Dear Shareholders

Clariant continued its success story in the 2018 financial year. This means that we were able to seamlessly build on the previous years, in which we significantly increased the attractiveness and earnings power of Clariant through the consistent implementation of our long-term strategy, in particular through the continuous development of the portfolio. Over the last few years, our shareholders have thus received a significantly higher total shareholder return than the peer-group average.

The 2018 results speak for themselves: We increased our sales in local currencies by 5% to around 6.6 billion Swiss francs. The EBITDA before exceptional items also improved by 5% to over 1 billion Swiss francs, which is the highest level since 2004. This operational performance improvement prompts us to propose a dividend increase of 10% to 0.55 Swiss francs for you at the next Annual General Meeting.

We have always stressed that we need to continuously and consistently develop the Clariant portfolio towards specialty chemicals to further enhance the value of the company for you as shareholders. The size of the company is one aspect of this development. However, we cannot rely on organic growth alone. For this reason, one of our strategic priorities since the acquisition of Süd-Chemie in 2011 has been portfolio management, which has been further intensified over the past three years. The planned merger with the US company Huntsman was part of it − it would have led to an increase in value of over 3 billion Swiss francs. This merger was, however, thwarted by an activist investor.

Since our management feels obligated to actually realize the potential increase in value held out to the shareholders, we will now do so in cooperation with SABIC. We intend to form the new High Performance Materials Business Area from SABIC’s specialty chemicals business and Clariant’s Additives and high-value Masterbatches businesses. At the same time, we will sell more mature businesses such as Pigments and Standard Masterbatches. In this way, Clariant’s portfolio will have a much more pronounced profile for high-quality specialty chemical products, which in turn will visibly improve the value of the company as a whole. At the same time, we will continue to develop our Care Chemicals, Catalysis, and Natural Resources Business Areas. Our focus remains on innovation, sustainability, highly qualified employees and the fast and reliable fulfillment of our customers’ needs as the basis for future success. This will be reflected in a significant increase in the profitability of these businesses.

Keyword sustainability: It has long been an integral part of our business strategy. For us, this means constantly orienting our activities and shaping our product portfolio in such a way that they make a positive contribution to sustainability, based on a holistic approach whether in environmental protection, in the supply chain, in the minimization of risks, or in employee engagement. That is why we also support all sustainability targets of the United Nations and, especially in our industry, the Responsible Care™ Charter. In addition, we are proud to report that we have achieved top rankings in the Dow Jones Sustainability Index in recent years.

Our agenda for 2019 and 2020 is clear: The management, headed by the new CEO Ernesto Occhiello, is currently working hard to develop the new High Performance Materials Business Area, which will be one of the core activities of the new Clariant from 2020 onward. This means that Clariant, in contrast to today, will be significantly larger, considerably more profitable and − thanks to an increased cash flow − will also have potential for further growth. In principle, our medium-term objective must be to focus Clariant’s portfolio even more on high-value, future-oriented and high-yield specialty chemical businesses.

This is all the more important because the performance of the macroeconomic environment is already weakening today. According to the International Monetary Fund (IMF), the risk of a greater decline in global economic growth has increased. Global gross domestic product is expected to increase by only 3.5% in 2019, compared to 3.7% in 2018. The geopolitical risks such as the trade conflict between the USA and China or the impending Brexit continue to be significant.

Nevertheless, we at Clariant are positive and confident about the future. The Board of Directors and Group management will continue to follow the current course in order to realize the potential increase in value held out to our shareholders and the desired attractiveness for customers and employees.

I would like to thank everyone who supported us in 2018 and the years before. I thank our employees for their loyalty and the high level of commitment we see within the company. Thank you, dear shareholders, for your continued confidence in Clariant. We will do our best to uphold this trust in the coming years.

Sincerely,

Hariolf Kottmann
Chairman of the Board of Directors