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Web Date: June 26, 2012

Clariant To Sell Three Businesses

Specialties: Swiss firm pursues strategy to increase profitability
Department: Business
Keywords: divestment, acquisition, biotechnology, adsorbents
Credit: Clariant

The Swiss specialty chemicals company Clariant plans to sell its emulsions, detergents, and intermediates business, as well as its paper specialties and textile chemicals businesses before 2014. The three businesses have combined annual sales of $1.5 billion to $1.6 billion. They represent 19 to 20% of Clariant’s sales but less than 10% of its earnings before interest, taxes, depreciation, and amortization (EBITDA).

Sale of the businesses would contribute to Clariant’s goal of increasing its EBITDA-to-sales ratio—a measure of profitability—from 12 to 13% in 2011 to more than 17% in 2015, Clariant CEO Hariolf Kottmann says. When it comes to profitability, “we want to be in the top quartile of the specialty chemicals industry,” Kottmann says.

The planned divestments are in line with the firm’s strategy to increase efficiency and focus on high-growth businesses. A sell-off would reduce Clariant’s exposure to cyclical industries to less than 30% of sales. The company plans to use proceeds from the divestments to pay down debt.

As part of an efficiency program launched in 2009, the company has reduced staff by 20% to about 22,000 employees, closed 20 manufacturing sites, and restructured itself into 11 business units.

Meanwhile, the integration of Süd-Chemie, a catalysts and adsorbents company that Clariant acquired in April 2011 for $2.8 billion, “is going very well” and is set to be “transformational” for the Swiss firm, Kottmann says. The acquisition provides Clariant for the first time with access to technologies for producing specialty chemicals from biobased materials. After the start-up of a pilot plant project in July, Clariant will look for a partner to invest $250 million to $300 million to build a larger facility for demonstrating new biotechnology processes, Kottmann adds.

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