Franc hits profits of two chemical makers

Swiss industrial firms Clariant and Lonza have both posted weaker than expected first half profits, in part due to the strength of the Swiss franc.

Basel-based specialty chemicals company Clariant on Wednesday posted a rise in net profit to SFr40 million ($49.80 million), but this was lower than had been forecast.

Clariant warned in its statement that raw material prices would rise in the second half after a sharp increase in the second quarter.

The chemicals maker Lonza Group, also headquartered in Basel, reported a 28.1 per cent drop in first-half net profit due to the franc, but said that revamp efforts, its recent acquisition of United States peer Arch Chemicals and healthy industry demand should allow it to reach its full-year targets.

Lonza’s net profit for the first six months of the year fell to SFr97 million from SFr135 million a year earlier.

The strong franc caused sales to fall 8.3 per cent to SFr1.19 billion from SFr1.30 billion. Lonza Chief Executive Stefan Borgas said that without the currency hit underlying growth was solid, and he was confident for the months ahead.

To reduce its dependence on Switzerland, where Lonza incurs a substantial part of its costs, the company has agreed to buy US biocides maker Arch Chemicals for $1.2 billion.