-
Creation of a
new and stronger Clariant with sales of approximately
CHF 9 billion and an EBITDA margin of around 20 % in
2021E
-
Intended
transaction to combine Clariant's Additives and high value
Masterbatches with parts of SABIC's Specialties business to form
the Business Area High Performance Materials which will provide
customers with significant benefits and strategic
advantages
-
Remaining
Plastics & Coatings business (Pigments, standard Masterbatches
and Medical Specialties) to be divested by 2020
-
The new
Clariant will benefit from an enhanced specialty portfolio,
creating the basis to accelerate profitable growth and become a
leading player in each of its Business Areas
-
Attractive
prospects in Care Chemicals, Catalysis and Natural Resources with
further improvements in margins
-
Clariant is a
dedicated and strong partner providing innovative, specialized
solutions for profitable growth and a sustainable
tomorrow
|
|
|
Muttenz, September 18, 2018 -
Clariant, a world leader in specialty chemicals, today announced an
updated strategy and financial outlook as well as the signing of a
Memorandum of Understanding with SABIC on a significant
collaboration opportunity between the two companies in the area of
high performance materials. The Group intends to expand more
strongly by focusing on customer-specific products and solution
offerings with attractive growth prospects and above average value
potential.
By 2021, following the creation of
High Performance Materials and the divestment of the remaining
Plastics & Coatings Business Area, Clariant expects to deliver
significantly higher sales of around CHF 9 billion and an
EBITDA margin of approximately 20 % with an operating cash
flow of more than CHF 1.2 billion.
"The portfolio upgrade together
with the continuation of Clariant's strategy enables the Group to
realize a significant step change into higher value specialties,
which will allow the Group to considerably augment value creation
for all our stakeholders", said Hariolf Kottmann, CEO of
Clariant.
The intended combination of
Clariant's Additives and high value Masterbatches (color, high
temperature resins and health care) and parts of SABIC's
Specialties business will create a uniquely positioned provider of
highly customer-specific high performance materials and solutions
under the name High Performance Materials.
This new Business Area will offer
a customer-specific, application know-how driven and competitively
advantaged product range of high-performance thermoplastics for
demanding thermo-electro-optical and mechanical environments,
specialty additives and masterbatches in tandem with an outstanding
global compounding platform. Major applications include smart
electronics, health care, aerospace, automotive, robotics, additive
manufacturing, renewable energy, and e-mobility. These applications
demand the fulfillment of stringent customer specifications which
require exclusive technology and formulation know-how.
High Performance Materials'
superior ability to meet customer specifications and provide
technological advantages will create the basis for an accelerated
profitable growth. This foundation in tandem with cost synergies
and enhanced operating efficiencies will fuel substantial
profitability progression and unlock greater value creation. By
2021, sales of High Performance Materials are expected to grow to
approximately CHF 4 billion from pro-forma 2017 sales of
CHF 3 billion and the EBITDA margin, including synergies,
to 24 - 25 % from 19.4 % in pro-forma 2017.
The combination of Clariant's and
SABIC's offerings within Clariant is expected to result in
significant synergies with an anticipated annual run-rate of
CHF 100 million, realized over three years from closing.
Implementation costs are estimated at CHF 80 million over
the same time. The combination will be significantly EPS accretive
in the first year.
Clariant will have the majority
stake in the intended business combination. Depending on the
definitive valuation which is to be determined by both parties in
the coming months, an equalization consideration will be made by
Clariant to SABIC. This, however, should not lead to Clariant's pro
forma 2019E net debt (including pensions) / EBITDA leverage ratio
exceeding 2.4 x (including SABIC's Specialties business but
based on Clariant's current portfolio set-up before disposals) and
should leave the current investment grade rating unaffected. In the
coming months, Clariant and SABIC will execute the carve-out of
their respective businesses, conduct reciprocal due diligence and
continue negotiating the transaction with the target to sign the
definitive agreement by the end of the first half of 2019.
Completion of the transaction is expected to take place towards the
end of 2019, effective as of 1 January 2020, subject to regulatory
clearances.
Divestment of the remaining
Plastics & Coatings businesses
In addition, Clariant announced
that by 2020 it intends to divest the Pigments, standard
Masterbatches and Medical Specialties businesses which will not be
included in the newly formed Business Area High Performance
Materials. This divestment decision underlines Clariant's
commitment to move the portfolio into higher specialty areas and to
ensure best ownership for each of its businesses. Despite being
well positioned and having significantly increased their
profitability over the past years, the businesses to be divested do
not match the Group's criteria to differentiate through innovation
in higher growth and higher profitability areas.
Clariant's Strategic
Direction
Following a strategic review
Clariant also announced new targets for 2021 in each Business Area.
Profitable growth will be driven by sustainable innovations and
specialized customer solutions which meet the demand for
convenience, safety, sustainability and energy efficiency. With the
strategic update and the resulting higher earnings quality,
Clariant also changes its EBITDA margin target from previously
"before exceptional items" to "after exceptional items" going
forward. As a consequence, Clariant's financial reporting will be
changed accordingly beginning in 2019.
The Business Area Care Chemicals
expects to continue to grow above the market, at a more accelerated
pace. This additional step up in growth will result from offering
more innovative sustainable solutions which meet the market's
increasing demand for convenience, renewable and natural products.
The entry into new market segments will also support this above
average growth. Consumer Care, which is comprised of Personal Care,
Home Care, Crop Solutions as well as Health Care, will be the main
driver of this Business Area's expansion strategy. The higher
degree of specialties in Care Chemicals and the offering of more
highly specified solutions will drive not only growth but also
increase profitability to new heights.
For the Business Area Catalysis,
Clariant targets continued above market growth rates by maintaining
and capitalizing on its innovation leadership and strong licensing
partnerships. Within Catalysts, the introduction of highly
innovative and customer-specific catalysts is the key driver for
future growth. Sustainable solutions such as the reduction of
hazardous materials, thereby providing a much improved
toxicological profile also adds to the growth. The Business Line
Biofuels & Derivatives will contribute to the growth
acceleration which is mainly driven by the global search for more
climate-friendly energy sources and the legal frameworks set out in
Europe, the US and China. Clariant expects to generate sales of at
least CHF 100 million from licenses for the sunliquid®
technology and bioethanol sales from the production plant in
Romania. The contribution from both, Biofuels & Derivatives and
new customer specific catalysts will significantly expand the
profitability of the Business Area Catalysis by 2021.
Within the Natural Resources
Business Area the Oil & Mining Services
activities are expected to build up momentum as general demand and
a rebound of the oil market improves the industry outlook.
Differentiated business steering according to the changing business
landscapes combined with technology and innovation will result in
sustainable strong growth. Within Functional Minerals growth
will be driven by entering new regional markets and moving into new
applications through innovations such as smart and active packaging
within feed and agro. As a consequence of the growth in both
Business Units the profitability of Natural Resources will further
improve.
The remaining
Plastics & Coatings Business Area, including
Pigments, standard Masterbatches and Medical Specialties, will
continue to be managed using differentiated business steering.
Pigments and standard Masterbatches are anticipated to grow in line
with GDP while Medical Specialties are expected to grow more
quickly in accordance with their underlying end market in health
care packaging. The profitability of Pigments and standard
Masterbatches is expected to sizably improve via stringent cost
management, while Medical Specialties will benefit from innovations
resulting in profitable growth.
Summary
With Clariant's new High
Performance Materials Business Area and the compelling outlook at
Care Chemicals, Catalysis and Natural Resources, the Clariant Group
will be able to provide an enhanced portfolio and solution
offering. This will facilitate the Group's ability to better
realize its full potential and deliver higher growth and
profitability faster. The resulting increase in earnings quality
and operating cash flow will enable the group to uphold an
attractive dividend policy, i.e. to increase or at least maintain
the absolute dividend amount in Swiss francs every year. Clariant
is a dedicated and strong partner who provides innovative,
specialized solutions for profitable growth and a sustainable
tomorrow.
Clariant makes
step change into higher value specialties*
*Reporting structure as of
01.01.2019
The new, stonger
Clariant
Step change into higher value specialties |
-
Creation of Business Area High Performance
Materials (HPM) through the combination of Clariant's Additives
& high value Masterbatches with parts of SABIC's Specialties
business
-
HPM will be a uniquely positioned provider of
highly customized high performance materials and solutions
-
Divestment of Pigments, standard Masterbatches
and Medical Specialties by 2020E
-
Attractive prospects in Care Chemicals,
Catalysis and Natural Resources
-
Portfolio upgrade allows Clariant to be focused
around customer-specific, technologically advanced applications
with high growth and value generations
|
Creation of High Performance Materials |
-
Signing of a Memorandum of Understanding to form
newly created Business Area High Performance Materials
-
Clariant to hold the majority stake in the
combination
-
Equalization consideration will be made by
Clariant to SABIC, valuation dependent
-
Realization of cost synergies and enhanced
operational efficiencies of CHF 100 mio until end 2022E
-
Net debt (incl. pensions) / EBITDA pro-forma
2019E leverage* not to exceed 2.4 x based on the current
portfolio
-
Completion expected end 2019, effective as of 1
January 2020, subject to reciprocal due diligence and regulatory
clearances
-
Significantly EPS accretive in first year
(2020E)
|
Financial Highlights |
-
Sales to reach approx. CHF 9 bn in 2021E post
creation of HPM and divestments
-
Sales growth upgrade to 5 - 6 %, driven by the
Group's enhanced growth profile
-
EBITDA margin after exceptional items to rise to
approx. 20 % by 2021E
-
Operating cash flow increase to above CHF 1.2 bn
in 2021E
|
* including SABIC's Specialties
business and Clariant's current portfolio set-up (before
divestments)
Analyst and Investor Conference
Call and Webcast Information
We will hold a conference call and live webcast
for analysts and investors this Tuesday, September 18, 2018 at
11:15 a.m. CEST and 10:15 a.m. BST.
Pre-Registration - Link to register
The conference call will be available via webcast
and can be accessed from the company's website at Clariant.com or
by using the following link: Webcast Link
Replay Information
The webcast replay will be available for replay
beginning September 18, 2018 at 1:00 p.m. CEST on the Clariant home
page for 30 days.
Corporate Media Relations |
Investor Relations |
Jochen Dubiel
Phone +41 61 469 63 63
jochen.dubiel@clariant.com |
Anja Pomrehn
Phone +41 61 469 67 45
anja.pomrehn@clariant.com |
Claudia Kamensky
Phone +41 61 469 63 63
claudia.kamensky@clariant.com |
Maria Ivek
Phone +41 61 469 63 73
maria.ivek@clariant.com |
Thijs
Bouwens
Phone +41 61 469 63 63
thijs.bouwens@clariant.com |
|
Follow us on Twitter, Facebook, Google Plus,
LinkedIn.
|
This media release contains certain statements that are neither
reported financial results nor other historical information. This
document also includes forward-looking statements. Because these
forward-looking statements are subject to risks and uncertainties,
actual future results may differ materially from those expressed in
or implied by the statements. Many of these risks and uncertainties
relate to factors that are beyond Clariant's ability to control or
estimate precisely, such as future market conditions, currency
fluctuations, the behavior of other market participants, the
actions of governmental regulators and other risk factors such as:
the timing and strength of new product offerings; pricing
strategies of competitors; the Company's ability to continue to
receive adequate products from its vendors on acceptable terms, or
at all, and to continue to obtain sufficient financing to meet its
liquidity needs; and changes in the political, social and
regulatory framework in which the Company operates or in economic
or technological trends or conditions, including currency
fluctuations, inflation and consumer confidence, on a global,
regional or national basis. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the date of this document. Clariant does not undertake
any obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after
the date of these materials.
www.clariant.com
Clariant is a globally leading specialty chemicals company, based
in Muttenz near Basel/Switzerland. On 31 December 2017 the company
employed a total workforce of 18 135. In the financial year
2017, Clariant recorded sales of CHF 6.377 billion for its
continuing businesses. The company reports in four Business Areas:
Care Chemicals, Catalysis, Natural Resources, and Plastics &
Coatings. Clariant's corporate strategy is based on five pillars:
focus on innovation and R&D, add value with sustainability,
reposition portfolio, intensify growth, and increase
profitability. |
New, stronger Clariant - Analyst
presentation
New, stronger Clariant - Media release