Clariant today announced full-year 2011 sales of CHF 7.370 billion, compared to CHF 7.120 billion in 2010. Sales grew 16% in local currencies and 4% in Swiss francs. The lower growth in Swiss francs was a result of the significant appreciation of the Swiss franc against most major currencies on a year-on-year basis.
Due to the acquisition of Süd-Chemie and the strength of the Business Unit Catalysis & Energy in the third and fourth quarters, sales were higher in the second half-year than in the first six months, despite a significant slowdown in some businesses towards year-end.
In addition to Catalysis & Energy, which had another record-year, the non-cyclical Business Units Additives, Functional Materials, Industrial & Consumer Specialties, and Oil & Mining Services contributed significantly to the sales increase in 2011. Those noncyclical businesses account for more than 50% of Group sales. In contrast, the cyclical Business Units Pigments and Masterbatches suffered from a slow-down in industrial production that started at the beginning of the second half-year and resulted in destocking activities along the value chain. All regions grew at a double-digit rate in local currencies.
The double-digit increase in sales was driven by year-on-year sales price increases of 7% and by acquisitions, which contributed 14% to sales growth. Volumes were 5% lower, reflecting the lower demand in the second half-year and the deliberate loss of sales that did not meet Clariant’s profitability targets.
The gross margin decreased to 26.7% from 27.9% in full-year 2010. Lower volumes, negative currency effects, and a one-time charge were the main drivers of the slightly lower margin, and were only partly offset by successful sales price management. Excluding the one-time charge of CHF 54 million as a result of the sale of Süd-Chemie inventories revalued to fair value less costs to sell, the gross margin was 27.4%. Despite the global economic slow-down, commodity prices remained at high levels. Raw material costs increased 14% compared to the previous year. Sales price increases of 7% fully compensated the higher raw material costs, leading to a slightly positive contribution to the gross margin.
EBITDA before exceptional items increased to CHF 975 million (margin 13.2%) from CHF 901 million (margin 12.7%) a year ago. A strong fourth quarter in Catalysis & Energy and a diminishing negative impact from currencies toward the end of the year pushed the margin higher. The operating profit (EBIT) before exceptional items rose to CHF 717 million (margin 9.7%) compared to CHF 696 million (margin 9.8%) in 2010. Lower restructuring costs led to an improvement in net income to CHF 251 million from CHF 191 million despite higher tax expenses.
The extreme volatility in the foreign exchange markets weighed on Clariant’s profitability in 2011. Both EBITDA and EBIT before exceptional items were negatively impacted by approx. CHF 190 million (EBITDA), corresponding to a 0.9 percentage-point margin, respectively approx. CHF 170 million (EBIT), corresponding to a 1.0 percentage-point margin.
Cash flow from operations of CHF 206 million was below last year’s CHF 642 million, which to a large extent had been obtained from the reduction in net working capital, but significantly above the CHF 21 million reported at the end of the third quarter 2011. As a percentage of annualized sales, net working capital reached 19.6%, below the targeted 20% of sales.
The acquisition of Süd-Chemie led to an increase in net debt to CHF 1.740 billion compared to CHF 126 million at year-end 2010.
