Clariant and SABIC “temporarily suspend” business combination amid Clariant CEO resignation

02 Aug 2019 --- Clariant and SABIC have agreed to “temporarily suspend” the discussions on the intended business combination High Performance Materials (HPM), consisting of Clariant’s Additives and high-value Masterbatches and parts of SABIC’s Specialties business. The day before the announcement, Ernesto Occhiello, Chief Executive Officer and Member of the Executive Committee for Clariant decided to leave the company for personal reasons with immediate effect. The Board of Directors asked Hariolf Kottmann, Chairman of the Board of Directors of Clariant, to assume his responsibilities in the interim as Executive Chairman until a successor is found.

As discussions were suspended, Clariant also announced that it will focus on its existing core Business Areas Care Chemicals, Catalysis and Natural Resources. The chemical company also stated that it will continue with the divestment of its Pigments business and has decided to also divest the entire Masterbatches business including both, standard and high-value Masterbatches. These divestments are expected to be concluded unchanged by the end of 2020.

The proceeds from the divestments will be used to invest in innovations and technological applications within the core Business Areas, to “strengthen Clariant’s balance sheet and to return capital to shareholders.”

Clariant reports that sales from continuing operations grew by 4 percent to US$2.27 billion. Continuing operations EBITDA before exceptional items softened by 2 percent to US$341 million with a 15.9 percent EBITDA margin. Meanwhile, operating cash flow rose by 11 percent to US$115 million.

“The first half-year 2019 was admittedly challenging – particularly the second quarter, which was additionally impacted by temporary negative influences and one-off occurrences,” comments Kottmann. “Our continuing businesses showed resilience in this difficult environment, which comforts us in our strategic decision to divest Masterbatches and Pigments.”

“Despite the uncertainties of the current economic environment, the growth profile of our continuing portfolio remains unchanged. We will continue to intensify our focus on customer experience and fast reliable customer fulfillment, enabling Clariant to realize above-market growth, higher profitability and stronger cash generation,” Kottmann adds.

For the first half-year, almost all regions contributed to the continuing operations sales growth in local currency. Sales in Latin America grew the strongest by 10 percent, followed by the Middle East & Africa at 8 percent. In Asia and Europe, the sales development was 5 percent and 4 percent, respectively. China, however, was down by 9 percent while North America reported a slight contraction of 3 percent.

The improved sales performance in the first half-year 2019 resulted from growth in the Business Areas Catalysis and Natural Resources, which both reported strong expansion, Clariant says. Natural Resources newly includes the Business Unit Additives, in addition to Oil & Mining Services and Functional Minerals. Sales in Catalysis rose by a robust 8 percent in local currency primarily supported by Syngas. Natural Resources sales rose by 6 percent in local currency with very notable expansion in Oil & Mining Services and some progression in Functional Minerals. Additives sales declined due to the softer consumer electronics and automotive markets.

Clariant is a focused and innovative specialty chemical company, based in Muttenz near Basel, Switzerland. On 31 December 2018, the company employed a total workforce of 17,901. In the financial year 2018, Clariant recorded sales of US$6.73 billion for its continuing businesses. The company reports in four business areas: Care Chemicals, Catalysis, Natural Resources, and Plastics & Coatings.