Clariant International AG
Clariant AG part 1
Clariant AG: Part 1 from 2
Ad-hoc-announcement processed and transmitted by DGAP.
The issuer is solely responsible for the content of this announcement.
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Part 2 from 2
Clariant improves operating performance – Net loss due to extraordinary
writedowns – Board of Directors approves package of measures
Muttenz, Switzerland, February 25, 2003 – Clariant generated sales growth of
4.7% in local currencies (-3.3% in CHF) despite difficult economic conditions.
All divisions contributed to the result. Since developments in the Life Science
units did not come up to expectations, the company made an extraordinary
writedown of CHF 890 million. Owing to this measure, Clariant reports a net
loss of CHF 648 million for fiscal 2002. If this writedown were factored out,
Clariant would have posted a net profit of CHF 242 million. The net loss and
negative currency effects reduced equity capital to CHF 914 million. No
dividend will be paid.
The Board of Directors approved a package of measures at its meeting that
took place on February 19, 2003. The measures are aimed at strengthening the
equity base and improving operating performance. Legal entities will be
formed in order to enhance strategic flexibility for certain business areas.
Moreover, Clariant will sell off non-core activities.
Key financial ratios
in CHF millions 2002 2001 reported 2001, pro forma* Change in % compared
with pro forma
CHF LC
Sales 9330 9871 9652 -3.3 +4.7
Gross profit 3055 3084 2997 +1.9 +9.5
EBITDA 1112 1186 1139 -2.4 +6.1
EBITA** 690 631 597 +15.6 +27.6
Net income -648 -1242 – – –
(loss)
Free cash flow 788 955 – – –
Capital 339 505 – – –
expenditure
As per Dec. 2002 Dec. 2001
Equity 914 1958
Net debt 3476 4282
* Various special effects from 2001 were included to ensure better comparability
of the key ratios: disposal of the PVA/PVB business, sale of the Cassella-
Offenbach plant and of the stake in Harlow Chemicals Company Ltd (UK). The data
represent the result from the ongoing businesses.
** Operating result prior to special effects and goodwill amortization.
Goodwill writedown
Clariant has made a goodwill writedown amounting to CHF 790 million because
growth in the Life Science unit did not come up to expectations and
improvements were not achieved on the necessary scale. Owing to the market
situation, only gradual improvement can be expected even in the medium term.
The entire goodwill from the BTP acquisition attributed to this business unit at
the end of the reporting period has thus been written off. In addition, a value
adjustment on plant, property and equipment amounting to CHF 100 million has
been made. These writedowns have resulted in a net loss of CHF 648 million.
The equity quota has thus contracted to 10.7%.
end of ad-hoc-announcement (c)DGAP 25.02.2003
Issuer’s information/explanatory remarks concerning this ad-hoc-announcement:
Sales and result
In 2002 the operating environment was difficult. Against this background,
Clariant posted sales growth of 4.7% in local currencies (-3.3% in CHF). All
divisions contributed to the sales growth with higher volumes and a better
product mix. With growth of more than 20% in local currencies (above 12% in
CHF), business in China, Hong Kong and Taiwan was extremely positive.
Despite the adverse circumstances, production costs fell from 68.2% in 2001 to
67.3% in 2002. Among the reasons for this decline were better capacity
utilization, the restructuring programs and falling prices for raw materials.
The proportion of variable costs in marketing and distribution remained stable,
while the proportion of fixed costs was reduced. The lower debt reduced
financing costs. However, the currency fluctuations in 2002 depressed the
company’s result. The Swiss franc appreciated, while the US dollar and certain
Latin American currencies lost value.
Extraordinary events had an adverse impact on the costs for administration and
current business. The biggest factor was the construction of a new production
plant in the United States, which incurred additional costs of CHF 50 million
owing to technical problems.
In the period under review, Clariant sold off its European emulsions business
and its worldwide emulsion powder business. Furthermore, the hydrosulfite
business in North America was sold. On balance, the company reports a net loss
of CHF 648 million for fiscal 2002. Without the extraordinary writedown,
Clariant would have posted a net profit of CHF 242 million, considerably higher
than the previous year.
Balance sheet
The company substantially reduced its net financial debt to below CHF 3.5
billion. There were a number of contributory factors: a high operating cash
flow, a reduction in current assets, lower capital spending, proceeds from
disposals and the strong Swiss franc. As a result of the net loss of CHF 648
million and negative currency effects, the equity capital fell to CHF 914
million. No dividend will be paid.
Measures
At its meeting on February 19, 2003, the Board of Directors approved a package
of measures designed to improve the financial and operational situation of the
company. These measures will strengthen the conditions for sustainable
development.
The measures include:
* Businesses that are not core activities will be sold off. This affects 7% of
sales in total.
* Distribution, logistics and administration expenditures will be reduced by
10% by the development of regional service centers, especially in Europe.
* The capacities of the Pharma and Custom Synthesis Business Units in the
Life Science & Electronic Materials Division will be substantially scaled
back.
* In order to enhance strategic flexibility, the Pharma, Custom Synthesis and
Electronic Materials Business Units and the Masterbatches Division will be
transformed into legal entities.
* Three positions on the Board of Management will be changed.
Report on the Divisions
Sales CHF mio Change in % EBITA margin
2002 2001 CHF LC %
Textile, Leather & Paper
Chemicals 2769 2965 -6.6 +1.9 9.6
Pigments & Additives 1814 1872 -3.1 +4.5 11.6
Masterbatches 1027 1038 -1.1 +5.4 9.8
Functional Chemicals 2102 2153 -2.4 +5.8 6.5
Life Science & Electronic
Chemicals 1618 1624 -0.4 +6.6 2.0
Group 9330 9652 -3.3 +4.7 7.4
Textile, Leather & Paper Chemicals
The Textile, Leather & Paper Chemicals Division raised its sales in local
currencies by 1.9% (-6.6% in CHF). EBITA came to CHF 267 million, equating to
a 9.6% margin. The Division posted a result that was better than the previous
year’s on the strength of rising volumes, moderate price pressure and stable
margins. The Textile Dyes and Textile Chemicals Business Units were
handicapped by the weak textile markets in the United States, Europe and Japan.
Shifting part of production to Asia, especially China, only partially offset the
downturn. In the automotive textile segment, which has high requirements in
terms of product fastness, the Division gained market share. The Textile
Chemicals unit posted high growth rates in Pakistan, India and Turkey with
products for technical textiles. The Paper Business Unit stood out clearly from
the general market growth rend with a very good performance on the whole.
Higher volumes for optical brighteners compensated for the price pressure.
Following a slow start, the leather business rebounded and reached the year-
back level. The traditional markets for shoe, clothing and upholstery leather
showed higher profitability with stable sales.
Clariant reinforced its presence in the automotive leather segment. The
Emulsions Business Unit initially benefited from falling raw material prices,
though these rose again in the second half of the year. Sales were dragged down
further by weakness in the construction industry, and the adhesives segment
only partially offset this trend.
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WKN: 895929; ISIN: CH0012142631; Index: SMI
Listed: Amtlicher Markt in Frankfurt (General Standard); Freiverkehr in Berlin,
Düsseldorf, München und Stuttgart; Schweizer Börse (Hauptsegment); SEAQ-Handel
in London
250730 Feb 03
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