Operating an Integrated Business Model

By transforming various resources into innovative, sustainable solutions, Clariant meets the evolving needs of its customers while also creating value for shareholders, employees, and the environment. In 2019, Clariant adapted its business model to reflect its focus on three core Business Areas.

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Performance

207

R&D spend in CHF m

2 642

Raw material procurement in CHF m

> 375

Active innovation projects

> 125

Scientific collaborations

118

Production facilities

3.13

Raw material procured in m t

People

1 570

New employees hired

205 861

Training hours

404

Client interviews

78 %

Raw material supply base by spend covered by sustainability evaluation

Planet

3 0583

Energy consumption in m kWh

44.33

Water consumption in m m3

3 Every three years, Clariant validates environmental data from all production sites. The last full reporting campaign was in 2017. In the interim years, including 2019, the reduced reporting scope comprises the larger sites responsible for 95 % of production.

Performance

6 526

Sales in CHF m

9.5 %

EBITDA margin after exceptional items

> 3 %1

Growth through innovation

6 500

Patents at year end

4.252

Production volume in m t

27

Products awarded with the EcoTain® label

1 Contains the contribution to growth of the innovation portfolio from both Top Line Innovation and Life Cycle Innovation. Potential cannibalization of existing sales by Life Cycle Innovation has not been excluded.

2 For 2019, the production volume is based on a reduced reporting scope, which includes sites that are responsible for 95 % of total production.

People

17 223

Staff in FTE at year-end

0.15

Lost time accident rate (LTAR)

Planet

0.843

Greenhouse gas emissions (scope 1 & 2) in m t

11.93

Waste water in m m3

3 Every three years, Clariant validates environmental data from all production sites. The last full reporting campaign was in 2017. In the interim years, including 2019, the reduced reporting scope comprises the larger sites responsible for 95 % of production.

Performance

211

R&D spend in CHF m (3.3 % of Group sales)

> 125

Scientific Collaborations

> 370

Active Innovation Projects (Class 1 and 2)

8

R&D Centers

> 50

Technical Centers

People

~ 1 100

Employees in R&D

9 522

Training hours in Group Technology & Innovation

Planet

Performance

6 600

Patents at year end

2.5 %

Growth through Innovation 1

People

272

Employees with Innovation Belts (250 Green Belts, 17 Black Belts and 5 Master Black Belts)

Planet

Performance

34

Marketing Excellence projects

People

515

Customer interviews in Marketing Excellence initiatives

80

Sales managers participated in a specific sales training

59

Industry experts interviewed

Planet

Performance

12.3

Additional margin in CHF m from Marketing Excellence projects

169

EcoTain® products at the end of 2017

People

Planet

Performance

248

Investments in property, plant and equipment in CHF m

2 674

Raw material procurement in CHF m

125

Production facilities

3.14

Raw materials procured in m t

People

7 000

Suppliers of raw material

65 %

Raw material supply base by spend covered by sustainability evaluations

Planet

3 245

Energy consumption in m kWh

49

Water consumption in m m3

Performance

6 377

Sales in CHF m

15.3 %

EBITDA margin before exceptional items

428

Operating cash flow in CHF m

4.60

Production volume in m t

People

0.20

Lost time accident rate (LTAR, accidents with at least 1 day lost/200 000 work hours)

Planet

13

Waste water in m m3

198

Waste in thousand t

0.97

Greenhouse gas emissions (scope 1 & 2) in m t

Performance

2.0 %

R&D spend of sales

629

Raw material procured
in CHF m

> 145

Active innovation projects

39

Production sites

3 697

Number of raw materials procured

People

47 993

Training hours

1 776

Raw material suppliers

Planet

1 033.32

Energy consumption in m kWh

2 Every three years, Clariant validates environmental data from all production sites. The last full reporting campaign was in 2017. In the interim years, including 2019, the reduced reporting scope comprises the larger sites responsible for 95 % of production.

Performance

1 874

Sales in CHF m

4 %

Growth in local currencies

16.3 %

EBITDA margin after exceptional items

2.971

Production volume in m t

People

3 948

Staff in FTE at year-end
(2018: 3 276; excl. Business Unit Additives)

Planet

134.82

Waste in thousand t

1072

Greenhouse gas emissions
in kg/t production

1 For 2019, the production volume is based on a reduced reporting scope, which includes sites that are responsible for 95 % of total production.

2 Every three years, Clariant validates environmental data from all production sites. The last full reporting campaign was in 2017. In the interim years, including 2019, the reduced reporting scope comprises the larger sites responsible for 95 % of production.

Performance

6.4 %

R&D spend of sales

272

Raw material procured
in CHF m

> 100

Active innovation projects

14

Production sites (50:50 or minority joint ventures not included)

1 174

Number of raw materials procured

People

29 721

Training hours

538

Raw material suppliers

Planet

609.92

Energy consumption in m kWh

2 Every three years, Clariant validates environmental data from all production sites. The last full reporting campaign was in 2017. In the interim years, including 2019, the reduced reporting scope comprises the larger sites responsible for 95 % of production.

Performance

925

Sales in CHF m

9 %

Growth in local currencies

22.9 %

EBITDA margin before exceptional items

0.061

Production volume in m t

People

2 113

Staff in FTE at year-end
(2018: 2 061)

Planet

15.52

Waste in thousand t

2 7462

Greenhouse gas emissions
in kg/t production

1 For 2019, the production volume is based on a reduced reporting scope, which includes sites that are responsible for 95 % of total production.

2 Every three years, Clariant validates environmental data from all production sites. The last full reporting campaign was in 2017. In the interim years, including 2019, the reduced reporting scope comprises the larger sites responsible for 95 % of production.

Performance

1.4 %

R&D spend of sales

1 149

Raw material procured
in CHF m

> 105

Active innovation projects

62

Production sites

15 305

Number of raw materials procured

People

28 459

Training hours

4 746

Raw material suppliers

Planet

9522

Energy consumption in m kWh

2 Every three years, Clariant validates environmental data from all production sites. The last full reporting campaign was in 2017. In interim years, including 2018, the reduced reporting scope comprises the larger sites responsible for 95 % of production.

Performance

2 703

Sales in CHF m

1 %

Growth in local currencies

15.2 %

EBITDA margin before exceptional items

0.361

Production volume in m t

People

6 793

Staff in FTE at year end
(2017: 6 759)

Planet

482

Waste in thousand t

7742

Greenhouse gas emissions
in kg/t production

1 For 2018, the production volume is based on a reduced reporting scope, which includes sites that are responsible for 95 % of total production.

2 Every three years, Clariant validates environmental data from all production sites. The last full reporting campaign was in 2017. In interim years, including 2018, the reduced reporting scope comprises the larger sites responsible for 95 % of production.

Performance

2.9 %

R&D spend of sales

857

Raw material procured
in CHF m

> 70

Active innovation projects

13

Production sites

2 714

Number of raw materials procured

People

32 172

Training hours

1 672

Raw material suppliers

Planet

757.22

Energy consumption in m kWh

2 Every three years, Clariant validates environmental data from all production sites. The last full reporting campaign was in 2017. In the interim years, including 2019, the reduced reporting scope comprises the larger sites responsible for 95 % of production.

Performance

1 600

Sales in CHF m

- 1 %

Growth in local currencies

17.6 %

EBITDA margin after exceptional items

0.961

Production volume in m t

People

2 614

Staff in FTE at year-end
(2018: 2 541)

Planet

65.42

Waste in thousand t

2092

Greenhouse gas emissions
in kg/t production

1 For 2019, the production volume is based on a reduced reporting scope, which includes sites that are responsible for 95 % of total production.

2 Every three years, Clariant validates environmental data from all production sites. The last full reporting campaign was in 2017. In the interim years, including 2019, the reduced reporting scope comprises the larger sites responsible for 95 % of production.


1. Pursuing a strong corporate strategy

Based on a clear vision, mission, and strong corporate values, Clariant fulfills its five-pillar strategy to achieve ambitious corporate objectives and financial targets. In 2019, Clariant successfully closed the divestment of its Healthcare Packaging business and agreed to sell its entire business to PolyOne, a leading global provider of specialized polymer materials, services, and solutions. The divestment of the Masterbatches business is expected to be closed by the third quarter of 2020. As part of the portfolio repositioning announced in 2018, Clariant also continued with the divestment of its business, which it expects to conclude by the end of 2020. This will allow Clariant to focus more intently on the three core that offer differentiated products and services with above-average growth potential. Read more in

2. Creating value by transforming six kinds of capital

Clariant’s is designed to create innovative, sustainable solutions that benefit all – customers, employees, shareholders, and the environment – by drawing on six kinds of capital: financial, intellectual, manufactured, human, relationship, and natural. Clariant categorizes these six different capitals under its brand values of Performance (financial, intellectual, and ), People (human and ), and Planet ().

  • is the pool of funds available to produce goods or provide services. This includes funds obtained through financing, such as debt, equity, or grants, and funds generated through sales or investments. According to Clariant’s Business Model, these are, for example, raw material spend as an input and the as an output.
  • is the knowledge-based intangibles used and created by the company and its partners. This can include intellectual property, such as patents, trademarks, copyrights, software, rights, and licenses, as well as »organizational capital,« such as tacit knowledge, systems, procedures, and protocols. Examples of Clariant’s intellectual capital include active innovation projects as an input and the resulting growth as an output.
  • Manufactured capital includes physical objects owned by the company, such as buildings, equipment, and products. These can include objects that are used to produce goods or provide services, or materials that the company produces for internal use or sale to customers. In Clariant’s business model, production facilities are an example of an input, and products awarded with Clariant’s EcoTain® label are an output.
  • is the company’s employees, including their competencies, capabilities, experience, and drive to innovate. This form of capital includes the employees’ alignment with corporate values and their ability to understand and implement the company’s strategy. At Clariant, inputs include new employees hired, while outputs are, for example, a successful employee health and safety record.
  • Relationship capital refers to key relationships, such as those with significant stakeholders and network partners. This capital can include shared values, trust, engagement, and related intangibles associated with its brand and reputation. For Clariant, client interviews are an input, and customer satisfaction is an output.
  • Natural capital includes the renewable and nonrenewable environmental resources and processes that support or affect the prosperity of the company. Examples include air, water, and land resources that are utilized or impacted by emissions. In the Clariant , water consumption is an example of an input, while wastewater is an output.

3. Ensuring excellence in execution with three value-creation phases

To ensure excellence in execution throughout all business activities and realize the goals of above-market growth, high profitability, and strong cash generation, Clariant’s Business Areas follow three value-creation phases:

  • Idea to Market
  • Market to Customer
  • Customer to Cash

The process comprises all innovation-related activities that contribute to a strong innovation pipeline and subsequent output. covers Clariant’s thrust to achieve true customer centricity in all marketing and sales processes. The process ensures Clariant’s safe, efficient production and reliable delivery of finished products and services.

Reading the report along three thematic »focus routes«

Focus Routes (illustration)

In addition to a sequential read-through, the Integrated Report 2019 can also be explored along three »focus routes« that follow the themes of innovation, customer experience, and operational excellence. To simplify navigation, the content of each focus route is highlighted with a specific color, icon, and vertical line.

Idea to Market

The focus route encompasses the innovation-themed parts of the Integrated Report. Starting with the »Idea to Market« chapter, this focus route takes readers through the innovation projects and an evaluation of the results achieved regarding innovation-related topics.

Market to Customer

The focus route ties together the sections that detail Clariant’s customer-centric approach. Launching from the »Market to Customer« chapter, this focus route examines the evolution of the Business Areas’ marketing and sales practices to achieve true customer centricity as well as the results achieved regarding customer-related topics.

Customer to Cash

The focus route includes the portions of the Integrated Report that focus on Clariant’s efforts to guarantee safe, reliable, and efficient operations. Starting with the »Customer to Cash« chapter, this route delves into how the Business Areas optimize procurement, planning, production, and delivery, and details the results regarding operations- and procurement-related topics.

Masterbatches

These are plastic additives in the form of granules with dyestuffs or other additives used to dye or alter the properties of natural plastic. View entire glossary

Pigments

Pigments are substances used for coloring; they are used in a technical manner, for example in the manufacture of dyes, varnishes, and plastics. View entire glossary

Business Area

For the financial reporting, Clariant grouped its businesses in three core Business Areas: Care Chemicals, Catalysis, and Natural Resources. View entire glossary

Business Model

The business model illustrates how a company draws on various capitals as inputs and converts them into outputs, such as products and services, through its business activities. The company’s activities and outputs lead to outcomes that affect the capitals, thus impacting the company and its stakeholders. View entire glossary

Stakeholders

Stakeholders are people or groups whose interests are linked in various ways with those of a company. They include shareholders, business partners, employees, neighbors, and the community. View entire glossary

Manufactured Capital

Manufactured physical objects such as buildings, equipment, and products. These can include objects that are available to the company for use in the production of goods or the provision of services, or that the company produces for sale to customers or for its own use. View entire glossary

Relationship Capital

Key relationships including those with significant groups of stakeholders and other networks. This can include shared values, the trust and willingness to engage that the company has developed, and related intangibles associated with its brand and reputation. View entire glossary

Natural Capital

Renewable and nonrenewable environmental resources and processes that support the past, current, or future prosperity of the company or are affected by it. Examples can include resources related to air, water, and land that are utilized or impacted for example by emissions. View entire glossary

Financial Capital

The pool of funds available to the company for use in the production of goods or the provision of services. This can include funds obtained through financing, such as debt, equity, or grants, and funds generated by the company, for example through sales or investments. View entire glossary

EBITDA margin

The EBITDA margin is calculated based on the ratio of EBITDA to sales and shows the return generated through operations from sales before depreciation and amortization. View entire glossary

Intellectual Capital

Knowledge-based intangibles used and created by the company, often in collaboration with partners. This can include intellectual property, such as patents, trademarks, copyrights, software, rights, and licenses, and »organizational capital« such as tacit knowledge, systems, procedures, and protocols. View entire glossary

Human Capital

The company’s staff and its composition, competencies, capabilities, experience, and motivation to innovate. This can include employees’ alignment with corporate values and their ability to understand and implement the company’s strategy. View entire glossary

Business Model

The business model illustrates how a company draws on various capitals as inputs and converts them into outputs, such as products and services, through its business activities. The company’s activities and outputs lead to outcomes that affect the capitals, thus impacting the company and its stakeholders. View entire glossary

Idea to Market

Core business activities that create additional value are structured into three value creation phases at Clariant. Idea to Market encompasses scouting global trends and ideas, scoping out customer needs, executing product development and commercializing, and monitoring product performance. View entire glossary

Market to Customer

Core business activities that create additional value are structured into three value creation phases at Clariant. Market to Customer includes identifying market attractiveness, developing a clear value proposition and articulating it to the customers, and capturing the value created through relationship building and the sales process. View entire glossary

Customer to Cash

Core business activities that create additional value are structured into three value creation phases at Clariant. Customer to Cash encompasses planning to balance demand and supply, optimizing sourcing for spend effectiveness, constantly monitoring production for high efficiency, and delivering finished goods on-time and in-full as required by the customer. View entire glossary

Idea to Market

Core business activities that create additional value are structured into three value creation phases at Clariant. Idea to Market encompasses scouting global trends and ideas, scoping out customer needs, executing product development and commercializing, and monitoring product performance. View entire glossary

Business Area

For the financial reporting, Clariant grouped its businesses in three core Business Areas: Care Chemicals, Catalysis, and Natural Resources. View entire glossary

Market to Customer

Core business activities that create additional value are structured into three value creation phases at Clariant. Market to Customer includes identifying market attractiveness, developing a clear value proposition and articulating it to the customers, and capturing the value created through relationship building and the sales process. View entire glossary

Customer to Cash

Core business activities that create additional value are structured into three value creation phases at Clariant. Customer to Cash encompasses planning to balance demand and supply, optimizing sourcing for spend effectiveness, constantly monitoring production for high efficiency, and delivering finished goods on-time and in-full as required by the customer. View entire glossary

Financial Capital

The pool of funds available to the company for use in the production of goods or the provision of services. This can include funds obtained through financing, such as debt, equity, or grants, and funds generated by the company, for example through sales or investments. View entire glossary

Intellectual Capital

Knowledge-based intangibles used and created by the company, often in collaboration with partners. This can include intellectual property, such as patents, trademarks, copyrights, software, rights, and licenses, and »organizational capital« such as tacit knowledge, systems, procedures, and protocols. View entire glossary

Manufactured Capital

Manufactured physical objects such as buildings, equipment, and products. These can include objects that are available to the company for use in the production of goods or the provision of services, or that the company produces for sale to customers or for its own use. View entire glossary

Human Capital

The company’s staff and its composition, competencies, capabilities, experience, and motivation to innovate. This can include employees’ alignment with corporate values and their ability to understand and implement the company’s strategy. View entire glossary

Relationship Capital

Key relationships including those with significant groups of stakeholders and other networks. This can include shared values, the trust and willingness to engage that the company has developed, and related intangibles associated with its brand and reputation. View entire glossary

Natural Capital

Renewable and nonrenewable environmental resources and processes that support the past, current, or future prosperity of the company or are affected by it. Examples can include resources related to air, water, and land that are utilized or impacted for example by emissions. View entire glossary

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