Clariant has to spell back after a difficult 2023
Published: Thursday, Feb 29th 2024, 10:00
Volver a Live Feed
The chemical group Clariant is facing strong headwinds. End customers are still reluctant to place orders and the Swiss franc is appreciating. The ambitious profit targets are therefore not (yet) achievable.
As Clariant announced on Thursday, sales shrank by 16 percent to 4.38 billion Swiss francs in the 2023 financial year. The Muttenz-based company's substances are used in the cosmetics and electronics industries as well as in the oil and mining sectors.
The currency effect alone reduced revenue by 3 percent, explained Clariant. At the same time, the company felt persistently weak customer demand in many markets.
As a result, the volumes sold fell by 7%. Average sales prices were stable compared to the previous year.
Less profit
The low volumes and therefore lower capacity utilization were reflected in profitability. Operating profit before depreciation and amortization (EBITDA), for example, fell by 25% to CHF 607 million. The corresponding margin fell by 1.7 percentage points to 13.9%.
Another reason for the lower operating profit was the closure of the bioethanol plant in Romania, which did not function as planned. This resulted in high restructuring costs and provisions.
And this ate up a large part of the annual profit: in the end, there was a surplus of CHF 213 million. In the previous year, even higher extraordinary costs had caused Clariant to make a loss of 101 million.
Nevertheless, there will be the same dividend for shareholders: the company intends to pay out 42 centimes per share. The funds for this are available: Operating cash flow amounted to CHF 421 million (-16%) in the reporting period.
Outlook lowered
Looking ahead, Clariant remains cautious. This is because 2024 will not be easy either, but will bring an improvement in the second half of the year. Profitability will not improve sustainably and significantly until 2025, it said.
However, it will not be enough to achieve the EBITDA margin target of 19 to 21 percent set for 2025. He now expects a margin of 17 to 18 percent in the year in question, said Group CEO Conrad Keijzer in an interview with the news agency AWP.
This is because Clariant needs growing end markets to achieve the target set for the end of 2021. Around three-thirds of the sales growth should come from the improvement in the margin, with the rest coming from efficiency improvements.
Savings on track after all
"We have done our part - the efficiency program is on track," said the company's CEO. The performance program has so far delivered CHF 135 million of the targeted CHF 170 million in savings, emphasized CFO Bill Collins.
"However, a margin of 19 to 21% is still possible with our highly specialized portfolio," Keijzer emphasized. The original range will therefore continue to be targeted, but will only be reached later.
On the way there, Clariant is aiming for sales growth in the low single-digit percentage range (in local currency) in 2024. At the same time, the EBITDA margin is to be improved to around 15 percent. It would even be 16 percent without further losses from the bioethanol adventure.
©Keystone/SDA
Spanish 
English 
German 
French 
Arabic