Clariant improves its operating margin
04/11/2008
Specialty chemicals provider Clariant has announced a 5% increase in sales in local currencies for the third quarter of 2008. Sales in Swiss francs (CHF) declined 2% owing to adverse currency effects.
The total sales figure for the quarter was CHF 6.3 billion compared to CHF 6.4 billion in the previous year. Towards the end of the reporting period, the company said volume growth was challenged by weaker demand in some businesses and regions, although it sought to offset this through higher selling prices.
Clariant increased prices by 6%, but explained that this measure was to offset a 15% increase in raw material costs in the first three quarters of the year. Looking forward, the company said the global macroeconomic downturn would adversely impact the demand for its products and affect top-line growth.
It said its leather, textile, paper chemicals division had been hit by unfavourable market conditions. This division’s sales declined by 3% in local currencies and 11% in CHF. It said the top line had suffered from “a deteriorating leather market, in particular in the third quarter” and from declining demand for textile chemicals and dyes. It added that growth in Asia and Latin America was still healthy but with a weakening trend towards the end of the period.
The company said its focus during the remainder of the year will be on continuous cash generation, cost reduction and price increases.
Despite an increasingly unfavorable macroeconomic environment, Clariant ex pects an improved operating margin before exceptional items of between 6.5% and 6.8% and a strong cash flow from operations.
Chief executive, Hariolf Kottmann, commented: “Clariant has been able to improve its operational performance in a difficult macroeconomic environment by decreasing costs and increasing prices. We have built the momentum to achieve our 2008 outlook.Going forward, we will accelerate our restructuring efforts and focus on operational excellence in order to significantly increase profitability and respond to expected negative market developments resulting from an extremely challenging macroeconomic environment.”
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