Clariant reports double digit sales growth
But demand was down in some business units
Specialty chemicals producer Clariant has achieved 18% sales growth (in local currencies, 13% in Swiss francs) to CHF1.945bn for the first quarter of 2012 compared to the previous period last year, a continuation of the trend seen in the fourth quarter of 2011.
The double digit increase in sales was due to a 14% increase in volume and higher sales prices of 4% year on year. However, excluding acquisitions, volumes were 6% lower which reflected both weaker demand in some business units and a deliberate loss of less profitable businesses.
Although the Q1 gross margin of 28.2% was up on Q4 2011 (26%), it was down on the first quarter result last year when it reached 29.8%. Clariant said the decline reflects declining demand year on year, resulting in lower capacity utilisation mainly in Masterbatches and Pigments.
In the Masterbatches Business Unit sales remained flat in local currencies and declined by 4% in Swiss francs. Sales improved in all regions except Europe compared to Q1 2011 but growth was impacted by the implementation of a price over volume strategy to offset rising raw material costs. The unit experienced a continued recovery in demand in the first quarter of 2012 with particular strength at the end of the quarter and as 2012 progresses, overall demand is expected to slightly improve.
Sales in the Pigments Business Unit were down by 7% in local currencies and 11% in Swiss francs, mainly due to lower underlying demand and an inflated base in Q1 2011 which was boosted by restocking activities. However sales improved in Q1 2012, particularly in Latin and North America and especially in the US where there was good demand for consumer product, coatings and plastics applications.
More positively, sales in the Industrial & Consumer Specialties Business Unit rose 3% in local currencies and declined 2% in Swiss francs in Q1 2012 compared to the same period in 2011, reaching CHF392m. Good growth was experienced in personal care and Clariant said the Business Unit “will continue to provide innovative solutions and high value-added businesses for the personal care industry. For the remainder of 2012, ICS expects continued good sales as there is strong underlying demand in most of its business lines.”
Overall for the rest of 2012, Clariant expects raw material costs to rise in the mid single digit range and exchange rates to remain stable compared to the beginning of the year. Therefore it anticipates the company’s results for the first half year to be lower compared to the high base set in the first half of 2011. But this will be followed by an improvement in the second half of the year, resulting in further sales growth and sustained profitability for full year 2012.
