Bloomberg News

Clariant Profit Beats as CEO Kottmann Turns Focus to Growth

February 14, 2013

Clariant AG, the Swiss chemical maker that’s exiting commodity products, reported profit that beat analysts’ estimates and said the focus this year will be on efficiency coupled with growth.

Full-year earnings before interest, taxes, depreciation and amortization from continuing operations and before exceptional items fell 4 percent to 802 million francs ($873 million), the Muttenz, Switzerland-based company said. Analysts estimated 744 million francs, on average, according to data compiled by Bloomberg.

Clariant is undergoing its biggest transformation since its spin off from drugmaker Sandoz in 1995. The $2.3 billion purchase of catalyst maker Sued-Chemie almost two years ago is spurring Chief Executive Officer Hariolf Kottmann to dismantle Clariant’s commodity past, with a sale process currently underway for leather chemicals and a detergents unit.

“What is pleasing is that it’s a very good mix and strong profitability for industrial and consumer specialties, oil and mining services and catalysts,” said Jaideep Pandya, an analyst at Berenberg Bank in London. “It’s a good result.”

Shares of Clariant climbed as much as 6.3 percent, their biggest intraday advance since June 29. The stock traded 3.7 percent higher at 13.90 francs as of 9:40 a.m. in Zurich.

Revenue rose 8 percent to 6.04 billion francs, in line with estimates. Kottmann said he’s budgeting for additional sales growth in local currencies this year and improved profitability. The company has set a goal for an Ebitda margin above 17 percent for 2015.

Focus on Growth

Kottmann’s saving thrust will be based on “fine-tuning” of the more cyclical commodities that are struggling the most against Europe’s weakened economy. While catalysts and consumer- care ingredients units are performing to plan, operations involved in pigments, masterbatches and additives need an extra push to achieve performance targets, the CEO said in an interview, adding that there is no figure for job cuts “on the table.”

The 57 year-old, with a PhD in organic chemistry, is finalizing the disposal of textile, paper and emulsions businesses to SK Capital for about 502 million francs, part of his aim to make Clariant less sensitive to the volatile cycles of demand inherent in commodity products.

Kottmann said the ongoing disposal plan is a response to investor demands for a more simplified company, and he will continue to review businesses.

Biotech Drive

By contrast, Clariant purchased CRM International, a French supplier of natural cosmetic ingredients such as emollients. It’s part of the next step as Clariant joins rivals including DuPont Co. that are reinventing themselves through investments and acquisitions designed to add new growth areas where western companies can retain an edge over lower-cost rivals in emerging markets through technology and innovation.

Kottmann also entered a long-term partnership with KitoZyme, a biotechnology company with cultures that help develop personal-care ingredients. The research and development budget for biotechnology has been increased to 25 million francs this year, Kottmann said, as Clariant develops some of the technology that came with Sued-Chemie that can be applied to the biofuel market.

Kottmann said he’s not prepared to invest in biofuel plants, a strategy employed by both Royal DSM NV and Novozymes A/S to try to kick-start the nascent industry.

To contact the reporter on this story: Andrew Noel in London at anoel@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net


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