Clariant adds colour to its results

Colours made by Clariant brighten up our daily lives. Clariant

Specialty chemicals company Clariant is continuing its recovery, announcing a second-quarter performance that has beaten expectations.

The group, which is based near Basel, reported on Tuesday that it made a net profit of SFr54 million ($42.31 million) compared with a SFr51 million loss last year.

Sales climbed to SFr2.213 billion in the second quarter from SFr2.167 billion a year ago, as the company benefited from an upswing in its markets, particularly in Asia and the United States.

Clariant, which makes pigments that go into everything from jeans to cars, showed a net income of SFr126 million in the first half, compared with a loss of SFr74 million for the same period in 2003.

The company, whose problems began with the expensive acquisition of British fine chemicals maker BTP in 2000, said in a statement that it expected to perform satisfactorily for the rest of the year.

Weaker second half?

But it cautioned that the second half of the year tended to be weaker than the first for specialty chemicals companies.

“This is a good set of results. The numbers are above consensus,” commented analyst Fabian Wenner at Switzerland’s largest bank UBS.

“They are on track to deliver on their restructuring programme now,” he added.

Clariant confirmed its goal to cut 4,000 jobs by the end of next year as part of a drive to lower costs and improve operating profit.

Part of the restructuring includes selling units that are not part of the core business.

Better balance sheet

Only last month it announced it was selling its electronics materials unit to Britain’s Carlyle Group for SFr518 million, the proceeds of which will go to improve the balance sheet.

Net debt stood at SFr1.84 billion at the end of June, and Clariant wants to cut this to below SFr1.5 billion by the end of the year.

When it launched its “transformation” programme a year ago, net debt was SFr3.69 billion.

Thursday’s statement said the company was committed to selling additional assets that no longer had a place in the core portfolio.

“Our priority in these sales processes is to achieve the best possible prices. Given our stronger financial position, we can take as much time as required to obtain positive results,” commented company CEO Roland Loesser.

Key facts

First-half figures:

Net income: SFr126 million
Sales: SFr4.419 million
Operating income: SFr317 million

In brief

Clariant expects to perform “satisfactorily” for the remainder of 2004 but has warned that because of seasonal factors, the second half tends to be weaker than the first.

A company spokesman said the economic development in Europe remained key to performance in the second half.

The company generated sales of SFr8.5 billion last year and showed a profit of SFr161 million.

Clariant surprised investors with a capital increase earlier this year, which helped give it more time to make divestments.