Q&A with the CFO
Clariant improved profitability and cash generation, while sales were flat. How do you assess the company’s performance?
I’m pleased with our execution in 2025. While the macroeconomic environment remained challenging, we delivered on what we can control. Our EBITDA margin before exceptional items improved, despite flat sales, for the third year in a row, now by 180 basis points to 17.8 %, and we achieved a free cash flow conversion of 42 % – reaching our medium-term target two years early. This demonstrates the strength of our performance improvement programs and disciplined cost management.
You often speak about a “triangle of value creation.” Can you explain what that means?
The triangle of value creation is a framework for creating sustainable shareholder value. It has three equally important elements: growth, margin, and cash. You need all three working together. In 2025, while sales were flat, we significantly strengthened the other two pillars – EBITDA b.e.i. margin and free cash flow conversion. In order to see all three elements of the triangle working in harmony, we need to focus on growth driven by innovation which is independent of a medium-term market recovery.
Let’s talk about EBITDA margin. What drove such a strong improvement in a difficult environment?
This improvement came from rigorous execution of our performance improvement program, which delivered CHF 50 million in savings in 2025. We focused on optimizing our cost structure, improving operational efficiency, and better managing our manufacturing footprint. Importantly, all three business units contributed to margin expansion, which really drove a joint effort towards our future performance.
Despite the improved EBITDA, you reported a negative net income. What happened?
This is predominantly an accounting matter related to the divestment of our operations in Venezuela. We recorded an effect of CHF 230 million cumulative translation adjustment (CTA) in our financial result as a transfer from our other comprehensive income. This is where we recorded the effects from translating assets and liabilities & equity from local currency to our reporting currency, the Swiss Franc, before. It’s important to understand that this is a non-cash accounting issue, with no impact on our operational performance or cash generation. On an underlying basis, excluding this one-time CTA impact, we delivered a positive net income of CHF 189 million for the year and hence, we were able to propose a stable distribution of CHF 0.42 to our shareholders.
You mentioned achieving your free cash flow conversion target early. How significant is that?
Very significant. Reaching 42 % free cash flow conversion in 2025 – two years ahead of our medium-term target – demonstrates our operational discipline in working capital and capital expenditure management. We generated CHF 273 million in free cash flow, up from CHF 209 million in 2024. This strong cash generation enabled us to continue deleveraging, bringing our net debt to EBITDA ratio down to 2.0x. This was an improvement compared to 2.25x recorded in the prior year and indicates our commitment to maintaining an investment grade rating.
