• Sales: CHF991 million, a 1% decrease in local currency with a 3% negative currency impact.
• Reported EBITDA: CHF139 million, a 13% decrease year-on-year, with a margin of 14%.
• EBITDA Before Exceptional Items: CHF155 million, a 5% decrease, with a margin of 15.6%.
• Care Chemicals Sales: Increased by 1% organically in local currency, 5% including scope.
• Catalyst Sales: Declined by 20% in local currency and 22% in Swiss francs.
• Adsorbents and Additives Sales: Increased by 7% in local currency.
• Cost Savings: CHF7 million achieved in the third quarter, with a target of CHF175 million by 2025.
• Sunliquid Impairment Reversal: CHF36 million related to right-of-use assets.
• Restructuring Charges: CHF9 million with expected annual run rate savings of CHF6 million.

• Warning! GuruFocus has detected 5 Warning Signs with CLZNF.

Release Date: October 29, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Clariant AG (CLZNF) reported stable pricing across all business units despite a deflationary environment, showcasing strong pricing ability.
• The integration and business combination of Lucas Meyer Cosmetics is on track, contributing positively to growth and profitability.
• The company achieved CHF7 million in cost savings in the third quarter, with over 90% of the CHF175 million savings target already realized.
• Clariant AG (CLZNF) identified additional restructuring opportunities, expected to deliver annual run rate savings of CHF6 million.
• The nomination of Ben van Beurden as a candidate for Clariant's Chairman brings extensive experience in the energy and chemical sectors, potentially benefiting the company's strategic direction.

Negative Points

• Clariant AG (CLZNF) experienced a 1% decrease in sales in local currency, with a negative currency impact of 3%.
• Volumes were down 3%, with lower-than-expected catalyst volumes impacting overall performance.
• Reported EBITDA decreased by 13% year-on-year, with a corresponding margin drop to 14%.
• The chemical industry faces uncertainties and risks, with expectations of recovery shifting to 2025.
• The European chemical industry continues to be challenged by weak demand and declining business confidence, impacting Clariant's performance in the region.

Q & A Highlights

Q: How long is your visibility in the refill business for catalysts, and what are your expectations for recovery? A: (Conrad Keijzer, CEO) The refill cycle typically occurs every three to four years. We believe we have bottomed out in the second and third quarters and expect a sequential improvement into the fourth quarter, driven by typical maintenance shutdowns and refills.

Q: Can you comment on the cash flow trend for the second half of the year? A: (Bill Collins, CFO) We have reduced our CapEx budget by CHF10 million. Operational cash flow is expected to be strong in the last quarter, with an EBITDA margin around 16%. However, cash flow will be impacted by cash outs related to the biofuel shutdown.

Q: What is the outlook for the catalyst business, and can it return to mid-20% EBITDA margins? A: (Conrad Keijzer, CEO) We remain confident in achieving over a 20% EBITDA margin. Despite a weak revenue environment, we achieved an 18.7% margin in Q3 due to cost base reductions and better pricing management.

Q: How do you see volume growth in care chemicals and overall for 2025? A: (Conrad Keijzer, CEO) We expect a continuation of current trends, with a potential pickup in Q4 due to de-icing and refinery businesses. For 2025, we anticipate 3% to 5% local currency sales growth, driven by a shift back to industrial GDP and improved consumer spending on durables.

Q: What are the macro assumptions for your early 2025 outlook? A: (Conrad Keijzer, CEO) We assume a GDP growth of 2.8% with a shift back to industrial GDP. Interest rate cuts are expected to boost consumer spending on durables, supporting our growth and profitability targets.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.