Long way to recovery for specialty chemicals makers

ZURICH (Reuters) - Swiss specialty chemicals companies Clariant and Givaudan hinted at a prolonged recovery process for an industry hit hard by the downturn in key markets like the car and building sectors.

European rivals like AkzoNobel and Solvay , both reporting later this week, will also likely indicate a slow recovery in the industry, which makes products ending up in anything from creams and tires to designer perfumes and food flavorings.

Clariant on Tuesday slashed another 500 jobs, or 3 percent of its workforce, and saw no sustainable recovery this year after reporting a narrower net loss of 67 million Swiss francs ($62 million) which was roughly in line with expectations.

Chief Executive Hariolf Kottmann is fighting a drastic fall in demand from customers in hard hit industries like carmaking and lower-cost competition from Asia, and Clariant trades at a discount to rivals like BASF , Bayer and Akzo Nobel.

"The big question for Clariant in 2010 is by how much raw material prices will go up and how quickly the company will be able to adapt to these prices," said Helvea analyst Martin Flueckiger.

Its shares fell 2 percent to 11.16 Swiss francs by 1005 GMT, underperforming a 1 percent rise in the DJ Stoxx European chemicals sector <.SX4P>.

GIVAUDAN MORE OPTIMISTIC

Flavors and fragrances company Givaudan , which makes ingredients for designer perfumes such as Calvin Klein and Burberry, was a bit more upbeat after reporting higher full-year profit which met forecasts.

The maker of ingredients for soaps, confectionery and soft drinks escaped much of the impact of the recession, but it gave a vague outlook saying only that it was confident of growing faster than the wider market this year.

Investors were also disappointed by the lack of any share buyback, which Chief Executive Gilles Andrier told Reuters took a backseat to reducing debt.

Shares fell 5.2 percent to 858 francs as investors locked in profits after a recent run-up in the stock, which left it trading at a premium over companies like Clariant as well as U.S. rival International Flavors and Fragrances .

($1=1.076 Swiss Franc)

(Editing by Jon Loades-Carter)

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