Clariant: Strong Cash Flow Despite Continuing Weak Demand

Clariant (www.clariant.com), a world leader in specialty chemicals, today announced sales of CHF 1.609 billion in the second quarter of 2009, compared to CHF 2.121 billion in the same period of the previous year. This represents a 24% decline in Swiss Francs, and 21% in local currency. The second quarter was characterized by continuous weak demand in most businesses. Although volumes came down 23% year-on-year, the gross margin increased to 29.3% from 28.9% in the previous-year period as a result of successful margin management. Net income remained negative (CHF –61 million) in the reporting period mainly due to the restructuring and impairment costs of CHF 74 million but also resulting from the weak operating income.

The previously announced reduction of 1350 job positions was already completed with 1423 job positions reduced. An additional 500 job positions to be made redundant in 2009 were identified and implementation has begun. Further reductions in 2009 and 2010 will follow in line with the company’s goal to close the performance gap to its peers and to adjust the company’s structure to the global recession.

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Operating cash flow reached CHF 184 million in the second quarter of 2009, compared to CHF 33 million in the comparable previous-year period. This substantial increase has been achieved through a stringent reduction in net working capital, in particular due to tight inventory management. The cash position in the group improved to CHF 545 million from CHF 438 million at the end of the first quarter of 2009.

Outlook
Clariant assumes that the global economy will only slowly recover. Consequently, Clariant sales in local currencies are predicted to remain weak until the end of the year, approximately in the range of 16-20% below the previous year. Going forward Clariant will continue its restructuring efforts with estimated restructuring costs of CHF 200-300 million in 2009 and further job reductions in 2009 and 2010.

Clariant International AG, Muttenz, Schweiz

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