grew by 4 % to CHF 639 million. The sales increase was experienced across all regions, but was primarily driven by emerging markets.
EBITDA before exceptional items from continuing operations of Clariant reached CHF 229 million, up 16% in local currencies year-on-year.
The EBITDA margin before exceptional items increased to 15.5%, well above the previous year’s level of 14.1%. Though all Business Areas improved their margins compared to the previous year, the major contributors to the margin expansion came from the improvement in Plastics & Coatings as well as in Natural Resources and was mainly driven by a positive mix effect and the impact of the differentiated business steering in Plastics & Coatings.
Outlook 2016 – to progress EBITDA margin and operating cash flow
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 United States, 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 currencies, 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 specialty chemicals industry. This corresponds to an EBITDA margin before exceptional items in the range of 16 % to 19 % and a return on invested capital (ROIC) above the peer group average.
Adapted from a press release by Louise Mulhall
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