Swiss chemical maker Clariant AG plans to move its plastics and coatings business into a separate unit in a bid to further improve profitability after the company reported better-than-expected margins in the second quarter.
The new unit will comprise of masterbatches, additives and pigments and will operate as a separate entity from Jan. 1, the Muttenz, Switzerland-based company said Thursday. Earnings before interest, taxes, depreciation, amortization and one-time items rose one percentage point to 15 percent, beating an analyst estimate for 14.7 percent.
Chief Executive Officer Hariolf Kottmann is trying to boost profits in a bid to stay independent, following reports earlier this year that Evonik Industries AG or Dow Chemical Co. could target the Swiss company. He today reiterated he’s sticking to a profitability-gain target of 16 percent to 19 percent in the medium term.
“We see Clariant’s story on track with strong management executions, increasing margins and cash flow and further portfolio change,” Markus Mayer, an analyst at Baader Bank, said in a note to clients. Mayer rates the stock a buy.
The stock gained as much as 2.9 percent, the most in almost a month, in Zurich. The shares have gained 16 percent this year, valuing the company at 6.3 billion francs ($6.5 billion).
Ebitda before special items fell 1 percent to 211 million Swiss francs in the second quarter, the maker of cosmetic ingredients and pigments said. Analysts had predicted 215.4 million francs. Sales dropped 8 percent to 1.4 billion francs.
While Clariant has no immediate plans to sell the plastics and coatings business, as it produces cash that the company needs, Kottmann didn’t rule out a joint venture for the unit.
“We want to apply a different kind of business model to this unit,” the executive said. “It’s much better to have a separate legal entity to convince the people and make clear to the people that life is a bit different than it was before.”