Clariant Drops on Disappointment With Chemical Maker’s Earnings

Updated on
  • Improvement in margin not as good as expected, analyst says
  • Second-quarter profit margin widens to 15.1% from 15%

Clariant AG shares fell the most in a month after the Swiss specialty-chemicals maker reported a weaker-than-expected profitability margin.

The margin on earnings before interest, taxes, depreciation, amortization and one-time items widened to 15.1 percent in the latest quarter from 15 percent a year earlier, the Basel-based company said Thursday in a statement. During the first half, the margin changed to 15.3 percent from 14.5 percent.

“The improvement was not as great as we had expected,” Philipp Gamper, an analyst at Zuercher Kantonalbank, wrote in a note to clients. Half-year earnings before interest and taxes as well as net profit also disappointed, making “clear that Clariant’s transformation has not made as much progress as we thought.”

Shares fell as much as 3.7 percent, the most since June 27, and were trading 2.6 percent lower at 17.29 euros at 11:34 a.m. in Zurich. They have dropped 9 percent since the start of the year.

Chief Executive Officer Hariolf Kottmann has been working to refocus the company by making acquisitions, selling commodity chemical assets and innovating in areas such as cosmetic ingredients, oil-drilling chemicals and catalysts. Clariant is using high-margin specialties and cost management to improve profitability, while also tapping growing demand for ingredients used in consumer-care products sold in emerging markets.

Oil Acquisitions

Clariant confirmed on Thursday a target for an annual improvement in its margin, reaching between 16 percent and 19 percent in the next two to four years.

“Further progress” is being made toward the goal even through the margin won’t enter the range this year, Chief Financial Officer Patrick Jany said in a telephone interview.

Earnings before interest, taxes, depreciation, amortization and one-time items increased 2 percent to 215 million Swiss francs ($218 million), Clariant said in the statement. That was in line with analyst predictions for 216 million francs, according to a Bloomberg survey.

The increase came as the chemical maker benefited from more demand in emerging markets for high-margin personal and home care chemicals. These include chemical ingredients in shampoos and creams.

“Growth in the next six months will be driven by care chemicals, where we are launching new products and being quite successful in personal care,” Jany said in the interview. “Plastics and coatings is certainly the driver in terms of profitability” with both sales and profit expected to keep up momentum, he said.

Oil and mining would be a particular focus for bolt-on acquisitions to support growth, Jany said. The Swiss company is technically strong in these areas but is lacking market share in the U.S., he said.