Clariant significantly improved profitability in Q2 2021 with double-digit sales growth

· In the second quarter of 2021, sales from continuing operations increased by 12% to CHF 1,032 million in local currencies

· Earnings before interest, tax, depreciation and amortization (EBITDA) margin from continuing operations improved significantly to 16.
8% in the second quarter of 2021 from 14.
6% in the second quarter of 2020

· Group net profit increased to CHF 157 million in the first half of 2021

· Operating cash flow of CHF 15 million in the first half of 2021

· Improved 2021 targets: sales growth of 7% – 9% in local currency, EBITDA margin rising to 16.
0% – 17.
0%

"Clariant delivered strong year-over-year revenue growth and a significant performance improvement in the second quarter of 2021.

The signing of the definitive agreement for the sale of the Pigments business is a key step in our portfolio transformation plan
.
" Clariant CEO Conrad Keijzer ) said, "Clariant was able to surpass its 2019 profitability level thanks to a recovery in broad market demand and our ability to effectively mitigate raw material cost inflation while addressing the many challenges posed by logistical bottlenecks
.
Our success In 2021
, our goal is to continue to improve our performance, with strong local currency sales growth expected and a high EBITDA margin at pre-coronavirus levels
.
"

Q2 2021 - Double-digit sales growth and significantly improved profitability

Shanghai, China/Moutenz, Switzerland, July 29, 2021 – Clariant, a focused, sustainable and innovative specialty chemicals company, today announced that sales from continuing operations for the second quarter of 2021 increased by 12% in local currencies % to CHF 1.
032 billion
.
In Swiss francs, it rose 11%
.
Growth in the Care Chemicals and Catalysts business was strong, and sales growth in the Natural Resources business was particularly positive
.
This growth was achieved thanks to higher production volumes and aggressive pricing across all business areas
.

In the second quarter of 2021, sales increased in all Clariant regions, reflecting a clear recovery in demand
.
In Asia Pacific, strong growth of 20% in local currencies was achieved thanks to business expansion in all business areas
.
Sales in the Middle East and Africa region increased significantly by 15%
.
Europe followed with a 13% increase
.
Latin America and North America achieved growth rates of 7% and 2%, respectively, due to the recovery of the oil services business
.

In the second quarter, double-digit growth in Industrial Applications led to an 11 percent increase in sales in the Care Chemicals segment in local currencies
.
Catalytic sales increased 7% in local currency, mainly due to strong growth in specialty catalyst sales
.
Sales of Natural Resources rose sharply by 17% in local currencies, driven by a strong rebound in the Additives and Functional Minerals business and a return to growth in the Petroleum Services business
.

EBITDA from continuing operations improved to CHF 173 million, corresponding to a margin of 16.
8%, up from 14.
6% in the second quarter of last year
.
This development stemmed from strong production ramp-up, improved operating leverage, and the positive impact of pricing measures
.
Clariant's efficiency program continued to be successfully executed, resulting in additional cost savings of CHF 9 million in the second quarter
.
The cost of the efficiency enhancement plan has been accrued in the second quarter of last year
.

First half of 2021 - Sales growth in all business areas and double-digit profitability growth

Sales from continuing operations in the first half of 2021 increased by 7% in local currencies and 5% in Swiss francs to CHF 2,034 million, compared to CHF 1,945 million in the first half of 2020
.

Sales rose in almost all regions in the first half of the year
.
Europe and Asia led the way with strong growth of 15% and 14%, respectively, with China up 20% in local currencies
.
Latin America grew 5% and the Middle East and Africa region grew 3%
.
Only North America saw a 15% decline, mainly due to environmental challenges and weather-related disruptions in the oil services business in the first quarter of 2021
.

In the first half of 2021, sales of care chemicals increased by 9% in local currencies due to a recovery in the industrial application market
.
Growth in all three business lines of the Catalysts business area (Petrochemicals, Specialty Catalysts and Syngas) drove sales up 9 percent in local currencies
.
Sales in the Natural Resources segment increased by 4% year-on-year in local currencies, driven by double-digit growth in Additives and Functional Minerals and a recovery in the Petroleum and Mining Services business
.

EBITDA from continuing operations increased to CHF 337 million as the Group continued to effectively execute our efficiency plan, supported by sales expansion and operating leverage, resulting in improved margins and an additional savings of 15 million in the first half The cost in Swiss francs
.
EBITDA margin increased to 16.
6% from 15.
0% last year, thanks to higher profitability in all three business areas and effective cost control
.

Group net profit increased to CHF 157 million in the first half of 2021 (H1 2020: CHF 90 million)
.
This was attributable to higher profitability, lower special item and enterprise costs, savings from efficiency programs, and higher earnings from discontinued operations
.

The Group's operating cash flow fell to CHF 15 million from CHF 89 million in the first half of 2020
.
This development was primarily attributable to higher traded receivables resulting from increased sales, more inventory prepared to meet higher demand and shortages of raw materials due to logistical instability, and pre-provisioned for efficiency enhancement programs Cost out of cash
.

With normal seasonal cash flow and working capital fluctuations, the Group's net debt increased to CHF 1.
29 billion from CHF 1.
04 billion at the end of 2020
.

Discontinued business

In the second quarter of 2021, excluding the sales of masterbatches in the second quarter of 2020, the sales of discontinued operations (pigments) increased by 17% in both local currency and Swiss francs
.
In the first half of 2021, excluding the sales of masterbatches in the first half of 2020, the more favorable economic environment resulted in a sales increase of 10% in local currencies and 8 in Swiss francs in the discontinued operations (pigments business) %
.

In the second quarter and first half of 2021, EBITDA margins improved due to higher sales in the Pigments business, a corresponding improvement in operating leverage, optimization of effective cost management, and the divestiture of the Masterbatches business
.

Clariant announced that it has signed definitive agreements with Heubach Group and SK Capital Partners to sell its pigments business, with the divestiture expected to be completed in the first half of 2022
.

Outlook: Full year 2021 expected to improve

Clariant is a focused, sustainable and innovative specialty chemical company committed to achieving higher profitability through sustainability and innovation
.
With the divestment of the medical packaging business in 2019, the sale of the masterbatch business in 2020 and the completion of the agreement to divest the pigment business this year, the group is significantly adjusting its product portfolio
.

Clariant expects that in the third quarter of 2021, thanks to the recovery of the care chemicals industrial application business, the increase in demand for catalyst petrochemical products, and the continued growth of the three business units in the natural resources field, the group will gain more in local currency than last year.
Continued strong growth
.
In the third quarter of 2021, Clariant plans to increase its year-on-year profit margin through sales growth, continued cost restraint and pricing measures to offset higher raw material and logistics costs, while margin acceleration will moderate slightly
.

For the full year 2021, Clariant expects to achieve 7% - 9% sales growth in local currencies from continuing operations
.
This includes proceeds from the joint venture with India Glycols on July 1, 2021
.
In addition, EBITDA margin is expected to reach 16.
0% - 17.
0%, supported by sales growth, improved product portfolio profitability and positive results from efficiency enhancement programs
.
The setting of the above targets is based on the premise of sustained economic recovery, and there is still a high degree of uncertainty
.