Auto and luxury lift Clariant Leather results in Q3

2 November 2012

Third quarter performanceClariant, a world leader in specialty chemicals, announced on October 31 sales of CHF 1.923 billion ($2.06 billion) in the third quarter 2012, up 3% compared to CHF 1.865 billion ($1.99 billion) in the previous-year period. In local currencies, sales were 3% lower.

BU Leather Services results

Year-on-year, Clariant’s Leather Services sales increased 11% in Swiss francs and 7% in local currencies. All regions except EMEA contributed to the solid sales growth. Demand was particularly strong in North and Latin America thanks to structural improvements that led to an increase in market share.

Underlying demand in the Business Unit’s end markets was similar to the previous quarters, with still good demand for automotive leather and luxury goods, whereas the shoe and upholstery industries remained stable at relatively low levels.

The EBITDA margin decreased compared to the previous year as the benefit of stronger growth during Q3 2012 could not fully compensate the additional marketing costs related to the introduction of new technologies on existing markets together with special applications developed for fast-growing new markets.

The new tanning technology “EasyWhite Tan” has been successfully introduced at tanneries that switched to the new ecological process, thereby confirming that the improved functionalities and easier process are key drivers for this change.

The trend from solvent-based towards eco-compatible water-based coating systems is also showing accelerated growth in non-leather coatings markets targeted by our strengthened sales & marketing organisation.

Going forward, Leather Services forecasts a weaker business environment, especially in Europe, which will be mitigated by over-proportional growth in other parts of the world.

The BU presented their latest innovations at the “All China Leather Exhibition” in Shanghai, China. Among the products they launched their Neosan Lucido pigment range which is based on a nanotechnology type of pigment dispersion and generates highly transparent and brilliant colours in pure aqueous finishing.

General results

In the third quarter, the global economy had not stabilised as expected. While Latin America continued on a solid growth path and North America remained stable, the downturn in Europe spread from the Southern countries across the continent. At the same time, the major economies in Asia/Pacific and Middle East & Africa started to soften.

At group level, volumes decreased 5% year-on-year. Although volume reductions affected most businesses, the Catalysis & Energy, Functional Materials, Industrial & Consumer Specialties and Masterbatches Business Units performed solidly in this environment and are on track to achieve their full-year targets. The Oil & Mining Services Business Unit continued to grow double-digit in local currencies. On the other hand, the particularly pronounced weakness in the electronics, coatings and increasingly in the automotive industries severely affected the Additives and Pigments Business Units. Leather Services, Textile Chemicals and Paper Specialties recovered from the low previous-year’s levels and posted robust single-digit sales growth in local currencies.

At 26.3%, the gross margin was higher than the previous year’s 26.1%. Sales prices decreased sequentially by 1% but raw material costs also weakened significantly. Year-on-year, prices increased by 2% while raw material costs decreased by 1%. The positive contribution from pricing was partially offset by unabsorbed production costs due to lower volumes, and an unfavorable product mix development.

Outlook 2012

In the third quarter, the expected stabilisation of the global economy did not materialise. The European economy deteriorated further, with the Southern European weakness spreading to other countries, affecting various industries. Unlike in the second quarter, growth in the rest of the world was not able to offset the decrease in Europe with growth dynamics slowing mainly in Asia/Pacific and Middle East & Africa. The further path of the global economy remains uncertain. In this economic scenario, raw material costs are expected to be unchanged in full-year 2012 versus full-year 2011, while exchange rates should remain at the levels of the beginning of the year.

Clariant remains committed to their mid-term targets 2015 despite a softening of the global economy and the short-term impact from a massive volume reduction in Europe. The confidence in achieving those targets is based on the growth and performance of the core Business Units, a disciplined pricing approach, the progress in the integration of Süd-Chemie, further cost benefits, and successful portfolio management.

For the full-year 2012, Clariant expects flat sales growth in local currencies and an EBITDA margin before exceptionals slightly ahead of the level after nine months.

Clariant CEO Hariolf Kottmann says: “Given the further deterioration of the global economy, in which slower emerging markets growth could not offset anymore a weakening in Europe, Clariant achieved a solid performance in the last three months. This was driven by a stable development of most core businesses, manifesting the consequent execution of our profitable growth strategy. Although the short-term economic challenges are expected to persist, Clariant’s mid-term guidance until 2015 remains intact.”

Privacy Policy
We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.