We will adjust for declining demand in our markets. At the same time, we need to accelerate our restructuring efforts in order to catch up with our competitors. On the foundation of a sustainable operational performance we will manage the company for profitable growth in 2011 and beyond.’

Clariant have announced sales of CHF8.1 billion for the full year 2008 compared to CHF8.5 billion in 2007. This translates into a 1% growth in local currency and a 5% decline in CHF. Clariant went through two distinct phases during fiscal year 2008.

In the first nine months, the company continued to benefit from a stable demand and could cope with rising raw material costs and adverse currency movements by substantially increasing sales prices. In the fourth quarter, Clariant were significantly impacted by an unprecedented decline in global economic activity that led to a weaker demand from customer industries such as textile, leather, automotive and construction.

Other markets such as agrochemicals, oil services or de-icing showed resilience against the downturn. Clariant countered the unfavourable demand development in Q4 by reducing temporary employees and overtime as well as extended plant shutdowns over Christmas.

The company were able to offset a 15% increase in raw materials costs in 2008 by sales price increases of 7%. Due to low capacity utilization in the fourth quarter the gross margin was slightly down to 28.7% from last year’s 29.2%. Because of Clariant’s strong focus on SG&A costs reduction, the operating margin before exceptional items improved to 6.6% from 6.3% in the previous year. The operating income before exceptionals reached CHF530 million compared to CHF539 million in 2007.

As a result of the deterioration of the leather and textile markets and their uncertain evolution in 2009, Clariant revised the business plans for these two businesses, which led to an impairment of CHF180 million.

By the end of 2008, Clariant had reduced roughly 1,650 job positions out of the reduction target of approximately 2,200 that was announced in 2006. The activities to reduce SG&A costs as well as the production site closures that were announced previously – namely in Horsforth, Coventry, Selby and Naucalpan – proceeded as planned. Restructuring and impairment costs related to those activities amounted to CHF 141 million. Total restructuring and impairment costs were at CHF321 million. The group recorded a net loss of CHF37 million.

The operating cash flow remained solid in 2008 and reached CHF391 million despite a negative impact from inventories build-up in the first nine months. This compares to an operating cash flow of CHF540 million in the previous year.

The balance sheet of the company remains solid. Clariant were able to reduce the net debt by 11% to CHF1.21 billion from CHF1.36 billion. The interest expenses also developed favourably, falling to CHF85 million from CHF107 million in 2007. The company will not face maturities in capital markets for almost three years as all mid and long-term debt was refinanced under favourable conditions between April 2006 and July 2008. Therefore, the liquidity of the Clariant Group is strong and the company is prepared for a potential further economic downturn.

Currently there is no evidence that the global economy will recover soon from the depressed levels seen in recent months. However, differentiated development among Clariant’s market segments as already observed in 2008 can be expected as parts of the company’s portfolio are less exposed to economic developments than others.

In this challenging environment, Clariant will accelerate several actions to address both the unsatisfactory performance and the economic slowdown. Cash generation through significantly decreasing net working capital and spending discipline will be the prevailing priority for 2009 in order to create the financial headroom for decisive restructuring.

Following this approach, Clariant will rapidly and forcefully implement the announced significant decrease in personnel costs by reducing 1,000 job positions in addition to the 2,200 announced in 2006. Also, Clariant will simplify their organisation in order to unwind additional cash generation and cost savings potential – in particular in the SG&A area. Restructuring costs in 2009 will amount to approximately CHF200 to 300 million.

Reflecting the current uncertainties in the economic environment, the board of directors will recommend to Clariant’s 14th General Assembly on April 2 to suspend dividends, grants or payouts to shareholders for 2008.

For 2010, Clariant have confirmed their target of an above industry average return on invested capital (ROIC).