Clariant: First Quarter Results
Clariant International Ltd, Muttenz, Switzerland, announced that sales reached CHF 1.6 billion in the first quarter compared to CHF 2.1 billion in the same period a year earlier, a decline of 19% in local currencies and 24% in Swiss francs. The quarter was characterized by a steep decline in demand. Volumes fell 25%, resulting in extremely low capacity utilizations which were accentuated by the company’s strong focus on cash flow generation by reducing inventories. The substantial reduction of inventories was achieved by lowering production volumes clearly below sales volumes. The resulting strong operating cash flow came at the expense of a lower gross margin and a negative operating margin.
Margins were also negatively influenced by a substantial inventory devaluation resulting from a fast decline in raw material costs during the quarter. Compared to the fourth quarter, raw material prices fell 15% on average and 2% compared to the same period one year ago. This effect is expected to become negligible once raw material price volatility decreases which we expect to take place already in the second quarter this year. While Clariant’s margin management was successful with 6% higher sales prices year-on-year, inventory devaluation and underutilization costs led to a decline of the gross margin to 23.6% from 30.5% in the previous year.
Sales, General & Administration (SG&A) costs were reduced to CHF 357 million from CHF 437 million in the first quarter 2008. As a result of the lower sales the SG&A ratio in percentage of sales increased to 22.2 % from 20.7%. Hence the group reported an operating loss before exceptionals of CHF 13 million and a negative operating margin before exceptionals of
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