Clariant returns to profitable growth, increasing both sales and profitability in the first quarter of 2021
- Sales from continuing operations increased by 2 % in local currency to CHF 1.002 billion, reflecting a broad recovery in our markets
- EBITDA of CHF 164 million rose by 4 % in Swiss francs, generating a notably improved EBITDA margin at 16.4 % (vs. 15.4 %)
- Pricing actions have been initiated to offset rising raw material and logistics cost
- Outlook 2021 Continuing Operations: moderate local currency sales growth and a step up in EBITDA margin to slightly above pre-COVID-19 pandemic levels
“The first quarter of 2021 demonstrated both Clariant’s return to growth as well as a sequential improvement in the Group’s performance. This progression was achieved through our portfolio of attractive businesses and the disciplined execution of our strategy and performance improvement programs,” said Conrad Keijzer, CEO of Clariant. “I would like to thank our teams for effectively mastering the current challenges amidst the continued COVID-19 pandemic; rising raw material cost as well as disruptions in supply chains. In 2021, we strive to make an important step up in our performance and expect Clariant to achieve moderate sales growth in local currency and a recovery in EBITDA margins to slightly above pre-COVID-19 pandemic levels. With our partnership with India Glycols Limited for green surfactants, we continue to advance our portfolio transformation toward a higher specialty value business.”
First Quarter 2021 – Progression towards mid-term targets
Muttenz, April 29, 2021 - Clariant, a focused, sustainable, and innovative specialty chemical company, today announced first quarter 2021 continuing operations sales of CHF 1.002 billion, compared to CHF 1.019 billion in the first quarter of 2020. This corresponds to a 2 % increase in local currency, whereas depreciating currencies led to a 2 % decrease in Swiss francs. The local currency expansion was driven by positive pricing.
On a regional basis, sales in Europe increased by 17 % in local currency due in part to the weather-related improvement in the Aviation business. Sales in Asia also grew by 9 %, driven by the economic recovery and the undemanding comparison base in China in the first quarter of 2020. This improvement was followed closely by Latin America, where sales rose by 4 %. Sales in the Middle East & Africa declined by 9 %, while North America was 27 % lower primarily driven by the continued challenging environment in Oil Services and the business disruptions in Texas due to the winter storms.
The Care Chemicals Business Area increased sales by 7 % in local currency due to improvements in both Consumer Care as well as Industrial Applications in the first quarter of 2021. Catalysis sales rose by a notable 10 % in local currency primarily due to the strong sales development in Petrochemicals. Natural Resources sales declined by 6 % in local currency due to the particularly challenging comparison base in the first quarter of 2020 as well as the continued weakness in the Oil and Refinery businesses.
The continuing operations EBITDA rose by 4 % in Swiss francs to CHF 164 million, positively influenced by the sales expansion in the first quarter of 2021 and the efficiency program-driven cost savings in the amount of CHF 6 million, which generated improvements in each of the three Business Areas. As a consequence, the EBITDA margin improved significantly to 16.4 % versus 15.4 % in the same period of the previous year.
For the first quarter of 2021, on a like-for-like basis, sales in discontinued operations (Pigments) increased by 4 % in local currency and remained unchanged in Swiss francs.
The EBITDA decreased in absolute value year-on-year due to the divestment of the Masterbatches business. The profitability of the underlying Pigments businesses was positively impacted by the higher sales as well as the execution of the efficiency program.
A Clariant subsidiary in the United States has been named along with many other defendants in lawsuits involving per- and polyfluoroalkyl substances (PFAS). Clariant is monitoring the development of these cases, which relate to the respective business divested in 2013, and is defending all litigation matters related to PFAS. As of this point in time, Clariant cannot assess if these litigations will have a material impact on Clariant’s financial results.
Outlook – Focused portfolio to achieve above-market growth, higher profitability, and stronger cash generation in the mid-term
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 planned divestment of Pigments.
For the second quarter of 2021, Clariant expects moderate growth in local currency versus the prior year among all three Business Areas driven by the recovery of Industrial Applications in Care Chemicals, demand for Petrochemicals in Catalysis, and continued growth in Additives and Functional Minerals in Natural Resources. Clariant aims to defend its first quarter 2021 margins in the second quarter of 2021 via cost discipline and pricing actions to overcome the rise in raw material, and logistics cost. Looking at the full year 2021, Clariant expects to achieve moderate local currency sales growth in continuing operations and a step up in EBITDA margin to slightly above pre-COVID-19 pandemic levels on the back of the growth 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.
In the mid-term, Clariant expects its continuing businesses to achieve above-market growth, higher profitability, and stronger cash generation based on the focused three pillars and high value specialty portfolio.
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