Clariant announces 12 percent increase in sales for second quarter

Muttenz, Germany – Clariant announced that during the second quarter 2021 sales from continuing operations increased by 12 percent in local currency to CHF 1.032 billion. This corresponds to an 11 percent improvement in Swiss francs. Strong growth in care chemicals and catalysis accompanied the particularly positive sales expansion reported in natural resources. This expansion was achieved via higher volumes and positive pricing in all business areas.

Clariant grew sales in all regions in the second quarter of 2021, thus reflecting a clear demand recovery. In Asia, the strong 20 percent growth in local currency was supported by expansion in all business areas. The Middle East and Africa region reported notable 15 percent growth, followed closely by Europe, where sales rose by 13 percent . The Americas also advanced at a growth rate of 7 percent in Latin America and by 2 percent in North America, resulting from the recovery in oil services.

In the second quarter, care chemicals increased sales by 11 percent in local currency, supported by a double-digit expansion in industrial applications. Catalysis sales rose by a notable 7 percent in local currency primarily due to the strong sales development in specialty catalysts. Natural resources sales increased by a resounding 17 percent in local currency due to the strong rebound in additives and functional minerals as well as the return to growth in oil services.

The continuing operations EBITDA increased to CHF 173 million and a corresponding margin of 16.8 percent , outperforming the 14.6 percent in the second quarter of the previous year. This development was positively influenced by strong volume expansion improving operating leverage together with pricing measures, the continued successful execution of Clariant’s efficiency programs, which resulted in additional cost savings of CHF 9 million in the second quarter, and due to the efficiency program provision booked in the second quarter of the previous year.

First half year 2021 continuing operations sales increased by 7 % in local currency and by 5 percent in Swiss francs to CHF 2.034 billion, compared to CHF 1.945 billion in the first half year 2020.

In the first half year, sales grew in almost all geographic regions. Europe and Asia set the pace with strong growth of 15 percent and 14 percent , respectively, whereby China expanded by 20 percent in local currency. Latin American sales rose by 5 percent , followed by the Middle East and Africa with 3 percent growth. Only North America weakened by 15 percent due to the challenging environment in oil services as well as the weather-related business disruptions in the first quarter of 2021. 

In the first half of 2021, care chemicals sales rose by 9 percent in local currency primarily due to the market recovery in industrial applications. The catalysis business area’s top line increased by 9 percent in local currency, propelled by growth in all three business lines (petrochemicals, specialty catalysts and syngas). Natural resources sales were 4 percent higher in local currency versus the same period of the previous year due to double-digit growth in additives and functional minerals together with an improvement in oil and mining services.

The continuing operations EBITDA increased to CHF 337 million as the group improved margins on the back of sales expansion and operating leverage in tandem with the continued effective execution of our efficiency improvement programs, which resulted in additional cost savings of CHF 15 million in the first half year. The EBITDA margin increased to 16.6 percent from 15.0 percent in the previous year due to the higher profitability in all three business areas and continued cost discipline.

In the first half of 2021, the net result for the total group increased to CHF 157 million versus CHF 90 million in the first half of 2020. This improvement can be ascribed to the higher profitability, lower exceptional and corporate cost, efficiency program-based savings and the higher contribution from discontinued operations.

Operating cash flow for the total group declined to CHF 15 million from CHF 89 million in the first half of 2020. This development was mainly attributable to higher trade receivables on the back of the sales growth, the inventory buildup needed to meet higher demand levels as well as the uncertainties connected to the instable logistics chain situation, the corresponding raw material scarcity in several businesses, as well as the cash out for the previously provisioned efficiency programs.

Net debt for the total group increased to CHF 1.290 billion versus CHF 1.040 billion as of the end of 2020, following the normal seasonal cash flow and net working capital pattern. 

In the second quarter of 2021, on a like-for-like basis, excluding masterbatches sales from the second quarter of 2020, sales in discontinued operations (pigments) increased by 17 percent in local currency and in Swiss francs. In the first half of 2021, on a like-for-like basis, excluding masterbatches sales from the first half of 2020, sales in discontinued operations (pigments) rose by 10 percent in local currency and by 8 percent in Swiss francs, supported by the stronger economic environment.

In the second quarter as well as in the first half year 2021, the EBITDA margin increased due to the higher sales levels of the pigments business, the corresponding operating leverage improvement, effective cost management optimization, and the divestment of the masterbatches business. 
Clariant announced that definitive agreements have been signed with Heubach Group and SK Capital Partners to divest its pigments business, with closing expected to take place in the first half of 2022.

Clariant is a focused, sustainable, and innovative specialty chemical company that aims to grow above the market to achieve higher profitability through sustainability and innovation. The group is significantly reshaping its portfolio through the divestment of healthcare packaging in 2019, the sale of masterbatches in 2020 and the signed agreements for the divestment of pigments.

For the third quarter of 2021, Clariant expects continued strong growth for the group in local currency versus the prior year, underpinned by expansion in all three business areas driven by the recovery of industrial applications in care chemicals, demand for petrochemicals in catalysis, and continued growth in all three natural resources business Units. Clariant aims to improve its year-on-year margin levels in the third quarter of 2021 via volume growth, continued cost discipline, and pricing actions to overcome the rise in raw material and logistics cost, while the margin development is likely to be slightly lower sequentially.

Looking at the full year 2021, Clariant expects to achieve local currency sales growth in continuing operations within a range of 7 percent to 9 percent , including the consolidation of the India Glycols Limited joint venture as of July 1, 2021, and a step up in the EBITDA margin to a range of 16.0 percent to 17.0 percent on the back of the sales growth, the improved profitability of its specialty portfolio, and the positive impact of the performance programs. This is based on an assumption of a continued economic recovery, while uncertainty remains high.

Clariant will be holding a capital market day on November 23.