In its three core Business Areas, Clariant focuses on developing differentiated, customer-specific products and offerings that have attractive growth prospects and above-average value potential. The alignment of Clariant’s five-pillar corporate strategy with most material topics, must-win battles, and the company’s excellence program supports the achievement of these goals.

1. Same goal, different means

Given current market conditions, Clariant and SABIC decided in 2019 to suspend discussions on creating a joint High Performance Materials (HPM) Business Area in order to protect the best interests of the respective shareholders of both companies. Consequently, as announced in 2015, Clariant continued focusing on its high-value specialty portfolio and decided to divest one third of its activities.

Clariant successfully divested its Healthcare Packaging business in 2019 and continued the divestments of its Pigments business and entire Masterbatches business. In the latter case, Clariant agreed to sell the business to PolyOne, a leading global provider of specialized polymer materials, services, and solutions. This divestment is expected to be closed by the third quarter of 2020. In addition to strengthening the company’s balance sheet and returning capital to shareholders, the proceeds from the divestments will be used to invest in innovations and technological applications within Clariant’s core Business Areas.

2. Guiding objectives underpin Clariant’s vision and mission

Clariant focuses on guiding objectives related to its different stakeholder groups. The company strives to

• be known as a powerhouse for R&D and innovation and increase value by applying a forward-looking sustainability lens to operations and market offerings;
• serve markets with future perspectives and strong growth rates and focus on businesses with good competitive positions;
• be a publicly listed company with a broad shareholder base, reliable long-term anchor shareholders, and a strong reputation for above industry-average profitability, growth, and Total Return to Shareholders (TRS); and
• be a preferred employer.

3. Staying the course on the five-pillar strategy

Clariant continues to be guided by its five-pillar strategy. With the ongoing divestment of the Business Units Pigments and Masterbatches, the company focused on the reposition the portfolio pillar in 2019. With the resulting, more streamlined portfolio structure, Clariant will be able to intensify its focus on customer experience and fast, reliable customer fulfillment, as well as on the development of innovative and sustainable products and applications. This will further support the first two strategic pillars, focus on innovation and R&D and add value with sustainability. With cutting-edge innovation formats, such as the iEngine and the iGarage, and the introduction of a strategic innovation process, Clariant strengthened the first pillar, focus on innovation and R&D, considerably in 2019. With 68% of the screened continuing operations’ product portfolio meeting the company’s sustainability definition, the launch of new sustainability designators, its EcoCircle initiative, and being listed in the top 5% of companies in the Dow Jones Sustainability index, Clariant’s efforts in 2019 regarding the second pillar, add value with sustainability, were highlighted. Regional growth initiatives in China and North America, as well as the ongoing Clariant Excellence programs, further strengthened the two strategic pillars, intensify growth and increase profitability. SEE FIGURE 001

001 The five-pillar strategy

4. Strategic pillars well aligned with most material topics

The strategic pillars are well aligned with the topics deemed most material for Clariant and its stakeholders. The material topic Innovation and Technological Advances corresponds to the first strategic pillar, focus on innovation and R&D. The topics of Product Stewardship/Sustainable Chemistry, Circular Economy, Environmental Protection and Resources, Occupational Health, Safety, and Well-being, and Customer Relationships are all essential aspects of the second strategic pillar, add value with sustainability. The pillar portfolio repositioning toward high-value specialties is linked to multiple material topics. The fourth strategic pillar, intensify growth, and the fifth strategic pillar, increase profitability, correspond primarily to the material topic Growth and Profitability. All five strategic pillars are underpinned by Clariant’s People Excellence initiative, for which the material topic of Talent Attraction and Development is important. By capturing digital business model opportunities and digitally enabled operating models, the material topic Digitalization supports all five pillars with new business models, data science, robotics and automation, and digital operating models. Read more in Materiality Assessment

5. Strategic Management Process underpins must-win battles

Clariant’s Strategic Management Process (SMP), conducted by the Business Units in collaboration with Corporate Planning & Strategy, ensures that overall strategy development is an iterative process at the Group level as well as for the Business Units. Each Business Unit addressed the megatrends observed by Clariant – Digitalization, Future of Oil, Future of Plastics, Future of Transportation, and Circular Economy – contributing to the Business Units’ strategy development. The strategy update for each Business Unit was presented to the Board of Directors in December 2019. In the course of the SMP, must-win battles for each Business Unit were also developed. Overall, 31 must-win battles in line with the five strategic pillars were identified. SEE FIGURE 002

Must-win battles are the focus areas for the Business Units’ strategy implementation and are aligned with strategic investment activities, such as enhancing investments in China and North America, which both present significant growth potential.

002 Examples of must-win battles of one or several Business Units

6. Investments in growth regions

China is the largest chemical-producing global region and is expected to also become the largest chemical market. Trends such as urbanization, mobility, stricter environmental regulations, and the industry and market shift toward specialty chemicals create opportunities for Clariant with its focus on safety, compliance, customer experience, excellence in execution, and sustainability. Clariant’s new head of Region China, together with the Region China top management team, will ensure the »Fringe to Core« strategy to bring Clariant’s China business to the fore, which includes investment in the One Clariant Campus, an integrated regional headquarters and innovation facility being built in Shanghai.

In North America, following significant investment in its Midland, Texas, and Clinton, Oklahoma, facilities, Clariant opened two new facilities in 2019. With its new High-Throughput Experimentation (HTE) laboratory in Houston, Texas, Clariant is the first company to adopt HTE technology, which achieves optimized formulations in a rapid time frame, as a standard tool for the Oil and Gas industry. Read more in Intellectual Capital

The new Clariant Consumer Care Innovation Center (CCIC) near New York strengthens collaborative innovation with North America’s consumer care brands by focusing on trends impacting North American consumers, where the need for convenient products for busy lifestyles overlaps with the demand for more sustainable products. Read more in Care Chemicals

7. Financial targets and overall objectives

Plans for executing the Business Unit strategies and must-win battles underpin the development of financial plans for each Business Unit, which are refined alongside the Group financial targets. Regarding growth, the Business Areas Care Chemicals and Natural Resources are expected to deliver an annual sales growth of 5 – 7%, while Catalysis is expected to deliver a 6 – 9% sales growth per year. With respect to EBITDA margin ambitions, expectations are 18 – 20% for Natural Resources, 19 – 21% for Care Chemicals, and 26 – 30% for Catalysis.

With respect to Group financial targets, Clariant expects its continuing businesses to achieve above-market growth, higher profitability, and stronger cash generation based on its focused, high-value specialty portfolio.

003 NET BENEFIT BY CLARIANT EXCELLENCE in CHF m

8. Clariant Excellence supports value creation

Clariant Excellence (CLNX), the company’s Business Excellence program, supports the Business Units in their strategy execution. Over the last decade, the program evolved from focusing on operational efficiency to becoming a holistic driver for profitable growth. The program comprises Clariant Innovation Excellence (CIX), Commercial Excellence (CCE), and Operational Excellence (COX), which includes excellence in Procurement, Production, and Supply Chain, as well as Clariant People Excellence. In total, CLNX projects delivered estimated net benefits of CHF 158 million in 2019, of which CHF 112 million were cost savings. SEE FIGURE 003 Read more in Idea to Market, Market to Customer and Customer to Cash