Clariant shares slip after chemicals group slashes annual sales target

Investing.com — Shares in Clariant (SIX:CLN) fell by more than 5% in early European trading on Tuesday after the Swiss chemicals group slashed its annual sales target and unveiled third-quarter profits that missed expectations.

Chief Executive Conrad Keijzer flagged the business has faced a “continued challenging environment” and broader uncertainties despite easing inflationary pressures. Chemical companies have been hit by higher energy prices and weaker customer demand, denting revenues.

Citing no prospect of a “significant economic recovery” this year, Clariant said it now expects to post a low single-digit percent decline in local currency sales in 2024. It had previously predicted that full-year sales would be flat or grow by up to the low single-digit percentage.

Growth in its absorbents and additives unit and care chemicals arm, which includes the recently-acquired Lucas Meyer Cosmetics, is also now tipped to “only partially offset” lower sales at its catalysts division.

But Clariant — the maker of products used to make items like de-icers and food ingredients — reiterated its guidance for 2024 earnings before interest, taxes, depreciation and amortization margin of around 16%. The firm noted the contribution of the Lucas Meyer purchase and a reduced impact from the closing of its Sunliquid bioethanol production in Romania helped counterbalance lower sales at its catalysts unit, which provides catalytic products for the chemical industry.

In 2025, Clariant added it projects “a year of continued improvement in profitability,” with sales growing by 3% to 5% and core income margin of 17% to 18%. The company said it “remains committed to its medium-term targets as end markets recover and growth normalizes over the next two to three years.”

For the third quarter, Clariant reported a 13% drop in core income versus the year-ago period to 139 million Swiss francs ($160.69 million) due in part to slipping catalysts segment volumes and restructuring costs. A company-compiled poll of analysts had called for 150 million Swiss francs.

“[D]emand in the business [is] also exposed to new capacity expansion in the industry, which is slowing due to the prevailing overcapacity,” analysts at JPMorgan Chase said in a note to clients.