Clariant AG — Interim / Quarterly Report 2007

May 8, 2007

Quarterly Report May 8, 2007

Contents	Page
News Release	1
Financial Review	4
Financial Discussion	4
Business Discussion	6
Condensed Financial Statement (unaudited)	12

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

Clariant Delivers 6% Sales Growth in First Quarter Selling Prices Rise; Strategy Implementation Underway

• > Solid demand across all businesses; selling prices increased 1%
• > Sales up 6% in local currency, 5% in Swiss francs; organic sales up 5%
• > Gross margin stable despite 3% rise in raw material costs
• > Measures to reduce SG&A expenses, improve site network and net working capital underway
• > Outlook for 2007 confirmed; on course to meet strategic goals

Key Financial Group Figures

				First Quarter
Continuing operations:	2007		2006
	CHF mn	% of sales	CHF mn	% of sales
Sales	2 156	100.0	2 048	100.0
Local currency growth (LC):	6%
Organic growth1	5%
Acquisitions/Divestitures	1%
Currencies	- 1%
Gross profi t	671	31.1	635	31.0
EBITDA before exceptionals*	219	10.2	225	11.0
EBITDA*	210	9.7	219	10.7
Operating income before exceptionals*	152	7.1	160	7.8
Operating income	139	6.4	154	7.5
Net income from continuing operations	86	4.0	96	4.7
Operating cash fl ow (total operations)	5		- 9
Discontinued operations:
Sales	46		113
Net loss from discontinued operations	- 2		- 2
Other key fi gures:	31.03.2007		31.12.2006
Net debt	1 544		1 556
Equity (including minorities)	2 567		2 433
Gearing	60%		64%
Number of employees	21 614		21 748

Throughout this statement the term "organic growth" is being used. It means volume and price effects excluding the impacts of changes in FX rates and acquisitions/divestitures.

* See Defi nitions of Terms of Financial Measurement on page 11.

Clariant posted a solid performance in the first three months of 2007, with growth of 6% in local currency terms and 5% in Swiss franc terms. Acquisitions made in 2006 contributed 1% to the sales gain. First Quarter sales rose to CHF 2.156 billion from CHF 2.048 billion a year earlier, with strong demand seen across all businesses.

Sales prices rose on average by 1% with notably strong increases in Functional Chemicals and Masterbatches. The gross margin remained stable at 31.1% from the previous year, despite a 3% increase in raw material prices during the period. Operating income before exceptionals declined to CHF 152 million from CHF 160 million, impacted by increased freight costs, an 11% rise in energy costs, unfavourable currency movements and one-time costs related to the integration of Ciba's masterbatches business. As a result, net income from continuing operations fell to CHF 86 million from CHF 96 million.

Clariant's plans to reduce net working capital are on track. Operating cash flow rose to CHF 5 million from a negative CHF 9 million a year earlier. As part of efforts to reduce its cost base and complexity, the company also announced a number of smaller site closures.

"Top-line growth continues to be solid, driven by strong volumes across all businesses and positive pricing developments," said Jan Secher, Clariant's chief executive officer. "Profitability in the First Quarter was unsatisfactory, but we have seen the first signs of improvement in our cash flow. We are confident that the steps we are now taking will allow us to deliver on our strategic initiatives, with cash flow a priority for 2007," he said.

STRATEGIC INITIATIVES ON TRACK

In order to achieve its mid-term goals, Clariant is fully committed to a set of targets for 2007, with a particular focus on reducing net working capital and SG&A expenses. The company announced in the First Quarter it will close several sites in its Masterbatches and Textile, Leather & Paper Chemicals divisions.

In Masterbatches, for example, Clariant announced it will consolidate three sites in France. In Textile, Leather & Paper Chemicals, it closed a leather plant in the U.K. Clariant also announced it will close two of its service laboratories for textile dyes in Switzerland.

"We are on track with all plans to implement the initiatives announced in November to achieve World Class Performance by 2010", Mr. Secher said.

STEADY GROWTH ACROSS ALL DIVISIONS

Pigments & Additives sees strong demand

The Pigment & Additives Division reported organic growth of 5% for the First Quarter, with notably strong demand in the coatings business. Conditions remained challenging for the printing business, while sales in plastics were stable. Operating margins declined to 11.3% from a strong 13.4% a year earlier, mainly driven by price erosion, rising raw material prices, negative currency effects and higher freight and energy costs.

Masterbatches delivers strongest growth

Masterbatches saw sales growth of 11% in local currency terms, supported by the successful integration of Ciba's masterbatches business. Organically, the business grew by 5%, boosted by a combination of price increases and strong demand from Asia and Latin America. Operating margins before exceptionals declined to 8.9% from 10.8%, mainly due to integration costs related to the acquisition, as well as the underperformance from the Australian business, which has subsequently been sold.

Prices stable in Textile, Leather & Paper Chemicals

The Textile, Leather & Paper Chemicals Division posted organic growth of 5% in the first three months of 2007. Prices remained stable over the period. Paper continued to be the strongest growth driver, a result of robust demand for optical brighteners. Despite good demand and firm price increases, Leather continued to be impacted by a challenging business environment. Textiles saw moderate growth, with a mixed picture across the regions. Underperformance in the U.S. was countered by the exit of some businesses there. Operating margins remained stable at 5.9%.

Price increases in Functional Chemicals

Functional Chemicals achieved a 4% rise in organic growth in the First Quarter with solid demand across most businesses. Significant price increases offset rising raw material costs. Growth was particularly strong in detergents, performance and oilfields chemicals. However, the de-icing business suffered from unseasonably mild weather. Operating margins before exceptionals declined to 8.5% from 8.8%, impacted by higher freight and marketing costs.

Strong growth , particularly in Asia

Looking at the regional picture, Asia posted the strongest organic growth of 11%, driven by an impressive 27% increase from China. India and Pakistan also contributed to the strong growth rate. Europe achieved 3% growth in local currency terms. The Americas meanwhile, achieved a robust 3% growth with a solid contribution from Latin America offsetting a 2% drop from the United States. The construction and automotive businesses slowed in the U.S., while the plastics business was also weaker compared to the high levels seen in 2006.

GROWTH SUPPORTED BY STRONGER FRONT-END FOCUS

As part of an overall push to be more front-end driven, Clariant's textile business entered a strategic partnership with Pantone, Inc., the global authority on color and provider of professional color standards for the design industries. The partners' combined capabilities will improve the color matching and approval cycle, reducing color development times and the associated management costs by 50% or more.

The Pigments & Additives Division was awarded the "Excellent Supplier Award" for 2006 by PPG Industries, one of the world's leading global paints and coatings producers. The award rates suppliers on various criteria such as quality, innovation, responsiveness and commercial value, including participation in cost savings.

POSITIVE OUTLOOK FOR FULL YEAR

Clariant confirmed its outlook for the Full Year. The company expects improved sales in local currency terms in 2007 in the context of a broadly stable macro-economic environment, as well as continued high raw material and energy prices. The company anticipates an increase in operating income before exceptionals from continuing operations, with margins remaining stable. Clariant also expects higher cash flow from operations before exceptional items, as well as an improvement in recurring net income. Achieving the 2007 targets will ensure the company is on course to reach its mid-term goal of above industry average ROIC by 2010.

"While we can confirm that we expect to see another good year in 2007 for top-line growth, our priority is very much on improving cash flow," Mr. Secher said. "We are fully committed to delivering on our medium-term goals, with a clear focus on reaching our ROIC targets."

-ends-

Financial Review Financial Discussion First Quarter

Economic Environment

The general macroeconomic environment in the First Quarter and the outlook for 2007 remains positive. According to the IMF, the world economy is expected to continue to grow robustly in 2007, with a modest deceleration from the rapid pace of 2006. As in the First Quarter, the expected growth rate of 4.9% is primarily based on strong economic activities in emerging markets such as China, India, Brazil and Russia. However, growth rates in the US are more moderate, putting pressure on the chemical and construction business as the housing market continues to slow down. The US automotive market still dampens and the plastic industry cooled off versus the strong previous year quarter. Economic growth rates in the euro zone remain positive, albeit slightly weaker than in 2006. The average oil price increased during the latter part of the First Quarter, and is expected to remain at high levels.

During the first three months of 2007, the trend of the Swiss franc against the other major currencies presented a mixed picture. Compared with the average exchange rates in the First Quarter of 2006, the euro and the British pound appreciated considerably against the Swiss franc, whereas the Japanese yen and US dollar lost further ground against the Swiss currency.

Sales and Operating Results

Consolidated sales from continuing operations showed a good performance with an increase of 5% in Swiss franc terms and 6% in local currency terms compared to the First Quarter of the previous year. Organic sales growths excluding the effect of the Ciba Specialty Chemicals Masterbatches business, was 5%. Price increases were implemented across most businesses, with average price increase of 1% for the group.

The gross margin increased slightly to 31.1% in terms of sales in the First Quarter compared to 31.0% in the same period a year earlier. Higher selling prices and improved fixed cost absorption owing to higher sales volumes were partially offset by 11% higher energy costs and a 3% rise in raw material costs.

Marketing, distribution, administration, and general overhead costs accounted for 21.8% of sales compared to 21.2% in the First Quarter of 2006. The increase in marketing and distribution costs was primarily due to higher freight costs. Initial optimization measures notably the successful integration of Ciba's masterbatches business, adversely affected administration and general overhead levels.

Research and development costs rose to CHF 53 million in the First Quarter of 2007 from CHF 49 million in the previous year.

Income from associates decreased to CHF 5 million in the First Quarter of 2007 compared to CHF 9 million during the prioryear quarter.

Restructuring costs and impairments totaling CHF 13 million take mainly into account integration costs for the newly acquired masterbatches business in France and restructuring activities in Australia.

Net finance costs in the First Quarter of 2007 fell to CHF 20 million, a drop of CHF 11 million compared with the prioryear period. This was due primarily to foreign exchange gains worth CHF 5 million in the First Quarter of 2007 compared with exchange rate losses of CHF 11 million in the previous year. Interest expenses increased by CHF 6 million to CHF 25 million in the first few months of 2007, owing mainly to a higher average financial debt of CHF 2 billion in the First Quarter of 2007 (versus CHF 1.8 billion in 2006) and higher average interest rates.

Tax expenses in the First Quarter of 2007 continued to be positively influenced by a substantial proportion of profits being generated in low-tax countries. Restructuring costs in the First Quarter had a positive impact on tax expenses.

Net income from continuing operations totaled CHF 86 million in the First Quarter of 2007, down from CHF 96 million in the previous year.

The loss from discontinued operations totaled CHF 2 million in the First Quarter of 2007, the same level as in the corresponding prior-year period. The result of discontinued operations in the First Quarter of 2007 also contains the gain on the disposal of the DMS unit in Germany, which was part of the Custom Manufacturing business and was sold in March. The related gain of CHF 13 million almost neutralized the negative impact of the underlying operating loss.

Balance Sheet Key Figures

Balance Sheet Key Figures

Total assets increased to CHF 7.429 billion as of March 31, 2007 from CHF 7.188 billion at the end of 2006. Moderate increases in inventories, trade receivables and a payment to the pension plan assets contributed to this effect.

Cash and cash equivalents increased to CHF 480 million as of March 31, 2007 from CHF 443 million at the end of 2006. This was mainly the result of the repayment of a vendor loan note incl. accrued interest totaling to CHF 48 million as part of the sale price for the disposal of the Electronic Materials business, which was sold in 2004.

Current financial debt increased to CHF 1.021 billion as of March 31, 2007 from CHF 623 million at the end of 2006, whereas non-current financial debt decreased to CHF 1.003 billion as of March 31, 2007 from CHF 1.376 billion at the end of 2006. This was due to the reclassification of a bond worth CHF 384 million from non-current to current debt, which will fall due in March 2008.

Equity increased to CHF 2.567 billion as of March 31, 2007 from CHF 2.433 billion at the end of 2006. This was due to net profits of CHF 84 million during the reporting period and the positive impact of FX movements. The euro and Brazilian real, in particular, contributed to this effect.

Net debt remained almost stable, decreasing minimally to CHF 1.544 billion as of March 31, 2007 from CHF 1.556 billion at the end of 2006.

Gearing, which reflects net financial debt in relation to equity including minorities, decreased to 60% as of March 31, 2007 from 64% at the end of 2006.

Cash Flow

Cash flow from operating activities before changes in working capital stood at CHF 120 million for the First Quarter of 2007. This compares to CHF 129 million in the First Quarter of 2006.

Working capital increased by CHF 115 million during the First Quarter of 2007 mainly driven by higher inventories and trade receivables, but also by a CHF 38 million payment into the pension plan in the UK, which resulted in an increase in pension plan assets. This compares to an increase of CHF 138 million in the First Quarter of 2006.

Cash flow from operating activities stood at CHF 5 million for the First Quarter of 2007, compared to a negative figure of CHF 9 million in the First Quarter of 2006. This first signs of improvement of operating cash flow could be achieved despite strong volume growth and increase in raw material prices.

Capital expenditure (PPE) stood at CHF 57 million for the First Quarter of 2007, compared to CHF 62 million in the First Quarter of 2006.

Other important investment activities in 2007 included the disposal of the DMS business in Germany – part of the Custom Manufacturing business – to be classified as a discontinued operations. This transaction resulted in CHF 13 million cash flowing to the Group.

				Textile, Leather & Paper Chemicals
--	--	--	--	------------------------------------

				First Quarter
		2007		2006
	CHF mn	% of sales	CHF mn	% of sales
Sales	580		564
EBITDA before exceptionals	52	9.0	52	9.2
Operating income before exceptionals	34	5.9	34	6.0
Operating income	33	5.7	33	5.9

See Defi nitions of Terms of Financial Measurements on page 11.

The Textile, Leather & Paper Chemicals Division improved sales in local currency and in Swiss franc terms compared to the First Quarter of 2006. The division posted organic growth of 5%. After a negative currency effect growth in Swiss franc terms stood at 3%. All areas contributed to the gratifying top-line trend while selling prices levels remained stable over the periode. Growth was highest in Paper Chemicals despite a high baseline. In regional terms, China and other key markets such as India and Pakistan saw the strongest growth; the European market enjoyed moderate growth with an excellent performance in Turkey; sales in North America declined as a result of active business portfolio optimizations and overall lower demand. Despite the favorable top line performance, operating margins were only held at 2006 levels as raw material and freight costs increased and currency movements were unfavorable.

According to the new strategy to further build on service and customer orientation, Clariant's Textile Business in March signed a strategic partnership with Pantone Inc. The global authority on color and a provider of professional color standards for the design industries. This will enable both sides of the partnership to further streamline the color development workflow for themselves and their customers.

Sales volumes in the Textile Business improved versus the prior-year level. As in the previous quarters, growth was mainly driven by dyeing & printing and finishing chemicals, whereas products for pre-treatment were somewhat weaker. Regionally, core textile markets such as China, India, Pakistan, and Turkey continued to improve, whereas North America showed some weakness. North America exhibited a weaker trend, as product ranges were adjusted in an active effort to respond to the pressure to migrate to low-cost countries.

The Paper Business once again performed strongly in the First Quarter. Growth was particularly driven by process and coating chemicals business, although paper dyes and optical brighteners (OBAs) also contributed to the pleasing trend. While OBA's maintained their strong track record, the Paper Business saw a greater contribution from the other segments as well. All regions expanded strongly, with Asia and Latin America enjoying remarkable growth.

With higher volumes and increased price levels, the Leather Business reported improved sales compared to the prior-year period. The overall market was impacted by a challenging business climate. As in the preceding quarters, wet-end dyes and chemicals saw good demand. Asian and some emerging countries showed continued strong growth, whereas North America experienced low levels of demand. The upholstery market weakened because of currently high hide prices.

Pigments & Additives

			First Quarter
	2007		2006
CHF mn	% of sales	CHF mn	% of sales
523		499
79	15.1	87	17.4
59	11.3	67	13.4
59	11.3	66	13.2

See Defi nitions of Terms of Financial Measurements on page 11.

The Pigments & Additives division continued to grow strongly in First Quarter of 2007 with organic growth of 5% from a year earlier. The exchange rate effect on sales was negligible.

Demand for Clariant's innovative product range increased, but the overall price pressure in the industry continued. Operating margins were additionally negatively affected by higher raw material and transport costs as well as adverse currency effects. At a regional level, the division saw quite strong growth rates in Europe and emerging markets, good growth in Asia and Latin America, while US markets weakened slightly.

Growth in the Coating Industry business is still strong. The positive trend in the First Quarter was in evidence throughout all businesses and regions. Despite weak US automotive production, sales in OEM-coatings increased. Mild winter months had a positive impact on decorative and industrial coating sales, while the cyclical weaknesses in the US housing market inhibited growth. Regionally, emerging markets such as China, Indonesia, and India exhibited the steepest growth trajectories.

Sales in the Plastic Industry unit stabilized at the same high level as the previous year. Prices remained under pressure. Demand from Europe, Turkey, and India was very positive, while plastic consumption in the US and Asia failed to match the previous year's level.

The Printing Industry posted slightly higher volumes in comparison with the previous year. The business was able to build on the successful portfolio focusing strategy already implemented last year. The consolidiation in the printing ink industry continued. The markets for non-impact printing were satisfying, but got off to a weak start at the beginning of the year in the important Japanese market.

The Specialties Business greatly expanded its sales in comparison with the prior-year period. All product groups increased their sales figures over the period under review. The continuing high demand for Exolit® halogen-free flame retardants is particularly worth noting. After a shortage of raw materials in the Fourth Quarter of 2006, production in Germany is running at full capacity again.

Masterbatches

			First Quarter
			2006
CHF mn	% of sales	CHF mn	% of sales
359		324
41		43	13.3
32		35	10.8
17		32	9.9
		2007 11.4 8.9 4.7

See Defi nitions of Terms of Financial Measurements on page 11.

The Masterbatches Division showed strong sales growth driven by acquisition effects. Organically, the division grew by 5% year on year. Including the recent acquisition of the Ciba Specialty Chemicals masterbatches business, sales rose by 11% in local currency terms with negligible currency impact. As in the previous quarters, higher volumes and increased price levels were achieved.

Growth was strong in Latin America, Asia as well as Eastern and Northern Europe. By contrast, sales in North America declined owing to the tight macroeconomic situation and a strong prior-year baseline. The Masterbatches Business showed good overall growth, especially notable in the packaging, resin producer, and textile segments. The environment in the plastics market remains healthy, although the US plastics market showed some weakness.

Following the acquisition of the Ciba's masterbatches business, the units taken over made the planned contribution to division's sales. Initial restructuring measures in connection with the takeover were introduced in France. As a result, all operating activities will be concentrated at one site in France and in the neighboring countries of Spain and Belgium. The two redundant production sites in France will close during the course of the year. As expected, in addition to the reported restructuring costs of CHF 11 million, there was a negative impact on the operating result before exceptionals owing to one-off integration costs.

The company also decided to exit the underperforming Australian masterbatches business and instead to bolster its strong presence in the promising New Zealand market. The expected net effect in 2007 on sales will be negative CHF 15 million. During the period, assets of CHF 4 million were written down.

Functional Chemicals

		First Quarter
		2006**
CHF mn	CHF mn	% of sales
694	661
76	74	11.2
59	58	8.8
62	58	8.8
	% of sales	2007 11.0 8.5 8.9

** Restated to include Life Science Chemicals Division, a separate division in 2006, which has become a part of Functional Chemical Division in 2007. See Defi nitions of Terms of Financial Measurements on page 11.

In the First Quarter of the year, the Functional Chemicals Division significantly increased its sales compared with the previous year. Organic growth was up 4% from a year earlier and was driven by both higher selling prices and better volumes. Foreign exchange effects were slightly positive amounting to 5% growth in Swiss franc terms. The business trend was unevenly distributed, however, with Detergents and Performance Chemicals continuing to show strong growth, while Process Chemicals experienced a sideways trend versus the prior-year quarter. Due to the mild winter season, the de-icing business was well below the strong prior-year level. As in the previous quarter, the division was able to offset higher raw material costs through price increases. However margins were affected by volatile commodity, increasing energy prices and higher freight costs.

Detergents showed excellent volume growth across all businesses, and a higher selling price level was achieved compared to the previous year. The division achieved a double-digit improvement in sales. Growth was broad-based in terms of regions, with Latin and North America emerging in a particularly positive light.

Performance Chemicals showed a strong performance in the First Quarter. The gratifying trend was driven in equal measure by higher selling prices and volumes. After weak demand for agrochemicals in the previous year, crop protection chemicals recorded a significant increase and grew strongly thanks to an improvement in its order backlog towards the end of the year. There was continued positive demand for personal care products and construction chemicals, including the innovative products for the manufacture of super plasticizer cement. Latin America and Europe stood out as regions of particularly strong growth. In the First Quarter, a new microbiological laboratory in Shanghai began operations, completing Clariant's range of services in the industrial biocides and personal care sectors. Following the dissolution of the Life Science Chemicals Division at the beginning of the year, the Specialty Intermediates unit (silicone, glyoxal, and glyoxylic acid derivative products) was integrated into the Performance Chemicals business and contributed to sales for the first time.

In the First Quarter Process Chemicals saw similar sales levels compared to the same period in 2006, as the de-icing business was unable to match prior-year levels owing to the mild winter months. This effect was partially counterbalanced by broad based price rises and the progress of Clariant's Oil Services and Refinery Chemicals, which both made a particularly positive showing. North America and Asia flourished. During the course of the quarter, Clariant added one more example to its expanding portfolio of products and services for the airline industry with a new aircraft deicing fluid recycling plant beginning operations at the Zurich International airport.

Regions

First Quarter Sales
CHF mn		2007 % of sales		2006 % of sales	CHF %	LC %
Europe	1 088	50.5	1 015	49.5	7	4
of which Germany	321		301		7	3
of which Switzerland	38		38		–	- 4
Americas	591	27.4	597	29.2	- 1	3
of which USA	272		290		- 6	- 2
Asia / Australia / Africa	477	22.1	436	21.3	9	13
Total continuing operations	2 156	100.0	2 048	100.0	5	6
Discontinued operations	46		113

Europe

European sales accounted for 51% of the Group total in the First Quarter of 2007 and increased to CHF 1,088 million, up from 1,015 million in the First Quarter of 2006. Organic growth (excluding the impact of the acquisition of the Ciba's masterbatches business) came to 3%. A positive performance across all businesses in Turkey (+30%) and Eastern Europe countries (+23%) proved to be the key driver behind this growth. Germany reported more selective growth, contributing a solid 3% and showing above-average improvements in the Coatings, Plastics, Masterbatches, Detergents and Performance Chemicals segments. Overall, sales in Spain were down on what was a strong prior-year quarter.

Americas

Sales in the Americas accounted for 27% of the Group total. However, the regional picture presented a clear split, with North American sales declining a further 2% (in organic terms) but with the Latin American countries showing a consistently positive trend. Led by Venezuela, Argentina and Brazil, nearly every major South American country recorded double-digit growth compared with the First Quarter of 2006.

Asia, Africa, Australia

In the First Quarter, this region delivered 11% organic and 13% local currency growth. Asia, Africa, Australia accounted for 22% of group sales in the First Quarter. China continued to be the main growth engine, soaring 27% thanks to double-digit growth in all divisions. Japan reported 1% negative growth in local currency terms from a year earlier. India, on a positive growth path since Clariant's decision to consolidate all units, finished just below the regional average with a promising performance particularly in the Pigments & Additives Division.

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 of fixed assets and amortization of intangibles and can be reconciled from the Condensed Financial Statements as follows:

EBITDA (Continuing)

		First Quarter
CHF mn	2007	2006
Operating income	139	154
+ Depreciation of PPE	65	63
+ Impairment of PPE / Goodwill	4	0
+ Amortization of other intangibles	2	2
EBITDA	210	219

EBITDA before exceptional items

– is calculated as EBITDA plus expenses for restructuring and impairment less impairment of PPE/goodwill and gain/ loss on disposals.

EBITDA before exceptionals (Continuing)

		First Quarter
CHF mn		2006
EBITDA	210	219
+ Restructuring and impairment	13	6
- Impairment of PPE / Goodwill	- 4	–
(reported under Restructuring and impairment)
- Gain on disposals of subsidiaries and associates	–	–
EBITDA before exceptionals	219	225

Operating income before exceptional items

– is calculated as operating income plus restructuring and impairment and gain/loss on disposals

Operating income before exceptionals (Continuing)

		First Quarter
CHF mn	2007	2006
Operating income	139	154
+ Restructuring and Impairment	13	6
- Gain on disposals of subsidiaries and associates	–	–
Operating income before exceptionals	152	160

Net debt

– is the sum of current and non-current fi nancial debt less cash and cash equivalents and current deposits reported in other current assets.

Net Debt

CHF mn	31.03.2007	31.12.2006
Non-current fi nancial debt	1 003	1 376
+ Current fi nancial debt	1 021	623
- Cash and cash equivalents	- 480	- 443
- Current deposits 90 to 365 days	–	–
Net Debt	1 544	1 556

Condensed Financial Statement of the Clariant Group

at March 31, 2007

	Consolidated balance sheets (unaudited)
--	-----------------------------------------	--

Assets		31.03.2007		31.12.2006
	CHF mn	%	CHF mn	%
Non-current assets
Property, plant and equipment	2 431		2 422
Intangible assets	340		335
Investments in associates	274		288
Financial assets	55		63
Prepaid pension assets	123		90
Deferred income tax assets	108		89
Total non-current assets	3 331	44.8	3 287	45.7
Current assets
Inventories	1 585		1 513
Trade receivables	1 550		1 446
Other current assets 1	366		378
Cash and cash equivalents	480		443
Current income tax receivables	21		24
Total current assets	4 002	53.9	3 804	52.9
Non-current assets held for sale	96	1.3	97	1.4
Total assets	7 429	100.0	7 188	100.0
Equity and liabilities	CHF mn	31.03.2007 %	CHF mn	31.12.2006 %
Capital and reserves attributable to Clariant shareholders
Share capital	1 035		1 035
Treasury shares (par value)	- 11		- 16
Other reserves	677		648
Retained earnings	802		706
	2 503		2 373
Minority interests	64		60
Total equity	2 567	34.6	2 433	33.8
Liabilities
Non-current liabilities
Financial debts	1 003		1 376
Deferred income tax liabilities	196		183
Retirement benefi t obligations	492		495
Provision for non-current liabilities	254		244
Total non-current liabilities	1 945	26.2	2 298	32.0
Current liabilities
Trade payables	1 266		1 207
Financial debts	1 021		623
Current income tax liabilities	229		215
Provision for current liabilities	343		351
Total current liabilities	2 859	38.5	2 396	33.3
Liabilities directly associated with non-current
assets held for sale	58	0.7	61	0.9
Total liabilities	4 862	65.4	4 755	66.2
Total equity and liabilities	7 429	100.0	7 188	100.0

1 Includes short-term deposits of 0 (2006: CHF 0)

Consolidated income statements (unaudited)

		First Quarter
		2007		2006
	CHF mn	%	CHF mn	%
Sales	2 156	100.0	2 048	100.0
Costs of goods sold	- 1 485	68.9	- 1 413	69.0
Gross profi t	671	31.1	635	31.0
Marketing and distribution	- 347	16.1	- 327	16.0
Administration and general overhead costs	- 124	5.7	- 108	5.2
Research and development	- 53	2.5	- 49	2.4
Income from associates	5	0.2	9	0.4
Restructuring and impairment	- 13	0.6	- 6	0.3
Operating income	139	6.4	154	7.5
Finance income	5	0.2	5	0.2
Finance costs1	- 25	1.1	- 36	1.7
Income before taxes	119	5.5	123	6.0
Taxes	- 33	1.5	- 27	1.3
Net income from continuing operations	86	4.0	96	4.7
Discontinued operations:
Income from discontinued operations	- 2		- 2
Net income	84		94
Attributable to:
Shareholders of Clariant Ltd	81		92
Minority interests	3		2
Net income	84	3.9	94	4.6
Basic earnings per share attributable to the shareholders of Clariant Ltd (CHF/share):
Continuing operations	0.36		0.41
Discontinued operations	- 0.01		- 0.01
Total	0.35		0.40
Diluted earnings per share attributable to the shareholders of Clariant Ltd (CHF/share):
Continuing operations	0.36		0.41
Discontinued operations	- 0.01		- 0.01
Total	0.35		0.40

1 Currency impact YTD 2007 of CHF +5 mn vs YTD Mar 2006 of CHF -11 mn.

Consolidated statements of cash fl ows (unaudited)

		First Quarter
CHF mn	2007	2006
Net income	84	94
Depreciation of property, plant and equipment (PPE)	65	69
Impairment and reversal of impairment	8	–
Amortization of intangible assets	2	1
Changes in provisions and taxes	28	4
Interest paid	- 23	- 27
Income taxes paid	- 32	2
Gain before taxes from the disposal of subsidiaries and associates	- 13	–
Other non-cash items	1	- 14
Cash fl ow before changes in working capital	120	129
Changes in inventories	- 64	- 104
Changes in trade receivables	- 75	- 28
Changes in trade payables	- 6	- 89
Changes in other current assets and liabilities	30	83
Cash fl ow from operating activities	5	- 9
Investments in PPE	- 57	- 62
Investments in fi nancial assets and associates	- 4	- 4
Investments in other intangible assets	- 1	–
Sale of PPE and intangible assets	2	1
Acquisition of companies, businesses and participations	–	- 18
Proceeds from the disposal of discontinued operations	13	–
Dividends received	19	–
Interest received	13	2
Cash fl ow from investing activities	- 15	- 81
Treasury share transactions	17	22
Proceeds from fi nancial debts	67	220
Repayments of fi nancial debts	- 39	- 119
Cash fl ow from fi nancing activities	45	123
Currency translation effect on cash and cash equivalents	2	1
Net change in cash and cash equivalents	37	34
Cash and cash equivalents at the beginning of the period	443	223
Cash and cash equivalents at the end of the period	480	257

Consolidated statements of recognized income and expense (unaudited)

		First Quarter
	2007	2006
	CHF mn	CHF mn
Cash fl ow hedges: Transferred to net income
Net investment hedge	- 11	–
Currency translation differences	41	26
Net income recognized directly in equity	30	26
Profi t for the period	84	94
Total recognized income and expense for the period	114	120
Attributable to:
Shareholders of Clariant Ltd	110	122
Minority interests	4	- 2
	114	120

This statement shows only changes in equity other than those arising from capital transactions with owners and distributions to owners. For a comprehensive presentation on equity, see note 11.

Notes to the 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 three-month period ended on 31 March 2007 (hereafter "the Group"). They are prepared in accordance with the International Accounting Standard 34 (IAS 34 "Interim Financial Reporting") and were approved on 4 May 2007 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 2006 (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. Restructuring and Impairment

During the reporting period, the Clariant Group recorded restructuring expenses in the amount of CHF 9 million, which were mainly incurred in the Masterbatch division in France. Impairment charges amounted to CHF 4 million in Continuing Operations. They arose mainly on the write-off of assets of the Masterbatch activities in Australia upon their reclassification to assets held for sale in the first quarter of 2007.

4. Discontinued Operations

In September 2006 Clariant launched a project to sell its Custom Manufacturing Business. As a result these activities are now reported as discontinued operations in accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations. The related assets were reclassified to assets held for sale and associated liabilities in the balance sheet.

The net result of Discontinued Operations in the first quarter of 2007 also contains the gain on the disposal of the DMS business in Germany in the amount of CHF 13 million. This activity had been part of Custom Manufacturing and was sold in March 2007.

Sales and operating result of the Custom Manufacturing busi-

ness for the first three months of 2007 and 2006 were as follows:

CHF million	2007	2006
Sales	46	60
Operating loss before
restructuring, impairment and disposals	-12	-4
Net loss	-4	-4
Systematic depreciation	0	2

For the first quarter 2006 Discontinued Operations additionally comprise the activities of the Pharmaceutical Fine Chemicals business, which was sold on 30 June 2006.

Sales and operating result of the Pharmaceutical Fine Chemicals business for the first three months of 2007 and 2006 were as follows:

CHF million	2007	2006
Sales	0	53
Operating loss before restructuring, impairment and disposals	0	0
Net loss	0	-1
Systematic depreciation	0	3

5. Non-current Assets Held for Sale

In non-current assets held for sale Clariant reports assets and associated liabilities of the Custom Manufacturing activities and Australian Masterbatch activities.

On reclassification to non-current assets held for sale these balance sheet items were revalued to the lower of book value or fair value less costs to sell. This revaluation caused an impairment devaluation of CHF 3 million relating to Australian Masterbatch activities, which is reported in the Income Statement line Restructuring and Impairment.

6. Nominal Value Reduction

On 2 April, 2007 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 4.50 to 4.25 per registered share. The pay-out will reduce the share capital by CHF 57 540 000 and is expected to take place by the end of June 2007.

7. Events after the balance sheet date

On 21 March 2007 Clariant announced the launch of a fiveyear CHF 250 million CHF-bond. The bond pays a coupon of 3.125% and was issued at a price of 100.354%. The payment date was 24 April 2007. The main purpose of this bond is to refinance financial liabilities with upcoming maturities.

8. Divisional Figures

First Quarter			Sales to 3rd parties				EBITDA before exceptionals					EBITDA
CHF mn	2007	2006	% CHF	% LC	2007	2006	% CHF	% LC	2007	2006	% CHF	% LC
Textile, Leather, Paper	580	564	3	5	52	52	–	3	51	51	–	4
Pigments & Additives	523	499	5	5	79	87	- 9	- 9	79	86	- 8	- 7
Masterbatches	359	324	11	11	41	43	- 5	- 6	29	40	- 28	- 27
Functional Chemicals**	694	661	5	4	76	74	3	1	79	74	7	5
Divisions Total	2 156	2 048			248	256			238	251
Corporate	–	–			- 29	- 31			- 28	- 32
Total continuing	2 156	2 048	5	6	219	225	- 3	- 3	210	219	- 4	- 4

Operating income before exceptionals						Operating Income		Systematic Depreciation of PPE
CHF mn	2007	2006	% CHF	% LC	2007	2006	% CHF	% LC	2007	2006
Textile, Leather, Paper	34	34	–	6	33	33	–	7	18	18
Pigments & Additives	59	67	- 12	- 11	59	66	- 11	- 10	20	20
Masterbatches	32	35	- 9	- 8	17	32	- 47	- 47	8	8
Functional Chemicals **	59	58	2	–	62	58	7	5	17	16
Divisions Total	184	194			171	189			63	62
Corporate	- 32	- 34			- 32	- 35			2	1
Total continuing	152	160	- 5	- 4	139	154	- 10	- 8	65	63

** Restated to include Life Science Chemicals Division, a separate division in 2006, which has become a part of Functional Chemical Division in 2007.

9. Divisional Margins

First Quarter		Sales to 3rd parties		EBITDA before exceptionals		EBITDA
in %	2007	2006	2007	2006	2007	2006
Textile, Leather, Paper	26.9	27.5	9.0	9.2	8.8	9.0
Pigments & Additives	24.3	24.4	15.1	17.4	15.1	17.2
Masterbatches	16.7	15.8	11.4	13.3	8.1	12.3
Functional Chemicals **	32.1	32.3	11.0	11.2	11.4	11.2
Total continuing	100.0	100.0	10.2	11.0	9.7	10.7

		Operating income b. exceptionals		Operating Income
in %	2007	2006	2007	2006
Textile, Leather, Paper	5.9	6.0	5.7	5.9
Pigments & Additives	11.3	13.4	11.3	13.2
Masterbatches	8.9	10.8	4.7	9.9
Functional Chemicals **	8.5	8.8	8.9	8.8
Total continuing	7.1	7.8	6.4	7.5

** Restated to include Life Science Chemicals Division, a separate division in 2006, which has become a part of Functional Chemical Division in 2007.

10. Regional developments

Sales						First Quarter
CHF mn		2007 % of sales		2006 % of sales	CHF %	LC %
Europe	1 088	50.5	1 015	49.5	7	4
of which Germany	321		301		7	3
of which Switzerland	38		38		–	- 4
Americas	591	27.4	597	29.2	- 1	3
of which USA	272		290		- 6	- 2
Asia / Australia / Africa	477	22.1	436	21.3	9	13
Total continuing operations	2 156	100.0	2 048	100.0	5	6
Discontinued operations	46		113

11. Consolidated statement of changes in equity

										First Quarter
					Other reserves
	Total share	Treasury	Share		Hedging Cumulative shares premium reserves translation		Total Retained	Total other earnings attributable interests	Minority	Total equity
CHF mn		capital (par value) reserves			reserves	reserves		to equity holders
Balance 31 December 2005	1 093	- 18	767	–	- 104	663	793	2 531	60	2 591
Total recognized income and expense for the period					30	30	92	122	- 2	120
Dividends to third parties
Share capital reduction
Treasury share transactions and share based payments		5					17	22		22
Balance 31 March 2006	1 093	- 13	767	–	- 74	693	902	2 675	58	2 733
Balance 31 December 2006	1 035	- 16	767	–	- 119	648	706	2 373	60	2 433
Total recognized income and expense for the period					29	29	81	110	4	114
Dividends to third parties
Share capital reduction
Treasury share transactions and share based payments		5				–	15	20	–	20
Balance 31 March 2007	1 035	- 11	767	–	- 90	677	802	2 503	64	2 567

12. Foreign Exchange Rates

Rates used to translate the consolidated	31.03.2007	31.12.2006	Change %
balance sheets (closing rate)
1 USD	1.22	1.22	–
1 EUR	1.62	1.61	1
1 GBP	2.39	2.39	–
100 JPY	1.03	1.02	1
			First Quarter
Average sales-weighted rates used to translate the income	2007	2006	Change %

statements and consolidated statements of cash fl ows
1 USD	1.23	1.30	- 5
1 EUR	1.62	1.56	4
1 GBP	2.41	2.27	6
100 JPY	1.03	1.11	- 7

13. Condensed Earnings Per Share Data

		First Quarter
CHF mn	2007	2006
Number of shares outstanding at 31.03.2007	230 160 000	230 160 000
and 31.03.2006 respectively
Weighted average,	227 636 593	226 678 365
number of shares outstanding
Weighted average, diluted	228 763 451	228 205 861
number of shares outstanding *
Basic earnings per share attributable
to the shareholders of Clariant Ltd (CHF/share):
Continuing operations	0.36	0.41
Discontinued operations	- 0.01	- 0.01
Total	0.35	0.40
Diluted earnings per share attributable
to the shareholders of Clariant Ltd (CHF/share):
Continuing operations	0.36	0.41
Discontinued operations	- 0.01	- 0.01
Total	0.35	0.40

* Restated for shares for members of management as at 31 March 2006 of 206 000 shares issued as part of a relocation program in 2005, which were accidentally not reported in this presentation.

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 22,000 people. Headquartered in Muttenz near Basel, it generated sales of around CHF 8.1 billion in 2006.

Clariant's businesses are organized in five divisions: Textile, Leather & Paper Chemicals, Pigments & Additives, Functional 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

Calendar of Corporate Events		Your Clariant Contacts
August 2, 2007	Half Year 2007 Results	Investor Relations	Fax +41 61 469 67 67
November 7, 2007	Nine Month 2007 Results	Holger Schimanke	Tel. +41 61 469 67 45
February 14, 2008	Full Year 2007 Results	Fabian Hildbrand	Tel. +41 61 469 67 49
April 10, 2008	Annual General Meeting
		Media Relations	Fax +41 61 469 69 99
		Walter Vaterlaus	Tel. +41 61 469 61 58