Clariant AG — Earnings Release 2002

Jul 31, 2002

Clariant International Ltd Rothausstrasse 61 CH-4132 Muttenz 1, Switzerland

Media Release

Net income significantly higher despite weak economy

Muttenz/Switzerland, August 22, 2002 — In the first six months of 2002, Clariant lifted net income by 18 percent compared with the first half of the previous year on a like-for-like basis. Sales in local currencies (LC) rose slightly (+1%) amidst sluggish economic trends. The restructuring efforts have therefore already paid off for the various divisions. Net debt was reduced by a further CHF 204 million in the first six months of the year. Personnel costs fell by 11 percent. Free cash flow increased significantly. Clariant remains optimistic that it can achieve three goals for the full year: a better operating result, higher net income and a reduction in net debt below CHF 4 billion.

in CHF millions	1st half 2002	1st half 2001 reported	1st half 2001, pro forma*	Change in % CHF	LC
Sales	4839	5197	5076	–5	+1
Gross profit	1651	1693	1680	–2	—
EBITDA	633	573	670	–6	0
EBITA	415	104	434	–4	+2
Net income (loss)	145	(-1314)	123	+18	—

As per	June 2002	Dec. 2001	June 2001
Net debt	4078	4282	5329

Various special effects from 2001 were included to ensure better comparability of the key ratios: disposal of the PVA/PVB business, sale of the Cassella-Offenbach plant and of the stake in Harlow Chemicals Company Ltd (UK) plus a special amortization of goodwill in the first half of 2001. The data represent the results from ongoing businesses. Officially the unaudited report after the text section is decisive.

Sales rose by a gratifying 6% to CHF 4839 million compared with the weak second half of 2001 (CHF 4575 million). Compared with the first half of 2001, however, they fell by 5% in Swiss franc terms. The decline was due mainly to the impact of currency fluctuation (-5.6%). The decrease in some prices (–2.3%) was more than offset by the marked increase in sales volume (+3.2%). On balance, sales thus rose by just under 1% in local currencies.

The EBITA margin (8.6%) recovered in the first half of 2002 compared with the second half of 2001 (3.6%) and is now back at the same level as in the year-back period (8.6%). Compared with the first half of 2001, EBITA declined 4% to CHF 415 million (+2% in LC) on a like-for-like basis. A major factor in this decrease was a provision made for the delay in bringing a plant of the Functional Chemicals division on stream.

Currency fluctuations on basis of EBITA (Translation) amounted to CHF 28 million. Relatively speaking, Clariant's sales are in line with its costs in the various regions. For about 85% of all business, sales are generated in those regions where manufacturing costs are incurred. The European Monetary Union, for instance, accounts for 42% of sales and 50% of costs. 31% of sales are made in US dollars, compared with 25% of all costs. In the other regions, the relationship between sales and costs is even more balanced.

Free cash flow increased by CHF 87 million to CHF 167 million. The reasons for this 109% increase were lower investments on the one hand and one-time earnings from dividends on the other hand.

Net debt was reduced further and came to CHF 4078 million at the end of the first half (-32% from June 2000, -23% from June 2001), which is close to the target defined by Clariant for 2002 of bringing debt to below CHF 4 billion.

In Germany the extensive restructuring program has now been completed. Greater efficiency and durably lower costs were reflected in the first half of 2002 in higher margins. The negative effect of falling prices was more than offset by strong

volume growth that was in excess of 5%. The overall result was sales growth of 1.6%, which was well above the average for the German chemical industry.

The optimization program evolved on the whole as planned and is making a positive contribution to the company's success. Globally, 60% of the program has already been implemented. In the current year, the cost-saving potential should amount to CHF 150 million, a figure that is set to grow to CHF 250 million next year.

Clariant will continue to focus on innovation-driven organic growth, on cash flow management and on cost savings. Even if the economic environment should remain weak and no recovery were to occur in the second half of the year, Clariant anticipates that for the full year operating profit and net income can be improved and net debt can be reduced to under CHF 4 billion.

Results by division

	1st half		Change in %
	2002	2001*	CHF	LC
Sales (CHF millions)	1428	1550	-7.9	-2.2
EBITDA (CHF	201	182	+10	+17
millions)
EBITDA margin in %	14.1	11.7

Textile, Leather & Paper Chemicals

* pro forma

In the Textile, Leather and Paper Chemicals division, sales in local currencies fell from CHF 1550 million to CHF 1428 million. The EBITDA margin rose from 11.7% to 14.1% owing to an optimized cost structure and lower commodity prices. The operational performance in Asia and Latin America was good, confirming our strategy of "following the markets". In the United States, business was stable at a low level, whereas in Europe the picture was mixed. On balance, the division improved its result amidst falling volumes.

Pigments & Additives

	1st half		Change in %
	2002	2001	CHF	LC
Sales (CHF millions)	951	1003	-5.2	+0.2
EBITDA (CHF	175	186	-6	-2
millions)
EBITDA margin in %	18.4	18.5

Sales in local currencies in the Pigments and Additives division were 0.2% above the year-back level, because the significant increase in sales volume was only just able to offset the downward pressure on prices. The division performed very well particularly in Asia and Latin America. The absolute result declined by 6% in Swiss francs, but the margin fortunately remained unaffected.

Masterbatches

	1st half		Change in %
	2002	2001	CHF	LC
Sales (CHF millions)	540	556	-2.8	+2.1
EBITDA (CHF	77	66	+17	+23
millions)
EBITDA margin in %	14.3	11.9

The Masterbatches division lifted its sales in local currencies by 2.1%. The improved result was helped by stringent cost management, good capacity utilization and favorable commodity prices. Demand was very good in Asia and good in the US and Europe (with the exception of the UK, Benelux and Germany), while margins increased substantially.

Functional Chemicals

	1st half		Change in %
	2002	2001*	CHF	LC
Sales (CHF millions)	1077	1114	-3.3	+2.8
EBITDA (CHF	96**	137	-30	-24
millions)
EBITDA margin in %	8.9	12.3

* pro forma

** includes a provision

The sales in the Functional Chemicals division rose by 2.8% in local currencies. On the whole, the division reported good operating results in all its business units. The plants for surfactants, methyl cellulose and for ethoxylation were running at high capacity. The division brought new facilities for ethoxylation and for the Personal Care sector successfully on stream. Business in the United States did well, but EBITDA was weighed down by a significant provision for the delay in bringing a facility for bleach activators on stream. The result would have been higher without this provision.

Life Science & Electronic Chemicals

	1st half		Change in %
	2002	2001*	CHF	LC
Sales (CHF millions)	843	853	-1.2	+4.2
EBITDA (CHF	102	92	+10	+17
millions)
EBITDA margin in %	12.1	10.8

* pro forma

Sales in the Life Science and Electronic Chemicals division improved by 4.2% in local currencies. The Pharma sector has begun to shift the focus of its activities to intermediates that are at an advanced stage of synthesis ("late stage intermediates"). The Electronic Materials business unit reported marked growth in Asia and slight but steady improvement in the United States. The far-reaching restructuring of the division is proceeding according to plan. Important landmarks in the first half of 2002 included a new management team, a new organization and an extensive program to increase efficiency. Evaluation of the product portfolio and of several of the division's plants will be completed by the end of the year. One site has already been sold, and negotiations are underway for four others.

Results pre special effects

in CHF mio	1st half 2002	1st half 2001	Change
		continuing	in %
		operations
		proforma
Sales	4,839	5,076	-5
Gross profit	1,651	1,680	-2
EBITDA	633	670	-6
Operating income before
amortisation of goodwill	415	434	-4
Net income	145	123	+18

This table has been prepared as a fair like-for-like comparison base. Officially the following unaudited report is decisive.

unaudited, all amounts in CHF mio

Sales 1st half
in CHF mio	2002	2001	Change in %
		Restated*	in CHF	in LC
Textile, Leather & Paper Chemicals	1,428	1,550	-8	-2
Pigments & Additives	951	1,003	-5	0
Masterbatches	540	556	-3	2
Functional Chemicals	1,077	1,131	-5	1
Life Science & Elektronic Chemicals	843	858	-2	4
Total continuing operations	4,839	5,098	-5	1
Discontinuing operations	—	99
Total Group	4,839	5,197	-7	-1

Effects of disposal: At the end of 2001 Clariant sold the Business Unit PVA/ PVB. Sales of this Business Unit up to 30 June 2001 are reported as Discontinuing operations.

* Sales per division were reformatted to comply with the divisional classification effective as of 1 January 2002.

Income Statements of the Group	1st half 2002		1st half 2001
		%		%
Sales	4,839	100.0	5,197	100
Cost of goods sold	-3,188	65.9	-3,504	67.4
Gross profit	1,651	34.1	1,693	32.6
Marketing and distribution Research and development Income from affiliated companies Administration and general overhead	-705 -177 21 -375	14.6 3.6 0.4 7.7	-757 -208 27 -304	14.6 4.0 0.5 5.8
cost Restructuring expense1)	—	—	-347	6.7
Operating income before amortization of goodwill	415	8.6	104	2.0
Amortization of goodwill	-41		-1,297
Operating income after amortization of goodwill	374	7.7	-1,193	-22.9
Financial result2)	-112		-131
Income before taxes and minority interests	262	5.4	-1,324	-25.5
Taxes	-112		15
Income before minority interests	150	3.1	-1,309	-25.2
Minority interests	-5		-5
Net income of the Group	145	3.0	-1,314	-25.3
Loss/Earnings per share (CHF) 3) Diluted earnings per share (CHF)4)	0.96 0.96		-8.60 -8.60

1) one-time restructuring charge included in 1st half 2001

2) of which currency losses in 2002 CHF 29 million, currency gains in 2001 CHF 6 million

3) calculated with average, weighted number of shares outstanding

4) calculated with average, weighted, diluted number of shares outstanding

Key Figures	1st half 2002		1st half 2001
Group Income Statements
		ROS		ROS
		in %		in %
Operating income before amortization
of goodwill and before special items,
- continuing operations	415		431
- discontinuing operations			20
Operating income before amortization of goodwill and before special items,
Total Group	415	8.6	451	8.7
Divisional operating income before corporate expense1)	446	9.2	165	3.2
Corporate expense	-31		-61
Operating income before
amortization of goodwill	415	8.6	104	2.0
Amortization of goodwill	-41		-1,297
Operating income after
amortization of goodwill	374	7.7	-1,193	-22.9
Financial result2)	-112		-131
Taxes	-112		15
Income before minority interests	150	3.1	-1,309	-25.2
Minority interests	-5		-5
Net income of the Group	145	3.0	-1,314	-25.3

1) after one-time restructuring charge of CHF 347 mio in 1st half 2001

2) of which currency losses in 2002 CHF 29 million, currency gains in 2001 CHF 6 million

Effects of disposal: At the end of 2001 Clariant sold the Business Unit PVA/ PVB. Sales of this Business Unit up to

30 June 2001 are reported as Discontinuing operations.

unaudited, all amounts in CHF mio

Sales by Regions	1st half 2002		1st half 2001
		%		%
Europe	2,369	49.0	2,512	48.3
of which Germany	659	13.6	733	14.1
Americas	1,412	29.1	1493	28.8
of which USA	803	16.6	867	16.7
Asia / Australia/ Africa	1,058	21.9	1093	21.0
Total continuing operations	4,839		5,098
Discontinuing operations	—	—	99	1.9
Total Group	4,839	100.0	5,197	100.0

Effects of disposal: At the end of 2001 Clariant sold the Business Unit PVA/ PVB. Sales of this Business Unit up to

30 June 2001 are reported as Discontinuing operations.

Divisional Information		Sales of Divisions	Sales of Operating income before Divisions amortization of goodwill			Restruc
				with 3rd		after			-turing
				parties			restructuring expense		expense
	1st	1st half	1st	1st half	1st		1st half		1st half
	half	2001	half	2001	half	%	2001	%	2001
	2002	restated*	2002	restated	2002	o.s	restated*	o.s	restated*
Textile,
Leather
& Paper
Chemicals	1,454	1,577	1,428	1,550	152	10.6	76	4.9	-67
Pigments & Additives	988	1,036	951	1,003	139	14.6	59	5.9	-84
Master
batches	541	556	540	556	62	11.5	44	7.9	-8
Functional
Chemicals	1,111	1,176	1,077	1,131	59	5.5	63	5.6	-36
Life Science
&
Electronic
Chemicals	893	939	843	858	34	4.0	-95	-11.1	-122
Corporate	—	—	—	—	-31		-61		-28
Total
continuing
operations	4,987	5,284	4,839	5,098	415	8.6	86	1.7	-345
Discontinuing
operations	—	100	—	99	—	—	18	18.2	-2
Total Group	4,987	5,384	4,839	5,197	415	8.6	104	2.0	-347

*Activities per Division were reformatted to comply with the divisional classification effective as of 1 January 2002. The margins in the column "Operating income before amortization of goodwill after restructuring expense, 1st half 2001, %o.s." are calculated after accounting for the restructuring expense. Comparable margins on an underlying basis versus 1st half 2001 can be calculated by adding-back the restructuring expense to the operating income of the 1st half 2001. The respective margins are: TLP 9.2%, P&A 14.3%, MB 9.4%, FUN 8.5%, LSE 3.2%, Total Continuing Operations 8.5%, Total Group 8.7%. For the 1st half year 2002 there was no restructuring expense.

Effects of disposal: At the end of 2001 Clariant sold the Business Unit PVA/ PVB. Sales of this Business Unit up to 30 June 2001 are reported as Discontinuing operations.

Divisional Information	EBITDA				Cash restructuring
				expense
	1st half		1st half		1st half	1st half
	2002		2001		2002	2001
		% o.s.	restated*	% o.s.
Textile, Leather & Paper
Chemicals	201	14.1	138	8.9	0	46
Pigments & Additives	175	18.4	139	13.9	0	47
Masterbatches	77	14.3	60	10.8	0	7
Functional Chemicals	96	8.9	106	9.4	0	35
Life Science & Electronic
Chemicals	102	12.1	13	1.5	0	83
Corporate1)	-18		93		0	2
Total continuing operations	633	13.1	549	10.8	0	220
Discontinuing operations	—	—	24		0	2
Total Group	633	13.1	573	11.0	0	222

1) The amount for the 1st half 2001 includes a special write-off charge amounting to CHF 94 mio for a cancelled project (planned for the division Functional Chemicals).

The margins in the column "% o.s., 1st half 2001" are calculated after accounting for the cash restructuring expense. Comparable margins on an underlying basis versus 1st half 2000 can be calculated by adding back the cash restructuring expense to the EBITDA of the 1st half 2001. The respective margins are: TLP 11.9%, P&A 18.5%, MB 12.1%, FUN 12.5%, LSE 11.2%, Total Continuing Operations 15.1%, Total Group 15.3%.

Effects of disposal: At the end of 2001 Clariant sold the Business Unit PVA/ PVB. Sales of this Business Unit up to 30 June 2001 are reported as Discontinuing operations.

Consolidated Balance Sheets	30.6.2002		31.12.2001
Assets
		%		%
Long-term assets
Tangible fixed assets	3,431		3,754
Intangible assets	1,350		1,420
Financial assets	852		929
Total long-term assets	5,633	56.7	6,103	57.8
Current assets
Inventories	1,854		1,984
Trade accounts receivable	1,499		1,452
Other current assets	530		472
Cash and short-term deposits	427		544
Total current assets	4,310	43.3	4,452	42.2
Total assets	9,943	100.0	10,555	100.0

Consolidated Balance Sheets	30.6.2002		31.12.2001
Equity and liabilities
		%		%
Equity
Share capital	767		767
Treasury shares (par value)	-12		-5
Reserves	1,070		1,196
Total equity	1,825	18.4	1,958	18.6
Minority interests	70	0.7	74	0.7
Liabilities
Long-term liabilities
Financial debts	3,678		3,801
Other long-term liabilities	1,499		1,555
Total long-term liabilities	5,177		5,356
Short-term liabilities
Financial debts	827		1,025
Trade accounts payable	651		731
Other short-term liabilities	1,393		1,411
Total short-term liabilities	2,871		3,167
Total liabilities	8,048	80.9	8,523	80.7
Total equity and liabilities	9,943	100.0	10,555	100.0

Consolidated Statements of Cash Flows	1st half 2002	1st half 2001
Cash flow before change in working capital	469	595
Change in working capital	-242	-281
Cash flow from operating activities	227	314
Cash flow from investing activities	-60	-234
Cash flow from financing activities	-271	-51
Currency translation effect on cash and short-term deposits	-13	11
Net change in cash and short-term deposits	-117	40
Cash and short-term deposits on 1.1. Cash and short-term deposits on 30.6.	544 427	309 349

Further Key Figures Results 1st half 2000	1st half 2002		1st half 2001
		%		%
Investment in tangible fixed assets Amortization of tangible fixed assets and	132		246
intangible assets (incl. goodwill)	259		1,766
EBITDA	633		573
in % of sales		13.1		11.0
Return on Net Assets / EBITDA in % (average of periods)	—	23.8	—	—
Interest coverage EBITDA		7.6x		4.2x
	30.6.2002		31.12.2001
Gearing (=net financial debt in % of equity incl. minorities)	224		219
Number of employees	28,649		28,904

unaudited, all amounts in CHF mio

	1st half 2002
Consolidated Statement of Changes in Equity	m Share miu Pre	Retained earnings	Translation mulative Differences Cu	Total reserves	Total share capital	Treasury shares par value	Total equity
Balance 31.12.2001	1,888	-615	-77	1,196	767	-5	1,958
Effect of IAS 39 Dividends to 3rd parties Dividends on treasury shares		-46		-46			-46
Treasury shares transactions Translation effects Net income		-26 145	-199	-26 -199 145		-7	-33 -199 145
Balance 30.6.2002	1,888	-542	-276	1,070	767	-12	1,825

Per Share Data	1st half 2002	1st half 2001
Number of shares outstanding	153,440,000	153,440,000
at 30.6.2002 resp. 30.6.2001
Average, weighted	151,049,046	152,785,343
number of shares outstanding
Average, weighted, diluted	151,049,046	152,785,343
number of shares outstanding
Earnings per share (in CHF) 1)	0.96	-8.60
Diluted earnings per share (in CHF) 2)	0.96	-8.60

1) calculated with average, weighted number of shares outstanding

2) calculated with average, weighted, diluted number of shares outstanding

Rates used to translate the consolidated balance sheets (closing rate)	30.6.2002	30.6.2001
1 USD	1.49	1.80
1 EUR	1.47	1.52
1 GBP	2.27	2.53
100 JPY	1.25	1.44
Average sales-weighted rates used to translate the income statements and consolidated statements of cash flow	1st half 2002	1st half 2001
1 USD	1.64	1.70
1 EUR	1.47	1.53
1 GBP	2.36	2.45
100 JPY	1.26	1.42

Forward-looking statements

Forward-looking statements contained herein are qualified in their entirety as there are certain factors that could cause results to differ materially from those anticipated. Investors are cautioned that all forward-looking statements involve risks and uncertainty. In addition to the factors discussed above, among the factors that could cause actual results to differ materially are the following: the timing and strength of new product offerings; pricing strategies of competitors; the Company's ability to continue to receive adequate products from its vendors b acceptable terms, or at all, and to continue to obtain sufficient financing to meet its liquidity needs; and changes in the political, social and regulatory framework in which the Company operates or in economic or technological trends or conditions, including currency fluctuations, inflation and consumer confidence, on a global, regional or national basis.

Key dates:

October 22, 2002	Sales 9 months 2002, telephone conference for analysts
November 25-26, 2002	Innovation Day in Frankfurt for analysts
February 2003	Results for 2002,
	Annual media conference/analysts' meeting
April 11, 2003	Annual General Meeting 2003
	Sales Q1 2003
	April 2003 Your contacts to Clariant

Media Relations

Rainer Weihofen Patrick Kaiser	Tel. +41 61 469 67 42 Tel. +41 61 469 67 40
Investor Relations
Iris Welten Holger Schimanke Daniel Leuthardt	Tel. +41 61 469 67 47 Tel. +41 61 469 67 45 Tel. +41 61 469 67 49

Clariant - Exactly your chemistry.

Clariant is a global leader in the production of fine and specialty chemicals with some 29,000 employees and annual sales of about CHF 10 billion. The Group operates worldwide with more than 100 companies on five continents. It is domiciled and headquartered in Muttenz near Basel/Switzerland. The products and services of the five divisions Textile, Leather & Paper Chemicals, Pigments & Additives, Masterbatches, Functional Chemicals and Life Science & Electronic Chemicals are based on innovative specialty chemicals. These play a decisive role in the clients' manufacturing processes, and upgrade their end-products. www.clariant.com