Bloomberg News

Clariant Expects Further Weakness in Fourth Quarter Demand

October 31, 2011

(Adds comments from finance chief from third paragraph.)

Oct. 31 (Bloomberg) -- Clariant AG said there are “clear signs of further weakness” in demand for coatings and plastics additives as economies falter.

Europe especially shows weak demand, the Muttenz, Switzerland-based company said today in a statement. Exchange rates will remain volatile, though commodity prices may stabilize, leading to an annual percentage increase in raw- material costs in the “mid-teens,” Clariant said.

Clariant, which lowered financial targets in September, has seen customers exercise more caution by placing smaller orders, Chief Financial Officer Patrick Jany said. The company will cut about 700 jobs by 2014, mostly in general and administrative functions, as it integrates Sued-Chemie, a German catalyst maker it acquired in April to diversify away from lower-margin products.

“We will continue to reduce our exposure to cyclical businesses and benefit from non-cyclical areas,” Jany said on a conference call. “The worst in terms of currency impact is behind us.”

The chemical maker has lost 48 percent this year in Zurich trading, cutting its market value to 2.87 billion Swiss francs ($3.3 billion).

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.

The Swiss company reported third-quarter Ebitda before special items of 216 million francs. That compares with an estimate from Nomura of 205 million francs. Sales gained 9 percent to 1.87 billion francs in the quarter.

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.

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

--Editors: Andrew Noel, Thomas Mulier

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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