Clariant AG — Earnings Release 2005

Aug 4, 2005

Clariant International AG

Rothausstrasse 61 CH-4132 Muttenz 1/ Switzerland

August 4, 2005

News Release

Clariant Posts Satisfactory First Half Results Sales Momentum Regained in Second Quarter

• Sales up 3% in local currency terms in the second quarter
• Further positive pricing developments
• High raw material costs continued to reduce margins
• Transformation Program now fully in implementation phase
• Net income up 30% to CHF 146 million

Key Financial Group Figures (in CHF mn)

First Half	2005	% of sales	2004	2004(2)	% of sales	% Change vs. like-for-like
in CHF millions			(reported)	(like-for-like)		CHF	LC
Sales	4'087	100.0%	4'419	4'089	100.0%	0%	1%
Gross profit	1'252	30.6%	1'459	1'342	32.8%	-7%	-6%
EBITDA*	377	9.2%	501	459	11.2%	-18%	-17%
EBITDA before exceptional items*	423	10.3%	545	503	12.3%	-16%	-15%
Operating income before exceptional items and amortization of goodwill*	282	6.9%	387	358	8.8%	-21%	-20%
Operating income	223	5.5%	317	292	7.1%	-24%	-22%
Net income/ loss (including minorities)	146	3.6%	131	112	2.7%
Operating cash flow(1)	-43		287
	30.6.2005		31.12.2004		30.6.2004
Net debt(1)	1'632		1'331		2'126
Equity (including minorities)(1)	2'496		2'288		2'221
Gearing	65%		58%		96%
Number of employees	24'036		24'769		26'178
Second Quarter in CHF millions	2005	% of sales	2004	2004(2)	% of sales	% Change vs. like-for-like
			(reported)	(like-for-like)		CHF	LC
Sales	2'095	100.0%	2'213	2'044	100.0%	2%	3%
Gross profit	639	30.5%	729	668	32.7%	-4%	-4%
EBITDA*	194	9.3%	238	216	10.6%	-10%	-10%
EBITDA before exceptional items*	215	10.3%	265	242	11.8%	-11%	-11%

Net income/ loss (including minorities) 74 3.5% 58 51 2.5%

(1) 30.06.2004 restated: Net debt includes ABS adjustment, Equity restated to include minority interests, Cash Flow restated (2) The numbers for 2004 are like-for-like to account for the disposals of business activities in 2004. Disposals in 2004: Electronic Materials and Lancaster Synthesis Ltd, UK and USA (both of the Life Science Chemicals Division), and Clariant Polymers, Japan, (of the Textile, Leather & Paper Chemicals Division). All activities were sold effective as per the end of 2004.

Operating income before exceptional 143 6.8% 188 172 8.4% -17% -17%

Operating income 113 5.4% 150 138 6.8% -18% -18%

* See Definitions of Terms of Financial Measurements on page 13.

Operating cash flow(1) -65 184

items and amortization of goodwill*

MUTTENZ, Switzerland – August 4, 2005 – Clariant achieved satisfactory first half results, with momentum picking up in the second quarter. Sales were up 3% in local currency terms in the second quarter compared to the same period in 2004.

Net income rose 30% to CHF 146 million compared to CHF 112 million on a like-forlike basis compared to the first half of 2004. Additional price increases were achieved across all divisions and in most businesses, although the positive impact was more than offset by the negative effect of higher raw material costs.

"In the context of the prevailing market conditions, this was a satisfactory first half," said Chief Executive Roland Loesser. "Particularly encouraging was the stronger second quarter, which we expect to be able to sustain. The main area of uncertainty, of course, is the current volatility of raw material prices."

Gross profit declined to CHF 1.252 billion, from CHF 1.342 billion a year earlier, affected by higher raw material costs. Operating income before exceptional items and amortization of goodwill on a like-for-like basis declined to CHF 282 million from CHF 358 million because of the aforementioned higher raw material prices and negative currency effects, which were partly offset by cost-cutting measures. Operating income fell to CHF 223 million, from CHF 292 million.

The majority of businesses that were able to raise prices above group average were in the Functional Chemicals, Textile, Leather & Paper Chemicals and Masterbatches divisions. Growth momentum was notable across all regions, with performance especially strong in Germany, Clariant's largest market.

Performance Improvements in Implementation Phase

Clariant's Performance Improvement Program (CPIP) has now reached its full implementation phase, meaning that all projects are operational and delivering positive results. The program is creating efficiencies throughout the organization and cutting costs. There are now some 5,500 measures identified, of which more than half are in process.

The program is on-track to create savings of more than CHF 800 million by the end of 2007. Cost savings of CHF 70 million were delivered in the second quarter on top of CHF 50 million in the first quarter, bringing the total savings generated by the program so far to CHF 270 million. These savings are being achieved amid overall sales growth.

The number of employees in the Clariant workforce has been reduced by 8% since the program began 18 months ago. This excludes employees transferred because of asset sales. The workforce now stands at some 24,000 at the end of the first half.

As an example of the complexity reducing benefits of CPIP, the number of warehouses used by the company has been sharply reduced worldwide, by more than half in Europe and by about one-fifth in Asia.

"The performance improvements are now a permanent part of Clariant and positively impacting every aspect of our business," Mr. Loesser said. "The next stage in our transformation is continually improving our processes and lifting our profitability."

Part of Clariant's transformation includes focusing on businesses where service and innovation are strong components of the business model, and selling those that do not fit the profile. To that end, the company closed the sale – first announced in June – of Clariant (Acetyl Building Blocks) GmbH & Co. KG to the Gilde Buy-Out Fund for CHF 74 million on July 29.

Breakthrough in DVD Innovation

There were several positive developments during the first half of the year in areas where Clariant is a leader in innovation and service. Notably, Clariant achieved positive results in a joint project with Toshiba Corporation to develop a new generation of high capacity DVDs. The breakthrough enables the manufacture of DVDs using an organic dye-based dual layer with a storage capacity of 30GB.

Clariant also developed several innovative products in the functional textile area, including treatments that improve resistance to wind, odors and creasing. A further application using nano-particles is able to create extremely soft textiles. Tiny particles are embedded deep in the fabric and the hydrophylic properties of the application also create a comfortable feeling on the skin.

In addition, the company has strengthened its world-leading position in multi-functional coatings based on polysilazanes, in particular in ultra-thin coatings. Applications include the creation of coatings resistant to scratching and corrosion as well as coatings that are easy to clean. The coatings have been successfully applied, for example, to silver to prevent tarnishing.

Clariant Confirms Positive Outlook

Mr. Loesser confirmed the outlook for 2005 (first given in March), expecting solid growth in sales in local currency terms and improved operating margins before exceptional items.

Prices for the principal raw materials that Clariant uses are expected to decline over the remainder of the year, however the volatility of oil prices make accurate forecasting difficult. The negative effect of the relatively high raw material prices should be more than offset by organic sales growth, further price increases and the positive effect of performance improvements initiated over the past 18 months.

Clariant expects to reduce its cost base by some CHF 300 million compared to 2004. All factors considered, the company anticipates higher net income in 2005.

"Clariant is well underway to creating a leaner and more efficient company, and I am confident this will ensure we achieve our goal of being among the leaders in the specialty chemical sector," Mr. Loesser said.

-end-

Financial Review

Financial Discussion Second Quarter

Economic Environment

Economic growth continued the pattern seen in the second half of 2004, albeit at reduced rates, which dampened market conditions worldwide. Recovery in continental Europe continued, but at a slower pace. The Chinese economy, however, continued to grow strongly. Geopolitical risks remained, putting pressure on commodity markets. Raw material prices were higher in the Second Quarter 2005 compared to the First Quarter 2005 as well as to the Second Quarter 2004. Oil and gas prices reached their six-month peak in June.

Compared to the average exchange rates of the Half Year 2004, major currencies such as the British pound, the U.S. dollar and the Japanese yen depreciated against the Swiss franc (details on page 28). In addition, most Asian currencies lost value against the Swiss franc.

Sales and Operating Result

Sales of the Group in the Second Quarter of 2005 were 1% higher in both local currency and Swiss franc terms. The exchange rate development of major currencies against the Swiss franc caused a minor negative impact on group sales from continuing operations in the Second Quarter, year-on-year.

The corresponding figures on a like-for-like basis were 3% higher in local currency and 2% higher in Swiss francs. The pricing climate continued to show improvements and with a few exceptions, all businesses were able to achieve price increases. In particular Pigments & Additives, Functional Chemicals and Masterbatches increased sales in local currency terms.

The Second Quarter of 2005 saw a decrease in the gross margin compared to the same period a year ago. Higher sales prices, benefits of the Performance Improvement Program and optimized capacity utilization were diluted because of higher raw material costs. The negative trend of raw material prices edging up by 10% was a factor for the third consecutive quarter.

Selling, general and administrative costs on a continuing basis were reduced both in absolute terms and by percentage of sales (21.4% from 21.9%). This improvement is partially a benefit of the ongoing implementation of the Transformation Program. This year some divisional sales costs previously reported under Administration and General Overhead Costs are shown as Marketing and Distribution Costs.

Research and development costs from continuing operations declined by CHF 5 million compared with the Second Quarter 2004 mainly because of reduced R&D expenses in cost-driven businesses such as Textile Dyes. In other businesses, R&D expenses remained at the same level in order to maintain a high rate of innovation.

Restructuring expenses and impairments of CHF 30 million in the Second Quarter of 2005 included restructuring activities in France, Switzerland, Germany, UK and the U.S. The Financial Net Result in the first six months 2005 was significantly improved, by CHF 67 million year-on-year, down to CHF 31 million. Exchange rate gains of CHF 37 million were the main driver for this reduction. Additionally the increased average liquidity as well as lower interest expenses resulting from the ongoing financial debt reduction further improved the Financial Result. Average gross financial debt was cut by one-fifth from CHF 3.5 bn in the Half Year 2004 to CHF 2.8 billion in the first six months of 2005.

Tax expenses were positively influenced by a reduced proportion of profits generated in high tax countries. Furthermore, foreign currency gains in low tax jurisdictions contributed to a reduction of the tax rate. A stable operating performance combined with reduced losses helped further to reduce tax charges in the Second Quarter (CHF 29 million or down 53% year-on-year).

Net income attributable to equity holders for the 2nd Quarter 2005 was CHF 72 million compared to CHF 54 million a year ago.

Balance Sheet Key Figures

The balance sheet of 2004 was restated to reflect the changes from IFRS, which took effect January 1st, 2005. Details of the resulting adjustments to the balance sheet and income statement are given in the notes to the condensed financial statements. All developments commented hereafter refer to the restated balance sheet.

Total assets increased from CHF 8.037 billion in December 2004 to CHF 8.355 billion at the end of June 2005 (CHF 8.108 billion on 31 March) The main factor contributing to this development was a moderate increase in the net working capital, which was affected by seasonal effects and higher raw material prices. The weakening of the Swiss franc compared to most currencies in the reporting period also increased the total assets.

Cash and cash equivalents and short-term financial liabilities decreased as the result of the repayment of a bond in the amount of CHF 201 million in March and a loan denominated in Japanese yen in the amount of CHF 78 million in June.

Equity was affected positively by currency trends during the reporting period, as the exchange rate differences recognized in equity amounted to CHF 128 million. This was the result of the Swiss franc weakening against several currencies in the first six months of 2005. The increase in equity was offset in part by the repayment of the nominal value of share capital in the amount of CHF 58 million in June. As approved at the Annual General Meeting, instead of payment of a cash dividend, a repayment of the nominal value of CHF 0.25 of each registered share (nominal value reduced from 5.00 to 4.75 Swiss francs) was made. Equity rose from CHF 2.288 billion at the end of 2004 to CHF 2.496 billion at the end of June 2005.

Net debt on June 30 rose to CHF 1.632 billion from CHF 1.331 billion (restated) on December 31, 2004, as a result mainly of currency fluctuations, since financial debt denominated in the U.S. dollar, the Euro and the Japanese yen also reflects the strengthening of these currencies. On March 31, net debt stood at CHF 1.392 billion. Gearing, which reflects net financial debt in relation to equity including minorities, increased to 65% from 58% at the end of December 2004, mainly as a result of the appreciation of major currencies against the Swiss franc.

Cash Flow

Cash flow from operating activities before changes in working capital was CHF 107 million for the Second Quarter of 2005 compared with CHF 128 million for the First Quarter and CHF 98 million for the same period in 2004. The operating cash flow of the first six months of 2005 was CHF 235 million compared to CHF 332 million for the first six months of 2004. Lower growth, lower profitability and higher restructuring cash outflows contributed to this trend.

Working capital increased by CHF 172 million during the Second Quarter of 2005, compared to a decrease of CHF 86 million for the same period of 2004. In the first six months of 2005, working capital increased by CHF 278 million compared to CHF 45 million for the same period of 2004. This reflects the seasonal pattern and the aforementioned higher raw material prices.

Cash flow from operating activities was a negative CHF 65 million in the Second Quarter of 2005, compared with CHF 184 million for the same period a year earlier. For the first six months of 2005, cash flow from operating activities was a negative CHF 43 million compared to CHF 287 million for the same period a year earlier.

Capital expenditure increased to CHF 81 million for the Second Quarter compared to a low level of CHF 58 million reported a year before. For the first six months of 2005, capital expenditure amounted to CHF 151 million compared to CHF 111 million for the first six months of 2004.

Financing activities were highlighted by the repayment of a bond in the amount of CHF 201 million and a loan denominated in Japanese yen in the amount of CHF 78 million. Additionally, CHF 58 million was paid to the shareholders in the form of a share capital reduction.

Business Discussion

The divisional information given below refers to continuing operations only. On September 30, 2004, Clariant sold the Business Unit Electronic Materials of the Life Science Chemicals Division. As a result, Electronic Materials is disclosed as discontinuing operations for 2004.

In addition, the businesses of Lancaster Synthesis, part of the Life Science Chemicals Division as well as Japanese Emulsion Clariant Polymers K.K., part of the Textile, Leather & Paper Division, were sold in 2004, but under IFRS did not qualify for reporting as discontinuing operations.

Textile, Leather & Paper Chemicals

First Half

	2005	% of	2004	% of	Change in %
in CHF millions		sales		sales	in CHF	in LC
Sales	1'061		1'123		-6%	-4%
EBITDA before exceptional items	111	10.5%	124	11.0%	-10%	-10%
Op. income bef. restructuring, disposals and amort. of goodwill	75	7.1%	90	8.0%	-17%	-16%
Operating income	68	6.4%	50	4.5%	36%	36%

Second Quarter

	2005	% of	2004	% of	Change in %
in CHF millions		sales		sales	in CHF	in LC
Sales	555		570		-3%	-2%
EBITDA before exceptional items	58	10.5%	61	10.7%	-5%	-7%
Op. income bef. restructuring, disposals and amort. of goodwill	40	7.2%	45	7.9%	-11%	-14%
Operating income	37	6.7%	24	4.2%	54%	48%

See Definitions of Terms of Financial Measurements on page 13.

Textile, Leather & Paper Chemicals Division reported declining sales in local currency terms with mixed trends in its different businesses. Price increases were achieved in nearly all segments, but volumes dropped mainly in the leather and textile dyes businesses. EBITDA margins before exceptional items held at 2004 levels, as significant raw material price increases were partially passed on to the customers, and wide-ranging restructuring measures taken in recent months began showing positive results.

The ongoing shift towards Asia for products in the Textile business resulted in continuing declines in sales for textile dyes. For the whole industry, an increased importance of retailers and prominent brand owners was notable. Clariant successfully launched initiatives in close cooperation with the retail industry, including total solution packages and application know-how with attractive margins. Regionally, Europe and North America saw declining sales while Asia, Latin America and emerging markets improved.

Compared to the same period last year, the Leather business lost volumes but maintained prices at the same level as in the previous quarter. The overall global market was weaker compared to a strong 2004. China in particular showed a drop in activity after several years of strong growth. The furniture upholstery market paused due to saturation. Several chemicals used to upgrade lower quality leather were successfully launched on the market.

Good demand for Paper Chemicals resulted in sales above last year's levels. The most important businesses were Paper Dyes and Optical Brighteners with strong volumes. Regions showed a mixed picture, with some weaknesses in Europe and good performance in the emerging markets, Asia, the US and Latin America.

Pigments & Additives

First Half

	2005 % of		2004	% of	Change in %
in CHF millions		sales		sales	in CHF	in LC
Sales	955		956		0%	2%
EBITDA before exceptional items	133	13.9%	159	16.6%	-16%	-16%
Op. income bef. restructuring, disposals and amort. of goodwill	98	10.3%	123	12.9%	-20%	-20%
Operating income	83	8.7%	91	9.5%	-9%	-8%

Second Quarter

	2005 % of		2004	% of	Change in %
in CHF millions		sales		sales	in CHF	in LC
Sales	495		482		3%	3%
EBITDA before exceptional items	73	14.7%	83	17.2%	-12%	-12%
Op. income bef. restructuring, disposals and amort. of goodwill	55	11.1%	65	13.5%	-15%	-16%
Operating income	47	9.5%	61	12.7%	-23%	-24%

* See Definitions of Terms of Financial Measurements on page 13.

The Pigments & Additives Division showed improved sales in local currency terms and in Swiss francs compared to a strong second quarter a year earlier. In a stable but challenging pricing climate volumes developed positively. The main cause of the lower margin was the effect of higher raw material prices, which could not be offset by higher volumes. Strong demand for more colorful products subsided in the second quarter, whereas the demand for additives remained strong.

The Coatings business saw a weaker Second Quarter compared with a strong Second Quarter in 2004. Higher raw material costs led to modest price increases for paints. The weather conditions and changing demand from end-users have caused a delay in seasonal pick-up for the decorative coatings industry. The business for industrial coating saw mixed business conditions, whereas the automotive business remained at low levels due to unfavorable color trends.

Products for the Plastics Industry saw an increased demand in the second quarter, mainly driven by additives. Increasing price pressure for several pigments created a more competitive environment overall. Expansion began into new regions with the successful pigment formulation of the DrizPearls® range.

Printing Industry businesses lost volumes compared to a strong demand in 2004. Sales in Publication Inks and Non-Impact Printing were fairly stable, whereas businesses in packaging and special inks were still at low levels. The trend in the printing ink industry towards further consolidation among our customers led to more purchasing power and the beginning of a trend toward in-sourcing of pigments.

The Specialties Business reported improved sales compared to same period a year earlier in a stable business environment. The main driver for this performance was good demand for intermediates as well as beginning sales with the new flame retardant range Exolith® and the new range of Licocene® waxes.

Masterbatches

First Half

	2005	% of	2004	% of	Change in %
in CHF millions		sales		sales	in CHF	in LC
Sales	570		570		0%	1%
EBITDA before exceptional items	58	10.2%	73	12.8%	-21%	-21%
Op. income bef. restructuring, disposals and amort. of goodwill	42	7.4%	59	10.4%	-29%	-28%
Operating income	38	6.7%	54	9.5%	-30%	-30%

Second Quarter

	2005	% of	2004	% of	Change in %
in CHF millions		sales		sales	in CHF	in LC
Sales	290		284		2%	2%
EBITDA before exceptional items	28	9.7%	36	12.7%	-22%	-26%
Op. income bef. restructuring, disposals and amort. of goodwill	20	6.9%	29	10.2%	-31%	-32%
Operating income	17	5.9%	26	9.2%	-35%	-36%

* See Definitions of Terms of Financial Measurements on page 13.

The Masterbatches Division returned to a moderate growth profile in the Second Quarter as the demand for plastic products improved. In the First Half of 2005, the entire plastics industry value chain was adversely affected by significant increases in oil related raw materials costs. Average sales prices were higher, but did not fully offset the raw material cost increases. The main driver of the growth was higher prices. Additionally, pricing initiatives adversely impacted sales volumes in price sensitive markets. Overall, the division managed to achieve sales growth in local currencies even while facing difficult market conditions in the automotive and synthetic fiber industries, for example. Operating income decreased because of the aforementioned rise in higher raw material prices. Growth continued in Asia but at a lower level as compared to previous year. Growth in Europe remained stable but was limited by weak economic conditions and a strong Euro. Business in North America was impacted by slowdown in the automotive industry. In Latin America, conditions improved from the First Quarter, but remained weak as strong local currencies led to more difficult import competition.

Masterbatches continued to focus on service and value adding differentiation in the marketplace. A combination of pigments and additives showed very good growth in North America, where treated lumber is being replaced in exterior applications by plastic wood.

Functional Chemicals

First Half

	2005	% of	2004	% of	Change in %
in CHF millions		sales		sales	in CHF	in LC
Sales	1'026		988		4%	5%
EBITDA before exceptional items	127	12.4%	129	13.1%	-2%	-2%
Op. income bef. restructuring, disposals and amort. of goodwill	103	10.0%	104	10.5%	-1%	-2%
Operating income	98	9.6%	116	11.7%	-16%	-16%

Second Quarter

	2005	% of	2004	% of	Change in %
in CHF millions		sales		sales	in CHF	in LC
Sales	499		468		7%	6%
EBITDA before exceptional items	59	11.8%	56	12.0%	5%	4%
Op. income bef. restructuring, disposals and amort. of goodwill	47	9.4%	45	9.6%	4%	1%
Operating income	47	9.4%	55	11.8%	-15%	-18%

* See Definitions of Terms of Financial Measurements on page 13.

Price increases and higher volumes for the Functional Chemicals Division resulted in solid growth in local currency terms. This positive development was in evidence throughout all regions and businesses. The higher prices were unable to offset the negative impact from substantially higher raw material costs, leading to a lower margin compared to a year ago. Responding to high oil prices, all crude oil-based raw materials rose substantially in the second quarter. Capacity utilization was at a high level across all businesses.

Higher raw material costs for the Detergents business were only partially passed on to the customer, below the divisional average. Good demand on the global market resulted in solid growth. Further progress with major key accounts to develop color care additives and low temperature bleach was achieved.

Higher volumes and an improved climate for better prices led to good growth for Performance Chemicals compared with the same period a year ago. Europe and Asia saw an increasing demand for Personal Care and Construction Chemicals. In the crop protection area, a new range of next generation environmentally friendly additives based on renewable raw materials was launched.

Good demand for Process Chemicals and higher prices compared with a year earlier resulted in solid growth. Higher raw material prices were not fully passed on to the customer. A strong increase in functional fluids and in all segments of the oil business such as exploration, production and refining were the main drivers for this development. The acquisition of Datachem Inc. in the Gulf of Mexico strengthened the American oilfield service business to serve the customers in the area.

Life Science & Electronic Chemicals (Continuing operations)

First Half

	2005	% of	2004	% of	Change in %
in CHF millions		sales		sales	in CHF	in LC
Sales	475		528		-10%	-9%
EBITDA before exceptional items	41	8.6%	42	8.0%	-2%	-1%
Op. income bef. restructuring, disposals and amort. of goodwill	22	4.6%	18	3.4%	22%	26%
Operating income	11	2.3%	20	3.8%	-45%	-44%

Second Quarter

	2005	% of	2004	% of	Change in %
in CHF millions		sales		sales	in CHF	in LC
Sales	256		275		-7%	-6%
EBITDA before exceptional items	25	9.8%	25	9.1%	0%	-1%
Op. income bef. restructuring, disposals and amort. of goodwill	16	6.3%	15	5.5%	7%	8%
Operating income	6	2.3%	1	0.4%

* See Definitions of Terms of Financial Measurements on page 13.

The Life Science Chemicals Division showed a mixed picture across its two main businesses. Higher prices were not able to offset the loss in volume resulting in declining sales in local currency terms. Higher raw material prices were passed on to customers only to a limited extent. Recent restructuring efforts started to show a positive impact, resulting in an improved operating margin before exceptionals.

Some delays in demand and a contract loss already reported in the first quarter depressed sales amid ongoing tough market conditions in the Pharma segment. The loss in volume was the main cause of the weaker performance. Positive developments in generics were unable to offset the negative developments in innovators. Increasing signs of customers outsourcing their requirements and considering Clariant as their partner were in evidence.

Good growth driven by a solid demand and higher prices for products was achieved in Specialty Fine Chemicals. Key products such as glyoxal, glyoxylic acid and side-chain chlorination products as precursors for agrochemicals performed well. Pressure on raw material costs eased somewhat for selected materials, while others were still in short supply at high cost. The agro market remained strong.

Second Quarter	2005	% of	2004	% of	% Change
		sales		sales	CHF	LC
in CHF millions
Europe	1'079	51.5%	1'066	51.3%	1%	1%
of which Germany	324		306		6%	4%
Americas	549	26.2%	551	26.5%	0%	1%
of which USA	261		291		-10%	-4%
Asia / Australia / Africa	467	22.3%	462	22.2%	1%	1%
Total continuing operations	2'095	100.0%	2'079	100.0%	1%	1%
Discontinuing operations	0		134
Total Group	2'095		2'213

Regional Developments (Continuing operations)

Europe

In the Second Quarter of 2005, European sales accounted for 52% of total group turnover. Sales increased by 1% both in local currency terms and in Swiss franc terms. The picture was mixed on a country basis. While Germany showed broad-based sales growth of 4% in local currency terms (+6% in Swiss francs), sales in other main European countries were mostly lower.

Americas

Group companies' sales in the Americas contributed 26% of Group turnover for the Second Quarter of 2005. Sales increased by 1% in local currency terms and remained flat in Swiss franc terms. In the U.S., sales decreased by 4% in local currency terms and by 10% in Swiss franc terms mainly due to adverse developments in the pharma and textile dyes sectors. In Latin America, sales developed positively in Swiss franc terms, substantial sales growth was achieved in particular in Argentina and Mexico.

Asia, Africa, Australia

In the Second Quarter of 2005, group companies' sales in Asia, Australia and Africa contributed 22% of group sales. Sales increased by 1% both in local currency terms and in Swiss franc terms. Substantial sales growth in Swiss franc terms (as well as in local currency terms) was achieved in particular in China, Japan, India and Pakistan, whereas sales in South Korea decreased.

Definition of Terms of Financial Measurements

The following financial measurements are supplementary financial indicators. They should be considered in addition to, not as a substitute for, operating income, net income, operating cash flow and other measures of financial performance and liquidity reported in accordance with International Financial Reporting Standards (IFRS).

EBITDA – (Earnings before Interest, Taxes, Depreciation and Amortization) is calculated as operating income plus depreciation on fixed assets and amortization of goodwill and intangibles and can be reconciled from the Condensed Financial Statements as follows:

EBITDA	First Half		Second Quarter
in CHF millions	2005	2004	2005	2004
Operating income	223	317	113	150
+ Depreciation of fixed assets	134	153	67	72
+ Impairment of goodwill and fixed assets	13	26	9	12
+ Amortization of intangibles	7	5	5	4
EBITDA	377	501	194	238

EBITDA before exceptional items – is calculated as EBITDA plus expenses for restructuring and impairment and gain/ loss on disposals

EBITDA before exceptional items	First Half	Second Quarter
in CHF millions	2005	2004	2005	2004
EBITDA	377	501	194	238
+ Restructuring and Impairment	59	65	30	41
- Impairment of fixed assets	-13	-11	-9	-4
(reported under Restructuring and
impairment)
+/- Gain/ Loss on Disposals	0	-10	0	-10
EBITDA before exceptional items	423	545	215	265

Operating income before exceptional items and amortization of goodwill – is calculated as operating income before restructuring and disposals plus amortization of goodwill and can be reconciled from the Condensed Financial Statements as follows:

Operating income before exceptional
items and amortization of goodwill	First Half		Second Quarter
in CHF millions	2005	2004	2005	2004
Operating income	223	317	113	150
+ Restructuring and Impairment	59	65	30	41
+/- Gain/ Loss on Disposals	0	-10	0	-10
+ Amortization of Goodwill	0	15	0	7
Operating income before exceptional
items and amortization of goodwill	282	387	143	188

EBITDA margin – is EBITDA expressed as a percentage of Third party sales Operating margin – is operating income expressed as percentage of Third party sales.

Net debt – is the sum of current and non-current financial debt less cash and cash equivalents and short-term deposits (CHF 71 million at June 30, 2005 and CHF 87 million the year before) reported in other current assets.

Condensed Financial Statement of the Clariant Group at June 30, 2005

unaudited, all amounts in CHF millions

Condensed Income Statements

Income Statements of the Group

	First Half				Second Quarter
	2005	% of	2004	% of	2005	% of	2004	% of
in CHF millions		sales		sales		sales		sales
Sales	4'087	100.0%	4'419	100.0%	2'095	100.0%	2'213	100.0%
Costs of goods sold	-2'835	69.4%	-2'960	67.0%	-1'456	69.5%	-1'484	67.1%
Gross profit	1'252	30.6%	1'459	33.0%	639	30.5%	729	32.9%
Marketing and distribution	-648	15.9%	-644	14.6%	-328	15.7%	-321	14.5%
Administration & general overhead cost	-226	5.5%	-298	6.7%	-120	5.7%	-156	7.0%
Research and development	-106	2.6%	-145	3.3%	-53	2.5%	-72	3.3%
Income from associated companies	10	0.2%	15	0.3%	5	0.2%	8	0.4%
Gain/ Loss on Disposal	0		10	0.2%	0		10	0.5%
Restructuring and impairment	-59	1.4%	-65	1.5%	-30	1.4%	-41	1.9%
Amortization of goodwill			-15	0.3%			-7	0.3%
Operating income	223	5.5%	317	7.2%	113	5.4%	150	6.8%
Finance costs - net (1)	-31	0.8%	-98	2.2%	-14	0.7%	-38	1.7%
Income before taxes and	192	4.7%	219	5.0%	99	4.7%	112	5.1%
minority interests
Taxes	-46	1.1%	-88	2.0%	-25	1.2%	-54	2.4%
Net income	146		131		74		58
Attributable to:
Equity holders of the company	142		126		72		54
Minority interests	4		5		2		4
Net income	146	3.6%	131	3.0%	74	3.5%	58	2.6%
Earnings per share for profit
attributable to the equity holders of
the company for the period:
Basic earnings per share (in CHF) (2)	0.62		0.65		0.30		0.23
Diluted earnings per share (in CHF) (2)	0.62		0.65		0.30		0.23

(1) Currency impact YTD 2005 of CHF +37 mn vs YTD June 2004 of CHF -15 mn. (2) calculated with average numbers of shares outstanding (prior year figures adjusted for capital increase with adjustment factor 1.15)

Condensed Divisional Figures

Sales of Divisions to 3rd parties	First Half			Second Quarter
	2005	2004	Change in %		2005	2004	Change in %
in CHF millions			in CHF	in LC			in CHF	in LC
Textile, Leather, Paper	1'061	1'123	-6%	-4%	555	570	-3%	-2%
Pigments & Additives	955	956	0%	2%	495	482	3%	3%
Masterbatches	570	570	0%	1%	290	284	2%	2%
Functional Chemicals	1'026	988	4%	5%	499	468	7%	6%
Life Science Chemicals	475	528	-10%	-9%	256	275	-7%	-6%
Divisions Total	4'087	4'165			2'095	2'079
Corporate	0	0			0	0
Total continuing	4'087	4'165	-2%	-1%	2'095	2'079	1%	1%
Discontinuing operations	0	254			0	134
Total	4'087	4'419			2'095	2'213
EBITDA*
	2005	2004		Change in %	2005	2004		Change in %
in CHF millions			in CHF	in LC			in CHF	in LC
Textile, Leather, Paper	104	95	9%	10%	55	46	20%	17%
Pigments & Additives	124	135	-8%	-8%	67	79	-15%	-16%
Masterbatches	54	71	-24%	-24%	25	35	-24%	-30%
Functional Chemicals	122	141	-13%	-13%	59	66	-11%	-13%
Life Science Chemicals	36	48	-25%	-24%	22	15	47%	41%
Divisions Total	440	490			228	241
Corporate Total continuing	-63 377	-33 457	-18%	-17%	-34 194	-27 214	-9%	-9%
Discontinuing operations	0	44			0	24
Total	377	501			194	238
Operating income
	2005	2004		Change in %	2005	2004		Change in %
in CHF millions			in CHF	in LC			in CHF	in LC
Textile, Leather, Paper	68	50	36%	36%	37	24	54%	48%
Pigments & Additives	83	91	-9%	-8%	47	61	-23%	-24%
Masterbatches	38	54	-30%	-30%	17	26	-35%	-36%
Functional Chemicals	98	116	-16%	-16%	47	55	-15%	-18%
Life Science Chemicals	11	20	-45%	-44%	6	1

Corporate -75 -45 -41 -35 Total continuing 223 286 -22% -21% 113 132 -14% -14% Discontinuing operations 0 31 0 18 Total 223 317 113 150

On September 30, 2004, Clariant sold the business unit Electronic Materials, belonging to the LSC division, to The Carlyle Group. As a consequence, Electronic Materials is disclosed as Discontinuing Operations for 2004.

Divisions Total 298 331 154 167

* See Definitions of Terms of Financial Measurements on page 13.

Condensed Divisional Figures

EBITDA margin*	First Half				Second Quarter
	2005	% of	2004	% of	2005	% of	2004	% of
in CHF millions		sales		sales		sales		sales
Textile, Leather, Paper	104	9.8%	95	8.5%	55	9.9%	46	8.1%
Pigments & Additives	124	13.0%		135 14.1%		67 13.5%	79	16.4%
Masterbatches	54	9.5%		71 12.5%	25	8.6%	35	12.3%
Functional Chemicals	122	11.9%		141 14.3%		59 11.8%	66	14.1%
Life Science Chemicals	36	7.6%	48	9.1%	22	8.6%	15	5.5%
Divisions Total	440		490		228		241
Corporate	-63		-33		-34		-27
Total continuing	377	9.2%		457 11.0%	194	9.3%	214	10.3%
Discontinuing operations	0		44		0		24
Total	377		501		194		238
Operating income margin*

	2005	% of	2004	% of	2005	% of	2004	% of
in CHF millions		sales		sales		sales		sales
Textile, Leather, Paper	68	6.4%	50	4.5%	37	6.7%	24	4.2%
Pigments & Additives	83	8.7%	91	9.5%	47	9.5%	61	12.7%
Masterbatches	38	6.7%	54	9.5%	17	5.9%	26	9.2%
Functional Chemicals	98	9.6%		116 11.7%	47	9.4%	55	11.8%
Life Science Chemicals	11	2.3%	20	3.8%	6	2.3%	1	0.4%
Divisions Total	298		331		154		167
Corporate	-75		-45		-41		-35
Total continuing	223	5.5%	286	6.9%	113	5.4%	132	6.3%
Discontinuing operations	0		31		0		18
Total	223		317		113		150

On September 30, 2004, Clariant sold the business unit Electronic Materials, belonging to the LSC division, to The Carlyle Group. As a consequence, Electronic Materials is disclosed as Discontinuing Operations for 2004. * See Definitions of Terms of Financial Measurements on page 13.

Condensed Statement of Sales by Regions

Allocated by region of-party's sales destination

First Half	2005 % of		2004	% of	% Change
		sales		sales	CHF	LC
in CHF millions
Europe	2'139	52.3%	2'172	52.2%	-2%	-1%
of which Germany	657		633		4%	5%
Americas	1'070	26.2%	1'097	26.3%	-2%	0%
of which USA	523		580		-10%	-6%
Asia / Australia / Africa	878	21.5%	896	21.5%	-2%	1%
Total continuing operations	4'087	100.0%	4'165	100.0%	-2%	-1%
Discontinuing operations	0		254
Total Group	4'087		4'419

Second Quarter	2005 % of		2004	% of	% Change
		sales		sales	CHF	LC
in CHF millions
Europe	1'079	51.5%	1'066	51.3%	1%	1%
of which Germany	324		306		6%	4%
Americas	549	26.2%	551	26.5%	0%	1%
of which USA	261		291		-10%	-4%
Asia / Australia / Africa	467	22.3%	462	22.2%	1%	1%
Total continuing operations	2'095	100.0%	2'079	100.0%	1%	1%
Discontinuing operations	0		134
Total Group	2'095		2'213

On September 30, 2004, Clariant sold the business unit Electronic Materials, belonging to the LSC division, to The Carlyle Group. As a consequence, Electronic Materials is disclosed as Discontinuing Operations for 2004.

Condensed Balance Sheets (unaudited)
	30.6.2005	% of	31.12.2004	% of
in CHF millions		assets	Restated	assets
Assets
Non-current assets
Tangible fixed assets	2'569		2'440
Intangible assets	408		405
Investments in associated companies	220		226
Financial and other non-current assets
Deferred tax assets	102		96
Total Non-current assets	285 3'584	42.9%	270 3'437	42.8%
Current assets
Inventories	1'566		1'325
Trade accounts receivable	1'482		1'374
Other current assets (1)	575		424
Cash and cash equivalents	1'092		1'477
Total Current assets	4'715	56.4%	4'600	57.2%
Non-current assets classified as held for
sale	56	0.7%	0	0.0%
Total Assets	8'355	100.0%	8'037	100.0%
Equity & Liabilities
Equity
Share capital	1'093		1'151
Treasury shares (par value)
Reserves	-18 648		-16 529
Retained earnings	706		568
Minority interests	67		56
Total Equity	2'496	29.9%	2'288	28.5%
Liabilities
Non-current liabilities
Financial debts	1'629		1'723
Deferred tax liabilities	365		373
Provisions for non-current liabilities	873		798
Total Non-current liabilities	2'867	34.3%	2'894	36.0%
Current liabilities
Trade and other accounts payable	1'229		1'165
Financial debts	1'167		1'172
Taxes payable	187		153
Provisions for current liabilities	381		365
Total Current liabilities	2'964	35.5%	2'855	35.5%
Liabilities directly associated with non
current assets classified as held for sale
	28	0.3%	0	0.0%
Total Liabilities	5'859	70.1%	5'749	71.5%
Total Equity & Liabilities	8'355	100.0%	8'037	100.0%

(1) Thereof CHF 71 million in short-term deposits (2004 CHF 87 million)

Condensed Cash Flow Statements (unaudited)

	First Half		Second Quarter
	2005	2004	2005	2004
in CHF millions		Restated		Restated
Net income (including minorities)	146	131	74	58
Depreciation of fixed assets	134	153	67	72
Impairment of goodwill and fixed assets	13	26	9	12
Amortization of intangible assets	7	5	5	3
Changes in non-current liabilities	80	148	27	48
Interest paid	-55	-61	-28	-26
Income tax paid	-37	-61	-14	-29
Bookgain on disposals (bef. Recycled FX variances
and taxes)	0	-10	0	-10
Other non cash items	-53	1	-33	-30
Operating Cash Flow before changes in working	235	332	107	98
capital
Change in inventories	-157	-23	-69	17
Change in trade account receivables	-50	-118	-68	-54
Change in trade account payables	-28	4	-5	21
Change in other current assets and liabilities	-43	92	-30	102
Operating Cash Flow	-43	287	-65	184
Investments in tangible fixed assets	-151	-111	-81	-58
Investments in intangible assets	-2	-6	-1	-6
Sale of tangible and intangible assets	7	6	5	4
Acquisitions of companies, businesses and
participations	-11	0	-11	0
Proceeds from the sale of discont. operations,
subsidaries, associated companies	5	10	5	10
Dividends received	22	29	10	9
Interest received	34	8	31	7
Total Cash Flow from investing activities	-96	-64	-42	-34
Increase/decrease of share capital	-58	874	-58	874
Treasury share transactions	-10	5	-8	4
Changes in current and non-current financial debt
and short-term deposits	-190	-882	-44	-533
Dividends paid to third parties	-2	-33	-2	-33
Total Cash Flow from financing activities	-260	-36	-112	312
Currency translation effect on cash and cash
equivalents	14	1	7	-4
Net change in cash & cash equivalents	-385	188	-212	458
Cash and cash equivalents at the beginning of
the period	1477	929	1304	659
Cash and cash equivalents at the end of period
	1092	1117	1092	1117

Condensed statement of changes in equity (unaudited)

CHF mn				Reserves
	Total	Treasury	Share	Hedging	Cumulative		Total Retained	Minorities	Total
	share	shares	premium	reserves	translation		earnings		equity
	capital	(par	reserves		reserves
		value)
Balance 31 December 2003	767	-18	274	-8	-243	23	404	64	1'240
Changes in accounting policy						0	22		22
Restated balance 31 December 2003	767	-18	274	-8	-243	23	426	64	1'262
Net income recognized directly in equity				3	-27	-24	1	1	-22
Net Income						0	126	5	131
Total recognized income and expense for the period	0	0	0	3	-27	-24	127	6	109
Dividends to third parties						0	-30	-3	-33
Increase/decrease of share capital	384		490			490			874
Treasury share transactions and share based payments						0	9		9
Balance 30 June 2004	1'151	-18	764	-5	-270	489	532	67	2'221
Balance 31 December 2004	1'151	-16	767	-5	-233	529	538	56	2'258
Changes in accounting policy						0	30		30
Restated balance 31 December 2004	1'151	-16	767	-5	-233	529	568	56	2'288
Net income recognized directly in equity	0	0	0	0	119	119	0	9	128
Net Income						0	142	4	146
Total recognized income and expense for the period	0	0	0	0	119	119	142	13	274
Dividends to third parties						0		-2	-2
Increase/decrease of share capital	-58					0			-58
Treasury share transactions and share based payments		-2				0	-4		-6
Balance 30 June 2005	1'093	-18	767	-5	-114	648	706	67	2'496

Condensed Earnings Per Share Data

First Half	2005	2004
Number of shares outstanding at 30.06.05 and 30.06.04 respectively	230'160'000	230'160'000
Weighted average, number of shares outstanding	226'858'343	193'875'406 *
Weighted average, diluted number of shares outstanding	228'014'377	195'042'898 *
Basic earnings per share (in CHF) Diluted earnings per share (in CHF)	0.62 0.62	0.65 0.65

* Restated for impact of capital increase in April 2004 (adjustment factor is 1.15)

Condensed Financial Statements (unaudited)

1. Basis of preparation of financial statements

These financial statements are the interim condensed financial statements of Clariant Ltd (hereafter "the interim financial statements"), a company registered in Switzerland, and its subsidiaries for the six-month period ended on 30 June, 2005 (hereafter "the Group"). They are prepared in accordance with the International Accounting Standard 34 (IAS 34 "Interim Financial Reporting") and were approved on July 28-29, 2005 by the Board of Directors. These interim financial statements should be read in conjunction with the Consolidated Financial Statements for the year ended 31 December 2004 (hereafter "the annual financial statements") as they provide an update of previously reported information.

The accounting policies used are consistent with those used in the annual financial statements. Where necessary, the comparatives have been reclassified or extended from the previously reported interim results to take into account any presentational changes made in the annual financial statements or in these interim financial statements.

The preparation of the interim financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and disclosure of contingent liabilities at the date of the interim financial statements. If in the future such estimates and assumptions, which are based on management's best judgment at the date of the interim financial statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the year in which the circumstances change.

2. Seasonality of Operations

The Group operates in industries where significant seasonal or cyclical variations in total sales are not experienced during the financial year.

3. Adoption of new and improved International Financial Reporting Standards

On 1 January 2005 a number of new and improved International Financial Reporting Standards became effective. This led to a number of reclassifications in the financial statement of the Group, the effects of which were the following on the balance sheet of 31 December 2004

IFRS 2, Share-based payment

The adoption of IFRS 2, Share-based payment has resulted in a change in the accounting policy for share-based payments. Until 31 December 2004 accruals for share-based payments were recorded as an expense in the income statement and a provision in the balance sheet. No expense was recognized for the provision of share options. The adoption of IFRS 2 led to the reclassification of CHF 39 million from provisions to equity and of CHF 9 million from deferred tax assets to equity, resulting in a total impact on equity of CHF 30 million as at 31 December 2004. Of this amount CHF 22 million refers to reporting periods up to 31 December 2003 and CHF 8 million to 2004. Of the latter amount CHF 4 million are reported in the condensed Statement of Changes in Equity for the First Six Months 2004 on a pro rata basis.

The adoption of IFRS 2 had an impact on the income statement of less than CHF 1 million in the First Six Months 2004 and an impact of approximately CHF 4 million in the First Six Months 2005.

IFRS 3, Business Combinations

The adoption of IFRS 3, IAS 36 (revised) and IAS 38 (revised) resulted in a change in the accounting policy for goodwill. Until 31 December 2004 goodwill was:

• Amortized on a straight line basis over a period ranging from ten to 20 years; and
• Assessed for an indication of impairment at each balance sheet date.

In accordance with IFRS 3:

• The group ceased amortization of goodwill from 1 January 2005;
• Accumulated amortization as at 31 December 2004 has been eliminated with a corresponding decrease in the cost of goodwill;
• From the year ended 31 December 2005 onwards, goodwill is tested annually for impairment, as well as when there are indications of impairment.
• Amortization of goodwill amounted to CHF 15 million for the First Six Months of 2004.

IAS 39, Financial Instruments (revised)

The modification of IAS 39 also comprised a clearer focus with regard to the criteria for derecognition of financial instruments on the balance sheet. In view of the new guidance to this point it was decided that the recognition in the balance sheet of trade receivables securitized in the US and Germany in ABS programs would give a clearer picture of the financial situation of the Group. This led to an increase of trade receivables and short-term financial debts of CHF 241 million in the balance sheet as at 31 December 2004.

IAS 21, The Effects of Changes in Foreign Exchange Rates (revised)

IAS 21 (revised 2003), which became effective as of 1 January 2005 allows exchange rate differences arising on monetary items that form part of a reporting entity's net investment in a foreign operation to be recorded in equity only if resulting from transactions between the reporting entity and the foreign operation, and are denominated in the functional currency of either the reporting entity or the foreign operation. This represents a more stringent requirement than the one included in the prior version of IAS 21. In the June 2005 discussion of the IASB, it was decided to amend IAS 21 (revised 2003) to allow monetary items to be expressed in a third currency, as well as permit monetary items transacted with other members of the consolidated group to be also considered as being of an equity nature when meeting the requirements for classification as investment. This amendment is expected to be implemented prior to the end of 2005. The company has therefore not amended its financial statements to reflect the above-mentioned changes introduced by IAS 21 (revised 2003) in its interim financial statements, as any such amendment is likely to require reversal in the annual financial statements. The effect of any such change of policy would have been a reduction of the cumulative translation reserve (CTA) balance and a corresponding decrease in finance costs for the reporting period and the same period of the preceding year.

IAS 1, Presentation of Financial Statements (revised)

The revised IAS 1 requires that minority interests are included in equity. The adoption of this requirement resulted in the reclassification of CHF 56 million to equity in the balance sheet as at 31 December 2004.

In addition to this IAS 1 (revised) now requires that net income in the income statement comprise the minority shares in the net income as well. As a consequence of this the line Net Income in the cash flow statement now also includes the minority share of the net income.

4. Repayments of debt

During the reporting period a bond in the amount CHF 201 million and a bank loan denominated in Japanese yen in the amount of CHF 78 million were paid back.

5. Non-current assets held for sale

On 1 January 2005 IFRS 5, Non-current Assets held for sale and Discontinued Operations became effective. The standard requires that non-current assets and associated liabilities are to be reported separately in the balance sheet, if it is Management's intention to sell them and if a sale is probable in the next twelve months. In accordance with this requirement assets held in Germany in the amount of CHF 56 million and the directly related liabilities in the amount of CHF 28 million are reported as held-for-sale in the balance sheet of 30 June 2005.

6. Restructuring and Impairment

During the reporting period, the Clariant Group recorded expenses for restructuring and impairment in the amount of CHF 59 million. This concerned a number of projects mainly in Switzerland, Germany, France and the UK where personnel levels are being further reduced and fixed assets that were made redundant were written off.

7. Nominal Value Reduction

On April 7, 2005 the ordinary General Meeting of shareholders approved the repayment of CHF 0.25 of the nominal value of each registered share, resulting in the reduction of the nominal value from CHF 5 to CHF 4.75 per registered share. The approved pay out took place on June 23, 2005 and reduced the share capital by CHF 57 540 000.

8. Recurring Divisional Figures

Sales of Divisions to 3rd parties

			Second Quarter
	2005	2004		Change in %	2005	2004		Change in %
in CHF millions			in CHF	in LC			in CHF	in LC
Textile, Leather, Paper	1'061	1'123	-6%	-4%	555	570	-3%	-2%
Pigments & Additives	955	956	0%	2%	495	482	3%	3%
Masterbatches	570	570	0%	1%	290	284	2%	2%
Functional Chemicals	1'026	988	4%	5%	499	468	7%	6%
Life Science Chemicals	475	528	-10%	-9%	256	275	-7%	-6%
Divisions Total	4'087	4'165			2'095	2'079
Corporate	0	0			0	0
Total continuing	4'087	4'165	-2%	-1%	2'095	2'079	1%	1%
Discontinuing operations	0	254			0	134
Total	4'087	4'419			2'095	2'213
EBITDA before exceptionals
	2005	2004		Change in %	2005	2004		Change in %
in CHF millions			in CHF	in LC			in CHF	in LC
Textile, Leather, Paper	111	124	-10%	-10%	58	61	-5%	-7%
Pigments & Additives	133	159	-16%	-16%	73	83	-12%	-12%
Masterbatches	58	73	-21%	-21%	28	36	-22%	-26%
Functional Chemicals	127	129	-2%	-2%	59	56	5%	4%
Life Science Chemicals	41	42	-2%	-1%	25	25	0%	-1%
Divisions Total	470	527			243	261
Corporate	-47	-26			-28	-20
Total continuing	423	501	-16%	-15%	215	241	-11%	-11%
Discontinuing operations	0	44			0	24
Total	423	545			215	265

Operating income before exceptionals

	2005	2004	Change in %		2005	2004	Change in %
in CHF millions			in CHF	in LC			in CHF	in LC
Textile, Leather, Paper	75	90	-17%	-16%	40	45	-11%	-14%
Pigments & Additives	98	123	-20%	-20%	55	65	-15%	-16%
Masterbatches	42	59	-29%	-28%	20	29	-31%	-32%
Functional Chemicals	103	104	-1%	-2%	47	45	4%	1%
Life Science Chemicals	22	18	22%	26%	16	15	7%	8%
Divisions Total	340	394			178	199
Corporate	-58	-38			-35	-29
Total continuing	282	356	-21%	-20%	143	170	-16%	-16%
Discontinuing operations	0	31			0	18
Total	282	387			143	188

9. Recurring Divisional Margins

Sales of Divisions to 3rd parties

		First Half				Second Quarter
	2005	%	2004	%	2005	% of	2004	% of
in CHF millions						sales		sales
Textile, Leather, Paper	1'061	26.0%	1'123	27.0%	555	26.5%	570	27.4%
Pigments & Additives	955	23.4%	956	23.0%	495	23.6%	482	23.2%
Masterbatches	570	13.9%	570	13.7%	290	13.9%	284	13.7%
Functional Chemicals	1'026	25.1%	988	23.7%	499	23.8%	468	22.5%
Life Science Chemicals	475	11.6%	528	12.6%	256	12.2%	275	13.2%
Divisions Total		4'087 100.0%		4'165 100.0%		2'095 100.0%		2'079 100.0%
Corporate	0		0		0		0
Total continuing	4'087		4'165		2'095		2'079
Discontinuing operations	0		254		0		134
Total	4'087		4'419		2'095		2'213
EBITDA margin before exceptionals
	2005	% of	2004	% of	2005	% of	2004	% of
in CHF millions		sales		sales		sales		sales
Textile, Leather, Paper	111	10.5%	124	11.0%	58	10.5%	61	10.7%
Pigments & Additives	133	13.9%	159	16.6%	73	14.7%	83	17.2%
Masterbatches	58	10.2%	73	12.8%	28	9.7%	36	12.7%
Functional Chemicals	127	12.4%	129	13.1%	59	11.8%	56	12.0%
Life Science Chemicals	41	8.6%	42	8.0%	25	9.8%	25	9.1%
Divisions Total	470		527		243		261
Corporate	-47		-26		-28		-20
Total continuing	423	10.3%	501	12.0%	215	10.3%	241	11.6%
Discontinuing operations	0		44		0		24
Total	423		545		215		265

Operating income margin before exceptionals

	2005	% of	2004	% of	2005	% of	2004	% of
in CHF millions		sales		sales		sales		sales
Textile, Leather, Paper	75	7.1%	90	8.0%	40	7.2%	45	7.9%
Pigments & Additives	98	10.3%	123	12.9%	55	11.1%	65	13.5%
Masterbatches	42	7.4%	59	10.4%	20	6.9%	29	10.2%
Functional Chemicals	103	10.0%	104	10.5%	47	9.4%	45	9.6%
Life Science and Electronic Materials	22	4.6%	18	3.4%	16	6.3%	15	5.5%
Divisions Total	340		394		178		199
Corporate	-58		-38		-35		-29
Total continuing	282	6.9%	356	8.5%	143	6.8%	170	8.2%
Discontinuing operations	0		31		0		18
Total	282		387		143		188

Systematic depreciation on tangible fixed assets

	2005	% of	2004	% of	2005	% of	2004	% of
in CHF millions		sales		sales		sales		sales
Textile, Leather, Paper	36	3.4%	34	3.0%	18	3.2%	16	2.8%
Pigments & Additives	35	3.7%	36	3.8%	18	3.6%	18	3.7%
Masterbatches	15	2.6%	13	2.3%	7	2.4%	6	2.1%
Functional Chemicals	24	2.3%	25	2.5%	12	2.4%	11	2.4%
Life Science and Electronic Materials	19	4.0%	24	4.5%	9	3.5%	10	3.6%
Divisions Total	129		132		64		61
Corporate	5		8		3		5
Total continuing	134	3.3%	140	3.4%	67	3.2%	66	3.2%
Discontinuing operations	0		13		0		6
Total	134		153		67		72

10. Restated Figures for First Quarter

As of 1 January 2005 a substantial number of changes in the internal accounting and reporting procedures were introduced. A critical review of these procedures during the second quarter 2005 made evident that the method used to allocate depreciation and amortization to the divisions was not fully consistent with the method used for prior years. As a consequence the allocation method was improved and the resulting numbers for the first quarter 2005 are restated below.

	First Quarter
EBITDA before exceptionals
	2005	2004	Change in %
in CHF millions			in CHF	in LC
Textile, Leather, Paper	53	63	-15.9%	-12.9%
Pigments & Additives	60	76	-21.1%	-19.3%
Masterbatches	30	37	-18.9%	-16.9%
Functional Chemicals	67	73	-8.2%	-5.7%
Life Science Chemicals	16	17	-5.9%	-2.6%
Divisions Total	226	266
Corporate	-18	-6
Total continuing	208	260	-20.0%	-10.4%
Discontinuing operations		20
Total	208	280

EBITDA

	2005	2004	Change in %
in CHF millions			in CHF	in LC
Textile, Leather, Paper	49	49	0.0%	3.1%
Pigments & Additives	57	56	1.8%	3.8%
Masterbatches	29	36	-19.4%	-18.0%
Functional Chemicals	63	75	-16.0%	-14.2%
Life Science Chemicals	14	33	-57.6%	-53.1%
Divisions Total	212	249
Corporate	-29	-6
Total continuing	183	243	-24.7%	-14.5%
Discontinuing operations	0	20
Total	183	263

*Split depreciation Service to Division

Systematic depreciation on tangible fixed assets restated

	2005	% of	2004	% of
in CHF millions		sales		sales
Textile, Leather, Paper	18	3.6%	18	3.3%
Pigments & Additives	17	3.7%	18	3.8%
Masterbatches	8	2.9%	7	2.4%
Functional Chemicals	12	2.3%	14	2.7%
Life Science and Electronic Materials	10	4.6%	14	5.5%
Divisions Total	65		71
Corporate	2		3
Total continuing	67	3.4%	74	3.5%
Discontinuing operations	0		7
Total	67		81

11. Rates

Rates used to translate the consolidated balance sheets (closing rate)	30.6.2005	31.12.2004	% Change
1 USD	1.28	1.13	13%
1 EUR	1.55	1.54	1%
1 GBP	2.31	2.18	6%
100 JPY	1.16	1.10	5%
Average sales-weighted rates used to translate the income statements and consolidated statements of cash flow	1st Half 2005	1st Half 2004	% Change
1 USD	1.20	1.27	-6%
1 EUR	1.55	1.55	0%
1 GBP	2.25	2.31	-3%
100 JPY	1.13	1.17	-3%

CALENDAR OF CORPORATE EVENTS

November 8, 2005	Nine Month 2005 Results
February 28, 2006	Full Year 2005 Results
April 7, 2006	Annual General Meeting
May 9, 2006	First Quarter 2006 Results
August 2, 2006	Half Year 2006 Results
November 7, 2006	Nine Month 2006 Results

YOUR CLARIANT CONTACTS
Investor Relations	Tel.	+41 61 469 67 48
	Fax	+41 61 469 67 67
Holger Schimanke	Tel.	+41 61 469 67 45
Fabian Hildbrand	Tel.	+41 61 469 67 49
Media Relations	Fax	+41 61 469 65 66
Walter Vaterlaus	Tel.	+41 61 469 61 58
Rainer Weihofen	Tel.	+41 61 469 67 42

Clariant – Exactly your chemistry.

Clariant is a global leader in the field of specialty chemicals. Strong business relationships, commitment to outstanding service and wide-ranging application know-how make Clariant a preferred partner for its customers.

Clariant, which is represented on five continents with over 100 group companies, employs about 24,000 people. Headquartered in Muttenz near Basel, it generated sales of around CHF 8.5 billion in 2004.

Clariant's businesses are organized in five divisions: Textile, Leather & Paper Chemicals, Pigments & Additives, Functional Chemicals, Life Science Chemicals and Masterbatches.

Clariant is committed to sustainable growth springing from its own innovative strength. Clariant's innovative products play a key role in its customers' manufacturing and treatment processes or else add value to their end products. The company's success is based on the know-how of its people and their ability to identify new customer needs at an early stage and to work together with customers to develop innovative, efficient solutions.

www.clariant.com