OREANDA-NEWS. Clariant, a world leader in specialty chemicals, today announced first quarter 2015 sales from continuing operations of CHF 1.465 billion compared to CHF 1.492 billion in the first quarter of 2014. This corresponds to an increase of 4 % in local currencies. The 4 % organic sales growth was driven by 5 % higher volumes and a decrease in prices of 1 %.

Given the strong volatility of currencies in the first quarter 2015, in particular the year-on-year weaknesses of the euro, Brazilian real, and the Japanese yen, the good sales growth in local currencies translated into a 2 % sales reduction in Swiss francs.

Clariant posted strong local currency sales growth of 23 % in Latin America. Sales in Asia/Pacific increased 8 % in local currencies, driven by smaller economies, as India and China did not contribute to growth in the first quarter. In the Middle East & Africa region, sales were 6 % lower year-on-year in local currencies compared to a higher basis in the first quarter in 2014. A strong demand in Catalysis as well as continued growth in Oil & Mining Services led to a growth of 3 % in local currencies in North America. Europe was 2 % lower in local currencies, mostly driven by regional weaknesses in Pigments and Functional Minerals.

All Business Areas achieved underlying sales growth in local currencies for the first quarter. Care Chemicals recorded a like-for-like growth of 4 %. Reported growth, however, was flat year-on-year, exclusively due to the pruning of low-margin base products in 2014. Sales in Catalysis & Energy increased by 26 % in local currencies with strong growth in all of its businesses. Natural Resources revenues increased by 8 %, which was driven by Oil & Mining Services. In Plastics & Coatings, sales increased by 1 % as strong demand in March compensated for a weak start into 2015.

At 30.8 %, the gross margin was above 28.9 % in the prior-year period benefitting from positive effects from higher volumes and slightly lower raw material costs. These effects overcompensated slight price decreases, a negative currency effect and inventory devaluations. The negative inventory effect is expected to reverse in the second quarter of 2015.

The EBITDA before exceptional items from continuing operations rose 8 % in local currencies and reached CHF 206 million, close to the CHF 210 million recorded in the previous year. The corresponding EBITDA margin was at the previous year's level of 14.1 % despite the negative impact of currencies in the first quarter, primarily marked by the strong appreciation of the Swiss franc against the euro.

Care Chemicals, Catalysis & Energy as well as Natural Resources had an increased absolute contribution to EBITDA in the first quarter of 2015. Plastics & Coatings was negatively affected by a slow start into the beginning of the quarter. However, profitability in Plastics & Coatings is expected to pick up in the coming months.

Exceptional items including restructuring, impairment, and transaction-related costs decreased significantly to CHF 13 million compared to CHF 99 million in the first quarter of 2014. This was due to lower restructuring costs in the first quarter of 2015 and the inclusion of a CHF 84 million impairment charge related to the divestment of the ASK Chemicals joint venture in the first quarter of 2014.

Net income from continuing operations was CHF 87 million compared to a net loss of CHF 39 million in the previous year.

Operating cash flow improved to CHF 14 million versus CHF -51 million one year ago, on lower build-up of net working capital. This is a clear reflection on Clariant's priority to increase cash generation in 2015.

Net debt stood at CHF 1.173 billion compared to CHF 1.263 billion recorded at year-end 2014. The gearing, reflecting net financial debt in relation to equity including non-controlling interests, rose to 50 % from 46 % at the end of 2014.

Outlook Confirmed- Focus on Performance, Growth and Innovation

Clariant expects an ongoing challenging environment characterized by an increased volatility in commodity prices and currencies. In emerging markets, the economic environment is expected to remain favorable, but at a lower level and with increased volatility. Moderate growth should continue in the United States. However, growth in Europe is expected to remain weak. The combined effect of the appreciation of the Swiss franc with the weakening of the euro will impact Clariant's sales and profitability in absolute terms, but it will be fairly neutral in terms of relative margins.

In 2015 Clariant will improve its operational efficiency by implementing a lean service organization; it will further improve its marketing excellence and will continue to launch innovations that generate value for its customers.

For 2015 Clariant expects low to mid-single digit sales growth in local currencies. The company will further increase its EBITDA margin before exceptional items above full-year 2014 and increase cash flow generation.

Clariant confirms its mid-term target to achieve a position in the top tier of the specialty chemicals industry. This corresponds to an EBITDA margin before exceptional items in the range of 16 % to 19 % and a return on invested capital (ROIC) above the peer group average.