Financial Review FIRST QUARTER

Transcription

1 Financial Review FIRST QUARTER CLARIANT INTERNATIONAL LTD Rothausstrasse Muttenz Switzerland

2 Page 1 of 20 Key Financial Group Figures Continuing operations: CHF m 2015 % of sales CHF m 2014 % of sales Sales Local currency growth (LC): 4% Organic growth 1 4% Acquisitions/divestitures 0% Currencies 6% Gross profit EBITDA before exceptional items* EBITDA* Operating income before exceptional items* Operating income Net result from continuing operations Basic earnings per share (CHF/share) Adjusted earnings per share (CHF/share)* Net income/ loss total Operating cash flow Discontinued operations: Sales 66 Net result from discontinued operations 9 Other key figures total Group: Net debt Equity (including non-controlling interests) Gearing 50% 46% Number of employees Throughout this statement the term organic growth is used to mean volume and price effects excluding the impacts of changes in FX rates and acquisitions/divestitures. 2 Total Group, including discontinued operations * See Definitions of Terms of Financial Measurement on pages 4 and 5.

3 Page 2 of 20 FINANCIAL DISCUSSION FIRST QUARTER Economic Environment The global economy continued to expand at a soft pace in the first quarter of Despite a harsh winter and the strong appreciation of the US dollar, the economic situation continues to be robust in the United States. This is mainly due to stronger domestic demand, lower crude oil prices and an improved fiscal situation, while the unemployment rate continued to drop further. The eurozone growth, while still at a low rate, was positively influenced by lower oil prices, the sharp weakening of the euro and the European Central Bank bond buying program. Growth rates in China, although still at a high level, continued to slow down despite accommodative monetary policies. Growth has slightly improved in India fuelled by the domestic economic reforms. The situation was less favorable in Brazil as a result of tighter economic fiscal and monetary policy. During the first quarter of 2015, crude oil prices were very volatile and dropped further. Other commodity prices also dropped, but at a slower pace than oil and still remain at a high level historically. Research and development costs of CHF 46 million in the first quarter of 2015 were below the level recorded in the same quarter of the previous year (CHF 51 million). Currency translation effects offset the slight increase in local currency terms. Income from associates and joint ventures of CHF 15 million in the first quarter of 2015 is at the level of CHF 16 million in the prior-year period. Restructuring, impairment and transaction-related costs amounting to CHF 13 million reflect costs related to streamline and optimize the service organization within the Group. In the previous year, restructuring, impairment and transaction-related costs totaled CHF 99 million, mainly pertaining to the impairment expense recorded in the context of the sale of the participation in ASK Chemicals. The exchange rate floor of CHF 1.20 per euro, which had been in place since the third quarter of 2011, was abandoned by the Swiss National Bank in January Compared to the first quarter of 2014, the Swiss Franc depreciated against the US dollar, Chinese yuan and the Indian rupee while it appreciated strongly against the euro, the Brazilian real and the Japanese yen. Sales and Operating Results 2015 Sales from continuing operations increased by 4% in local currency and decreased 2% in Swiss francs, compared to the first quarter of the previous year. The gross margin in the first quarter of 2015 was 30.8% and therefore above the 28.9% recorded in the prior-year period, benefitting from positive effects from higher volumes, slightly lower raw material costs, and some cost reclassifications to SG&A. 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 Selling, general and administrative costs accounted for 19.0% of sales and were above the 17.2% of the previous year period. The variance is mainly due to reclassification of costs previously reported under cost of goods sold. Gain from disposals not qualifying as discontinuing operations of CHF 10 million mainly refers to a book gain from the sale of the Energy Storage business and the sale of the Water Treatment business in Latin America. The net financial result was CHF -29 million in the first quarter of The financial result before foreign currency impacts and including discontinued operations improved by 39% to CHF -19 million in the first quarter of 2015 from CHF -31 million in the first quarter of The repayment of German Certificates of Indebtedness in the amount of EUR 267 million, as well as a one-time currency effect on the Euro Bond interests, were the main drivers for a decrease in financial expenses while financial income remained stable. Tax expense of CHF 23 million for the continuing business was recorded in the first quarter of 2015 compared to a tax expense of CHF 44 million recorded in the prior-year period. The recorded tax expense in the first quarter of 2015 was positively impacted by an increased profitability in low tax jurisdictions. Net result from continuing operations amounted to CHF 87 million in the first quarter of 2015, which was above the CHF 39 million net loss reported in the same period of Net result from discontinued operations was nil in the first quarter of 2015.

4 Page 3 of 20 Balance Sheet Key Figures March 2015 Total assets decreased to CHF billion as of 31 March 2015 from CHF billion at the end of 2014 mainly as a consequence of the appreciation of the Swiss franc against the euro. This occured following the announcement made by the Swiss National Bank on 15 January 2015 to discontinue the exchange rate floor of 1.20 Swiss franc per euro. Investments in associates and joint ventures decreased from CHF 635 million to CHF 535 million mainly due to the depreciation of the euro against the Swiss franc. Near cash assets increased to CHF 236 million from CHF 180 million and include short-term deposits with an original maturity between 90 and 365 days. Assets held for sale sharply decreased at the end of March 2015 compared with end of December 2014 due to the closing of the disposal of the Energy Storage activities. Financial debts globally slightly decreased (CHF 78 million). Non-current financial debts decreased to CHF billion at the end of March 2015, from CHF billion at the end of December 2014, while current financial debts increased to CHF 458 million at the end of March 2015, from CHF 430 million at the end of December Equity decreased to CHF billion at the end of March 2015, from CHF billion at the end of This was mainly due to the negative currency translation differences amounting to CHF 411 million associated with change in the euro/swiss franc exchange rate, to a distribution from capital contribution reserves of CHF 129 million and to CHF 31 million dividends to non-controlling interests and to the combined effect of actuarial losses on retirement benefit obligations and a positive return on pension plan assets amounting to a negative CHF 48 million, net of deferred tax. The positive impact of net investment hedges amounting to CHF 97 million, the net profit of the period amounting to CHF 87 million and treasury shares transactions amounting to CHF 34 million partially offset the negative effects on equity as of end of March Gearing, which reflects net financial debt in relation to equity including non-controlling interests, increased from 46% at the end of December 2014 to 50% at the end of March Cash Flow Cash flow from operating activities before changes in working capital and provisions amounted to CHF 134 million for the first quarter of 2015, compared to CHF 183 million for the first quarter of the previous year. Working capital increased by CHF 120 million in the first quarter of 2015, compared to an increase of CHF 234 million during the first quarter of Cash flow from operating activities was a positive CHF 14 million for the first quarter of 2015, compared to a negative CHF 51 million for the prior year. Capital expenditures (PPE) were CHF 51 million for the first quarter of 2015, compared to CHF 45 million for the first quarter of Proceeds from disposals of activities not qualifying as discontinued operations mainly includes cash proceeds resulting from the disposal of the Energy Storage activities. Financing activities mainly includes the sale of treasury shares, proceeds from and repayments of financial debt, dividends paid to non-contorlling interests and the related interests paid and received. Net debt decreased to CHF billion at the end of March 2015, from CHF billion at the end of This figure includes current and non-current financial debts, cash and cash equivalents, near cash assets and financial instruments with positive fair values.

5 Page 4 of 20 DEFINITION OF TERMS OF FINANCIAL MEASUREMENTS (UNAUDITED) The following financial measurements are supplementary financial indicators. They should be considered in addition to, not as a substitute for, operating income, net income, operating cash flow and other measures of financial performance and liquidity reported in accordance with International Financial Reporting Standards (IFRS). EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is calculated as operating income plus depreciation of PPE, plus impairment and amortization of intangible assets, and can be reconciled from the Condensed Financial Statements as follows: EBITDA (Continuing) CHF m Operating income Depreciation of PPE Impairment 87 + Amortization of intangible assets EBITDA EBITDA before exceptional items is calculated as EBITDA plus expenses for restructuring, impairment and transaction related costs less impairment and gain/ loss on disposals. EBITDA before exceptional items (Continuing) CHF m EBITDA Restructuring, impairment and transaction related costs Impairment (reported under Restructuring and impairment) 87 Gain from disposals not qualifying as discontinued operations 10 EBITDA before exceptional items Operating income before exceptional items is calculated as operating income plus restructuring, impairment and transaction related costs and gain/loss on disposals. Operating income before exceptional items (Continuing) CHF m Operating income Restructuring, impairment and transaction related costs Gain from disposals not qualifying as discontinued operations 10 Operating income before exceptional items

6 Page 5 of 20 Adjusted earnings per share is the earnings per share adjusted for the impact of exceptional items, assuming an adjusted income tax rate of 26% for the period. Adjusted earnings per share (Continuing) CHF m Operating income before exceptional items Amortization of intangible assets Finance income 4 4 Finance costs Adjusted income before taxes Adjusted income taxes Adjusted net result from continuing operations Thereof attributable to non-controlling interests 3 2 Thereof attributable to shareholders of Clariant Ltd Weighted average number of shares outstanding Adjusted earnings per share attributable to shareholders of Clariant Ltd (CHF/share) Net debt is the sum of current and non-current financial debt less cash and cash equivalents, near cash assets and financial instruments with positive fair values. Net debt CHF m Non-current financial debt Current financial debt Cash and cash equivalents Near cash assets Financial instruments with positive fair values Net debt

7 Page 6 of 20 CONDENSED FINANCIAL STATEMENTS OF THE CLARIANT GROUP Consolidated balance sheets ASSETS CHF m % CHF m % Non-current assets Property, plant and equipment Intangible assets Investments in associates and joint ventures Financial assets Prepaid pension assets 6 18 Deferred tax assets Total non-current assets Current assets Inventories Trade receivables Other current assets Current income tax receivables Near cash assets Cash and cash equivalents Total current assets Assets held for sale Total assets EQUITY AND LIABILITIES CHF m % CHF m % Equity Share capital Treasury shares (par value) Other reserves Retained earnings Total capital and reserves attributable to Clariant shareholders Non-controlling interests Total equity Liabilities Non-current liabilities Financial debts Deferred tax liabilities Retirement benefit obligations Provision for non-current liabilities Total non-current liabilities Current liabilities Trade and other payables Financial debts Current income tax liabilities Provision for current liabilities Total current liabilities Liabilities directly associated with assets held for sale Total liabilities Total equity and liabilities

8 Page 7 of 20 Consolidated income statements CHF m % CHF m % Sales Costs of goods sold Gross profit Selling, general and administrative costs Research and development costs Income from associates and joint ventures Gain from disposals not qualifying as discontinued operations Restructuring, impairment and transaction related costs Operating income Finance income Finance costs Income before taxes Taxes Net result from continuing operations Attributable to: Shareholders of Clariant Ltd Non-controlling interests 3 1 Net result from discontinued operations 9 Attributable to: Shareholders of Clariant Ltd 10 Non-controlling interests 1 Net income / loss Attributable to: Shareholders of Clariant Ltd Non-controlling interests 3 2 Basic earnings per share attributable to the shareholders of Clariant Ltd (CHF/share): Continuing operations Discontinued operations 0.03 Total Diluted earnings per share attributable to the shareholders of Clariant Ltd (CHF/share): Continuing operations Discontinued operations 0.03 Total

9 Page 8 of 20 Consolidated statements of comprehensive income CHF m Net income / loss Other comprehensive income: Remeasurements: Actuarial gain/loss on retirement benefit obligations Return on retirement benefit plan assets, excluding amount included in interest expense Total items that will not be reclassified subsequently to the income statement, gross Deferred tax on remeasurements Total items that will not be reclassified subsequently to the income statement, net Net investment hedge 97 6 Currency translation differences Effect of the reclassification of foreign exchange differences on previously held net investments in foreign entities 4 Total items that will be reclassified subsequently to the income statement, gross Deferred tax effect Total items that will be reclassified subsequently to the income statement, net Other comprehensive income for the period, net of tax Total comprehensive income for the period Attributable to: Shareholders of Clariant Ltd Non-controlling interests 1 3 Total comprehensive income for the period Total comprehensive income attributable to shareholders of Clariant Ltd arising from: Continuing operations Discontinued operations 12 Total comprehensive income attributable to shareholders of Clariant Ltd

10 Page 9 of 20 Consolidated statement of changes in equity Other Reserves CHF m Total share capital Treasury shares (par value) Share premium reserves Cumulative translation reserves Total other reserves Retained earnings Total attributable to equity holders Noncontrolling interests Total equity Balance 31 December Net income / loss Net investment hedge Remeasurements: Actuarial gain/ loss on retirement benefit obligations Return on retirement benefit plan assets, excluding amount included in interest expense Deferred tax on remeasurements Currency translation differences Effect of the reclassification of foreign exchange differences on previously held net investments in for- eign entities Total comprehensive income for the period Dividends to non-controlling interests 5 5 Distributions Employee share & option scheme: Effect of employee services Treasury share transactions Balance 31 March Balance 31 December Net income Net investment hedge Remeasurements: Actuarial gain/ loss retirement benefit obligations Return on retirement benefit plan assets, excluding amount included in interest expense Deferred tax on remeasurements Currency translation differences Effect of the reclassification of foreign exchange differences on previously held net investments in for- eign entities Total comprehensive income for the period Dividends to non-controlling interest Distributions Employee share & option scheme: Effect of employee services Treasury share transactions Balance 31 March

11 Page 10 of 20 Consolidated statements of cash flows CHF m Net income Adjustment for: Depreciation of property, plant and equipment (PPE) Impairment and reversal of impairment 87 Amortization of intangible assets Impairment of working capital Income from associates and joint ventures Tax expense Net financial income and costs Gain from disposals not qualifying as discontinued operations 10 Loss on disposals of discontinued operations 12 Other non-cash items Total reversal of non-cash items Dividends received from associates and joint ventures Income taxes paid Payments for restructuring Cash flow before changes in working capital and provisions Changes in inventories Changes in trade receivables Changes in trade payables Changes in other current assets and liabilities 9 35 Changes in provisions (excluding payments for restructuring) Cash flow from operating activities Investments in PPE Investments in financial assets, associates and joint ventures 1 Investments in intangible assets 3 2 Changes in current financial assets and near cash assets Sale of PPE and intangible assets 2 2 Acquisition of companies, businesses and participations 2 Proceeds from disposals of discontinued operations 4 50 Proceeds from disposal of activities not qualifying as discontinued operations 71 Cash flow from investing activities Purchase of treasury shares 10 Sale of treasury shares Proceeds from financial debts Repayments of financial debts Dividends paid to non-controlling interest 31 5 Interest paid Interest received 4 2 Cash flow from financing activities Currency translation effect on cash and cash equivalents 21 2 Net change in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period

12 Page 11 of 20 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 1. Basis of preparation of financial statements These financial statements are the interim condensed consolidated financial statements (hereafter the interim consolidated financial statements ) of Clariant Ltd, a company registered in Switzerland, and its subsidiaries (hereafter the Group ) for the three-month period ended on 31 March They are prepared in accordance with the International Accounting Standard 34 (IAS 34 Interim Financial Reporting ) and were approved on 27 April 2015 by the Board of Directors. These interim consolidated financial statements should be read in conjunction with the Consolidated Financial Statements for the year ended 31 December 2014 (hereafter the annual financial statements ) as they provide an update of previously reported information. The accounting policies applied are consistent with the ones applied at year-end The preparation of the interim consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities, and disclosure of contingent liabilities at the date of the interim consolidated financial statements. If, in the future, such estimates and assumptions, which are based on the Management s best judgment at the date of the interim consolidated financial statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the year in which the circumstances change. The following table shows the calculation of the result realized by Clariant in 2015 on the sale of its Energy Storage activities. million CHF Total consideration for the sale 75 Net assets transferred, after impairment recorded in 2014, including disposal-related expenses -67 Result on the disposal before taxes 8 Taxes 1 After tax profit on the disposal 9 4. Restructuring, impairment and transactionrelated costs During the first quarter of 2015, Clariant recorded restructuring expenses in the amount of CHF 10 million, mainly pertaining to projects in Europe, and transaction-related costs in the amount of CHF 3 million. During the same period in the previous year, restructuring, impairment and transaction related costs totaled CHF 99 million, mainly pertaining to the impairment expense recorded in the context of the sale of the participation in ASK Chemicals. 2. Seasonality of operations The Group operates in industries where significant seasonal or cyclical variations in total sales are not experienced during the financial year. 3. Disposal activities 5. Distribution from reserves On 31 March 2015, the General Meeting approved a distribution of CHF 0.40 per registered share from capital contribution reserves. On 8 April 2015, a distribution totaling CHF 129 million was made to Clariant shareholders. This was accrued for in the interim consolidated accounts as of 31 March Disposal of Energy Storage activities On 28 February 2015, Clariant sold its Energy Storage activities pertaining to the Business Area Catalysis & Energy to British-based Johnson Matthey. Assets and liabilities pertaining to the Energy Storage activities, presented as held for sale in the balance sheet at the end of 2014, were deconsolidated.

13 Page 12 of Events subsequent to the balance sheet date 6.1. Launch of a new certificate of indebtedness On 17 April 2015, Clariant issued four certificates of indebtedness with a total sum of EUR 300 million. These certificates have a term of 5 years (EUR 150 million) and 8 years (EUR 150 million) respectively, each with fixed (based on mid-swap) or floating (based on six months Euribor) coupons. The interest costs of the tranches range from 0.9% to 1.6% per year.

14 Page 13 of Business Area figures Sales to 3rd parties EBITDA before exceptionals EBITDA CHF m % CHF % LC % CHF % LC % CHF % LC Care Chemicals Catalysis & Energy Natural Resources Plastics & Coatings Business Areas total Corporate Total Operating income before exceptionals Operating income Systematic depreciation of PPE CHF m % CHF % LC % CHF % LC Care Chemicals Catalysis & Energy Natural Resources Plastics & Coatings Business Areas total Corporate Total

15 Page 14 of Business Area margins Sales to 3rd parties EBITDA before exceptionals EBITDA in % Care Chemicals Catalysis & Energy Natural Resources Plastics & Coatings Total Operating income before Operating income exceptionals in % Care Chemicals Catalysis & Energy Natural Resources Plastics & Coatings Total

16 Page 15 of Operating income EBITDA bridge Care Chemicals Catalysis & Energy Natural Resources Plastics & Coatings Total Business Areas Corporate Total Continuing CHF m Operating income / loss Depreciation of PPE Impairment Amortization of intangible assets EBITDA Restructuring, impairment and transaction related costs Impairment (reported under Restructuring and impairment) Gain from the disposals not qualifying as discontinued operations EBITDA before exceptional items Operating income / loss before exceptional items - Restructuring, impairment and transaction related costs + Gain from the disposals not qualifying as discontinued operations Operating income / loss Finance income 4 4 Finance costs Income before taxes 110 5

17 Page 16 of Geographic information Sales CHF m 2015 % of sales % of sales CHF % LC % EMEA of which Europe of which Germany of which Switzerland of which MEA North America of which USA Latin America of which Brazil Asia / Pacific of which China of which India Total Discontinued operations 66

18 Page 17 of Condensed earnings per share data Net income/ loss attributable to shareholders of Clariant Ltd, undiluted and diluted (CHF m) Continuing operations Discontinued operations 10 Total Shares Number of registered shares at and respectively Weighted average number of shares outstanding Adjustment for granted Clariant shares Adjustment for dilutive share options Weighted average diluted number of shares outstanding Basic earnings per share attributable to shareholders of Clariant Ltd (CHF/share) Continuing operations Discontinued operations 0.03 Total Diluted earnings per share attributable to shareholders of Clariant Ltd (CHF/share) Continuing operations Discontinued operations 0.03 Total

19 Page 18 of Finance income and costs Finance income in CHF m Interest income 3 3 Other financial income 1 1 Total finance income 4 4 Finance costs in CHF m Interest costs thereof effect of discounting of non-current provisions 1 1 thereof interest component of pension provisions 5 6 Other financial expenses 3 3 Currency result, net 10 7 Total finance costs thereof reported under discontinued operations 2 Total finance costs continuing operations 33 40

20 Page 19 of Foreign exchange rates Rates used to translate the consolidated balance sheets (closing rate) Change % 1 USD EUR BRL CNY INR JPY Average sales-weighted rates used to translate the consolidated income Change % statements and consolidated statements of cash flows 1 USD EUR BRL CNY INR JPY

21 Page 20 of 20 CLARIANT WHAT IS PRECIOUS TO YOU? Clariant is a globally leading specialty chemicals company, based in Muttenz near Basel/Switzerland. On 31 December 2014, the company employed a total workforce of In the financial year 2014, Clariant recorded sales of CHF billion for its continuing businesses. Clariant s corporate strategy is based on five pillars: increase profitability, reposition portfolio, add value with sustainability, foster innovation and R&D, and intensify growth. The company reports in four Business Areas: Care Chemicals, Catalysis & Energy, Natural Resources, and Plastics & Coatings. Calendar of Corporate Events Your Clariant Contacts 30 July 2015 First Half 2015 Results 29 October 2015 Nine Months 2015 Results 17 February 2016 Full Year 2015 Results 21 April 2016 Annual General Meeting Investor Relations Fax Siegfried Schwirzer Tel Marco Ferraro Tel Media Relations Fax Carsten Seum Tel Stefanie Nehlsen Tel Disclaimer This document contains certain statements that are neither reported financial results nor other historical information. This presentation also includes forward-looking statements. Because these forward-looking statements are subject to risks and uncertainties, actual future results may differ materially from those expressed in or implied by the statements. Many of these risks and uncertainties relate to factors that are beyond Clariant s ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behavior of other market participants, the actions of governmental regulators and other risk factors such as: the timing and strength of new product offerings; pricing strategies of competitors; the Company s ability to continue to receive adequate products from its vendors on acceptable terms, or at all, and to continue to obtain sufficient financing to meet its liquidity needs; and changes in the political, social, and regulatory framework in which the Company operates or in economic or technological trends or conditions, including currency fluctuations, inflation, and consumer confidence, on a global, regional, or national basis. Readers are cautioned not to place undue reliance on these forwardlooking statements, which pertain only as of the date of this document. Clariant does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of these materials.