April 30 (Bloomberg) -- Clariant AG, the world's biggest maker of chemicals used in printing ink, rose the most since first trading in Zurich in 1995 after first-quarter profit beat analyst estimates.

The supplier of dyes and waterproof coatings climbed 19 percent, today's biggest increase on the benchmark Dow Jones Stoxx 600 index. Net income fell to 39 million francs ($38 million) from 81 million francs a year earlier the Muttenz, Switzerland-based company said today. Analysts surveyed by Bloomberg predicted profit of 33 million francs, according to a median estimate.

Clariant cut 400 jobs in the quarter and closed nine factories last year as it struggled to close the gap between price increases and rising raw materials costs. Chief Executive Officer Jan Secher, 50, today said he'll take further action if markets deteriorate. Clariant's gross margin widened for the third straight quarter on a 4 percent price rise.

``You see a ray of hope,'' said Zuercher Kantonalbank analyst Martin Schreiber, who has a ``market perform'' rating on the chemicals maker. ``As a whole, this is a solid result.''

Clariant, whose chemicals are used in textiles and detergents, advanced 1.85 francs to 11.42 francs, giving the company a value of 2.48 billion francs. Prior to today, the stock had fallen 51 percent in 12 months, compared with a 21 percent decline in the benchmark Swiss Market Index.

Margin Outlook

Clariant forecast improved profitability and ``strong'' cash flow in 2008. Sales slipped 2 percent to 2.11 billion francs, hurt by ``adverse'' currency effects, it said.

The company has so far failed to increase annual profit to the levels posted before it bought U.K.-based fine chemicals maker BTP Plc for $2 billion at the start of 2000. Like other fine-chemicals makers, it has booked writedowns over the past several years after an anticipated boom in demand for drug ingredients from pharmaceutical companies didn't materialize.

The maker of detergents, whose customers include Procter & Gamble Co., the largest U.S. consumer-goods maker, transforms crude oil derivatives such as ethylene into pigments, plastic additives and dyes. It has posted losses in the past two years because of overhaul costs.

``The first quarter shows good progress,'' Chief Financial Officer Patrick Jany said on a conference call. ``We are making significant changes and starting to implement them.''

Cost Increases

Raw-material costs will probably increase about 5 percent in the full year, a slower pace than in the first quarter, Jany said. Clariant last year started prioritize pricing over volume and that's paying off now. The company will continue to reshape its business by selling less profitable businesses, he said.

Swiss rival Ciba Specialty Chemicals AG, the maker of ``Ferrari red'' car-paint pigment, said yesterday that first- quarter profit missed analyst estimates. The company lowered its annual earnings target on a 4.5 percent rise in raw-material costs and ``challenging'' markets in North America and Europe.

Clariant said there is no reason to improve full-year guidance as the market environment remained ``uncertain.''

Both Clariant and rival Ciba are at a disadvantage to BASF AG and other suppliers of commodity chemicals such as polyolefins because the specialty chemicals market is more fragmented, meaning customers can readily switch allegiance to a competitor when faced with a price increase.

Swiss pharmaceutical companies Sandoz AG and Ciba-Geigy AG merged in 1996 to form Novartis AG, Switzerland's second-largest drugmaker, and spun off their specialty chemicals units as Clariant AG in 1995 and Ciba Specialty Chemicals AG in 1997.

To contact the reporter on this story: Antonio Ligi in Zurich at aligi@bloomberg.net.

Last Updated: April 30, 2008 11:35 EDT