Clariant Ag · SIX:CLN
Clariant — Q3 2009 Earnings Presentation
48 slides from Clariant's earnings presentation, Nov 4, 2009
Slide 1: Nine Months / Third Quarter 2009 Results
Public Nine Months / Third Quarter 2009 Results 4 November 2009
Slide 2: Agenda
Agenda Highlights and financial results nine months Financial results third quarter Business review Strategy update Outlook Public Q3 2009 Analyst Presentation, 4 November 2009 (Copyright Clariant. All rights reserved.) Slide 2 / 48
Slide 3: Nine months 2009 – highlights
Nine months 2009 – highlights Sales down 18% in local currencies and 22% in CHF Demand bottomed out in the second quarter, modest recovery in the third quarter Quarter-on-quarter improvement in EBIT before exceptional items Cash flow from operations increased to CHF 533 million from CHF 174
Slide 4: Nine months – financials
Nine months – financials 9M/09 9M/08 in CHF in LC Sales in CHF million 4 904 6 327 –22% –18% Gross margin 27.7% 29.6% EBIT before exceptionals in CHF million 163 28.7% 29.2% 488 EBIT margin before exceptionals 3.3% 7.7% Net loss / income in CHF million -127 171 Operating cash flow in CHF million 533
Slide 5: Agenda
Highlights and financial results nine months Financial results third quarter Business review Strategy update Outlook Public Q3 2009 Analyst Presentation, 4 November 2009 (Copyright Clariant. All rights reserved.) Slide 5 / 48
Slide 6: Third quarter – financials
Third quarter – financials Q3/09 Q3/08 in CHF in LC Sales in CHF million 1 691 2 094 –19% –14% Gross margin 30.1% 29.4% EBIT before exceptionals in CHF million 107 28.7% 29.2% 178 EBIT margin before exceptionals 6.3% 8.5% Net loss / income in CHF million 25 79 Operating cash flow in CHF million 193
Slide 7: Resilience in Latin America – Europe and the United States stabilizing
Resilience in Latin America – Europe and the United States stabilizing Q3/09 Q3/08 Sales growth in local currencies –14% +5% Sales mix: Asia / Australia Total sales Q3/09: CHF 1 691 million – Volume –11% Africa 461 – Price –3% Europe – Acq./div. 0% 726 -8% – Currency –5% -20% including China 102 +
Slide 8: Idle facility costs and inventory devaluation effect on gross margin further reduced
Idle facility costs and inventory devaluation effect on gross margin further reduced Q1/09: –6.3% Q3/09 Q3/08 33.5% –2.4% Q1/09: –3.6% Q2/09: –3.9% –1.0% Q2/09: –1.2% 30.1% +3.4% 29.4% 28.1% –2.1% Gross margin before inventory Idle facility Inventory Gross margin valuation and capacity costs devalua
Slide 9: Increased focus on sales prices as raw material costs rise
Increased focus on sales prices as raw material costs rise Raw material costs were 16% lower 15% Raw material costs change, quarter-on-quarter compared to Q3 2008, but 1% higher 10% compared to Q2 2009 5% 0% Continued positive contribution of -5% lower raw material costs to gross -10% margin, bu
Slide 10: Operating income
Operating income Q3/09 Q3/08 EBIT before exceptionals in CHF million 107 178 EBIT margin before exceptionals 6.3% 8.5% Lower operating margin compared to Q3/08, but higher compared to Q2/09 (4.3%) Operating income before exceptional items progressively recovering from CHF –13 million in Q1/09 an
Slide 11: Strong cash flow as a result of strict net working capital management
Strong cash flow as a result of strict net working capital management Q3/09 Q3/08 Operating cash flow in CHF million 193 147 Strong cash flow driven by both increased operating profit and a further reduction of CHF 115 million in net working capital Inventories CHF 18 million lower, ongoing focu
Slide 12: Financial result
Financial result Q3/09 Q3/08 Financial result in CHF million -28 -12 Lower financial result entirely due to FX losses of CHF 4 million compared to an FX gain of CHF 13 million in Q3/08 Stable net interest expenses of CHF 20 million compared to CHF 21 million in Q3/08 Cash and cash equivalents
Slide 13: Agenda
Highlights and financial results nine months Financial results third quarter Business review Strategy update Outlook Public Q3 2009 Analyst Presentation, 4 November 2009 (Copyright Clariant. All rights reserved.) Slide 13 / 48
Slide 14: General trends in Clariant’s businesses
General trends in Clariant’s businesses Demand has moderately improved, but no signs of a sustained recovery Varying picture from business to business and region to region Sales still far below the corresponding 2008 levels Further reduction in idle facility costs as production has been ramp
Slide 15: Textile, Leather & Paper Chemicals
Textile, Leather & Paper Chemicals Third quarter 2009 2008 Change CHF million % of sales CHF million % of sales % CHF % LC Sales 425 521 -18 -12 EBITDA before exceptionals 37 8.7 43 8.3 -14 -4 Operating income before exceptionals 25 5.9 26 5.0 -4 9 Operating income 27 6.4 7 1.3 -- -- Business trends
Slide 16: Pigments & Additives
Pigments & Additives Third quarter 2009 2008 Change CHF million % of sales CHF million % of sales % CHF % LC Sales 384 510 -25 -21 EBITDA before exceptionals 55 14.3 91 17.8 -40 -38 Operating income before exceptionals 39 10.2 71 13.9 -45 -45 Operating income 34 8.9 66 12.9 -48 -47 Business trends
Slide 17: Masterbatches
Masterbatches Third quarter 2009 2008 Change CHF million % of sales CHF million % of sales % CHF % LC Sales 305 338 -10 -4 EBITDA before exceptionals 37 12.1 37 10.9 0 12 Operating income before exceptionals 29 9.5 28 8.3 4 13 Operating income 10 3.3 17 5.0 -41 -36 Business trends Broad-based dema
Slide 18: Functional Chemicals
Functional Chemicals Third quarter 2009 2008 Change CHF million % of sales CHF million % of sales % CHF % LC Sales 577 725 -20 -15 EBITDA before exceptionals 68 11.8 84 11.6 -19 -13 Operating income before exceptionals 51 8.8 67 9.2 -24 -16 Operating income 54 9.4 66 9.1 -18 -11 Business trends Ov
Slide 19: Agenda
Highlights and financial results nine months Financial results third quarter Business review Strategy update Outlook Public Q3 2009 Analyst Presentation, 4 November 2009 (Copyright Clariant. All rights reserved.) Slide 19 / 48
Slide 20: Restructuring update – measures and results in the nine months 2009
Restructuring update – measures and results in the nine months 2009 Sustainable NWC reduction Measures such as manual production planning, tight credit management with a focus on overdues, and weekly review of purchase orders continued CASH Further potential for working capital reduction into 20
Slide 21: Agenda
Highlights and financial results nine months Financial results third quarter Business review Strategy update Outlook Public Q3 2009 Analyst Presentation, 4 November 2009 (Copyright Clariant. All rights reserved.) Slide 21 / 48
Slide 22: Outlook – business conditions
Outlook – business conditions Environment Global economy will recover slowly No sustained recovery in demand expected in 2010 Raw material costs to rise on slightly higher and volatile commodity prices Public Q3 2009 Analyst Presentation, 4 November 2009 (Copyright Clariant. All rights reserve
Slide 23: Outlook – Clariant
Outlook – Clariant Cash generation and further cost reductions remain top priorities to: – address the unsatisfactory performance relative to peers – weather the global economic crisis – build a sustainable platform for continuous improvement and growth after 2010 2009 guidance: Sales in local c
Slide 24: Calendar of upcoming corporate events
Calendar of upcoming corporate events 16 February 2010 Full-Year Results 2009 29 March 2010 Annual General Meeting, Basel 29 April 2010 First Quarter Results 2010 29 July 2010 Second Quarter Results 2010 03 November 2010 Third Quarter Results 2010 Public Q3 2009 Analyst Presentation, 4 November 2009
Slide 25: IR contacts
IR contacts Dr. Ulrich Steiner Head of Investor Relations Phone +41 (0) 61 469 67 45 Mobile +41 (0) 79 297 27 07 email ulrich.steiner@clariant.com Jaideep Pandya Investor Relations Officer Phone +41 (0) 61 469 67 49 Mobile +41 (0) 79 702 97 41 email jaideep.pandya@clariant.com Edith Schwab Phone +41
Slide 26: Backup Slides Nine Months / Third Quarter Results
Backup Slides Nine Months / Third Quarter Results Public Q3 2009 Analyst Presentation, 4 November 2009 (Copyright Clariant. All rights reserved.) Slide 26 / 48
Slide 27: Nine months – key financials
Nine months – key financials Nine months 2009 2008 CHF million % of sales CHF million % of sales Sales 4 904 6 327 Local currency growth (LC) -18% - Organic growth rate* -18% - Acquisitions/Divestments 0% Currencies -4% Gross profit 1 359 27.7% 1 874 29.6% EBITDA before exceptionals 331 6.7% 679 10.
Slide 28: Sales – nine months
Sales – nine months 9M/09 9M/08 Sales growth in local currencies –18% +5% Sales mix: Asia / Australia Total sales 9M/09: CHF 4 904 million – Volume –20% Africa 1 283 – Price +2% Europe – Acq./div. 0% 2 175 -14% – Currency –4% including -24% China 259 -17% -23% including US -28% 550 including -10%
Slide 29: Sales and EBITDA margins by divisions – nine months
Sales and EBITDA margins by divisions – nine months Nine months 2009 Sales EBITDA* EBITDA Margin in %* CHF million % LC in % of Group 2009 2008 Textile, Leather & Paper Chemicals 1 217 -18% 14 4.9 8.9 Pigments & Additives 1 080 -29% 20 7.5 15.7 Masterbatches 842 -13% 20 9.6 11.2 Functional Chemicals
Slide 30: Cash flow – nine months
Cash flow – nine months Nine months 2009 2008 CHF million CHF million Net loss / income -127 170 Depreciation, amortization and impairment 203 212 Other 53 72 Payments for restructuring -131 -62 Operating cash flow before working capital changes -2 392 Changes in working capital and provisions 535 -
Slide 31: Financial result – nine months
Financial result – nine months Nine months 2009 2008 CHF million CHF million Interest income 5 11 Other financial income 2 4 Total financial income 7 15 Interest expenses -61 -64 Other financial expenses -11 -14 Currency result, net -18 -35 Total financial expenses -90 -113 Total financial result -8
Slide 32: Textile, Leather & Paper Chemicals – nine months
Textile, Leather & Paper Chemicals – nine months Nine months 2009 2008 Change CHF million % of sales CHF million % of sales % CHF % LC Sales 1 217 1 591 -24 -18 EBITDA before exceptionals 60 4.9 141 8.9 -57 -49 Operating income before exceptionals 24 2.0 92 5.8 -74 -63 Operating income 4 0.3 58 3.6
Slide 33: Pigments & Additives – nine months
Pigments & Additives – nine months Nine months 2009 2008 Change CHF million % of sales CHF million % of sales % CHF % LC Sales 1 080 1 578 -32 -29 EBITDA before exceptionals 81 7.5 247 15.7 -67 -65 Operating income before exceptionals 32 3.0 189 12.0 -83 -82 Operating income -3 – 167 10.6 – – Busine
Slide 34: Masterbatches – nine months
Masterbatches – nine months Nine months 2009 2008 Change CHF million % of sales CHF million % of sales % CHF % LC Sales 842 1 020 -17 -13 EBITDA before exceptionals 81 9.6 114 11.2 -29 -22 Operating income before exceptionals 56 6.7 89 8.7 -37 -31 Operating income 25 3.0 76 7.5 -67 -63 Business tren
Slide 35: Functional Chemicals – nine months
Functional Chemicals – nine months Nine months 2009 2008 Change CHF million % of sales CHF million % of sales % CHF % LC Sales 1 765 2 138 -17 -12 EBITDA before exceptionals 187 10.6 236 11.0 -21 -12 Operating income before exceptionals 139 7.9 185 8.7 -25 -15 Operating income 130 7.4 177 8.3 -27 -1
Slide 36: Third quarter – key financials
Third quarter – key financials Third quarter 2009 2008 CHF million % of sales CHF million % of sales Sales 1 691 2 094 Local currency growth (LC) -14% - Organic growth rate* -14% - Acquisitions/Divestments 0% Currencies -5% Gross profit 509 30.1% 615 29.4% EBITDA before exceptionals 163 9.6% 242 11.
Slide 37: Sales and EBITDA margins by divisions – third quarter
Sales and EBITDA margins by divisions – third quarter Third quarter 2009 Sales EBITDA* EBITDA Margin in %* CHF million % LC in % of Group 2009 2008 Textile, Leather & Paper Chemicals 425 -12% 19 8.7 8.3 Pigments & Additives 384 -21% 28 14.3 17.8 Masterbatches 305 -4% 19 12.1 10.9 Functional Chemical
Slide 38: Cash flow – third quarter
Cash flow – third quarter Third quarter 2009 2008 CHF million CHF million Net income 25 78 Depreciation, amortization and impairment 61 79 Other 37 6 Payments for restructuring -45 -20 Operating cash flow before working capital changes 78 143 Changes in working capital and provisions 115 4 Operating
Slide 39: Financial result – third quarter
Financial result – third quarter Third quarter 2009 2008 CHF million CHF million Interest income 1 3 Other financial income 1 3 Total financial income 2 6 Interest expenses -21 -24 Other financial expenses -5 -7 Currency result, net -4 13 Total financial expenses -30 -18 Total financial result -28 -
Slide 40: Ample liquidity headroom available
Ample liquidity headroom available > CHF 2.3 bn financial CHF 995 million cash and cash headroom available at 995 headquarters and in the equivalents as of end Q3/09, up from countries CHF 545 million as of end Q2/09 Syndicated bank facility, maturing June ‘10; 400 undrawn; no intention to draw,
Slide 41: Debt maturity profile as of 30 Sept. 2009
Debt maturity profile as of 30 Sept. 2009 Liquidity headroom Maturities of financial debt Bonds & Private Placements 2500 1000 Uncommitted & other loans 800 Open undrawn 800 credit facilities 2000 889 at local affiliates Open undrawn credit facilities 600 in Switzerland 1500 200 Backstop facility, 4
Slide 42: Well diversified product portfolio
Well diversified product portfolio Divisions Textile, Leather & Paper Pigments & Additives Masterbatches Functional Chemicals Textile: 14% Leather: 5% Chemical Management Solutions: 8% Paper: 6% - oil services, mining services Coatings Business: 7% Industrial & Consumer Care: 17% - personal care, in
Slide 43: Sales and cost structure – nine months
Sales and cost structure – nine months Global sales distribution in % Global cost distribution in % Emerging Emerging CHF 0 Markets CHF 6 Markets JPY 1 20 JPY 3 17 CHF 6 USD 31 USD 24 EUR 44 EUR 50 GBP 2 GBP 2 These distributions represent an approximation to total cash in- and outflows and are clos
Slide 44: Top five products in percentage of total raw material costs – nine months 2009
Top five products in percentage of total raw material costs – nine months 2009 Ranking Product 1 Ethylene and -oxide 2 Acetic anhydride Group ~17% Total 3 Polyethylene 4 Caustic soda 5 Propylene glycol Public Q3 2009 Analyst Presentation, 4 November 2009 (Copyright Clariant. All rights reserved.) Ba
Slide 45: New organization as of 1 January 2010
New organization as of 1 January 2010 Executive Committee Corporate Center Business Units Business Services Group Technology Services BU Industrial & BU Paper Group Finance Consumer Group IT Services Specialties Services Specialties Group Technology Services Group HR Regional Logistics BU Pigments B
Slide 46: Ten Business Units as from 1 January 2010
Ten Business Units as from 1 January 2010 From a Divisional structure… …to a new Business Unit structure Pigments & Additives BU Pigments 22% of sales* BU Additives BU Paper Specialties Textile, Leather & Paper BU Leather Services Chemicals BU Textile Chemicals 25% of sales* BU Emulsions BU Industri
Slide 47: Roles of main organization units in overall setup of new corporate structure
Roles of main organization units in overall setup of new corporate structure Strategically and operationally manage the Group Executive Committee (EC) Ensure interests of customers, employees and shareholders Provide leadership; ensure implementation Act as staff to EC and Board of Directors
Slide 48: Disclaimer
Disclaimer This presentation contains certain statements that are neither reported financial results nor other historical information. This presentation also includes forward-looking statements. Because these forward-looking statements are subject to risks and uncertainties, actual future results ma