Clariant adjusts annual target: Profit decline increases cost pressure

Shares of Clariant fell by over 5% in early European trading on Tuesday after the Swiss chemical company adjusted its sales expectations for the year downward and reported third-quarter earnings that were below forecasts. CEO Conrad Keijzer emphasized that despite easing inflationary pressures, the company continues to face a 'challenging environment' and broader uncertainties. In particular, high energy costs and weakened customer demand are sustainably impacting sales in the chemical industry. In the absence of a 'significant economic recovery' this year, Clariant now forecasts a decline in local sales in the range of a single-digit percentage for 2024. Previously, sales were expected to stagnate or grow slightly. Growth in the Adsorbents and Additives divisions, as well as the Care Chemicals segment, which includes the newly acquired Lucas Meyer Cosmetics, can only 'partially' compensate for declining sales in the Catalysts division. Simultaneously, Clariant reaffirmed its forecast for an EBIT margin of around 16% in 2024. The acquisition of Lucas Meyer and the reduced impact of closing their Sunliquid bioethanol production in Romania acted as stabilizing factors amid the declining sales of the Catalysts division. For 2025, Clariant plans a 'continued improvement in profitability,' with sales growth of 3% to 5% and a core profit margin between 17% and 18%. The company is confident about its mid-term targets, while the end markets are expected to recover over the next two to three years. The third quarter brought Clariant a reduction in core earnings by 13% compared to the previous year, amounting to 139 million Swiss francs (USD 160.69 million) due to declining volumes in the catalyst segment and restructuring costs. A survey conducted by the company among analysts expected a profit of 150 million Swiss francs. Analysts at JPMorgan Chase pointed out that demand in the industry is also influenced by the slowdown of new capacity expansions, which is due to the prevailing overcapacity.