Clariant AG (CLN), the Swiss maker of specialty chemicals, cut its full-year sales and profit forecasts amid a “massive volume reduction,” as weakening demand spreads from southern Europe to the rest of the region.
The stabilization of the global economy that Clariant had aimed for in the third quarter didn’t materialize, the company said in a statement today. Clariant now predicts unchanged sales in local currencies this year, compared with a July 25 forecast of revenue growth and sustained profitability.
“We currently expect this to continue, there is no real reason why the economy fundamentally would go better,” Chief Financial Officer Patrick Jany said in an interview. Sales declines were most pronounced in chemicals used in coatings, paints and in the manufacture of mobile phones and computers, he said.
Chief Executive Officer Hariolf Kottmann is banking on less cyclical businesses from last year’s acquisition of German catalyst-maker Sued-Chemie to steer the company through times of stagnating global demand. Midland, Michigan-based Dow Chemical Co. (DOW) announced 2,400 job cuts on Oct. 24 to cope with a slowing economy.
Clariant declined as much as 0.83 Swiss francs, or 7.7 percent, to 10.01 francs, and traded at 10.30 francs as of 10 a.m. in Zurich. That tapered the gain to 11 percent this year, for a market value of 3.03 billion francs ($3.26 billion).
Third-quarter earnings before interest, taxes, depreciation and amortization excluding one-time items fell 7 percent to 201 million francs, the Muttenz-based company said today. Analysts in a Bloomberg survey predicted 225 million francs. The Ebitda margin fell to 10.5 percent from 11.6 percent a year earlier.
Jany said the slowdown is not affecting less-cyclical units such as oil & mining or catalysis & energy, which will contribute to a stronger fourth quarter compared with the three months that just ended. Clariant’s mid-term forecast to 2015 remains intact, the company said.
Business units most affected by the slowdown “probably need to review their dimensions a bit in Europe,” Jany said. Clariant will not make major changes after reducing its workforce by 850 people this year as it integrates Sued-Chemie, and completed a restructuring during 2009 and 2010, Jany said.
Clariant is in the midst of divesting units such as paper, textile, emulsions and detergents that have more than $1 billion in combined revenue. Margins at these units have declined because of competition and rising energy costs.
Jany reiterated a goal of exiting the units by the end of 2013. He could not confirm the number of bidders of whether the units would be sold individually or as a package.
“We are pleased by the dynamics of the process,” he said.
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