Swiss specialty chemical manufacturer Clariant has registered a drop of 16% in Q3 operating profit to CHF 127 million ($140 million), with the profit margin narrowing to 14.2% from 14.5%. Sales slipped to CHF 893 million from CHF 1.04 billion in the year-earlier period. “In the third quarter, Care Chemicals sales softened by a mere 1 % in local currency, supported by higher Consumer Care sales. Catalysis sales also slowed by 1% compared to a particularly strong previous year. Natural Resources sales declined by 14 % in local currency primarily because Oil and Mining Services sales were hampered by the lower consumption of oil and oil-derived products,” the company said in a statement. 

 

“Over the first nine months of 2020, we successfully upheld the profitability of our continuing operations despite an exceedingly challenging environment. Although the COVID-19 pandemic had a significant negative impact on several of Clariant’s key end markets in the third quarter, the performance resilience clearly validates the success of our strategic focus on the three core specialty Business Areas,” said Hariolf Kottmann, Executive Chairman ad interim of Clariant.

 

“The growth profile of our core portfolio remains intact despite the current economic environment and uncertain outlook. We will continue to focus on both mitigating the impact of this pandemic as well as executing our transformation program. We therefore continue to anticipate above-market growth, higher profitability and stronger cash generation.”

 

According to the company, the third quarter 2020 saw the most pronounced sales decline of the first three quarters in 2020 with a 7% decrease in local currency in continuing operations sales to CHF 893 million. This corresponds to a 14% decline in Swiss francs due to unfavorable currency effects. The main driver was the sales decline in Natural Resources, where all three businesses were negatively impacted by the oversupply in the oil markets and the global COVID-19 pandemic, while sales in Care Chemicals and Catalysis softened only slightly.

 

On a regional basis, the positive development in Asia in local currency was underpinned by very strong sales growth in China and India in the third quarter of 2020. Sales in Latin America decreased slightly, while Europe declined in high single digits, followed by the Middle East & Africa. The more notable decrease in North America is ascribable to lower volumes in Natural Resources.

 

The company informed that sales in discontinued operations declined by 25% in local currency and by 31% in Swiss francs for the first nine months. “However, on a like-for-like basis, excluding Healthcare Packaging sales from the first nine months of 2019 and Masterbatches from the third quarter of 2019, as these businesses were divested, sales weakened by only a slight 4% in local currency and by 11% in Swiss francs as a result of the weak economic environment,” it said. 

 

Outlook – Continued COVID-19 impact anticipated in the fourth quarter 2020 with small improvement versus the third quarter, while performance measures lift portfolio to achieve above-market growth, higher profitability and stronger cash generation in the mid-term.

 

Clariant anticipates that the COVID-19 pandemic will have a continued, but slightly less negative impact on sales and profitability in the fourth quarter of 2020 compared to the third quarter. 

 

In addition, the Group is significantly reshaping its portfolio through the divestment of Healthcare Packaging in October 2019 and the sale of Masterbatches in July 2020. The Group is also progressing with the planned divestment of Pigments while preparing the rightsizing of the organization. The transformed Clariant will be a focused, sustainable and innovative specialty chemical company that aims to grow above the market to achieve higher profitability based on its three core specialty Business Areas.