Catalysts sales increased by 8 % driven by the propylene and syngas & fuels segments
Clariant, a sustainability-focused specialty chemical company, today announced third quarter 2023 sales of CHF 1.031 billion, down 8 % organically, 13 % in local currency and 21 % in Swiss francs.
Pricing decreased by 3 % year-on-year and volumes by 5 %. Scope had a net negative impact of 5 % as the acquisition of the US Attapulgite business was more than offset by the divestments of the North America Land Oil and Quats businesses.
“Our performance is improving, despite continued uncertainties and risks related to the geopolitical and economic environment. On a Group basis Clariant has delivered an underlying sequential quarterly increase of 21% in EBITDA. Organic Group volumes increased slightly compared to the previous quarter, although weak demand for durable goods persisted, which primarily affected our Additives business. Our proactive measures to adjust our cost base are improving profitability with over CHF 120 million of savings achieved to date out of our CHF 170 million commitment. This, together with our underlying performance improvement, underpinned our strong cash generation in the third quarter. In addition, we continue to see strong Catalysts performance, both in volume and pricing. Despite a continued soft recessionary environment and currency headwinds, we expect to land in our guidance range for 2023. Our focused specialty chemicals portfolio and our highly committed people leave us well-positioned for profitable growth as end markets recover”, said Conrad Keijzer, Chief Executive Officer of Clariant.
Care Chemicals sales decreased by 18 % in local currency. While Oil Services recorded strong organic volume growth, sales in the other segments were lower against a very strong Q3 2022 comparable base. Catalysts sales increased by 8 % in local currency, driven by the Propylene and Syngas & Fuels segments, continuing the positive project execution observed in recent quarters. Adsorbents & Additives sales decreased by 19 % in local currency against a strong comparable base. In Additives, demand in key end markets remained challenging with continued destocking.
Group EBITDA decreased by 28 % to CHF 159 million versus Q3 2022, with an EBITDA margin of 15.4 %. Currency translation negatively impacted EBITDA by 14 % while lower volumes affected production utilization in Care Chemicals and Additives. The net negative operational impact from sunliquid® was CHF 11 million (an improvement of CHF 2 million year-on-year). However, cost savings from performance programs of CHF 14 million addressed remnant costs from divested businesses and contributed positively to offset inflation. Raw material costs also eased by 16 % year-on-year.
ESG Update – Leading in Sustainability
Clariant’s Scope 1 and 2 total greenhouse gas emissions fell to 0.58 million tons in the last twelve months (September 2022 to September 2023), a decline of 6 % from 0.62 million tons in the full year 2022. The total indirect greenhouse gas emissions for purchased goods and services (Scope 3) also decreased by 13 %, from 2.58 million tons in the full year 2022 to 2.25 million tons in the last twelve months. These results are to an extent attributable to the lower sales volumes in the first nine months of 2023 as well as improvements at Clariant’s own sites and in its supplier engagement (Scope 3). This demonstrates Clariant’s continued progress toward reaching the Group’s 2030 emissions reduction targets.
Outlook – Full Year 2023
Clariant expects to see an easing inflationary environment, but no economic recovery in the final three months of 2023, with macroeconomic uncertainties and risks remaining. Despite this backdrop, Clariant confirms its sales guidance for the full year 2023 of CHF 4.55 – 4.65 billion. This includes a net divestments/acquisition impact of around CHF – 150 million relating to the Quats, North American Land Oil, and Attapulgite transactions as well as an FX translation impact currently expected at the upper end of the previously published negative 5 – 10 % range. Clariant also confirms its reported EBITDA guidance for the full year 2023 of CHF 650 – 700 million (14.3 % – 15.1 % reported EBITDA margin), including a preliminary CHF 62 million gain from the Quats divestment and approximately CHF 30 million in restructuring charges. Clariant expects an increased negative annualized sunliquid® impact to be counterbalanced by savings benefits from the restructuring programs.
Clariant is on track to deliver its sustainability targets. The Group has become a true specialty chemical company and remains committed toward its 2025 ambition to deliver profitable sales growth (4 – 6 % CAGR), a Group EBITDA margin between 19 – 21 %, and a free cash flow conversion of around 40 %.
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