Clariant announces sell-off to slash debt

Clariant is taking tough action to reduce its debt Keystone

Swiss specialty chemicals group Clariant has unveiled a recovery programme, including plans to raise SFr1.5 billion ($1.1 billion) through asset sales.

Tuesday’s restructuring announcement came as the company posted a first-half net loss of SFr49 million – compared with a profit of SFr145 million a year ago.

Clariant blamed tough market conditions for a seven per cent drop in sales to SFr4.27 billion and a 38 per cent fall in operating income to SFr213 million.

Chief executive Roland Lösser, who took charge in March, admitted the figures were far from satisfactory.

He said Clariant would strengthen its balance sheet by selling assets, including its electronics materials unit and its cellulose ethers business, for SFr1.5 billion.

Four agrochemical plants in Germany will also close, with the loss of 200 jobs.

The restructuring is being headed by Thomas Wellauer, former boss of Credit Suisse Financial Services. He will not be on the payroll.

Clariant, whose shares have lost a third of their value in 2003, has suffered two years of losses largely tied to its disastrous acquisition of British fine chemicals firm BTP in 2000.

In March Clariant reported a surprise loss of SFr648 million for 2002 and announced it would be slashing 1,700 jobs.

However, Tuesday’s news drove shares up by more than 17 per cent to SFr18.00 during mid-morning trading.

Mixed bag

“Overall the result is a mixed bag,” said analyst Bernd Pomrehn at Zurich Cantonal Bank.

“The measures went further than some thought, but they have pushed back their target to cut debt and there is nothing on new profit goals.”

Clariant said potential buyers had shown interest in the businesses to be sold, while its life sciences division, which includes BTP, would restructure leading to the closure of the four agrochemical plants.

Overall, the new programme aims to reduce the cost base by SFr100 million by 2004, and the firm’s operating income by over SFr400 million in the medium term.

“We expect little or no help for the rest of 2003 from a market environment that remains difficult,” said Lösser.

The firm said it would cut net debt to below SFr2.5 billion within nine months – rather than this year as previously stated – from the current SFr3.7 billion.

swissinfo with agencies

Clariant half-year

Clariant has imposed a sweeping restructuring programme in an effort to cut debt of around SFr3.7 billion ($2.74 billion).

The restructuring is being headed by an outsider – Thomas Wellauer, former boss of Credit Suisse Financial Services.

The specialty chemicals firm has announced a SFr1.5 billion sale of assets to strengthen its balance sheet.

Clariant hopes to reduce its cost base by SFr100 million by 2004 and increase operating income by over SFr400 million in the medium term.

Chief financial officer Francois Note could not say whether the firm would make a net profit this year.