Clariant International Ltd (SWX:CLN):
-0-
*T
Key Financial Group Figures
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Full Year Fourth Quarter
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Continuing
operations: 2007 2006 2007 2006
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CHF % of CHF % of CHF % of CHF % of
mn sales mn sales mn sales mn sales
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Sales 8533 100.0 8100 100.0 2086 100.0 2010 100.0
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Local currency growth
(LC): 4% 3%
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Organic growth 3% 2%
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Acquisitions/
Divestitures 1% 1%
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Currencies 1% 1%
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Gross profit 2488 29.2 2486 30.7 580 27.8 585 29.1
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EBITDA before
exceptionals 812 9.5 855 10.6 194 9.3 202 10.0
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EBITDA 628 7.4 798 9.9 90 4.3 182 9.1
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Operating income
before exceptionals 539 6.3 592 7.3 122 5.8 134 6.7
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Operating income 278 3.3 385 4.8 7 0.3 112 5.6
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Net income from
continuing
operations 108 1.3 131 1.6 -21 1.0 23 1.1
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Operating cash flow
(total operations) 540 328 220 155
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Discontinued
operations:
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Sales 82 325 1 55
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Net loss from
discontinued
operations -103 -209 4 -24
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31. 31.
Dez Dez
Other key figures: 07 06
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Net debt 1361 1556
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Equity (including
minorities) 2372 2433
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Gearing 57% 64%
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Return on invested
capital (ROIC) 7.80% 8.30%
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Number of employees 20931 21748
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*T
Jan Secher, CEO of Clariant, commented:
"We have progressed in building momentum in operational
performance and we have significantly improved our cash flow, although
profitability was impacted by higher raw material and energy costs as
well as unfavorable currency movements. We expect our continuing
initiatives in increasing prices and striving for cost leadership to
deliver improved profitability in 2008. Moving ahead, we will focus on
businesses where we can optimize value through leveraging strong
market positions and selectively participate in the consolidation of
these market segments. This will result in a period of active
portfolio re-shaping."
Clariant posted sales growth of 4% in local currencies (5% in
Swiss Francs) for Full-Year 2007. Sales in 2007 amounted to CHF 8.533
billion compared to CHF 8.100 billion in the previous year. Although
sales in the second half of the year were not as strong as in the
first half, sales in the fourth quarter recovered after a slower third
quarter.
In 2007 Clariant was able to raise its prices by more than 1%,
with increasing momentum towards year-end. However, higher selling
prices were not sufficient to offset a 5% rise in raw material costs.
Consequently, the gross margin decreased to 29.2% from 30.7% in 2006.
Clariant´s focus on cost reduction delivered results. Sales,
General & Administrative (SG&A) costs expressed as a percentage of
sales improved to 20.8 % in 2007 from 21.3% in 2006, partly mitigating
the decline in gross margin. Furthermore, unfavorable currency effects
adversely impacted Clariant´s profitability by CHF 68 million, which
led to an operating income before exceptionals of CHF 539 million
compared to CHF 592 million in 2006. Operating margin decreased to
6.3%. from 7.3% in 2006. Net income (after exceptional items)
increased to CHF 5 million from CHF -78 million in 2006, also due to
lower taxes and improved financial results.
During 2007 Clariant benefited from the stabilization of the
supply chain and its strong focus on net working capital reduction.
Cash flow from operations rose substantially to CHF 540 million
compared to CHF 328 million in 2006, mainly driven by inventory
reduction and lower trade receivables.
Restructuring efforts progressing
Restructuring efforts progressed in line with Clariant´s 2010
goals, with restructuring costs reaching CHF 262 million in 2007. Nine
smaller sites have been closed and three larger ones have been
announced for closure. Approximately 800 job positions have been
reduced and a further 600 have been announced. This totals more than
half of the previously announced reduction of 2,200 job positions. In
addition, more than 20% of the product portfolio has been pruned in
order to reduce complexity, and has thus nearly reached the 2010
target of 25%.
The company implemented a number of senior management changes
during 2007 with the objective of driving a performance-oriented
culture at Clariant. These external appointments and internal
promotions are already having an impact across the group and the
company expects to see the benefits of this fresh approach through the
coming years.
Profitable growth in service-driven businesses and strong focus on
pricing improvements across all divisions
Overall, the service-driven businesses at Clariant saw profitable
growth. For example, the Oil Service Business increased sales and
profitability, benefiting from strong demand for crude oil. The
Coatings Business was able to offset weakening market development in
Europe by good sales and profitability growth in Asia and Latin
America. Masterbatches also performed well in 2007. The Leather
Business, on the other hand, suffered from declining demand and
overcapacity.
Within the product-driven businesses, the Detergents and Specialty
Intermediates Business had a difficult year due to increasing raw
material costs.
The efforts on price increases have started to pay off in all
divisions, with increasing momentum towards the end of the year. The
Pigments and Additives Division, as well as Textile, Leather and Paper
Chemicals, reversed the negative trend of declining prices of recent
years and achieved higher selling prices towards the end of the year.
Price increases in the Functional Chemicals Division also mitigated
the margin squeeze towards year-end. The Masterbatches Division was
able to fully compensate the rising raw material and energy costs by
price increases.
Strong growth in Asia and Latin America
Asian markets saw the strongest growth for Clariant in 2007, with
growth of 9% in local currencies. Decreasing momentum in the third
quarter was partially counterbalanced by increased growth in the
fourth quarter. China remained the strongest growth contributor in
Asia, while growth in India was affected by a slowdown in the
export-driven industries.
A 4% rise (local currencies) in sales in the Americas was mainly
driven by strong growth in Latin America (+9%). Sales in the US
remained firm at +1%, with a strong fourth quarter that offset weak
demand amongst some of Clariant´s customer industries in the first
nine months.
European sales were up 1%, positively influenced by the good
economic development in Germany that compensated for the weaker demand
development in Southern Europe.
Annual General Meeting 2008
Based on the reported full-year results, at the 13th Annual
General Meeting on April 10, 2008 Clariant´s Board of Directors will
propose a payout of CHF 0.25 per share by reducing nominal value from
CHF 4.25 to CHF 4.00. The proposed payout remains unchanged from the
previous year.
Roland Losser, Chairman of the Board of Directors, has decided for
personal reasons not to stand for re-election as Board member at the
Annual General Meeting. The Board of Directors plans to appoint Jurg
Witmer as Chairman following the Annual General Meeting on April 10.
Jurg Witmer joined the Board in April 2007.
Outlook: Improved operating margins before exceptional items and
continued strong cash generation
Against a backdrop of an increasingly uncertain global
macro-economic outlook, Clariant´s focus during the coming year will
be on the continuing implementation of price increases and cost
leadership which will help offset expected further increases in raw
material and energy costs. With the benefits of the operational
performance improvements already underway, Clariant expects to an
improved operating margin before exceptional items and continuing
strong cash flow from operations in 2008.
Going forward, the company will focus on businesses where it will
be able to leverage strong market positions in attractive markets, and
thus proactively manage its portfolio.
Clariant - Exactly your chemistry.
Clariant is a global leader in the field of specialty chemicals.
Strong business relationships, commitment to outstanding service and
wide-ranging application know-how make Clariant a preferred partner
for its customers.
Clariant, which is represented on five continents with over 100
group companies, employs around 21,000 people. Headquartered in
Muttenz near Basel, Switzerland, it generated sales of CHF 8.5 billion
in 2007. Clariant´s businesses are organized in four divisions:
Textile, Leather & Paper Chemicals, Pigments & Additives,
Masterbatches and Functional Chemicals.
Clariant is committed to sustainable growth springing from its own
innovative strength. Clariant´s innovative products play a key role in
its customers´ manufacturing and treatment processes or else add value
to their end products. The company´s success is based on the knowhow
of its people and their ability to identify new customer needs at an
early stage and to work together with customers to develop innovative,
efficient solutions.
www.clariant.com
