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.
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
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 Masterbatches 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 Pigments business, which it expects to conclude by the end of 2020. This will allow Clariant to focus more intently on the three core Business Areas that offer differentiated products and services with above-average growth potential. Read more in Strategy
2. Creating value by transforming six kinds of capital
Clariant’s business model is designed to create innovative, sustainable solutions that benefit all stakeholders – 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 manufactured capital), People (human and relationship capital), and Planet (natural capital).
- Financial capital 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 EBITDA margin as an output.
- Intellectual capital 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.
- Human capital 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 business model, 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 Idea-to-Market process comprises all innovation-related activities that contribute to a strong innovation pipeline and subsequent output. Market to Customer covers Clariant’s thrust to achieve true customer centricity in all marketing and sales processes. The Customer-to-Cash process ensures Clariant’s safe, efficient production and reliable delivery of finished products and services.
Reading the report along three thematic »focus routes«
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 Idea-to-Market 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 Business Areas’ innovation projects and an evaluation of the results achieved regarding innovation-related topics.
Value Creation, Idea to MarketMarket to Customer
The Market-to-Customer 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.
Value Creation, Market to CustomerCustomer to Cash
The Customer-to-Cash 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.
Value Creation, Customer to CashThese 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 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
For the financial reporting, Clariant grouped its businesses in three core Business Areas: Care Chemicals, Catalysis, and Natural Resources. View entire glossary
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 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 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
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
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
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
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
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
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
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
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
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
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
For the financial reporting, Clariant grouped its businesses in three core Business Areas: Care Chemicals, Catalysis, and Natural Resources. View entire glossary
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
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
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