Clariant AG — Interim / Quarterly Report 2004

Nov 25, 2004

Clariant International AG

Rothausstrasse 61 CH-4132 Muttenz 1/ Switzerland November 9, 2004

News Release

Clariant Posts Strong 9-Month Results Sales and Cash Flow Significantly Higher

• Sales grew 7% in local currency terms, to CHF 6.550 billion; volume up 10%
• Net income rose sharply, to CHF 170 million, from CHF 49 million loss
• Strong sales in Americas and Asia; modest growth in Europe
• Improved pricing trend in nearly all businesses
• Operating cash flow surged to CHF 561 million, from CHF 164 million
• Transformation Program well on-track

Key Financial Group Figures (in CHF mn)

Nine Months	2004	% ofsales	2003	20031	% ofsales	% Changevs. like-for-like
			(reported)	(like-for-like)		CHF	LC
Sales	6,550	100.0	6,402	6,159	100.0	+6	+7
Gross profit	2,106	32.2	2,062	1,984	32.2	+6	+7
EBITDA*	746	11.4	696	648	10.5	+15	+18
EBITDA before exceptional items*	760	11.6	774	724	11.8	+5	+7
Operating income before exceptionalitems and amortization of goodwill*	517	7.9	505	466	7.6	+11	+13
Operating income	469	7.2	297	258	4.2	+82	+89
Net income/ loss	170	2.6	-11	-49		-	-
Operating Cash Flow	561		164

as per	Sep 04	Dec 03	Sep 03
Net debt*	1,304	2,905	3,487
Equity	2,242	1,176	1,015
Gearing	57%	234%	323%
Number of employees	25,082	27,008	27,671

Third Quarter	2004	% ofsales	2003	20031	% ofsales	% Changevs. like-for-like
			(reported)	(like-for-like)		CHF	LC
Sales	2,131	100.0	2,129	2,041	100.0	+4	+9
Gross profit	647	30.4	650	622	30.4	+4	+8
EBITDA*	245	11.5	183	166	8.1	+48	+60
EBITDA before exceptional items*	215	10.1	225	206	10.1	+4	+6
Operating income before exceptional	130	6.1	135	121	5.9	+7	+9
items and amortization of goodwill*
Operating income	152	7.1	84	70	3.4	-	-
Net income/ loss	44	2.1	38	25	1.2	-	-
Operating Cash Flow	241		217
1

The numbers for 2003 were like-for-like to account for the sales of business activities in 2003. Sales in 2003: Cellulose Ethers of Division Functional Chemicals and AP Chemicals, UK, of Division Life Science and Electronic Chemicals. All activities were sold effective as per the end of 2003.

* See Definitions of Terms of Financial Measurements on page 13

MUTTENZ, Switzerland – Nov. 9, 2004 -- Clariant reported strong results for the first nine months of the year, with sales on a like-for-like basis increasing 7% in local currency terms and operating margins before exceptional items improving to 7.9%, from 7.6%.

Growth was in evidence across all regions, especially in the Americas and in Asia, while signs of recovery were visible in Europe. Sales in the Third Quarter were particularly robust, up 9% in local currency terms. The company reported a better pricing climate for its products and said it will continue to increase prices.

Among the other financial highlights, operating income before exceptional items and amortization of goodwill improved to CHF 517 million from CHF 466 million over the same period in 2003, while operating cash flow surged to CHF 561 million, from CHF 164 million.

Sales in local currency terms on a like-for-like basis over the nine-month period totalled CHF 6.550 billion, up from CHF 6.159 billion a year earlier. Volume growth – at 10% was again particularly strong. Sales growth on a continuing basis was strongest in the Americas region, up 11% in local currency terms, followed by Asia, Australia and Africa, at 9%, with European sales up 2%.

Gross profit rose by 6% to CHF 2.106 billion, from CHF 1.984 billion, while Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) grew 15%, to CHF 746 million, from CHF 648 million. Net debt dropped substantially during the period, to CHF 1.304 billion, from CHF 3.487 billion a year earlier.

Business Growing Well Amid Transformation Process

The company also reported good progress on its Transformation Program, which is creating efficiencies throughout the organization, cutting cost and enabling a sharper focus on businesses where it already has or is able to gain a competitive advantage.

"These results demonstrate what determination and hard work can achieve," said Clariant Chief Executive Roland Loesser. "We have been able to substantially grow the business while simultaneously driving costs down and creating a revitalized company with excellent long-term prospects. This is exactly what is demanded by the competitive marketplace we are in."

Strength Visible Across Nearly All Businesses

Growth was strong across most businesses units, particularly in service-driven areas. Businesses still under considerable pressure include Textile Dyes and Pharma Chemicals, where overcapacities in the industry prevent satisfactory performance.

Functional Chemicals reported a 13% increase in local currency terms, followed by Masterbatches, at 8%, Pigments & Additives at 6% and Textile, Leather & Paper Chemicals, at 4%. Only Life Science Chemicals posted negative numbers, with a 4% decline. EBITDA margins before exceptional items improved in every division, particularly in Pigments & Additives, where they rose to 16.4%, from 14.6% due to better capacity utilization, and in Masterbatches, where they climbed to 12.6%, from 11.3% because of stronger volumes.

Clariant's focus on innovative, service-driven business has begun to show results, with the company receiving good feedback on two new market-leading businesses it launched in the Third Quarter. Exolit OP®, a range of halogen-free flame retardants that conform to new European environmental directives, provides technical advantages and cost-effective solutions. The range is now being used in plastics for equipment made by major electronic manufacturers.

In addition, Licocene®, a range of metallocene waxes, is being used by numerous customers as a bonding and coupling agent in glass fiber reinforced polymers and as dispersion agent in pigment preparations and coatings. Their exceptional properties enable Clariant to provide tailor-made waxes according to individual customer specifications in the plastics, coatings and automotive industries. Response so far to both the Exolit OP® and Licocene® ranges has been very encouraging.

Clariant Holds Broadly Positive Outlook

Mr. Loesser issued a broadly positive outlook for the company for the remainder of the year, expecting continuing sales and operating income, excluding performance improvement costs, to be above 2003 levels. "We are very confident about our overall targets because we have already achieved substantial savings this year," he said. "In addition, the significant improvement of our cash flow is a clear indication that the program is taking hold."

Mr. Loesser confirmed the on-time achievement of the program's objectives, namely at least CHF 100 million in cost reductions this year and approx. another CHF 300 million in 2005. "We are moving into the intense implementation part of the program, and we are confident that this is when many of the long-term benefits will be generated."

"Clariant should continue to grow above the market amid a positive macro economic climate," Mr. Loesser said. "We expect good progress on our Transformation Program in the Fourth Quarter and beyond, which will sustainably improve our performance."

-end-

Financial Review

Financial Discussion

Economic Environment

Market conditions developed positively worldwide. Global economic growth continued, particularly strong in the U.S., China and the rest of Asia. However, there was reduced momentum in the Third Quarter compared to the first two Quarters of the year. Europe's economic recovery continued while the relatively high level of the British pound hampered the UK recovery. Geopolitical risks remained. Raw material prices were higher in the Third Quarter 2004 compared to the previous quarters as oil and gas prices increased further.

The major European currencies developed positively against the Swiss Franc. However, the U.S. Dollar and currencies in Asia and Latin America declined significantly versus the Franc.

Compared to the sales-weighted average exchange rates of the third three months of the previous year, the exchange rate of the British Pound (up 5%), Euro (up 3%) and Japanese Yen (up 1%) continued to appreciate against the Swiss Franc; whereas the most important currency that was significantly lower against the Swiss Franc was the US Dollar (-7%). Besides that, most Latin American and Asian currencies lost value versus the Franc.

Overall, the revaluation difference of major currencies caused a negative impact on group sales from continuous operations from exchange rate changes by negative 4% on a yearon-year basis.

Sales and Operating Result

Sales for the group from continuing operations in the Third Quarter of 2004 were 7% higher in local currency terms and 3% higher in Swiss Francs. The corresponding figures on a like-for-like basis were 9% higher in local currencies and 4% higher in Swiss Francs. Strong volume growth in the Third Quarter amounted to a 10% increase (9% for continuing operations) over the nine-month period, compared with the same period last year, offsetting the decline in average prices of 3%. The Third Quarter saw an improvement in the pricing climate, with several businesses able to increase prices. All divisions -- with the exception of LSE, where sales were mostly flat -- increased sales in local currencies, reinforcing the trend observed in the previous Quarters. This represented a considerable achievement in a continuously improving trading environment.

The slight increase of the gross margin in the Third Quarter 2004 resulted from a combination of factors. The healthy volume growth and consequently better capacity utilization, helped the gross margin and was able offset lower selling prices, higher raw material costs and a one-time devaluation of inventory related to a fire at Lancaster Synthesis in the U.K. On a sequential basis, the gross profit margin was lower in the Third Quarter than in the first two, a pattern similar to the respective Quarters from a year ago.

Marketing and distribution costs in relation to sales decreased compared to the Third Quarter of the previous year (to 14.8% from 15.1%). Variable costs in percentage of sales terms declined and fixed costs decreased slightly in absolute terms.

Administration and general overheads in the Third Quarter increased both in absolute terms and as a percentage of sales to 6.4%, from 5.8%. The main reason for this development was non-recurring costs related to the Transformation Program (e.g. I.T. and consultant costs) recorded during the current Quarter.

Restructuring expenses of CHF 22 million in the Third Quarter included mainly restructuring activities in the Textile, Leather and Paper division in Switzerland. The restructuring activities are a part of the worldwide Performance Improvement Program.

Three businesses were sold as of September 30, 2004. The book gain on disposals in the 3rd Quarter of CHF 51 million refers to a gain related to the sale of the AZ Electronic Material business unit, and book losses related to the sale of the minority stake in SF-Chem and the disposal of the worldwide businesses of Lancaster Synthesis.

Interest Expenses were further cut because of debt repayment in 2004. Average gross financial debt was reduced from CHF 4.1 billion in 2003 to CHF 3.4 billion in 2004. Exchange rate losses amounted to CHF 28 million in the Third Quarter 2004. This was due to exchange rate variances mainly related to asset sales.

Tax expenses were influenced by an increasing proportion of profits generated in countries with high tax rates. In addition, the tax rate increased because some restructuring costs generated losses for which no tax assets were capitalized. Nevertheless the improvement in operating performance helped to reduce the tax rate compared to 2003. In addition, tax planning measures contributed to a reduction of the overall tax expenses.

Net income for the Third Quarter of 2004 was CHF 44 million, compared to CHF 38 million as reported in the same period a year earlier.

Balance Sheet Key Figures

Total assets increased from CHF 8.003 billion in December 2003 to CHF 8.159 billion at the end of September. The main factor contributing to this development was the capital increase that took place at the end of April. Net of all related costs this transaction contributed CHF 875 million to the Group's equity. Another factor was the total proceeds from disposal activities which took place at end September and replaced the carrying value of some assets with cash and as a result long-term assets shrank while current assets increased. A part of the proceeds from capital increase and disposal activities was used to pay back financial debt, while the amount of CHF 400 million was temporarily invested in short-term deposits, thus substantially increasing Other Current Assets. Apart from these, assets and liabilities remained fairly stable compared to December 2003. Equity was affected positively by currency trends during the Third Quarter. While after the first half, a negative effect of changes in FX rates in the amount of CHF 27 million was reported. This was a positive amount of CHF 48 million for the first nine months of 2004. The currencies most heavily contributing to this development were the Euro and the Brazilian real. Together with the capital increase, and the result of the reporting period, this increased equity from CHF 1.176 billion at the end of 2003 to CHF 2.242 billion at the end of September 2004.

Net debt on September 30 declined to CHF 1.304 billion from CHF 2.905 billion on December 31, 2003, as a result mainly of the capital increase, and the proceeds from the asset sales as well as the improved operating cash flow performance.

Gearing, which reflects net financial debt in relation to equity capital, including minorities, declined from 234% on December 31, 2003 to 57% at the end of September 2004. The calculation of this figure takes into account short and long-term financial debt less cash and cash equivalents, but also the amount of CHF 400 million of short-term deposits that are reported in Other Current Assets in the Balance Sheet.

Cash Flow

Cash flow (from operating activities before changes in working capital) was CHF 150 million for the Third Quarter of 2004 compared with CHF 110 million for the Third Quarter of 2003 and CHF 393 million for the first half of 2004. The operating cash flow of the first nine months of 2004 was CHF 543 million compared to CHF 429 million for first nine months of 2003. The increased operating cash flow was mainly the result of the improved performance of the reporting period.

Working capital decreased by CHF 91 million during the Third Quarter of 2004, compared to an increase of 73 million in the first half of 2004 and decrease of 107 million for the Third Quarter of 2003. This good performance was the result of tight working capital management.

Cash flow from operating activities was CHF 241 million in the Third Quarter of 2004, compared with CHF 217 million for the same period a year earlier. For the first nine months of 2004 an operating cash flow of CHF 561 million was achieved, compared to 164 million for the same period a year earlier.

Capital expenditure remained tightly constrained at CHF 204 million for the first nine months, slightly higher than the CHF 199 million reported for the same period last year and considerably below the depreciation of fixed assets.

Sales of business activities and financial fixed assets totalled CHF 418 million, including the proceeds from the sale of AZ Electronic Materials business unit, participation in SF-Chem, Lancaster Synthesis business, and additional proceeds from sales in 2003.

Financing activities were highlighted by the capital increase, which took place at the end of April. It resulted in net proceeds totalling CHF 875 million. During the reporting period a syndicated loan in the amount of CHF 164 million, loan notes in the amount of CHF 395 million and a bond in the amount of CHF 250 million were paid back. CHF 400 million was temporarily invested in short-term deposits.

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 LSE Division. As a consequence, Electronic Materials is disclosed as Discontinuing Operations for both 2004 and 2003. The business unit Cellulose Ethers of the FUN Division was sold in 2003.

Textile, Leather & Paper Chemicals

Nine month	2004	% ofsales	2003	% ofsales	Change in %
CHF mn					CHF	LC
Sales	1,672	100.0	1,632	100.0	+2	+4
EBITDA before exceptional items*	185	11.1	174	10.7	+6	+8
Operating income before exceptionalitems and amortization of goodwill*	131	7.8	135	8.3	-3	-2
Operating income	44	2.6	105	6.4	-58	-56
Systematic depreciation	54	3.2	39	2.4	+38	+39
on tangible fixed assets
Third Quarter	2004	% ofsales	2003	% ofsales	Change in %
CHF mn					CHF	LC
Sales	549	100.0	550	100.0	0	+4
EBITDA before exceptional items*	61	11.1	48	8.7	+27	+31
Operating income before exceptional	41	7.5	35	6.4	+17	+21
items and amortization of goodwill*
Operating income	-6	-	17	3.1	-	-
Systematic depreciationon tangible fixed assets	20	3.6	13	2.4	+54	+57

* See Definitions of Terms of Financial Measurements on page 13

In the Textile, Leather & Paper Chemicals Division, steady volume growth in the 3rd Quarter offset price pressure in all business segments, except for textile dyes, resulting in a 4% growth in local currency terms. "Following the markets" and the selective expansion of textiles to Asia, especially to China, showed good results. Margins, driven by improved sales, increased significantly. A book loss related to the sale of the stake in SF Chem and other smaller restructuring charges depressed the operating income after exceptional items.

The shift to Asia and strong low-cost competition led to relatively low volume growth in the area of Textile Dyes. Constant price pressure, especially in the area of disperse and reactive dyes, was not offset by volume growth. Notably, in contrast to the previous Quarters, the business for Textile Chemicals in Europe and especially in Germany started to recover. Overall a stable sales and earnings performance in an improved pricing climate continued with sustainable growth in Asia and in emerging markets.

Strong growth in volume combined with easing price pressure resulted in a good 3rd Quarter for the Leather business. Greater China saw robust growth while Europe showed signs of recovery, especially in Germany and Austria, mainly driven by increasing demand of leather finishing products for the automotive industry.

The slight increase in sales for Paper Chemicals was mainly driven by stronger volumes. The trend in the different business sections showed a mixed picture, as optical brighteners experienced increasing demand, dyes and process chemicals slowed down and surface chemicals remained flat.

Pigments & Additives

Nine months	2004	% ofsales	2003	% ofsales	Change in %
CHF mn					CHF	LC
		100.0		100.0	+5	+6
SalesEBITDA before exceptional items*	1,406230	16.4	1,334195	14.6	+18	+19
Operating income before exceptionalitems and amortization of goodwill*	178	12.7	148	11.1	+20	+21
Operating income	138	9.8	141	10.6	-2	-1
Systematic depreciationon tangible fixed assets	53	3.8	47	3.5	+13	+13
Third Quarter	2004	% ofsales	2003	% ofsales	Change in %
CHF mn					CHF	LC
Sales	450	100.0	434	100.0	+4	+8
EBITDA before exceptional items*	71	15.8	50	11.5	+42	+48
Operating income before exceptionalitems and amortization of goodwill*	55	12.2	36	8.3	+52	+58
Operating income	47	10.4	31	7.1	+52	+57
Systematic depreciationon tangible fixed assets	17	3.8	14	3.2	+21	+22

* See Definitions of Terms of Financial Measurements on page 13

Sales growth in the 3rd Quarter was very strong in the Pigments & Additives Division showing a rise of 8% in local currency terms. Overall, the demand for more colorful products in the market was visible. Margins improved due to better capacity utilization and higher volumes amid an improved pricing environment.

The greatest volume growth in the division was seen in the Coatings business. The strong demand in decorative and industrial paints as well as positive developments in the automotive industry made sustainable contributions to these results. Products for fire protection coatings as well as plastic additives continued to meet good demand.

A positive trend in sales starting from a weak beginning in 2004 for Printing Industries was in evidence. Growth was mainly driven by higher demand and stronger volumes because of positive trends for printing inks, while prices experienced the strongest pressure in the division driven by the continuing customer consolidation. Good growth was seen in pigments for Plastics, which showed a robust 3rd Quarter mainly driven by volumes. The introduction of the new Licocene ® metallocene waxes received positive feedback from customers; the foundation stone for a new plant was laid in September. Also the new plant for the recent successfully introduced halogen-free flame retardants Exolit OP® went on stream in the 3rd Quarter.

Volumes rose in the 3rd Quarter resulting in good growth for Specialized Industries, especially in the US and Europe.

Masterbatches

Nine month	2004	% ofsales	2003	% ofsales	Change in %
CHF mn					CHF	LC
SalesEBITDA before exceptional items*Operating income before exceptional	85210786	100.012.610.1	7898969	100.011.38.7	+8+20+25	+8+20+25
items and amortization of goodwill*Operating incomeSystematic depreciationon tangible fixed assets	7721	9.02.5	6520	8.22.5	+18+5	+18+5
Third Quarter	2004	% ofsales	2003	% ofsales	Change in %
CHF mn					CHF	LC
SalesEBITDA before exceptional items*Operating income before exceptionalitems and amortization of goodwill*	2823427	100.012.19.6	2642820	100.010.67.6	+7+21+35	+11+22+36
Operating incomeSystematic depreciationon tangible fixed assets	238	8.22.8	187	6.82.7	+28+14	+31+15

* See Definitions of Terms of Financial Measurements on page 13

The Masterbatches Division showed very strong growth in the 3rd Quarter above the overall market. The plastics market continued to respond to the improving global economic conditions.

Sales in local currencies rose 11%, mainly thanks to recovery in North and South America, while sales in Asia Pacific also saw continued double-digit growth. A moderate growth for Europe was mainly driven by limited signs of economic recovery this region. The robust sales and performance of this division was mainly driven by good volumes and stable prices. Resin prices increased due to higher feedstocks.

Given the fact that Asia is the core growth region for this division, Clariant is significantly increasing its presence in Greater China with expanded operations in Taiwan and Shanghai and a new plant in Beijing.

Functional Chemicals (Continuing operations)

Nine month	2004	% ofsales	2003	% ofsales	Change in %
CHF mn			Restated1		CHF	LC
Sales	1,464	100.0	1,303	100.0	+12	+13
EBITDA before exceptional items*	197	13.5	161	12.4	+22	+22
Operating income before exceptional items	159	10.9	123	9.4	+29	+29
and amortization of goodwill*
Operating income	171	11.7	-19	-	-	-
Systematic depreciation	38	2.6	38	2.9	0	0
on tangible fixed assets

Third Quarter	2004	% ofsales	2003	% ofsales	Change in %
CHF mn			Restated1		CHF	LC
Sales	476	100.0	437	100.0	+9	+14
EBITDA before exceptional items*	68	14.3	55	12.6	+24	+24
Operating income before exceptional itemsand amortization of goodwill*	55	11.6	41	9.4	+34	+34
Operating income	55	11.6	41	9.4	+34	+42
Systematic depreciation	13	2.7	14	3.2	-7	-7
on tangible fixed assets

1 In 2003 the business unit Cellulose Ethers pertaining to the division Functional Chemicals was sold. * See Definitions of Terms of Financial Measurements on page 13

A strong increase in volume, which partially offset some price pressure, resulted in 14% growth in local currency terms for the Functional Chemicals Division in the 3rd Quarter**.** Margins increased because of two factors: good capacity utilization by volume growth and rationalization of fixed costs.

Price pressure in the Detergent business eased, resulting in a moderate growth globally. The better performance of this business was mainly driven by better volumes in highmargin products and new business with performance boosters. Raw material price increased, responding to high oil prices.

The Performance Chemicals businesses were able to improve sales mainly due to better volumes compared with the same period last year. In particular, the crop protection business was exceptional good, because of strong business in Latin America, as well as robust demand in the US for all businesses helped substantially.

Good sales in all businesses for Process Chemicals were achieved as well, partly influenced by higher raw material costs but much better pricing conditions. The oil service business could successfully expand their business into markets in Eastern Europe, Near East and Africa.

Life Science & Electronic Chemicals (Continuing operations)

Nine month	2004	% ofsales	2003	% ofsales	Change in %
CHF mn			Restated1		CHF	LC
Sales	768	100.0	803	100.0	-4	-4
EBITDA before Exceptional items*	35	4.6	35	4.4	-	-
Operating income before exceptional itemsand amortization of goodwill*	-7	-	-21	-	-	-
Operating income	85	11.1	-44	-	-	-
Systematic depreciation	41	5.3	56	7.0	-27	-27
on tangible fixed assets
Third Quarter	2004	% ofsales	2003	% ofsales	Change in %
CHF mn			Restated1		CHF	LC
SalesEBITDA before Exceptional items*	240-7	100.0-	249-5	100.0-	-4-	-1-
Operating income before exceptional itemsand amortization of goodwill*	-25	-	-24	-	-	-
Operating income	65	27.1	-47	*-	-	-
Systematic depreciationon tangible fixed assets	17	7.1	19	7.6	-11	-10

1 On September 30, 2004, Clariant sold the business unit Electronic Materials pertaining to the division LSE to the Carlyle group. As a consequence, Electronic Materials is now disclosed as Discontinuing Operations for both 2004 and 2003.

* See Definitions of Terms of Financial Measurements on page 13

The sales and performance in the Life Science & Electronic Chemicals Division was characterized by adverse trends in the different businesses. Sales declined by 1% in local currency terms in a market where price pressure is easing but volumes were lower compared to the 3rd Quarter in 2003.

Operating income after exceptional items was positively influenced by the book gain on the disposal of the AZ Electronic Material business to the Carlyle Group, but negatively affected by the sale of Lancaster Synthesis to Johnson Matthey.

Some contract losses and constant price pressure in the Pharma business characterized the tougher market conditions in this segment. The promising development in the segment of generics was unable to offset these negative developments. No change of in-sourcing trends in pharma was in evidence.

Price pressure on chemicals for the agro industry has leveled off in Custom Synthesis. A moderate increase in volumes led to a small growth in this business area, mainly driven by better demand for agrochemicals and photochemicals. Some capacity was eliminated by Clariant and by competitors, but considerable pressure from under-utilized assets in developed countries is still present. Asia continues to progress with technological capabilities and market acceptance.

Good demand and a positive volume development led to a good performance in Specialty Fine Chemicals. Increased performance was visible across all four business lines: Glyoxal, Diketens, Acetyl Building Blocks and Silanes.

Regional Developments

Europe

In the Third Quarter of 2004, European sales of group companies accounted for 49% of continuing operations of Group turnover. On a continuing basis, sales decreased by 1% both, in Swiss Franc terms and in local currency terms. The picture was mixed on a country basis. While Germany showed healthy sales growth, +9% in CHF and +5% in local currency terms, sales in the UK, hampered by a strong pound, decreased.

Americas

Group companies' sales in the Americas contributed 28% of continuing operations of Group turnover for the Third Quarter of 2004. Sales increased by 15% in local currency terms and by 10% in Swiss Franc terms. In the U.S., the sales development weakened. In Latin America, sales growth was strong in both Swiss Franc and local currency terms. Substantial sales growth was achieved in particular in Brazil, Argentina and Venezuela.

Asia, Africa, Australia

In the Third Quarter of 2004, group companies' sales in Asia, Australia and Africa contributed 23% of continuing operations of group sales. Sales grew by 6% in Swiss Franc terms and by 8% in local currency terms. Substantial sales growth in Swiss Franc terms (as well as in local currency terms) was achieved in particular in China and Taiwan. Sales in Greater China, which took over a leading role in Asia, reached strong double-digit rates, both in Swiss Franc and in local currency terms.

Definition of Terms of Financial Measurements

The following financial measurements are supplementary financial indicators. Those 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, Depreciations and Amortization) is calculated as operating income plus depreciation on fixed assets and on intangibles and amortization of goodwill and could be reconciled from the Condensed Financial Statements as follows:

CHF mn	Nine month		Third Quarter
	2004	2003	2004	2003
Operating Income	469	297	152	84
+ Depreciation of fixed assets	246	371	82	90
+ Amortization of Goodwill	22	23	7	8
+ Amortization of other	9	5	4	1
intangibles
EBITDA	746	696	245	183

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

CHF mn	Nine month		Third Quarter
	2004	2003	2004	2003
EBITDA	746	696	245	183
+ Restructuring and	87	185	22	43
Impairment
- Depreciation of fixed assets	-12	-107	-1	-1
(reported under Restructuring
and impairment)
+/- Gain/ Loss on Disposals	-61	0	-51	0
EBITDA before exceptional
items	760	774	215	225

Operating income before exceptional items and amortization of goodwill – is

calculated as Operating Income before restructuring and disposals plus amortization of goodwill and could be reconciled from the Condensed Financial Statements as follows:

CHF mn	Nine month		Third Quarter
	2004	2003	2004	2003
Operating Income	469	297	152	84
+ Restructuring and	87	185	22	43
Impairment
+/- Gain/ Loss on Disposals	-61	0	-51	0
+Amortization of Goodwill	22	23	7	8
Operating Income before
exceptional items and	517	505	130	135
amortization of Goodwill

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 long-term and short-term financial debt less cash and cash equivalents and short-term deposits (CHF 400 million) reported in other current assets. Condensed Financial Statement of the Clariant Group at November 9, 2004 unaudited, all amounts in CHF millions

Condensed Income Statements (unaudited)

Income Statements

of the Group		Nine month					Third Quarter
	2004		2003		2004		2003
	CHF mn	%	CHF mn	%	CHF mn	%	CHF mn	%
Sales	6,550	100.0	6'402	100.0	2,131	100.0	2,129	100.0
Cost of goods sold	-4,444	67.8	-4'340	67.8	-1,484	69.6	-1,479	69.5
Gross profit	2,106	32.2	2'062	32.2	647	30.4	650	30.5
Marketing and distribution	-960	14.7	-967	15.1	-316	14.8	-322	15.1
Research and development	-215	3.3	-229	3.5	-70	3.3	-77	3.6
Income from	17	0.3	21	0.3	2	0.1	6	0.3
affiliated companies
Administration and	-431	6.6	-382	6.0	-133	6.4	-122	5.8
general overhead costs
Gain / Loss on Disposal	61	0.9	0	0.0	51	2.4	0	0.0
Restructuring	-87	1.3	-185	2.9	-22	1.0	-43	2.0
and impairment
Amortization of goodwill	-22	0.3	-23	0.4	-7	0.3	-8	0.4
Operating income	469	7.2	297	4.6	152	7.1	84	3.9
Financial result1a, 1b	-173		-180		-75		-36
Income before taxes	296	4.5	117	1.8	77	3.6	48	2.3
and minority interests
Taxes	-120		-120		-32		-7
Income before	176	2.7	-3	0.0	45	2.1	41	1.9
minority interests
Minority interests	-6		-8		-1		-3
Net income of the Group	170	2.6	-11	-0.2	44	2.1	38	1.8
Earnings per share (CHF)2,4	0.83		-0.06		0.18		0.22
Diluted earningsper share (CHF)3,4	0.83		-0.06		0.18		0.22

1a of which currency losses in nine months 2004 of CHF 43 million, currency losses in nine month 2003 of CHF 52 million

1b of which currency losses in the Third Quarter 2004 of CHF 28 million, currency losses in the Third Quarter 2003 of 2 million

2

calculated with average, weighted number of shares outstanding (dilution factor 1.15) 3 calculated with average, weighted, diluted number of shares outstanding (dilution factor 1.15) 4 For 2003, restated for impact of capital increase (dilution factor 1.15)

Condensed Divisional Figures (unaudited)

Sales of Divisionsto 3rd parties		Nine month				Third Quarter
	2004	2003	Change in %		2004	2003	Change in %
CHF mn		Restated1	in CHF	in LC		Restated1	in CHF	In LC
Textile, Leather &	1,672	1,632	+2	+4	549	550	0	+4
Paper Chemicals
Pigments & Additives	1,406	1,334	+5	+6	450	434	+4	+8
Masterbatches	852	789	+8	+8	282	264	+7	+11
Functional Chemicals	1,464	1,303	+12	+13	476	437	+9	+14
Life Science &	768	803	-4	-4	240	249	-4	-1
Electronic Chemicals
Total continuing operations	6,162	5,861	+5	+6	1,997	1'934	+3	+7
Discontinuing operations	388	541			134	195
Total Group	6,550	6'402	+2	+3	2,131	2'129	0	+4

EBITDA*		Nine month				Third Quarter
	2004	2003	Change in %		2004	2003	Change in %
CHF mn		Restated1	in CHF	in LC		Restated1	in CHF	In LC
Textile, Leather &	114	161	-29	-27	19	35	-46	-40
Paper Chemicals
Pigments & Additives	203	195	+4	+5	68	49	+39	+40
Masterbatches	101	87	+16	+17	30	26	+15	+23
Functional Chemicals	209	123	+70	+72	68	55	+24	+28
Life Science &	129	12	-	-	81	-28	-	-
Electronic Chemicals
Total Divisions	756	578	+31	+34	266	137	+94	-
Corporate	-73	19			-40	8
Total continuing operations	683	597	+14	+16	226	145	+56	+62
Discontinuing operations	63	99			19	38
Total Group	746	696	+7	+9	245	183	+34	+44

Operating Income		Nine month				Third Quarter
	2004	2003	Change in %		2004	2003	Change in %
CHF mn		Restated1	in CHF	in LC		Restated1	in CHF	In LC
Textile, Leather &	44	105	-58	-56	-6	17	-	-
Paper Chemicals
Pigments & Additives	138	141	-2	-1	47	31	+52	+57
Masterbatches	77	65	+18	+18	23	18	+28	+31
Functional Chemicals	171	-19	-	-	55	41	+34	+42
Life Science &	85	-44	-	-	65	-47	-	-
Electronic Chemicals
Total Divisions	515	248	-	-	184	60	-	-
Corporate	-88	-17			-43	-3
Total continuing operations	427	231	+85	+92	141	57	-	-
Discontinuing operations	42	66			11	27
Total Group	469	297	+58	+64	152	84	+81	-

1 On September 30, 2004, Clariant sold the business unit Electronic Materials pertaining to the division LSE to the Carlyle group. As a consequence, Electronic Materials is now disclosed as Discontinuing Operations for both 2004 and 2003. In 2003 the business unit Cellulose Ethers pertaining to the division FUN was sold. * See Definitions of Terms of Financial Measurements on page 13

Condensed Divisional Figures (unaudited)

EBITDA margin*			Nine month				Third Quarter
	2004	% of	2003	% of	2004	% of	2003	% of
CHF mn		sales	Restated1	sales		sales	Restated1	sales
Textile, Leather &	114	6.8	161	9.9	19	3.5	35	6.4
Paper Chemicals
Pigments & Additives	203	14.4	195	14.6	68	15.1	49	11.3
Masterbatches	101	11.9	87	11.0	30	10.6	26	9.9
Functional Chemicals	209	14.3	123	9.4	68	14.3	55	12.6
Life Science &	129	16.8	12	1.5	81	33.8	-28	-
Electronic Chemicals
Corporate	-73		19		-40		8
Total continuing operations	683	11.1	597	10.2	226	11.3	145	7.5
Discontinuing operations	63		99		19		38
Total Group	746	11.4	696	10.9	245	11.5	183	8.6

Operating Income margin*			Nine month				Third Quarter
	2004	% ofsales	2003Restated1	% ofsales	2004	% ofsales	2003Restated1	% ofsales
CHF mn
Textile, Leather &Paper Chemicals	44	2.6	105	6.4	-6	-	17	3.1
Pigments & Additives	138	9.8	141	10.6	47	10.4	31	7.1
Masterbatches	77	9.0	65	8.2	23	8.2	18	6.8
Functional Chemicals	171	11.7	-19	-	55	11.6	41	9.4
Life Science &	85	11.1	-44	-	65	27.1	-47	-
Electronic Chemicals
Corporate	-88		-17		-43		-3
Total continuing operations	427	6.9	231	3.9	141	7.1	57	2.9
Discontinuing operations	42		66		11		27
Total Group	469	7.2	297	4.6	152	7.1	84	3.9

1 On September 30, 2004, Clariant sold the business unit Electronic Materials pertaining to the division LSE to the Carlyle group. As a consequence, Electronic Materials is now disclosed as Discontinuing Operations for both 2004 and 2003. In 2003 the business unit Cellulose Ethers pertaining to the division FUN was sold. * See Definitions of Terms of Financial Measurements on page 13

Condensed Statement of Sales by Regions (unaudited)

Allocated by region of third-party's sales destination

Nine month	2004	% ofsales	2003Restated1	% ofsales	Changein %	Changein %
CHF mn					CHF	LC
Europe	3,146	48.0	3,026	47.3	+4	+2
of which Germany	934	14.3	862	13.5	+8	+4
Americas	1.659	25.4	1,563	24.4	+6	+11
of which USA	853	13.0	873	13.6	-2	+6
Asia / Australia / Africa	1,357	20.7	1,272	19.9	+7	+9
Total continuing operations	6,162		5,861		+5	+6
Discontinuing operations	388	5.9	541	8.4	-
Total Group	6,550	100.0	6,402	100.0	+2	+3
Third Quarter	2004	% ofsales	2003	% of	Change	Change
CHF mn			Restated1	sales	in %CHF	in %LC
Europe	974	45.7	985	46.3	-1	-1
of which Germany	301	14.1	277	13.0	+9	+5
Americas	562	26.4	513	24.1	+10	+15
of which USA	273	12.8	288	13.5	-5	+11
Asia / Australia / Africa	461	21.6	436	20.4	+6	+8
Total continuing operations	1'997		1'934		+3	+7
Discontinuing operations	134	6.3	195	9.2

On September 30, 2004, Clariant sold the business unit Electronic Materials pertaining to the division LSE to the Carlyle group. As a consequence, Electronic Materials is now disclosed as Discontinuing Operations for both 2004 and 2003. In 2003 the business unit Cellulose Ethers pertaining to the division FUN was sold.

Condensed Balance Sheets (unaudited)

Assets
CHF mn	30.09.04	%	30.06.04	%	31.12.03	%
Long-term assets
Tangible fixed assets	2'542		2'689		2'776
Intangible assets	416		437		451
Financial assets	310		396		419
Deferred taxes	231		309		291
Total long-term assets	3'499	42.9	3'831	44.3	3'937	49.2
Current assets
Inventories	1'451		1'536		1'569
Trade accounts receivable	1'257		1'336		1'259
Other current assets1	838		821		309
Cash and cash equivalents	1'114		1'117		929
Total current assets	4'660	57.1	4'810	55.7	4'066	50.8
Total assets	8'159	100.0	8'641	100.0	8'003	100.0
Equity and liabilities
in CHF mn	30.09.04	%	30.06.04	%	31.12.03	%
Equity
Share capital	1'151		1'151		767
Treasury shares (par value)	-19		-18		-18
Reserves	1'110		995		427
Total equity	2'242	27.5	2'128	24.6	1'176	14.7
Minority interests	61	0.7	67	0.8	64	0.8
Liabilities
Long-term liabilities
Financial debts	1'924		2'421		2'620
Deferred taxes	324		408		384
Other long-term liabilities	977		957		893
Total long-term liabilities	3'225		3'786		3'897
Short-term liabilities
Financial debts	894		936		1'214
Trade accounts payable	619		628		632
Other short-term liabilities	1'118		1'096		1'020
Total short-term liabilities	2'631		2'660		2'866
Total liabilities	5'856	71.8	6'446	74.6	6'763	84.5
	8'159		8'641		8'003
Total equity and liabilities		100.0		100.0		100.0

1 thereof CHF 400 million cash / short-term deposits

	Nine month		Third Quarter
	30.09.	30.09.	30.09.	30.09.
CHF mn	2004	2003	2004	2003
Net Result	170	-11	44	38
Depreciation of fixed assets	246	371	82	90
Amortization of goodwill	22	23	7	8
Amortization of intangibles	8	5	3	1
Changes in long-term liabilities	174	24	87	12
Gain / Loss on disposal before taxes	-61	0	-51	0
Other non-cash items	-16	17	-22	-39
Operating Cash Flow before changes in working capital	543	429	150	110
Changes in inventory	-48	-68	-25	55
Changes in trade receivables	-41	12	53	63
Changes in trade payables	36	-175	32	-58
Changes in short-term liabilities and other current assets	71	-34	31	47
Operating Cash Flow	561	164	241	217
Investments in tangible fixed assets	-204	-199	-93	-74
Investments in financial fixed assets	0	0	0	0
Investments in other intangibles	-7	-1	-1	0
Disposals of tangible and intangible fixed assets	11	2	5	1
Acquisitions	-24	-3	-24	0
Disposal of business activities and financial assets	418	0	408	0
Dividends from associated companies	31	31	2	4
Total cash flow from investing activities	225	-170	297	-69
Cash Flow before financing activities	786	-6	538	148
Capital increase	875	0	1	0
Treasury share transactions	2	5	-3	2
Changes in short- and long-term financial debts and shortterm deposits	-1'443	-247	-536	-357
Dividends paid to minorities	-6	-6	-3	-4
Dividends paid	-30	0	0	0
Cash Flow from financing activities	-602	-248	-541	-359
Currency translation effect on cash and cash equivalents	1	1	0	-1
Change in cash and cash equivalents	185	-253	-3	-212
Cash and cash equivalents on 1.1.2003 / 2002	929	718	1'117	677
Cash and cash equivalents at the end of period	1'114	465	1'114	465

Condensed Cash Flow Statements (unaudited)

Condensed Statement of Changes in Equity (unaudited)

CHF mn	PremiumShare	Retainedearnings	DifferencesCumulativeTranslation	Total reserves	Total sharecapital	shares parTreasuryvalue	Total equity
Balance 31.12.2002	1'888	-1'378	-344	166	767	-19	914
Capital increaseDividends to3rd partiesDividends on treasurysharesValuation of cash flowhedgesTreasury sharestransactions						1	1
Translation effects			111	111			111
Net income		-11		-11			-11
Balance 30.09.2003	1'888	-1'389	-233	266	767	-18	1'015
Balance 31.12.2003	274	396	-243	427	767	-18	1'176
Capital increaseDividends to3rd parties	491	-30		491-30	384		875-30
Dividends on treasurysharesValuation of cash flowhedges		1		1			1
Treasury sharestransactions		3		3		-1	2
Translation effects			48	48			48
Net income		170		170			170
Balance 30.09.2004	765	540	-195	1'110	1'151	-19	2'242

Condensed Earnings Per Share Data

Nine month	2004	20033
Number of shares outstandingat 30.09.2004 resp. 30.09.2003	230 160 000	153 440 000
Average, weightednumber of shares outstanding	204 781 640	172 712 505
Average, weighted, dilutednumber of shares outstanding	206 131 214	172 712 505
Earnings per share (in CHF) 1)	0.83	-0.06
Diluted earnings per share (in CHF) 2)	0.83	-0.06

1 calculated with average, weighted number of shares outstanding (dilution factor 1.15) 2

calculated with average, weighted, diluted number of shares outstanding (dilution factor 1.15) 3

restated for impact of capital increase (dilution factor 1.15)

Condensed Financial Statements (unaudited)

1. Basis of preparation of financial statements (reference IAS 34.16 lit a)

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 nine-month period ended 30 September 2004 (hereafter "the Group"). They are prepared in accordance with the International Accounting Standard 34 (IAS 34 "Interim Financial Reporting") and were approved on November 4, 2004 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 2003 (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. Capital increase

On April 2, 2004 the Annual General Meting of Clariant Ltd approved a capital increase in the total amount of CHF 920.6 million. For each two existing shares a new share was issued. In total 76 720 000 shares were issued at the price of CHF 12. The net proceeds from the capital increase after the deduction of all fees, taxes and transaction-related costs was CHF 875 million.

4. Repayments of debt

During the reporting period a syndicated loan in the amount of CHF 164 million, loan notes in the amount of CHF 395 million and a bond in the amount of CHF 250 million were paid back.

5. Dividends paid

On April 2, 2004 the Annual General Meeting approved the distribution of a dividend of CHF 0.20 per share in respect of the business year 2003. The distribution to holders of outstanding shares totaled CHF 30 million and has been recorded against retained earnings in 2004. No dividend was distributed in the prior year.

6. Gain/Loss on Disposals

During the reporting period the Group recorded a gain of CHF 61 million, which consists of a gain of CHF 89 million on the sale of the Electronic Materials business to the Carlyle group. As part of the disposal of Electronic Materials, Clariant granted a vendor loan note in the amount of CHF 40 million. An additional gain of CHF 10 million was recorded on a prior year's disposal. On the other hand, a loss of CHF 6 million was incurred on the disposal of the activities of Lancaster and a further loss of CHF 32 million was incurred on the disposal of the investment in the associated company SF Chem. The exchange rate variances which had to be recycled as a result of the disposal of Electronic Materials, amounted to an expense of CHF 26 million.

7. Restructuring and Impairment

During the reporting period, the Clariant group recorded expenses for restructuring and impairment in the amount of CHF 87 million. The most important events comprised by this amount are site closures in Germany and the UK, the restructuring of a site in Switzerland and the impairment revaluation of two companies in the US and the UK.

Rates

Rates used to translate theconsolidatedbalance sheets (closing rate)	30.09.2004	31.12.2003	% Change
1 USD	1.26	1.24	+2
1 EUR	1.55	1.56	-1
1 GBP	2.27	2.20	+3
100 JPY	1.14	1.16	-2
Average sales-weighted rates usedto translate the income statementsand consolidated statements of cashflow	Nine month 2004	Nine month 2003	% Change
1 USD	1.26	1.36	-7
1 EUR	1.55	1.51	+3
1 GBP	2.30	2.19	+5
100 JPY	1.16	1.15	+1

CALENDAR OF CORPORATE EVENTS

March 8, 2005April 7, 2005May 10, 2005August 4, 2005November 9, 2005	Full Year 2004 ResultsAGMFirst Quarter 2005 ResultsFirst Half 2005 ResultsNine Month 2005 Results
YOUR CLARIANT CONTACTS
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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 26,500 people. Headquartered in Muttenz near Basel, it generated sales of around CHF 8.5 billion in 2003.

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

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