Surging Swiss Franc costs Clariant some profits despite soaring EBITDA in Q2 2015 results

In Switzerland, Clariant reported Net sales of CHF 1.406 billion, Net result from continuing operations at CHF 56, EBITDA margin before exceptional items improved significantly to 15.0 % and confirmed its 2015 outlook in announcing Q2 2015 results.

The company said that given the continuing strong volatility of currencies in the second quarter of 2015, in particular the year-on-year weaknesses of the euro, Brazilian real, and the Japanese yen, the flat sales development in local currencies translated into an 8 % sales reduction in Swiss francs. Growth was focused in the Americas with Clariant posting strong local currency sales growth of 16 % in Latin America and 7 % in North America, the latter led by strong demand in Catalysis as well as continued growth in Oil & Mining Services. Europe was 2 % lower in local currencies but basically continued to be flat if the reduction of the exposure to the low-margin base products business is taken into account.

The lower growth was mostly due to the regions Asia/Pacific and Middle East & Africa. In Asia/Pacific sales in local currencies decreased by 5 %. The decline was due to weak demand in China and to a high base in the Catalyst business, where in addition second quarter orders were shifted into the first quarter of 2015. The strong development in smaller economies in Asia could not compensate for this base effect. In the Middle East & Africa region, sales were 21 % lower year-on-year in local currencies, because of a higher basis in the second quarter of 2014, which still included sales from the Water Treatment business, which was divested in July 2014.

“In the last few years our Business Units Masterbatches, Pigments and Additives have established themselves as leaders in their respective markets in terms of profitability and market share. The new Plastics & Coatings subsidiary will further enable differentiated business steering with a clear focus on absolute profitability and cash generation to further safeguard and improve competitiveness in already mature markets. This set up will further increase value creation for the Group. That is why, the entity will remain a vital part of the Group,” said CEO Hariolf Kottmann. “This step will also enable us to make appropriate investments in our growth areas”, he added.

Clariant expects the challenging environment characterized by an increased volatility in commodity prices and currencies, to continue. In emerging markets, the economic environment is expected to remain favorable, but at a lower level and with increased volatility. Moderate growth should continue in the United States. However, growth in Europe is expected to remain weak. The combined effect of the appreciation of the Swiss franc with the weakening of the euro will impact Clariant’s sales and profitability in absolute terms, but it will continue to be fairly neutral in terms of relative margins.

Clariant confirms its mid-term target to achieve 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.