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Clariant to spin off Plastics & Coatings business

Clariant to spin off Plastics & Coatings business

Amid the announcements earlier this month about Clariant’s (Muttenz, Switzerland) significantly improved EBITDA margin and better cash flow in the second quarter on 2015, was tucked in a piece of news about the Plastics & Coatings business. In order to “fully leverage their value creation potential for the company,” Clariant is establishing a subsidiary for the Business Area Plastics & Coatings comprised of the Business Units Masterbatches, Additives and Pigments.

Amid the announcements earlier this month about Clariant’s (Muttenz, Switzerland) significantly improved EBITDA margin and better cash flow in the second quarter on 2015, was tucked in a piece of news about the Plastics & Coatings business. In order to “fully leverage their value creation potential for the company,” Clariant is establishing a subsidiary for the Business Area Plastics & Coatings comprised of the Business Units Masterbatches, Additives and Pigments. As a separate entity, Plastics & Coatings will be better able to be steered towards higher absolute profitability and cash generation. The new subsidiaries across the world will be fully owned by Clariant and will start operating as of January 1, 2016.

Clariant says that, in the last few years its Business Units Masterbatches, Pigments and Additives have established themselves as leaders in their respective markets in terms of profitability and market share. “The new Plastics & Coatings subsidiary will further enable differentiated business steering with a clear focus on absolute profitability and cash generation to further safeguard and improve competiveness in already mature markets. This set up will further increase value creation for the Group. That is why, the entity will remain a vital part of the Group,” said CEO Hariolf Kottmann. “This step will also enable us to make appropriate investments in our growth areas”, he added.

The existing business unit structure with Masterbatches, Additives and Pigments, will be remain. The restructuring is not expected to cost any jobs: all 7,000 employees and all assets and liabilities will be retained.

Sales of the Business Area Plastics & Coatings were CHF 2.6 billion in 2014; the reported EBITDA margin before exceptional items was 14%.

The company is expecting further progress in sales, profitability and cash across the board during the second half of 2015. “We expect cash generation to continue to increase in the second half of the year. Clariant is well on track to achieve its growth and profitability targets, despite a continued mixed economic environment particularly in Asia and very volatile currencies,” Kottmann commented.

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 continue to be fairly neutral in terms of relative margins.
 

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