Cost cutting at Clariant boosts bottom line

Things are looking more colourful at the company. Clariant

Net profit at Swiss specialty chemicals firm, Clariant, rose 29 per cent last year to SFr192 million ($145 million), despite falling sales.

The improvement in the bottom line was attributed to savings from a restructuring programme, even though sales were down slightly at SFr8.181 billion.

The company, which makes pigments for paints and textiles, as well as chemicals, warned last November that its full-year result might fail to impress because of higher costs for raw materials, energy and transport.

It nevertheless performed better than cross-town rival, Ciba, which reported a net loss of SFr256 million on the back of restructuring costs. Without that charge, Ciba’s profit fell three per cent to SFr364 million.

Clariant’s chief executive Roland Lösser stressed that, while 2005 was a difficult year, the company was now better positioned.

“We have taken tough measures in 2005 to put Clariant on a strong footing, with… several charges in the fourth quarter that lowered the results,” Lösser said.

“The measures now in place are positively affecting the company across-the-board.”

Debt

Clariant’s restructuring programme – which includes divestments, job cuts and a capital increase – is aimed at reducing significant debt since its acquisition of British fine chemicals maker BTP, in 2000. The measures include cutting 4,000 jobs or 15 per cent of its staff.

Analysts say it remains to be seen whether Clariant’s turnaround has laid the foundations for long-term growth, but said the firm had met its targets.

The company itself was optimistic about 2006.

“All signs point to a satisfactory year ahead, which we expect will be highlighted by strong results coming through from the performance improvements put in place in 2005,” Lösser said.

“We do not anticipate any further negative effects from increases in raw material prices for 2006,” he added.

Rumours persist that Clariant and Ciba may merge – despite denials from both sides – because their product ranges are similar.

The 2005 results are the last for Lösser, who hands over the reins to Swede Jan Secher, on April 7. Lösser will become chairman on the same day.

swissinfo with agencies

In brief

Basel-based Clariant is a global leader in the field of fine and specialty chemicals.

It produces dyes, pigments, functional chemicals, additives and masterbatches for the textile, paper, leather, plastics, synthetic fibres and paint industries.

The company has a strong heritage going back to the 1850s, with roots in both Sandoz and Hoechst Specialty Chemicals.

It employs over 24,000 people worldwide.