Clariant, a world leader in specialty chemicals, today announced sales of CHF 1.817 
billion in the first quarter 2010, compared to CHF 1.604 billion in the previous year, 
an improvement of 13% in Swiss Francs and 16% in local currency. However, sales were 
still clearly behind pre-crisis levels.

Sales improved significantly compared to the low base a year ago and also strengthened 
on a quarter-on-quarter basis. Especially in the business units (BU) Pigments, 
Additives, Leather and Masterbatches, sales growth was above the average group level. At 
the regional level, growth in Asia – and particularly in China with local currency sales 
growth of +65% – outperformed the other regions compared to the first quarter of 2009. 
Europe and North America showed double-digit sales growth while Latin America remained 
slightly behind as the region had showed resilience against the downturn in the previous 
year.

The gross margin improved to 28.7% from 18.9% a year ago. This positive development was 
a result of mainly three effects. Firstly, 20% higher sales volumes that led to improved 
capacity utilization rates and therefore significantly lower idle facility costs. 
Secondly, a favorable business / product mix with higher margin businesses recovering 
from trough levels seen in the previous year. And thirdly, the absence of any material 
inventory de- or revaluation effects. While sales prices dropped 4%, raw material costs 
fell 1% compared to the first quarter 2009, resulting in a negative squeeze at the gross 
margin level. However, sales prices increased from the fourth quarter 2009, as a result 
of the stringent focus on managing the gross margin by adapting sales prices where 
appropriate. Clariant will continue to increase sales prices in order to react to higher 
raw material costs.

Mainly as a result of some project-related one-time costs, SG&A increased to CHF 307 
million compared to CHF 281 million during the same period a year ago. In percentage of 
sales SG&A costs fell to 16.9% from 17.5%.

Resulting from a higher gross margin and the positive impact of the decisive 
implementation of restructuring measures, the operating income (EBIT) before exceptional 
items reached CHF 183 million and improved significantly - not only compared to the 
previous year quarter (CHF -13 million) - but also compared to the third and fourth 
quarter of 2009. The EBIT margin before exceptional items improved to 10.1% from -0.8% a 
year ago.

Restructuring and impairment costs amounted to CHF 110 million. The number of job 
positions was reduced to 17’331 from 17’536 during the quarter. However, despite these 
restructuring expenses, Clariant reported a net profit of CHF 10 million compared to a 
net loss of CHF 91 million a year ago based on the favorable development of the 
operating income.

Cash flow from operations amounted to CHF 159 million and was at about the same level as 
in the previous year period (CHF 156 million). Contrary to a year ago when the reduction 
of net working capital was the main driver, cash flow generation in the first quarter 
this year was mainly driven by the improved operational performance. Net working capital 
as a percentage of sales was lower at 20.2% and in reach of our below 20% target at the 
end of 2010.

Clariant continued to strengthen its balance sheet by increasing its cash position to 
CHF 1,241 million compared to CHF 1,140 million at the end of 2009. Net debt was further 
reduced to CHF 378 million and the company’s gearing – net debt divided by equity – 
further improved to 20%.

Outlook
In spite of a better than expected economic environment in the first quarter the global 
economy will recover only slowly. Based on this scenario and giving reference to the 
fact that the second half of the year is normally weaker than the first half, Clariant 
expects mid single digit sales growth compared to 2009. Operating cash flow will remain 
strong.

As announced previously, 2009 and 2010 are restructuring years. The continuation of the 
restructuring efforts will result in a further reduction of job positions as well as 
further site and plant consolidation. Restructuring and impairment costs will amount to 
CHF 250 – 300 million in 2010.

Clariant will continue to focus on generating cash, reducing costs and reducing 
complexity, resulting in a positive impact on the operating result. First quarter 
operating income must not be taken as a basis for the full-year result due to the still 
fragile economic environment. The EBIT margin before exceptional items is expected to be 
above the 2008 level of 6.6%.

Clariant confirms its target of an above industry average return on invested capital 
(ROIC) by the end of 2010.

Business Discussion First Quarter

BU Industrial & Consumer Specialties

The business unit Industrial & Consumer Specialties reported strong demand in almost all 
of its business segments, both on a year-on-year and quarter-on-quarter view. While 
Metal Working experienced above average sales growth due to a recovery in the automotive 
and engineering industry, Agrochemicals remained at the same low level of the second 
half of 2009. The de-icing segment had a strong season due to favorable cold and wet 
weather conditions across Europe.

All regions led by Europe contributed to the good result. In a still difficult North 
American market, ICS realized some market share gains. Margins continued to improve as a 
result of rising demand levels and therefore lower idle facility costs and an improved 
global production capacity management. However, the better demand picture has already 
led to an acceleration of raw material costs. ICS will adapt sales prices where needed 
to absorb the rising raw materials bill.

BU Masterbatches
In the Masterbatches business unit, the recovery that started in the third quarter of 
2009 has been confirmed in the first quarter 2010. Demand remained robust across all 
markets and regions. Germany surprised to the upside with an unexpectedly strong 
recovery in automotive applications. In Asia and the Middle East, the business unit was 
also able to reap the benefits of an uptake in demand across all segments.

Margins were stable sequentially despite rising costs for important raw materials such 
as polyethylene, polypropylene and certain pigments and additives. By implementing 
selective sales price increases, Masterbatches will absorb the higher input costs that 
are expected for the remainder of 2010. In the coming quarters, the business unit will 
continue to focus on optimizing its cost structure and to deploy its successful business 
model into growing applications such as masterbatches for medical devices or into the 
field of liquid masterbatches.

BU Pigments
In the business unit Pigments, sales grew double-digit year-on-year and low single-digit 
sequentially as de-stocking has come to an end. Some replenishment of stocks took place 
in the first quarter. Demand improved in all segments, driven by a recovery in 
automotive and decorative paints, but also from the upswing in the plastics industry 
that started some months ago. In Printing, pigments for non-impact printing applications 
such as laser and ink jet printers experienced strong growth. Sales growth in the 
emerging markets was strongest. Finally, Europe and North America have stabilized and 
recovered not only compared to the previous year period, but also compared to the last 
quarter of 2009.

In spite of cost inflation for some raw materials, Pigments was able to improve its 
margins by aggressively reducing personnel costs. In addition, capacity utilization 
improved substantially which in turn led to substantially lower idle facility costs 
compared to the last few quarters. The business unit will take further measures to 
optimize its production network in 2010.

BU Textile Chemicals
The Textile Chemicals business unit developed according to the trends seen during the 
second half of 2009. A further stabilization in demand led to a double-digit sales 
growth compared to the previous year period and flat sales sequentially. Sales growth 
has been achieved in all regions. Demand in Asia was particularly strong. Business 
conditions in Europe improved while demand in Latin America and North America remained 
stable.

As a result of the early and decisive implementation of restructuring measures, Textile 
Chemicals improved its margins despite rising pressure from raw material costs. The 
business unit has already started to selectively adapt prices where needed to cope with 
the higher raw material costs expected in 2010.

BU Oil & Mining Services
Oil & Mining Services had a slow start into 2010. Despite some volume growth, sales were 
down year-on-year and remained flat sequentially. Demand in the Oil segment started to 
improve during the quarter. In the Mining segment, demand went up strongly, as industry 
activity picked up on the back of rising prices for both precious and base metals. The 
business unit managed to strengthen its market position in Latin America, which is 
reflected in a double-digit sales growth. On the other hand, sales in the other regions 
contracted slightly.

Margins were higher as a consequence of the clear focus on profitability, which also led 
to the lower year-on-year sales numbers. The business unit focused on profitable 
projects and stepped out of some less profitable or unprofitable contracts during 2009.

BU Leather Services
Sales growth in the Leather Services business unit was strong in the first quarter as 
demand improved markedly year-on-year. Leather Services experienced the strongest 
recovery within the group as the most important end-markets automotive, furniture and 
shoes bounced back. Asia remained the driver behind the first quarter improvement, but 
all other regions also contributed to the good result. Most importantly, some of 
Clariant’s key mature markets such as Italy, Central Europe and Eastern Europe 
stabilized.

Leather Services has massively reduced its cost base over the last few quarters. As a 
result, margins improved both year-on-year and sequentially. Despite the lean structure 
achieved, pressure on margins is expected to intensify due to markedly rising raw 
material costs. Leather Services will therefore focus on managing its margins by 
increasing sales prices in the coming quarters.

Performance Chemicals - includes the business units Additives, Detergents & 
Intermediates, Emulsions and Paper Specialities

Sales in Performance Chemicals rose double-digit as sales recovered strongly in the 
Additives business unit. All businesses had a slow start into the year but demand picked 
up markedly in the second half of the quarter.
Demand in the business unit Additives has been driven by the electronics and the 
plastics industry, with Asia outperforming the other regions. In Detergents & 
Intermediates, sales were slightly lower but volumes improved. Led by a robust demand 
for paper dyes, Paper Specialties reported good sales growth in all of its business 
lines. Sales in the business unit Emulsion remained stable with no pronounced regional 
differences.

Margins overall improved as higher volumes led to an improvement in plant utilization 
and costs have been lowered across all business units. Similar to the other business 
units, Performance Chemicals faces challenges from rising raw material, energy and 
logistics costs, however, with a differentiated picture from BU to BU. The business 
units concerned will implement selective price increases in order to compensate the 
rising raw material costs.

Contact
Clariant International Ltd
Rothausstrasse 61
4132 Muttenz 1
Switzerland
Tel.: +41 61 469 51 11
Fax.: +41 61 469 59 01
www.clariant.ch

Die Clariant (Schweiz) AG ist ein schweizerisches Unternehmen. Ihr Domizil 
ist das Clariant Werk Muttenz (Kanton Basel-Landschaft), wo sich auch der 
Hauptsitz des Konzerns und mehrerer Divisionen befindet. Sie produziert 
nicht nur auf die Bedürfnisse der Kunden zugeschnittene Farbstoff- und 
Chemikalien-Spezialitäten, sondern bietet den Konzerngesellschaften und den 
Kunden eine Reihe besonderer Dienstleistungen in den Bereichen 
Verfahrensentwicklung, Chemie-Engineering, Qualitätsprüfung, Sicherheit und 
Umwelt sowie Logistik und internationale Transportorganisation an.

Die Clariant AG entstand anlässlich der Verselbständigung der Division 
Chemikalien von Sandoz mittels Börsengang im Sommer 1995. 1997 übernahm die 
Clariant AG das Geschäft mit Spezialchemikalien von Hoechst, 1999 dasjenige 
von BTP. Der Konzern ist weltweit tätig und operiert mit über 100 
Gesellschaften in fünf Kontinenten. Das Werk Muttenz ist der Sitz der 
Konzernleitung und mehrerer Divisionen.

Die Clariant (Schweiz) AG hat ihre Anlagen ständig modernisiert und 
erweitert. Auch die Dienstleistungen für Konzerngesellschaften und Kunden sind 
bedeutend ausgebaut worden. Das Werk Muttenz darf heute als Kompetenzzentrum für 
Verfahrensentwicklung und Engineering betrachtet werden.