In local currencies, sales growth amounted to 25%. In Swiss francs, year-on-year sales were only 9% higher as the Swiss franc continued to strengthen against most major currencies especially in the first half of the third quarter.
Sales growth was driven by higher prices and the acquisition of Süd-Chemie. The less cyclical Business Units Additives, Catalysis Energy, Functional Materials, Industrial Consumer Specialties and Oil Mining Services – accounting for roughly 50% of group sales – showed the most dynamic growth. By contrast, the slowdown in demand in the more cyclical businesses already observed in June has spread along the plastics value chain and into the coatings business. Regionally, the traditional markets of Europe and North America outpaced Asia/Pacific, Latin America and the Middle East Africa. In the emerging markets a slow-down in the dynamic growth of the last few quarters has been observed. Excluding Süd-Chemie, sales increased by 5%, driven by a 9% increase in sales prices, while volumes decreased 4% compared to the previous-year period as a result of a combination of softening demand in some businesses and the deliberate loss of unprofitable contracts.
The gross margin fell to 26.1% from 27.9% a year ago, mainly due to the negative currency impact and volume effects. In a slower global economic growth environment, commodity prices stabilized during the quarter. As a consequence, raw material costs remained flat compared to the second quarter 2011, but were 13% higher than in the previous-year period. As expected, increased raw material costs were fully absorbed by higher sales prices, both year-on-year and sequentially.
Operating profit (EBIT) before exceptional items stood at CHF 144 million ($166 million) (margin 7.7%) compared to CHF 182 million ($209 million) (margin 10.6%) in the third quarter of 2010.
At the beginning of 2011, Clariant shifted their focus from restructuring to continuous improvement and profitable growth. While the continuous improvement initiative ‘Clariant Excellence’ will make the competitive cost basis sustainable, the company are now focusing on creating value by investing in future profitable growth.
In the fourth quarter, Clariant expects the general slow-down in economic activity to continue, with clear signs of further weakness in demand in some regions and industries, especially in Europe. Exchange rates for the major currencies are expected to remain volatile. Commodity prices look set to stabilise at the level of the third quarter, leading to an increase in raw material costs in the mid-teens in 2011 compared to 2010.
For 2011, Clariant – including eight months of consolidated Süd-Chemie figures – expects sales in the range of CHF 7.0 to 7.2 billion ($8.0 to 8.3 billion) and an EBITDA margin before exceptional items of 12.8% to 13.2%.
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