Bloomberg News

Clariant Climbs After Reporting Better-Than-Expected Profit

October 31, 2011

(Adds comments from finance chief from third paragraph.)

Oct. 31 (Bloomberg) -- Clariant AG, which made its biggest ever takeover in April, climbed the most in more than two months in Zurich trading after it reported better-than-expected profit in the third quarter.

The Swiss maker of plastic additives rose as much as 4 percent, its biggest intraday jump since Aug. 17. Earnings before interest, taxes, depreciation, amortization and one-time items declined 7 percent to 216 million francs ($248 million), beating a Nomura estimate of 205 million francs.

Clariant is eliminating 700 jobs to boost profit by as much as 95 million euros ($133 million) by next year as it integrates the 2 billion-euro purchase of Sued-Chemie. The acquisition remodeled Clariant into a maker of higher-margin catalysts used in fuels and chemicals, moving it away from more cyclical chemicals and dyes used in textiles and coatings.

“Today we have a portfolio that is stronger and more profitable,” Chief Financial Officer Patrick Jany said today in a phone interview. “There are areas we’re still working on. We’re closely watching them.”

Clariant was trading up 2.1 percent at 9.92 francs as of 10:15 a.m. local time, even as the benchmark Swiss Market Index fell 1 percent. The Muttenz-based company’s stock has lost 47 percent this year for a market value of 2.9 billion francs.

Jany said reinstating dividend payments is an integral part of Clariant’s strategy and the two preconditions of earning the cost of capital and making a profit will likely be met, Jany said today. Bloomberg forecasts a payment of 0.25 francs for this year’s earnings.

Ongoing Review

Chief Executive Officer Hariolf Kottmann and Jany are reviewing the company’s 12 business units. After first maximising margins in areas such as textile chemicals, they may opt to weed out lower-performing operations. Those strategic decisions will be made from the end of 2012, Jany said in an interview.

For now, Clariant is closing factories in its remaining cyclical businesses, including textile-chemicals, amid “clear signs of further weakness” in demand, especially in Europe. Customers are exercising more caution by placing smaller orders and are reducing their inventories toward the end of the year, Jany said in the interview.

Third-quarter sales gained 9 percent to 1.87 billion francs, while net income dropped to 81 million francs from 109 million francs. Clariant stuck to full-year forecasts for sales of 7 billion francs to 7.2 billion francs and a margin based on earnings before interest, tax, depreciation, amortization and exceptional items of as much as 13.2 percent.

Clariant, which this month raised 365 million euros in a sale of certificates, plans other transactions to refinance bonds that mature in 2013 and has open access to capital markets, according to Jany. The company has refinanced about half of its 2013 debt and will be looking at markets for an opportunity to raise the other half, the finance chief said today.

“Money is available, particularly when you’re not a bank,” the CFO said.

--Editors: Andrew Noel, Benedikt Kammel

To contact the reporter on this story: Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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