AI assistant
Clariant AG Interim / Quarterly Report 2003
856_10-q_2003-09-30_078d6585-29f2-4fcd-b121-960119af5121.pdf
Interim / Quarterly Report
Open in viewerOpens in your device viewer
Financial Review 2003
Nine Month Results
November 4, 2003
The First Nine Months of 2003 in Summary
Sales by Divisions
Total nine month 2003: CHF 6 402 mn
| 2 Functional Chemicals | |
|---|---|
| 3 Pigments & Additives | |
| 4 Life Science & Electronic Chemicals | |
| 5 Masterbatches |
Sales by Regions
| Nine monthCHF mn | 2003Total operations | 2002Reported | 2002Pro-forma* | CHF | Change in %2003 total operationscompared with 2002 pro-formaLC |
|---|---|---|---|---|---|
| Sales | 6 402 | 7 121 | 6 727 | - 5 | + 1 |
| Gross profit | 2 062 | 2 391 | 2 263 | - 9 | - 5 |
| EBITDA | 696 | 893 | 835 | - 17 | - 13 |
| EBIT | |||||
| excluding restructuring and impairment | 482 | 513 | 471 | + 2 | – |
| EBIT | 297 | 513 | 471 | - 37 | - 37 |
| Net income | - 11 | 184 | 142 | – | – |
| As per | September 2003 | June 2003 | March 2003 | ||
| Net debt | 3 487 | 3 686 | 3 665 | ||
| Equity | 1 015 | 1 061 | 947 |
* The numbers for 2002 were restated to account for the disposals of business activities in 2002.
Disposals in 2002:
Emulsion Business of Division Textile, Leather & Paper Hydrosulfite North America of Division Textile, Leather & Paper Emulsion Business Portugal of Division Textile, Leather & Paper All activities were sold effective as per the end of 2002.
| Third quarterCHF mn | 2003Total operations | 2002Reported | 2002Pro-forma* | Change in %2003 total operationscompared with 2002 pro-formaCHF |
|---|---|---|---|---|
| Sales | 2 129 | 2 282 | 2 143 | - 1 |
| Gross profit | 650 | 740 | 698 | - 7 |
| EBITDA | 183 | 260 | 243 | - 25 |
| EBIT | ||||
| excluding restructuring and impairment | 127 | 139 | 128 | - 1 |
| EBIT | 84 | 139 | 128 | - 34 |
| Net income | 38 | 39 | – | – |
Overview
- Positive nine month performance, sales growth +1% in LC
- Gross margin affected by destocking, price pressure and increased raw material prices
- EBIT (excluding restructuring & impairment) improved EBITA (excluding restructuring & impairment) stable
- Measures introduced in the second quarter resulted in savings of CHF 87 m for the first nine months
- Restructuring charges in the quarter from plant closures amounting to additional CHF 43 m
- Net profit of CHF 38 m in the third quarter
- Transformation program well on-track
- Asset sale of Cellulose Ethers to Shin-Etsu Chemical Co., Ltd. for the price of EUR 241 million (around CHF 370 million)
| Nine monthCHF mn | 2003Continuingoperations | 2002continuingoperations | Change in % | |
|---|---|---|---|---|
| (restated*) | CHF | LC | ||
| Sales | 5 861 | 6 220 | - 6 | 0 |
| Gross profit | 1 865 | 2 077 | - 10 | - 6 |
| EBITDA | 597 | 748 | - 20 | - 18 |
| EBIT | 231 | 424 | - 46 | - 47 |
| Net income | - 75 | 95 | – | – |
* On August 5, 2003, Clariant announced that the Business Unit Cellulose Ethers pertaining to the division Functional Chemicals and the Business Unit Electronic Materials pertaining to the division Life Science & Electronic Chemicals would be sold. As a consequence, these activities are now
disclosed as Discontinuing Operations for both 2003 and 2002. In 2002, Clariant sold the Business Units Emulsions and Hydrosulfite pertaining to the division Textile, Leather & Paper. The numbers of these two Business Units are also included in Discontinuing Operations for 2002.
Clariant reports Sales Growth and positive Net Income in third quarter Cellulose Ethers business unit sold
Clariant increased sales in local currencies by 1% in the first nine months of 2003 over the same period a year earlier. Operating profit for the first nine months improved by 2% to CHF 482 million. The net loss year-to-date fell to CHF 11 million thanks to a net profit of CHF 38 million posted in the third quarter of 2003.
The active management of Clariant's working capital had a positive impact on operating cash flow, which reached CHF 217 million in the third quarter. Operating Cash flow after nine months increased to CHF 164 million. Clariant also announced the sale of the Cellulose Ethers business unit to Shin-Etsu Chemical Co., Ltd. for the price of EUR 241 million (around CHF 370 million).
Sales increase
Thanks to a strong September, Clariant lifted sales in local currencies over the first nine months by 1% versus the year-earlier period. Four divisions reported higher revenues, and only the Life Science & Electronic Chemicals Division (LSE) recorded a decline in sales in local currencies. This can be explained mainly by the ongoing decrease in sales volume in agrochemicals. Consolidated sales in Swiss francs fell by 5% to CHF 6 402 billion because of the strong appreciation of the Swiss franc against most major currencies. Clariant CEO Roland Lösser said: «Despite the continuing difficult market environment, we managed to raise our sales in local currencies slightly. We're particularly pleased by the growth in Asia, especially China, where we increased revenues by 20%.»
Results improved by cost savings
On a comparable basis, operating profit (EBIT) before restructuring came to CHF 482 million after nine months, a 2% advance on the year-earlier period (CHF 471 million1 ). The EBIT margin rose from 7.0% to 7.5% on the back of lower amortization charges and the cost-savings measures the company initiated in the second quarter. In addition to the restructuring charges of CHF 142 million reported in the half-year results, further restructuring charges of CHF 43 million were incurred in the third quarter for the closure of four agrochemical plants (Life Science & Electronic Chemicals Division) and one production facility for hydrosulfite (Textile, Leather & Paper Chemicals Division). After restructuring charges, EBIT amounted to CHF 297 million.
1 Pro-forma 2002
The net loss year-to-date fell to CHF 11 million because of a net profit of CHF 38 million delivered in the third quarter of 2003.
Positive cash flow trend
Operating cash flow increased by CHF 217 million in the third quarter because of a reduction in current assets. Following negative operating cash flow of CHF 53 million after six months, operating cash flow was positive after nine months, at CHF 164 million. As a result, Clariant was able to reduce its net debt to below CHF 3.5 billion. Equity remained virtually unchanged compared with June 30, 2003 at CHF 1 015 billion.
CEO Roland Lösser said: «The cash flow and EBIT trends are the first signs that the measures we have taken are beginning to take effect. The earnings situation makes it clear, though, that the cost-cutting measures announced as part of the Transformation Program are absolutely necessary.»
Transformation drive on course
The sale of Cellulose Ethers marks a first milestone in the disposal program. The projects in the first phase of the Clariant Performance Improvement Program have started up. The aim is to achieve cost savings in the coming year of at least CHF 100 million. «The transformation drive is making good progress,» Mr. Lösser said. «We can confirm our target of reducing net debt by Spring to below CHF 2.5 billion and improving EBIT by CHF 400 million in the next three to four years. We will thus raise our return on capital to over 12%.»
Cautious outlook
Given the uncertain economic situation, Clariant confirms the cautious outlook for fiscal 2003. CEO Roland Lösser stated the following guidance: «We expect that our sales in 2003 will be at about the same level as the previous year in local currencies and we are projecting a net profit for fiscal 2003.»
Overview
Macro Economic Conditions
Difficult market conditions continue to prevail throughout the third quarter of 2003, with underlying economic uncertainty affecting customer demand. The first signs of recovery that could be detected in Asia and the US have not yet reached the markets for Specialty Chemicals.
The severe movements of exchange rates that marked the first half of 2003 have abated during the third quarter. However the situation has not really done more than becoming stabilized. The strong decline of many currencies against the Swiss franc we suffered during the first six months were not recovered during the third quarter and impact the result of the first nine months compared to the same period of the prior year. Compared to the sales weighted average exchange-rates of the first nine months of the prior year, the most important currencies, that are significantly lower against the Swiss franc include the British Pound (down 6%), the US-Dollar (down 14%), the Japanese Yen (down 9%) and the Brazilian Real (down 7%), whereas the Euro appreciated by 3% over the same period.
As a result of the above, the overall negative impact on group sales was 6% for the first nine months as compared to 9% after six months.
Sales and Operating Result
Sales for the group in the third quarter of 2003 were 7% lower than reported sales a year earlier, both in Swiss Francs and local currencies. The corresponding figures for continuing operations1 were 2% lower. Growth from higher volumes was 1% in the third quarter. A 2% decline in average prices could not be compensated by volume growth. Local currency sales growth was lower in the third quarter than in the second as volume growth eased and pricing pressures increased. The Masterbatch Division increased sales in local currency terms.
In the third quarter cost of goods sold increased, reducing gross margins to 30.5% from 32.4%. Reduction in inventory and moderate volume growth led to lower capacity utilization. Raw material costs in the first nine months 2003 were higher than in the same period a year earlier, but were easing in the third quarter 2003.
Marketing and distribution costs increased slightly in the third quarter in relation to sales (to 15.1% from 14.9%), mainly because of the impact of higher insurance premiums.
Administration and general overheads in the third quarter decreased as a percentage of sales to 5.8 %, from 7.1%. This improvement was mainly achieved by specific cost-saving measures, including cuts in bonuses to personnel. These cost savings were partly due to release of provisions that will improve the cash flow over the next year.
The underlying net interest expense rate in the third quarter of 2003 was similar to the rate in 2002. Foreign exchange rate losses, mainly arising from financial debts denominated in currencies other than Swiss Franc, were lower than in the same period a year earlier.
Tax expenses were still negatively affected by the limited scope for capitalizing tax assets on expenses for restructuring and losses. In particular, there was no capitalization of tax assets on the plant closure in the US. In addition, the tax rate was influenced by a high proportion of profits generated in countries with high tax rates, such as Germany, Italy and Japan. In several countries tax-planning measures contributed important one-time items which brought down the overall tax rate substantially for the third quarter. With the improvement in operating performance, the tax rate is expected to normalize in the medium-term.
The net income for the third quarter of 2003 was CHF 38 million.
1 Continuing operations: On August 5, 2003, Clariant announced the intention to sell the Business Unit Cellulose Ethers and the Business Unit Electronic Materials. As a consequence these activities are now disclosed as Discontinuing Operations.
Balance Sheet Key Figures
Total assets declined slightly from CHF 8 791 billion in June 2003, to CHF 8 114 billion with several factors contributing to this development. The main effects were the reductions in the net working capital and a repayment of financial debt. A further effect was the slight depreciation of certain currencies – mainly the EURO and some Asian and South American currencies – against the Swiss Franc in the third quarter. This trend also affected equity, where the positive effect from foreign exchange variances was CHF 111 million at end of September 2003 compared to CHF 197 million at the end of the second quarter.
Net debt on September 30 was CHF 3 487 billion compared to CHF 3 686 billion on June 30, a decline of CHF 199 million in the third quarter. Apart from foreign exchange effects, this decline mainly reflects the reduction in net working capital initiated at the beginning of the third quarter. We expect working capital to be reduced further during the fourth quarter.
Gearing, which reflects net financial debt in relation to equity capital, including minorities, declined slightly from 326% on June 30 to 323% at the end of September 2003. Exchange rates variances of currencies with the Swiss Franc adversly affected equity.
Cash Flow
Cash flow (from operating activities before change in working capital) was CHF 429 million for the first nine months compared to CHF 319 million for first six months and compared to CHF 705 million for the first nine months of 2002. The reduced operating cash flow was mainly affected by the lower operating results.
Working capital has been reduced by more than CHF 100 million over the quarter. Cash flow from operating activities was CHF 164 million in the first nine months of 2003, compared with a negative CHF 53 million after six months and a positive CHF 525 million in the prior year period. Capital expenditure remained tightly constrained at CHF 199 million, equal to the amount reported for the same period of last year, considerably below depreciation of fixed assets.
For the fourth quarter of the year, a further substantial decline in inventories is expected.
Financial debts were reduced by CHF 247 million. The temporary cash drain was compensated for by a slight increase in short-term financial debt and a reduction in cash and cash equivalents.
Divisions
The divisional information given below refers to continuing operations only. On August 5, 2003, Clariant announced that the business unit Cellulose Ethers in the Division Functional Chemicals and the business unit Electronic Materials in the Life Science & Electronic Chemicals Division will be sold. As a consequence, these activities are now disclosed as discontinuing operations for both 2003 and 2002. In 2002, Clariant sold the business units Emulsions and Hydrosulfite, in the Textiles, Leather & Paper Division. The figures from these two business units are also included in discontinuing operations for 2002.
Textile, Leather & Paper Chemicals (Continuing operations)
| Nine month | 2003 | 2002* | Change in % | |
|---|---|---|---|---|
| CHF | LC | |||
| Sales (CHF mn) | 1 632 | 1 752 | - 7 | + 1 |
| EBITDA (CHF mn) | 161 | 224 | - 28 | - 18 |
| EBITDA margin in % | 9.9 | 12.8 | – | – |
| * restated |
Continuous price pressure in the commodities area are affecting the performance in the Textile, Leather & Paper Chemicals Division. Driven by a moderate volume development, sales grew 1% in local currencies. Margins were lower than in the year earlier period, mainly due to lower capacity utilization.
The negative trend in the area of Textile Dyes is easing, but structural changes in the industry are still continuing. Strong interest from global retailers for Textile Chemicals offset the pressure on commodity business for traditional textiles and led to good volume growth and stable prices.
«Wet-end» chemicals as well as dyes for Clariant's Leather business experienced increased price pressure in addition to unfavorable raw material costs. The higher value-added finishing business is resilient to the economic environment. Good capacity utilization and positive volume developments for Paper Chemicals were offset by increased price pressure especially for optical brighteners. The plant closure in the UK completes the exit from the hydrosulfite business.
Pigments & Additives
| Nine month | 2003 | 2002 | Change in % | |
|---|---|---|---|---|
| CHF | LC | |||
| Sales (CHF mn) | 1 334 | 1 402 | - 5 | + 1 |
| EBITDA (CHF mn) | 195 | 225 | - 13 | - 10 |
| EBITDA margin in % | 14.6 | 16.0 | – | – |
Throughout the first nine months of the year the Pigments & Additives Division showed continuing flat sales with a good volume development. Margins declined mainly due to lower prices and capacity utilization.
The Coatings business showed a positive picture with fire protection coatings as well as plastic additives developing well. Automotive and industry coatings remained at a lower level compared to last year. A weak demand especially in the publishing area for chemicals for Printing Industries and continuous customer consolidation had a negative impact on the sales and performance for this business. Products for Plastics showed good development as prices were maintained in an increasingly competitive environment. The demand for products for Specialized Industries showed stable development and good progress.
Masterbatches
| Nine month | 2003 | 2002 | Change in % | |
|---|---|---|---|---|
| CHF | LC | |||
| Sales (CHF mn) | 789 | 793 | - 1 | + 5 |
| EBITDA (CHF mn) | 87 | 105 | - 17 | - 13 |
| EBITDA margin in % | 11.0 | 13.2 | – | – |
Continuous growth in volumes in the Masterbatches Division led to an increase in sales in local currencies of 5%. Sales prices were maintained in the third quarter despite competitive market conditions. Margins have been affected by unfavourable but stabilizing raw material prices.
The regions showed a mixed picture. Europe saw an easing of demand in the third quarter, NAFTA reported stable sales. Latin America showed seasonal strong growth, Asia and especially China remained strong.
| Functional Chemicals (Continuing operations) | ||||||
|---|---|---|---|---|---|---|
| Nine month | 2003 | 2002* | Change in % | |||
| CHF | LC | |||||
| Sales (CHF mn) | 1 303 | 1 350 | - 3 | + 2 | ||
| EBITDA (CHF mn) | 123 | 121 | + 2 | - 1 | ||
| EBITDA margin in % | 9.4 | 9.0 | – | – | ||
| * restated |
The Functional Chemicals Division showed stable sales and margins. Sales grew 2% in local currencies as prices and volumes were increased. As raw material costs were stable, the operating margin has been mainly improved by the good volume development.
The Detergent business saw an increased demand especially in Europe. The Performance Chemicals business in the industrial sector showed stable sales against a declining demand in the consumer sector. Price increases for Process Chemicals were achieved as new innovative products such as gas inhibitors for the oilfield industry were introduced.
Life Science & Electronic Chemicals (Continuing operations)
| Nine month | 2003 | 2002* | Change in % | |
|---|---|---|---|---|
| CHF | LC | |||
| Sales (CHF mn) | 803 | 923 | - 13 | - 10 |
| EBITDA (CHF mn) | 12 | 82 | - 85 | - 87 |
| EBITDA margin in % | 1.5 | 8.9 | – | – |
| * restated |
The weak results for the Life Science & Electronic Chemicals Division were mainly characterized by the following: Unsatisfying results from agrochemical products, the competitive environment for chemicals for the pharma industry and adverse currency movements. Sales in local currency terms decreased by 10% as volumes and prices declined. Margins were squeezed compared to the year before, mainly due to pressure on price, lower volumes and restructuring charges.
Promising developments in the segment of generics supported stable sales for Pharma intermediates against a continuing weak demand in the market. The implementation of the strategy as well as initiatives to improve the unit's performance showed some results in the third quarter. Continued price pressure from Asia compounded by the strong Euro led to a further deterioration in the agrochemicals segment of the Custom Synthesis business unit. After a solid performance in the first half of 2003, Specialty Fine Chemicals sales declined in the third quarter.
Discontinuing Operations
Cellulose Ethers showed a stable development amongst a market characterized by an easing demand in the construction industry and increasing competition trying to regain market share.
Electronic Materials achieved a significant growth in volumes with easing prices. This development was mainly drivend by an strong demand for flat panels.
Regional Developments (based on continuing operations)
Europe
In the first nine months 2003, the European sales of group companies accounted for 47% of Group turnover. Sales decreased by 1% in Swiss Franc terms and 3% in local currency terms. In Central Europe, sales were slightly above the previous year, while in the UK, sales were limited by weak demand in almost all business sectors.
Americas
Group companies' sales in the Americas contributed 24% of group turnover for the first nine months of 2003. Sales increased by 3% in local currency terms, but declined by 15% in Swiss Franc terms. The devaluation of some currencies in this region was considerable compared to the first nine months of 2002 (Brazil -27%, Mexico -23% and US -14% against the Swiss Franc).
Asia, Africa, Australia
In the first nine months of 2003, group companies' sales in Asia, Australia and Africa contributed 20% of group sales. In local currency terms, sales grew by 4%, and decreased by 4% in Swiss Franc terms. This was due to the weak currency developments in Hong Kong (-15%), India (-11%), Korea (-10%) and Japan (-9%) compared to the Swiss Franc. Considerable sales growth in local currencies was achieved in China (20%) and Pakistan (11%).
Consolidated Financial Statements of the Clariant Group at November 4, 2003
unaudited, all amounts in CHF mn
According to the requirements of the International Financial Reporting Standards (IFRS), an enterprise that has announced the intention to dispose business activities shall report these businesses as discontinued operations.
tion to sell the Business Unit Cellulose Ethers, part of the Division Functional Chemicals, and the Business Unit Electronic Materials, part of the Division Life Science & Electronics. As a consequence, these activities are now disclosed as Discontinuing Operations for both 2003 and 2002.
On August 5, 2003, Clariant announced the inten-
Income Statements
| Income Statements of the GroupNine month | CHF mn | 2003% | CHF mn | 2002% |
|---|---|---|---|---|
| Sales | 6 402 100.0 | 7 121 100.0 | ||
| Cost of goods sold | - 4 340 | 67.8 | - 4 730 | 66.4 |
| Gross profit | 2 062 | 32.2 | 2 391 | 33.6 |
| Marketing and distribution | - 967 | 15.1 | - 1 044 | 14.7 |
| Research and development | - 229 | 3.5 | - 264 | 3.7 |
| Income from affiliated companies | 21 | 0.3 | 27 | 0.4 |
| Administration and general overhead costs | - 382 | 6.0 | - 536 | 7.7 |
| Operating income before impairment and amortization of goodwill | 505 | 7.9 | 574 | 8.1 |
| Restructuring and impairment | - 185 | 2.9 | ||
| Amortization of goodwill | - 23 | 0.4 | - 61 | 0.9 |
| Operating income after impairment and amortization of goodwill | 297 | 4.6 | 513 | 7.2 |
| Financial result 1) | - 180 | - 169 | ||
| Income before taxes and minority interests | 117 | 1.8 | 344 | 4.8 |
| Taxes | - 120 | - 153 | ||
| Income before minority interests | - 3 - 0.0 | 191 | 2.7 | |
| Minority interests | - 8 | - 7 | ||
| Net income/loss of the Group | - 11 | - 0.2 | 184 | 2.6 |
| Earnings per share (CHF) 2) | - 0.07 | 1.22 | ||
| Diluted earnings per share (CHF) 3) | - 0.07 | 1.22 |
-
of which currency losses in 2003 CHF 52 mn, currency losses in 2002 CHF 37 mn
-
calculated with average, weighted number of shares outstanding
-
calculated with average, weighted, diluted number of shares outstanding
| Key FinancialIncome Statement Figures | DivisionsTotal | Corporate | TotalContinuingOperations | Discontinuing | TotalOperations | Total | ||||
|---|---|---|---|---|---|---|---|---|---|---|
| Nine monthCHF mn | 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | 2003 | 2002 |
| Sales | 5 861 | 6 220 | – | – | 5 861 | 6 220 | 541 | 901 | 6 402 | 7 121 |
| EBITDA | 578 | 757 | 19 | - 9 | 597 | 748 | 99 | 145 | 696 | 893 |
| EBIT | 248 | 459 | - 17 | - 35 | 231 | 424 | 66 | 89 | 297 | 513 |
Income Statements
| Income Statements of the Group | ||||
|---|---|---|---|---|
| Third quarter | CHF mn | 2003% | CHF mn | 2002% |
| Sales | 2 129 100.0 | 2 282 100.0 | ||
| Cost of goods sold | - 1 479 | 69.5 | - 1 542 | 67.6 |
| Gross profit | 650 | 30.5 | 740 | 32.4 |
| Marketing and distribution | - 322 | 15.1 | - 339 | 14.9 |
| Research and development | - 77 | 3.6 | - 87 | 3.8 |
| Income from affiliated companies | 6 | 0.3 | 6 | 0.3 |
| Administration and general overhead costs | - 122 | 5.8 | - 161 | 7.1 |
| Operating income before impairment and amortization of goodwill | 135 | 6.3 | 159 | 6.9 |
| Restructuring and impairment | - 43 | 2.0 | ||
| Amortization of goodwill | - 8 | 0.4 | - 20 | 0.9 |
| Operating income after impairment and amortization of goodwill | 84 | 3.9 | 139 | 6.1 |
| Financial result 1) | - 36 | - 57 | ||
| Income before taxes and minority interests | 48 | 2.3 | 82 | 3.6 |
| Taxes | - 7 | - 41 | ||
| Income before minority interests | 41 | 1.9 | 41 | 1.8 |
| Minority interests | - 3 | - 2 | ||
| Net income/loss of the Group | 38 | 1.8 | 39 | 1.7 |
| Earnings per share (CHF) 2) | 0.26 | 0.26 | ||
| Diluted earnings per share (CHF) 3) | 0.26 | 0.26 |
-
of which currency losses in 2003 CHF 2 mn, currency losses in 2002 CHF 8 mn
-
calculated with average, weighted number of shares outstanding
-
calculated with average, weighted, diluted number of shares outstanding
Sales
| Sales of Divisionsto 3rd parties | ||||
|---|---|---|---|---|
| Nine month | 2003 | 2002 | Change in % | |
| CHF mn | Restated* | in CHF | in LC | |
| Textile, Leather & Paper Chemicals | 1 632 | 1 752 | - 7 | + 1 |
| Pigments & Additives | 1 334 | 1 402 | - 5 | + 1 |
| Masterbatches | 789 | 793 | - 1 | + 5 |
| Functional Chemicals | 1 303 | 1 350 | - 3 | + 2 |
| Life Science & Electronic Chemicals | 803 | 923 | - 13 | - 10 |
| Total continuing operations | 5 861 | 6 220 | - 6 | 0 |
| Discontinuing operations | 541 | 901 | ||
| Total Group | 6 402 | 7 121 | - 10 | - 4 |
EBITDA
| Nine month | 2003 | 2002 | Change in % | |
|---|---|---|---|---|
| CHF mn | Restated* | in CHF | in LC | |
| Textile, Leather & Paper Chemicals | 161 | 224 | - 28 | - 18 |
| Pigments & Additives | 195 | 225 | - 13 | - 10 |
| Masterbatches | 87 | 105 | - 17 | - 13 |
| Functional Chemicals | 123 | 121 | + 2 | - 1 |
| Life Science & Electronic Chemicals | 12 | 82 | - 85 | - 87 |
| Corporate | 19 | - 9 | ||
| Total continuing operations | 597 | 748 | - 20 | - 18 |
| Discontinuing operations | 99 | 145 | ||
| Total Group | 696 | 893 | - 22 | - 19 |
EBIT
| Nine month | 2003 | 2002 | Change in % | |
|---|---|---|---|---|
| CHF mn | Restated* | in CHF | in LC | |
| Textile, Leather & Paper Chemicals | 105 | 149 | - 30 | - 24 |
| Pigments & Additives | 141 | 167 | - 16 | - 11 |
| Masterbatches | 65 | 82 | - 21 | - 18 |
| Functional Chemicals | - 19 | 79 | na | na |
| Life Science & Electronic Chemicals | - 44 | - 18 | na | na |
| Corporate | - 17 | - 35 | ||
| Total continuing operations | 231 | 424 | - 46 | - 47 |
| Discontinuing operations | 66 | 89 | ||
| Total Group | 297 | 513 | - 42 | - 43 |
* On August 5, 2003, Clariant announced that the Business Unit Cellulose Ethers pertaining to the division Functional Chemicals and the Business Unit Electronic Materials pertaining to the division Life Science & Electronic Chemicals would be sold. As a consequence, these activities are now
Sales
| Sales of Divisions | to 3rd parties | |||
|---|---|---|---|---|
| Third quarter | 2003 | 2002 | Change in % | |
| CHF mn | Restated* | in CHF | in LC | |
| Textile, Leather & Paper Chemicals | 550 | 557 | - 1 | 0 |
| Pigments & Additives | 434 | 451 | - 4 | - 4 |
| Masterbatches | 264 | 253 | + 4 | + 3 |
| Functional Chemicals | 437 | 433 | + 1 | - 1 |
| Life Science & Electronic Chemicals | 249 | 274 | - 9 | - 10 |
| Total continuing operations | 1 934 | 1 968 | - 2 | - 2 |
| Discontinuing operations | 195 | 314 | ||
| Total Group | 2 129 | 2 282 | - 7 | - 7 |
EBITDA
| Third quarter | 2003 | 2002 | Change in % | |
|---|---|---|---|---|
| CHF mn | Restated* | in CHF | in LC | |
| Textile, Leather & Paper Chemicals | 35 | 63 | - 44 | - 41 |
| Pigments & Additives | 49 | 50 | - 2 | - 4 |
| Masterbatches | 26 | 28 | - 7 | - 12 |
| Functional Chemicals | 55 | 52 | + 6 | - 26 |
| Life Science & Electronic Chemicals | - 28 | 11 | na | na |
| Corporate | 8 | 10 | ||
| Total continuing operations | 145 | 214 | - 32 | - 41 |
| Discontinuing operations | 38 | 46 | ||
| Total Group | 183 | 260 | - 30 | - 31 |
EBIT
| Third quarterCHF mn | 2003 | 2002Restated* | Change in %in CHF | in LC |
|---|---|---|---|---|
| Textile, Leather & Paper Chemicals | 17 | 39 | - 56 | - 59 |
| Pigments & Additives | 31 | 32 | - 3 | - 2 |
| Masterbatches | 18 | 22 | - 18 | - 18 |
| Functional Chemicals | 40 | 39 | + 3 | + 17 |
| Life Science & Electronic Chemicals | - 47 | - 19 | na | na |
| Corporate | - 2 | - 5 | ||
| Total continuing operations | 57 | 108 | - 47 | - 44 |
| Discontinuing operations | 27 | 31 | ||
| Total Group | 84 | 139 | - 40 | - 41 |
* On August 5, 2003, Clariant announced that the Business Unit Cellulose Ethers pertaining to the division Functional Chemicals and the Business Unit Electronic Materials pertaining to the division Life Science & Electronic Chemicals would be sold. As a consequence, these activities are now
disclosed as Discontinuing Operations for both 2003 and 2002. In 2002, Clariant sold the Business Units Emulsions and Hydrosulfite pertaining to the division Textile, Leather & Paper. The numbers of these two Business Units are also included in Discontinuing Operations for 2002.
12
EBITDA/EBIT Margin
| EBITDA | ||||
|---|---|---|---|---|
| Nine month | 2003 | % of | 2002 | % of |
| CHF mn | sales | Restated* | sales | |
| Textile, Leather & Paper Chemicals | 161 | 9.9 | 224 | 12.8 |
| Pigments & Additives | 195 | 14.6 | 225 | 16.0 |
| Masterbatches | 87 | 11.0 | 105 | 13.2 |
| Functional Chemicals | 123 | 9.4 | 121 | 9.0 |
| Life Science & Electronic Chemicals | 12 | 1.5 | 82 | 8.9 |
| Corporate | 19 | - 9 | ||
| Total continuing operations | 597 | 10.2 | 748 | 12.0 |
| Discontinuing operations | 99 | 145 | ||
| Total Group | 696 | 10.9 | 893 | 12.5 |
| EBITNine month | 2003 | % of | 2002 | % of |
| CHF mn | sales | Restated* | sales | |
| Textile, Leather & Paper Chemicals | 105 | 6.4 | 149 | 8.5 |
| Pigments & Additives | 141 | 10.6 | 167 | 11.9 |
| Masterbatches | 65 | 8.2 | 82 | 10.3 |
| Functional Chemicals | - 19 | - 1.5 | 79 | 5.9 |
| Life Science & Electronic Chemicals | - 44 | - 5.5 | - 18 | - 1.9 |
| Corporate | - 17 | - 35 | ||
| Total continuing operations | 231 | 3.9 | 424 | 6.8 |
| Discontinuing operations | 66 | 89 | ||
| Total Group | 297 | 4.6 | 513 | 7.2 |
* On August 5, 2003, Clariant announced that the Business Unit Cellulose Ethers pertaining to the division Functional Chemicals and the Business Unit Electronic Materials pertaining to the division Life Science & Electronic Chemicals would be sold. As a consequence, these activities are now
EBITDA/EBIT Margin
| EBITDAThird quarterCHF mn | 2003 | % ofsales | 2002Restated* | % ofsales |
|---|---|---|---|---|
| Textile, Leather & Paper Chemicals | 35 | 6.4 | 63 | 11.3 |
| Pigments & Additives | 49 | 11.3 | 50 | 11.1 |
| Masterbatches | 26 | 9.8 | 28 | 11.1 |
| Functional Chemicals | 55 | 12.6 | 52 | 12.0 |
| Life Science & Electronic Chemicals | - 28 | - 11.2 | 11 | 4.0 |
| Corporate | 8 | 10 | ||
| Total continuing operations | 145 | 7.5 | 214 | 10.9 |
| Discontinuing operations | 38 | 46 | ||
| Total Group | 183 | 8.6 | 260 | 11.4 |
| EBITThird quarterCHF mn | 2003 | % ofsales | 2002Restated* | % ofsales |
| Textile, Leather & Paper Chemicals | 17 | 3.1 | 39 | 7.0 |
| Pigments & Additives | 31 | 7.1 | 32 | 7.1 |
| Masterbatches | 18 | 6.8 | 22 | 8.7 |
| Functional Chemicals | 40 | 9.2 | 39 | 9.0 |
| Life Science & Electronic Chemicals | - 47 | - 18.9 | - 19 | - 6.9 |
| Corporate | - 2 | - 5 | ||
| Total continuing operations | 57 | 2.9 | 108 | 5.5 |
Discontinuing operations 27 31
Total Group 84 3.9 139 6.1 * On August 5, 2003, Clariant announced that the Business Unit Cellulose Ethers pertaining to the division Functional
Chemicals and the Business Unit Electronic Materials pertaining to the division Life Science & Electronic Chemicals would be sold. As a consequence, these activities are now
Sales by Regions
| Nine month | 2003 | 2002Restated* | Change in % | |||
|---|---|---|---|---|---|---|
| CHF mn | % | CHF mn | % | CHF | LC | |
| Europe | 3 026 | 47 | 3 056 | 43 | - 1 | - 3 |
| of which Germany | 862 | 13 | 815 | 11 | ||
| Americas | 1 563 | 24 | 1 838 | 26 | - 15 | + 3 |
| of which USA | 873 | 14 | 1 034 | 15 | ||
| Asia / Australia/ Africa | 1 272 | 20 | 1 326 | 19 | - 4 | + 4 |
| Total continuing operations | 5 861 | 6 220 | - 6 | + 0 | ||
| Discontinuing operations | 541 | 9 | 901 | 12 | ||
| Total Group | 6 402 | 100 | 7 121 | 100 |
* On August 5, 2003, Clariant announced that the Business Unit Cellulose Ethers pertaining to the division Functional Chemicals and the Business Unit Electronic Materials pertaining to the division Life Science & Electronic Chemicals would be sold. As a consequence, these activities are now
Balance Sheet
| Assets | 30.9.2003 | 30.6.2003 | 31.12.2002 | |||
|---|---|---|---|---|---|---|
| CHF mn | % | CHF mn | % | CHF mn | % | |
| Long-term assets | ||||||
| Tangible fixed assets | 2 953 | 3 012 | 3 055 | |||
| Intangible assets | 462 | 472 | 489 | |||
| Financial assets | 738 | 851 | 807 | |||
| Total long-term assets | 4 153 | 51.2 | 4 335 | 49.3 | 4 351 | 50.9 |
| Current assets | ||||||
| Inventories | 1 731 | 1 842 | 1 689 | |||
| Trade accounts receivable | 1 392 | 1 477 | 1 379 | |||
| Other current assets | 373 | 460 | 413 | |||
| Cash and short-term deposits | 465 | 677 | 718 | |||
| Total current assets | 3 961 | 48.8 | 4 456 | 50.7 | 4 199 | 49.1 |
| Total assets | 8 114 | 100.0 | 8 791 | 100.0 | 8 550 | 100.0 |
| Equity and liabilities | 30.9.2003 | 30.6.2003 | 31.12.2002 | |||
| CHF mn | % | CHF mn | % | CHF mn | % | |
| Equity | ||||||
| Share capital | 767 | 767 | 767 | |||
| Treasury shares (par value) | - 18 | - 18 | - 19 | |||
| Reserves | 266 | 312 | 166 | |||
| Total equity | 1 015 | 12.5 | 1 061 | 12.1 | 914 | 10.7 |
| Minority interests | 66 | 0.8 | 67 | 0.8 | 63 | 0.7 |
| Liabilities | ||||||
| Long-term liabilities | ||||||
| Financial debts | 2 693 | 3 119 | 3 102 | |||
| Other long-term liabilities | 1 330 | 1 490 | 1 465 | |||
| Total long-term liabilities | 4 023 | 4 609 | 4 567 | |||
| Short-term liabilities | ||||||
| Financial debts | 1 259 | 1 244 | 1 092 | |||
| Trade accounts payable | 551 | 617 | 705 | |||
| Other short-term liabilities | 1 200 | 1 193 | 1 209 | |||
| Total short-term liabilities | 3 010 | 3 054 | 3 006 | |||
| Total liabilities | 7 033 | 86.7 | 7 663 | 87.1 | 7 573 | 88.6 |
| Total equity and liabilities | 8 114 | 100.0 | 8 791 | 100.0 | 8 550 | 100.0 |
Cash Flow Statement
| CHF in millions | 30.9.2003 | 30.6.2003 | 30.9.2002 |
|---|---|---|---|
| Net Result | - 11 | - 49 | 184 |
| Depreciation of fixed assets | 371 | 281 | 311 |
| Depreciation of goodwill | 23 | 15 | 61 |
| Depreciation of intangibles | 5 | 4 | 8 |
| Changes in long term liabilities | 24 | 12 | 160 |
| Other non-cash items | 17 | 56 | - 19 |
| Operating Cash Flow before changes in working capital | 429 | 319 | 705 |
| Changes in inventory | - 68 | - 123 | - 64 |
| Changes in trade receivables | 12 | - 51 | - 117 |
| Changes in trade payables | - 175 | - 117 | - 80 |
| Changes in short-term liabilities and other current assets | - 34 | - 81 | 81 |
| Operating Cash Flow | 164 | - 53 | 525 |
| Investments in tangible fixed assets | - 199 | - 125 | - 199 |
| Investments in financial fixed assets | 0 | 0 | - 33 |
| Investments in other intangibles | - 1 | - 1 | - 4 |
| Disposals | 2 | 1 | 9 |
| Acquisitions | - 3 | - 3 | 0 |
| Dividends from associated companies | 31 | 27 | 100 |
| Total cash flow from investing activities | - 170 | - 101 | - 127 |
| Cash Flow before financing activities | - 6 | - 154 | 398 |
| Treasury share transactions | 5 | 3 | -45 |
| Changes in short and long term financial debts and securities | - 247 | 110 | - 288 |
| Dividends paid to minorities | - 6 | - 2 | - 5 |
| Dividends paid | 0 | 0 | - 46 |
| Cash Flow from financing activities | - 248 | 111 | - 384 |
| Currency translation effect on cash and short-term deposits | 1 | 2 | - 14 |
| Change in cash and cash equivalents | - 253 | - 41 | 0.0 |
| Cash and cash equivalents on 1.1.2003 / 2002 | 718 | 718 | 544.0 |
| Cash and cash equivalents at the end of period | 465 | 677 | 544.0 |
Further Key Figures
| Nine monthCHF mn | 2003% | 2002% |
|---|---|---|
| Net interest expense | 128 | 133 |
| Interest coverage EBITDA | 5.4x30.9.2003 | 6.7x30.9.2002 |
| Gearing (= net financial debt in % of equity incl. minorities) | 323 | 345 |
| Number of employees | 27 671 | 28 779 |
Statement of Changes in Equity
| Nine monthCHF mn | Share RetainedPremium earnings | Cumu-Trans-lation | Totallative reserves | share | Total Treasurysharecapital par value | Totalequity | |
|---|---|---|---|---|---|---|---|
| Balance 31.12.2002 | 1 888 | - 1 378 | - 344 | 166 | 767 | - 19 | 914 |
| Dividends to 3rd parties | |||||||
| Dividends on treasury shares | |||||||
| Treasury shares transactions | 1 | 1 | |||||
| Translation effects | 111 | 111 | 111 | ||||
| Net income | - 11 | - 11 | - 11 | ||||
| Balance 30.9.2003 | 1 888 | - 1 389 | - 233 | 266 | 767 | - 18 | 1 015 |
Per Share Data
| Nine month | 2003 | 2002 |
|---|---|---|
| Number of shares outstanding at 30.9.2003 resp. 30.9.2002 | 153 440 000 | 153 440 000 |
| Average, weighted number of shares outstanding | 149 797 020 | 151 059 607 |
| Average, weighted, diluted number of shares outstanding | 149 797 020 | 151 059 607 |
| Earnings per share (in CHF) 1) | - 0.07 | 1.22 |
| Diluted earnings per share (in CHF) 2) | - 0.07 | 1.22 |
- calculated with average, weighted number of shares
outstanding
- calculated with average, weighted, diluted number of shares outstanding
Rates
| Rates used to translate the consolidatedbalance sheets (closing rate) | 30.9.2003 | 31.12.2002 | Change% | |
|---|---|---|---|---|
| 1 USD | 1.32 | 1.39 | - 5 | |
| 1 EUR | 1.54 | 1.45 | + 6 | |
| 1 GBP | 2.20 | 2.23 | - 1 | |
| 100 JPY | 1.19 | 1.17 | + 2 | |
| Average sales-weighted rates used totranslate the income statements andconsolidated statements of cash flow | Nine month 2003 | Nine month 2002 | Change% | |
| 1 USD | 1.36 | 1.59 | - 14 | |
| 1 EUR | 1.51 | 1.47 | + 3 | |
| 1 GBP | 2.19 | 2.34 | - 6 |
Forward-looking statements
Calendar of Corporate Events
February 24, 2004 2003 Full Year Results April 2, 2004 Annual General Meeting
| Contact | ||
|---|---|---|
Clariant International Ltd Investor Relations Rothausstrasse 61 CH-4132 Muttenz 1, Switzerland
Tel. +41 61 469 67 48 Fax +41 61 469 67 67 www.clariant.com/investors 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 on 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.
Clariant – Exactly your chemistry.
Based at Muttenz near Basel, Switzerland, Clariant is a global leader in the field of fine and specialty chemicals. Some 28 000 employees in more than 100 Group companies on five continents generate annual sales of over CHF 8 billion.
Clariant is divided into five Divisions: Textile, Leather & Paper Chemicals, Pigments & Additives, Masterbatches, Functional Chemicals, Life Science & Electronic Chemicals.
Clariant's innovative products play a decisive role in the customers' manufacturing and treatment processes or add value to their end-products. The company's success is based on the know-how of its staff, and on their ability to identify new customer needs at an early stage and to work together with customers to find innovative, efficient solutions.
Clariant is committed to sustainable growth springing from its own innovative strength. Our objective is to achieve 30% of sales with products and services that are no more than five years old.
Financial Review 2003
Clariant International Ltd Investor Relations Rothausstrasse 61 CH-4132 Muttenz 1, Switzerland