Swiss specialty chemicals firm Clariant AG (CLZNF.PK,CRN.L, CLZNY.PK) on Thursday reported a plunge in profit for the first quarter as margins were hurt by an uncertain environment in Europe for its cyclical businesses. The company confirmed its outlook for 2012.
Clariant said the quarter was weaker due to economic headwinds, unfavorable currency development and the absence of restocking activities. The company saw slightly higher prices for raw materials, especially oil.
CEO Hariolf Kottmann said, "As expected, Clariant had a soft start into the year as the global economy stabilized. While the non-cyclical parts of the portfolio continued to perform well, the more cyclical businesses faced ongoing challenges in the current uncertain environment, especially in Europe. This is reflected in lower margins for the Group compared to an extraordinarily strong quarter one year ago."
Net income attributable to shareholders of the company plunged to 16 million francs ($17.5 million) or 0.05 francs per share from 105 million francs or 0.40 per share in the prior year.
The company incurred restructuring and impairment costs of 41 million francs compared to 29 million francs last year, mainly related to the integration of Süd-Chemie and additional projects related with sustainable cost reductions.
Sales increased to 1.95 billion francs from 1.72 billion francs. Sales grew 18 percent in local currencies and 13 percent in francs, mainly driven by the acquisition of Süd-Chemie.
On a like-for-like basis, sales slipped 2 percent in local currencies year-on-year. Gross margin decreased to 28.2 percent from 29.8 percent in the prior year.
Segment-wise, Oil & Mining Services reported a 17 percent increase in sales to 173 million francs with strong demand from the Middle East, Latin America, and North America.
Sales at the Industrial & Consumer Specialties business slipped 2 percent to 392 million francs. The personal care, construction chemicals and crop protection businesses experienced good growth. However, the de-icing business was weak, impacted by unfavorable weather conditions with a mild winter in North America and a cold but dry winter in Europe.
Masterbatches generated 296 million francs, down 4 percent from last year, with improvement in all regions but Europe.
Sales of Pigments fell 11 percent to 230 million francs due to lower underlying demand and an inflated base in the prior year quarter that was boosted by restocking activities.
Clariant expects further sales growth in local currencies and sustained profitability in 2012 as the global economy is expected to strengthen in the course of the year.
Results for the first half-year are expected to be lower compared to the high base of last year with an improvement in the second half of the year.
The stock closed in Zurich on Wednesday higher by 1.47 percent at 11.71 euros on a volume of 3.23 million shares.
by RTT Staff Writer
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