Clariant CEO Shifts Gaze to Inflated Admin Costs After Disposals

Clariant (CLN) Chief Executive Officer Hariolf Kottmann said he’s turning his attention to growth and savings in administration after the end of a disposal program that absorbed much of management’s time over the past year.

Kottmann, who today opened a $140 million research hub in Germany, will sit down with executives next week to plan his spending for 2014, he said in an interview. On the savings front, the focus is on areas such as human resources, logistics, financing and IT, after the the disposal of units making up about one-quarter of sales left Clariant’s cost base outsized relative to its slimmer structure, he added.

“The service units have to be adjusted to the size of the company,” said the CEO at the even in Frankfurt’s Hoechst chemical-manufacturing district. “We will reduce costs in all service units and all countries.”

Clariant’s plan to sell a unit making leather chemicals to private equity owned competitor Stahl, announced yesterday, marked the end of portfolio overhaul to make the Muttenz, Switzerland-based company less dependent on commodity chemicals. The $2.5 billion purchase of Sued-Chemie added a business supplying catalysts to cut exhaust fumes and enhance chemical production.

Disposals removed businesses with about 1.75 billion francs ($1.9 billion) in sales. Clariant employed 21,202 workers at the end of 2012.

Kottmann said Clariant’s future lies in higher-margin areas such as ingredients for cosmetics, rather than the emulsions, paper- and textile-chemical operations that it recently sold.

The innovation center, the biggest investment to date by Clariant, cost the equivalent of more than a third of a typical annual spending budget. The four-story building is dedicated to developing new technology for a diverse range of customers, from oil drillers to formulators of moisturizers and paint.

“We will go through all business units to enable managers to define the right and expected service levels,” Kottmann said against a backdrop of a live band playing jazz and a huge screen that ran videos of how Clariant’s new products are used. He declined to define the scope of the cuts.

To contact the reporters on this story: Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net; Patrick Winters in Zurich at pwinters3@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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