Clariant Profit Margin Widens on Consumer Care Chemicals

  • Third-quarter ebitda gains 8%, narrowly beating estimates
  • Swiss company says no plans to sell plastics and coatings unit

Clariant AG, a Swiss maker of oil-drilling chemicals and shampoo ingredients, reported higher third-quarter earnings due to improved profit margins and sales at its faster-growing consumer-care unit.

Earnings before interest, taxes, depreciation and amortization and exceptional items gained 8 percent in local currencies to 207 million Swiss francs ($208 million), while the margin improved to 14.7 percent from 14 percent, the Muttenz, Switzerland-based company said in a statement on Thursday. That beat an average estimate for Ebitda of 205.8 million Swiss francs, according to analysts surveyed by Bloomberg.

“It’s a quarter where our three growth-business areas, consumer care, catalysis and natural resources, have grown and improved results and margins,” Chief Financial Officer Patrick Jany said in a phone interview, citing lower raw materials costs and price increases as helping margins.

Clariant shares rose as much as 1.1 percent and traded 0.2 percent lower at 17.85 francs by 10:32 a.m. in Zurich, valuing the company at 6 billion francs.

Consumer Chemicals

Chief Executive Officer Hariolf Kottmann has made Clariant smaller and more profitable over his seven years in the position, with a focus on areas such as catalysts for the petrochemical industry, agrochemicals and ingredients for shampoos and moisturizers. The company’s consumer-care chemicals business, which makes household products as well as anti-aging ingredients used in cosmetics, reported a 12 percent increase in sales in local currencies, and a 1 percent rise in Swiss franc terms.

Total sales rose 2 percent in local currencies to 1.4 billion francs, in line with estimates. In Swiss franc terms, revenue fell 6 percent due to the depreciation of the Brazilian real, the company said.

Clariant plans to continue to invest in its consumer-care unit in emerging markets, which alongside North America is absorbing 60 percent of the company’s capital expenditure this year, Jany said. The company is moving its hair-care operations to Brazil from Europe.

“Even if in some countries, such as in Brazil and China, there is a slowdown, it is just temporary,” he said. “In the long run, the growth is there and we continue to invest.”

Keeping Plastics

The company’s plastics and coatings units, which produce waxes and pigments, reported a 1 percent sales decline in local currencies due to a slowdown in Asia. Clariant said in July it would form a separate unit from these businesses in January to help improve profitability, yet the company has no plans to sell it, Jany said.

“The portfolio is fixed,” the CFO said. “The focus is not really on selling the unit, the focus is on performance. We are counting on this unit as part of the portfolio for next year to contribute its cash.”

Clariant said it was on track to meet its group target for low to mid single-digit sales growth in local currencies for the full year.

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