Clariant again significantly increases operating cash flow

"Clariant considerably expanded its operating cash flow in 2016 while reporting sales growth and profitability improvement," said CEO Hariolf Kottmann. "Our good business performance was primarily achieved by means of a continued shift to high margin specialities, the impact of the differentiated steering in Plastics & Coatings as well as good cost management. For 2017, we are confident that we will achieve our targets, i.e. growth in local currency, progression in operating cash flow, absolute EBITDA and EBITDA margin before exceptional items in spite of a continued challenging economic environment."

Key Financial Data

Full Year 2016 - Another significant increase in operating cash flow and continued improvement in sales and margins

Muttenz, February 16, 2017 - Clariant, a world leader in specialty chemicals, today announced full year 2016 sales of CHF 5.847 billion compared to CHF 5.807 billion in  2015. This corresponds to a 2 % growth in local currency driven by higher volumes.

For the full year, local currency growth was strongest in Asia and the Middle East & Africa at 4 %. In Asia the strong growth was mainly supported by China and India. In North America and Europe sales growth was 2 %. Latin America grew at a level of 1 %.

The improved sales performance for the full year resulted from strong growth in Care Chemicals and Plastics & Coatings. In Care Chemicals, sales in local currency increased by 5 % to CHF 1 465 million. In Plastics & Coatings, sales in local currency progressed by 4 % to CHF 2 525 million. The good sales performance in Plastics & Coatings was seen across all regions.

Despite the difficult market environment, sales in Natural Resources grew by 2 % in local currency and amounted to CHF 1 184 million. There was a decline in the Oil and Mining Services business which was compensated by acquisitions and the continued growth in Functional Minerals. Sales in Catalysis declined by 8 % in local currency, reaching CHF 673 million due to portfolio mix effects and lower demand in Asia and North America.

EBITDA before exceptional items increased by 4 % in Swiss francs and reached CHF 887 million, compared to CHF 853 million in the previous year. The profitability improvement was driven by Care Chemicals and Plastics & Coatings.

The corresponding EBITDA margin before exceptional items of 15.2 % was significantly above the previous year's level of 14.7 % mostly due to a sharp increase in Plastics & Coatings. Margins in Care Chemicals and Natural Resources were stable and both delivered at the higher end of the respective margin guidance. As anticipated, Catalysis was below the previous year's level largely due to lower demand in Asia and North America.

Net income climbed to CHF 263 million from CHF 227 million in the previous year. The 16 % increase year-on-year resulted from the continued expansion in absolute EBITDA, lower finance costs and an improvement in the tax rate.

Operating cash flow rose significantly by 29 % to CHF 646 million compared to CHF 502 million in the previous year. This improvement is primarily attributable to higher profit, lower cash out for exceptional items and lower income taxes paid.

Net debt was CHF 1.540 billion compared to CHF 1.312 billion recorded at year-end 2015 as a result of the bolt-on acquisitions in 2016.

The continued improvement in performance that Clariant achieved despite the difficult economic environment, allows the Board of Directors to propose a dividend of CHF 0.45 per share to the Annual General Meeting. This sum reflects an increase of 12.5 % compared to the previous year. The distribution is proposed to be made from the capital contribution reserve which is exempt from Swiss withholding tax.

Fourth Quarter 2016 - Further progress in profitability

In the fourth quarter of 2016, sales grew by 3 % in local currency to CHF 1.548 billion. Excluding acquisition effects in the Oil and Mining Services business, year-on-year sales were stable.

On a regional level, sales grew at 6 % in Europe driven by volume increases. In the Middle East & Africa, sales were up 7 % in local currency. Asia grew at 4 % in local currency with further improvement in China. Latin America saw a decline of 17 % led by a weakening demand in Brazil, while North America advanced by 14 % in local currency as a result of the bolt-on acquisitions.

Care Chemicals reported sales of CHF 378 million with local currency sales growth of 5 %. In Plastics & Coatings, sales rose by 3 % in local currency to CHF 594 million, with a strong sales performance in each of the three businesses Masterbatches, Pigments and Additives. Sales in Natural Resources were CHF 345 million, up 7 % in local currency. This growth was driven by Functional Minerals and acquisitions in the Oil and Mining Services business. Catalysis sales were 6 % lower in local currency to CHF 231 million, against a high comparable base in the previous year.

EBITDA before exceptional items rose by 3 % in Swiss francs to CHF 235 million driven by the differentiated steering in Plastics & Coatings. As a result, the EBITDA margin before exceptional items increased to 15.2 % in the fourth quarter.

Outlook 2017 - Continued progression in profitability and operating cash flow generation

Clariant expects the uncertain environment, characterized by a high volatility in commodity prices, currencies as well as political uncertainties, to continue. In emerging markets, we anticipate the economic environment to remain challenging and volatile; we expect moderate growth in the United States, while growth in Europe is expected to remain stable.

For 2017, in spite of a continued challenging economic environment, Clariant is confident to be able to achieve growth in local currency, as well as progression in operating cash flow, absolute EBITDA and EBITDA margin before exceptional items.

Clariant confirms its mid-term target of reaching a position in the top tier of the specialty chemicals industry. This corresponds to an EBITDA margin before exceptional items in the range of 16 % to 19 % and a return on invested capital (ROIC) above the peer group average.