How Care Chemicals Creates Value
The Business Area Care Chemicals, comprised of Industrial & Consumer Specialties (ICS) and New Business Development (NBD), concentrates on markets with high margins and low cyclicality. By responding to consumer-driven trends, generating cutting-edge innovation, and operating agile, integrated value chains, Care Chemicals has created a foundation for success in highly dynamic markets.
001 CARE CHEMICALS
1. Responding agilely to market developments in each business
As overall economic conditions improve, and the megatrends of convenience, well-being, sustainability, and urbanization continue to drive demand, Care Chemicals has risen to the challenge with its high-performing, sustainable products.
In the personal care market, Asia is a center of gravity as new regulatory requirements are generating opportunities for developing market-specific molecules, while Latin America continues to set the trends in hair care and cosmetics. In Europe, the new ISO standard 16128-1 for organic products provides further pull for natural solutions, and new brands in the North American market are spurring growth in eco-friendly and responsibly sourced products.
In the home care market, Clariant offers a comprehensive portfolio of highly concentrated and easy-to-handle solutions that address new customer needs, such as quick-drying formulations. With stringent regulations for sustainability driving the industry toward ingredients that perform well at low temperature and low water consumption, Clariant constantly scouts new ingredients in order to benefit from first-mover advantages.
Clariant’s paints and coatings business achieved market growth of more than 5% in 2018. With an extensive portfolio of neutralizing additives, watering and dispersing agents, and emulsifiers, Clariant capitalizes on the demand for more ecological and less harmful ingredients in waterborne paints, which represent more than 80% of the architectural coatings market.
While the crop solutions business has been affected by shrinking farm incomes, new regulations and increasing demand for bio-based solutions are disrupting the crop market. In Europe, the ban on additives for agrochemicals and the discontinuation of endocrine disruptors has unlocked opportunities for substitute products. With its previous investment in a modern crop greenhouse, Clariant is now in a leadership position to benefit from the continuing global trend toward bio-based pesticides, foliar fertilizers, and plant growth regulators.
IDEA TO MARKET
2. Innovating ahead of the curve
Creating disruptive innovation requires a diversified toolset. In 2018, Care Chemicals broke new ground by piloting the Innovation Garage. Read more The iGarage combines aspects of agile innovation and design thinking by bringing together various parties (e.g., detergent customers, washing machine manufacturers, and academic researchers) to enhance Clariant’s understanding of different needs along the value chain. Such collaborations help formalize product and service offerings for the benefit of all parties in the value chain.
To keep up with increasing requirements for agility and speed, Care Chemicals is also exploiting the possibilities of digitalization. By synergistically combining advanced electronic laboratory documentation with data from High Throughput Experimentation (HTE), Read more Clariant is able to develop predictive tools that can increase the speed and quality of innovation and enhance the capability to find disruptive solutions.
To minimize products’ ecological impacts during production and use, Clariant is improving the traceability of raw materials so customers can distinguish a sustainably produced ingredient from a chemically identical product. New Business Development addresses this challenge by scouting partnerships with companies offering suitable technologies. For example, a minority stake in Haelixa, a spin-off from the Swiss Federal Institute of Technology Zurich, was acquired. Haelixa provides expertise in a unique tagging and tracing technology based on encapsulated DNA. This technology may be applied to ensure product authenticity in the value chain and is evaluated for several fields of application with the support of New Business Development. Areas of focus for future innovation activities include recycling plastic waste for chemical building blocks and developing biodegradable polymers to address the microplastic problem.
30
By 2025 Care Chemicals aims to increase the use of renewable raw materials by 30%.
Care Chemicals is striving to create a portfolio based on renewable resources coming from agricultural waste streams, which do not compete with food production. By 2025, Care Chemicals aims to increase the use of renewable raw materials by 30% and achieve an innovation pipeline that is entirely based on renewable feedstocks. Regarding the use of palm oil, Industrial & Consumer Specialties already offers almost all personal and home care products in RSPO Mass Balance quality. Read more Since a key enabler of this transition is the combination of chemistry and biotechnology, Industrial & Consumer Specialties teamed up with Group Biotechnology in 2018 to drive future innovation in this field.
One example of how Care Chemicals addresses the sustainability megatrend is with its high-performing hair conditioner line Genadvance®, which was launched globally in 2018. The conditioning agents outperform classical technologies and show a significantly improved sustainability profile, mainly due to the use of natural raw materials and a silicone-free formulation. Genadvance® Hydra is certified by the independent organic certification organization ECOCERT™ and is one of nine new product launches that have been awarded the EcoTain® label in 2018. Read more
ECOCERT™
ECOCERT™ is active in over 80 countries and one of the largest organic inspection and certification organizations in the world. ecocert.com
Another 2018 highlight was the global launch of Aristocare™ Smart, a versatile polymer that reduces the filming, spotting, and drying time of cleaning detergents. This considerably lowers the cleaning effort for consumers and responds to the growing demand for high-performance, easy-to-use home care products.
Catalysis, Innovating for a fossil-free futureMARKET TO CUSTOMER
3. Addressing emerging customer needs with new products and solutions
Given the sharp increase in demand for plant-based ingredients, Care Chemicals strengthened its integration of sustainability into key marketing segments. As a first step, a business development role was established to fully capture the natural ingredients trend and further develop the portfolio. Mutually beneficial partnerships play a key role in this regard, such as a partnership announced in October 2018 with the Indonesian company PT Martina Berto, which will add Southeast Asian biodiversity ingredients to Clariant’s expanding personal care portfolio.
The personal and home care businesses leverage their respective trend-monitoring platforms, BeautyForward® and CleanForward™, to identify market trends at an early stage and pinpoint customers’ evolving needs. For example, in 2018, products that protect consumers from blue light and pollution were identified as a trending customer demand. In response, Clariant launched Eosidin®, an active ingredient that protects skin from indoor pollution. Eosidin® won the silver Itehpec Innovation Award at InCosmetics in Brazil in 2018 and the gold medal for »Sustainable Innovation of the Year« at Cosmetics Design Europe.
»Our ambition is to become the number one supplier for natural and sustainable solutions for consumer care.«
Vincent Gass Head of Global Marketing, Business Unit Industrial & Consumer Specialties
New Business Development focused on the rapidly growing 3D printing market. At the end of 2017, it bundled Clariant’s materials capabilities to create a portfolio of high-quality 3D printing filaments that meet the evolving requirements of end-part production. In 2018, Clariant collaborated with Original Equipment Manufacturers (OEMs) to tailor filaments that meet their specific material requirements and comply with the relevant regulations in their respective end markets. In addition, Clariant continually increased the printability of the materials. To make the printing as reliable and simple as possible, a collaboration was entered with the printer manufacturer Ultimaker, which provides optimized printing parameters for Clariant’s filaments. Its high-quality materials, ability to rapidly adapt to industry requirements, and its print optimization support have made Clariant an attractive partner for OEMs who significantly support the expanding market of 3D printed products.
According to the customer satisfaction survey conducted in 2018, the customers of Business Area Care Chemicals particularly value its products. »Products and Packaging« was ranked as the most important buying criteria by survey respondents and showed an outstanding competitive performance. Overall customer satisfaction improved to 79 points (2016: 77) and the Net Promoter Score jumped to 43% (2016: 28%).
Net Promoter Score (NPS)
The NPS gauges the loyalty of a company’s customers on a scale from – 100 (no loyalty) to + 100 (high loyalty). An NPS of >50% is felt to be excellent.
4. Increasing marketing and digital capabilities to enhance customer relationships
Industrial & Consumer Specialties has further developed its marketing organization in 2018 based on a blueprint developed in 2017. It created five centers of excellence for strategy execution, innovation management, market intelligence, launch management, and portfolio value management. All functions were replicated at a global and regional level and new key positions were filled, adding valuable competencies to detect, qualify, segment, and serve local market opportunities. To translate improved market penetration into profitable growth, Care Chemicals successfully ran a transactional pricing campaign in 2018 and implemented value-based pricing methods for all new product launches.
Customer relationships were simplified through a series of digital initiatives. In Europe, an e-commerce platform was deployed for industrial applications and a chatbot was added on the Industrial & Consumer Specialties website to address basic customer requests. Furthermore, Clariant launched Chemberry™, a chemical ingredients search engine to enhance the connection between suppliers and buyers. Read more
Catalysis, Engaging with customersCUSTOMER TO CASH
5. Streamlining production and delivery processes
To upgrade the portfolio to higher-value products, Care Chemicals is working to adapt production processes to smaller batch sizes and shift from bulk shipping to transporting smaller packages. This shift will benefit customers who demand more agility and shorter lead times for their orders. To improve production planning and securing of raw material supplies, a web shop for distributor self-service was introduced, enabling fast and flexible offer placement and management, and facilitating the coordination between the commercial and the operational chain.
As a result of the continued rollout of the Manufacturing Execution System, which provides a real-time view of the status of production, and the implementation of the Integrated Planning Landscape (IPL) in Latin America, North America, and Europe, operational reliability was strengthened. Read more Additionally, relationships with 360 new suppliers were established to reduce dependence on single-sourced materials, leading to improved flexibility and reliability.
360
Care Chemicals established relationships with 360 new suppliers.
6. Increasing efficiency while reducing environmental impacts
In 2018, Care Chemicals reduced the consumption of energy and water and the emission of waste, wastewater, and greenhouse gases, in accordance with Clariant’s 2025 environmental targets. By analyzing end-to-end processes with a focus on increasing yield through initiatives such as the Production System Yield, Energy, Environment (YEE) Read more, emissions and resource consumption were reduced, helping Industrial & Consumer Specialties achieve ISO 50001 certification for all of its sites in Europe. To further reduce pollution and protect ecosystems, a chiller at the Gendorf, Germany, site was replaced, eliminating the emission of Frigen, a halogenated hydrocarbon. At the Bonthapally, India, site, the wastewater treatment was upgraded to achieve zero liquid discharge. Read more
In 2018, Industrial & Consumer Specialties started Project Olive II, which will upgrade the site in Tarragona, Spain, to a fully integrated production plant for Squalane and Squalene and the respective downstream products. Integrating several value creation steps in one location will allow Clariant to produce higher-value products while effectively reducing negative impacts on the environment by decreasing transport requirements.
7. Achieving safe operations
In 2018, Care Chemicals undertook important steps toward Clariant’s goal of zero accidents. The Avoiding Accidents program was implemented at all sites while refresher trainings were conducted at four sites that had already implemented the program. Read more Additionally, individual safety training sessions for managers were rolled out, covering modules such as electrical safety and personal protective equipment. At its Gendorf, Germany, site, Industrial & Consumer Specialties conducted a pilot of the Global Operational Discipline initiative, which is based on an approach developed by DuPont and consists of safety trainings and an awareness-raising campaign. The global rollout of the initiative began in 2018 with the initial implementation at Clariant’s Suzano, Brazil, site. Other sites will follow over the course of 2019 and 2020. Finally, frequent audits at all plants contributed to rigorous improvements in product quality, environmental protections, and health and safety precautions.
Catalysis, Securing profitable partnershipsTargets 2021
Growth potential per year
EBITDA target margin
Input
Performance
2.8 %
R&D spend of sales
965
Raw material procured
in CHF m
> 70
Active innovation projects
13
Production sites
2 988
Number of raw materials procured
People
32 019
Training hours
1 710
Raw material suppliers
Planet
8062
Energy consumption in m kWh
Output
Performance
1 665
Sales in CHF m
7 %
Growth in local currencies
19 %
EBITDA margin before exceptional items
0.981
Production volume in m t
People
2 541
Staff in FTE at year end
(2017: 2 582)
Planet
602
Waste in thousand t
2172
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.
In 2013 Clariant adjusted its reporting segments and grouped its businesses with similar end-user markets and growth drivers into four distinct Business Areas: Care Chemicals, Catalysis, Natural Resources, and Plastics & Coatings. View entire glossary
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
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 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
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
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
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