Value Creation at the Group Level

In the full year 2022, sales from continuing operations were CHF 5.198 billion, compared to CHF 4.372 billion in the full year 2021. This corresponds to an increase of 24 % in local currency and 19 % in Swiss francs. Both pricing and volume growth had a positive impact on the Group of 17 % and 7 %, respectively, while the currency impact was –5 %.

In the full year 2022, sales growth exceeded 20 % in local currency in all geographic regions. Clariant’s performance was especially strong in North America, Latin America, and the Middle East & Africa.

Care Chemicals grew sales by 28 % in local currency in full year 2022 with double-digit sales growth in all key businesses. In Catalysis, the top line was up by 14 % in local currency, propelled by the Petrochemicals and Specialty Catalysts businesses. Oil and Mining Services, Functional Minerals, and Additives in particular, all contributed to the 25 % local currency sales growth reported at Natural Resources.

The continuing operations EBITDAEBITDAEarnings before interest, taxes, depreciation, and amortization.View entire glossary increased by 14 % to CHF 810 million as the Group improved profitability on the back of sales growth. The EBITDAEBITDAEarnings before interest, taxes, depreciation, and amortization.View entire glossary margin was 15.6 %, versus 16.2 % in the previous year. Adjusting for restructuring expenses of CHF 40 million related to the implementation of the new operating model, booked in the fourth quarter of 2022, the 16.4 % EBITDAEBITDAEarnings before interest, taxes, depreciation, and amortization.View entire glossary margin exceeded the previous year’s level. The adjusted profitability improvement was propelled by pricing measures that more than fully offset the high raw material cost increase (25 % year-on-year) and higher energy (+35 %) and logistics cost (+6 %). The Group’s ongoing cost discipline and the profitability improvement in Care Chemicals and Natural Resources more than offset the relative weakness in Catalysis, which includes a CHF 43 million negative impact from sunliquid®.

The EBITEBITEarnings before interest and taxes.View entire glossary decreased to CHF 72 million in the full year 2022 from CHF 440 million in the previous year, mainly due to three impairments totaling CHF 462 million. A non-cash impairment in the amount of CHF 233 million was related to the sale of Clariant’s North American Land Oil business to Dorf Ketal, which is expected to close in the first quarter of 2023. A further impairment of CHF 220 million was booked for the sunliquid® bioethanol plant in Romania based on the delayed ramp-up and the plant’s current financial performance. A CHF 5 million impairment was also made on Clariant’s assets in Ukraine. Excluding these charges, the EBITEBITEarnings before interest and taxes.View entire glossary increased to CHF 534 million, 21 % above the full year 2021.

In the full year 2022, the total Group net result was CHF 116 million, versus CHF 373 million in the previous year. The net result was lifted by the net result from discontinued operations of CHF 217 million, mainly related to the gain on the PigmentsPigmentsPigments are substances used for coloring; they are used in a technical manner, for example in the manufacture of dyes, varnishes, and plastics. In 2020, Clariant launched the divestment process of its Pigments business, which was completed on 3 January 2022.View entire glossary disposal; the strong business performance of the continuing operations; and the corresponding margin improvement, while impairments had a negative impact of CHF 462 million.

Net operating cash flow for the total Group increased to CHF 502 million from CHF 363 million in the full year 2021. This development was mainly attributable to strong underlying earnings and net working capital management. The increased free cash flow of CHF 293 million compared to CHF 6 million in 2021 resulted in a conversion rate in 2022 of 36 %, versus 1 % a year ago, and is attributable to the strong operating cash flow and disciplined capital expenditures.

Net debt for the total Group decreased to CHF 750 million, versus CHF 1.535 billion recorded at the end of 2021. This development is largely attributable to a significant reduction in current financial debt and an increase in short-term deposits due to proceeds received from the divestment of the PigmentsPigmentsPigments are substances used for coloring; they are used in a technical manner, for example in the manufacture of dyes, varnishes, and plastics. In 2020, Clariant launched the divestment process of its Pigments business, which was completed on 3 January 2022.View entire glossary business and the Scientific Design Company stake.

The Board of Directors recommends an increased regular distribution of CHF 0.42 per share to the Annual General Meeting (AGM) on 4 April 2023 based on the strong performance in 2022. This distribution is proposed to be made through a capital reduction by way of a par value reduction.

Clariant aims to grow above the market to achieve higher profitability through sustainability and innovation. Clariant has become a true specialty chemicals company and confirms its 2025 ambition to deliver profitable sales growth (4 – 6 % CAGR), a Group EBITDAEBITDAEarnings before interest, taxes, depreciation, and amortization.View entire glossary margin between 19 – 21 %, and a free cash flow conversion of around 40 %.

As of 1 January 2023, Clariant will report in the business unit structure aligned with its new operating model. The Business Unit Care Chemicals includes the former Business AreaBusiness AreaFor the financial reporting, Clariant grouped its businesses in three core Business Areas: Care Chemicals, Catalysis, and Natural Resources. As of 1 January 2023, the Group conducts its business through the three newly formed Business Units Care Chemicals, Catalysts, and Adsorbents & Additives and will report accordingly as of the first quarter of 2023.View entire glossary Care Chemicals and the Business Unit Oil & Mining Services (previously part of the former Business AreaBusiness AreaFor the financial reporting, Clariant grouped its businesses in three core Business Areas: Care Chemicals, Catalysis, and Natural Resources. As of 1 January 2023, the Group conducts its business through the three newly formed Business Units Care Chemicals, Catalysts, and Adsorbents & Additives and will report accordingly as of the first quarter of 2023.View entire glossary Natural Resources). The Business Unit Catalysts is unchanged from the former Business AreaBusiness AreaFor the financial reporting, Clariant grouped its businesses in three core Business Areas: Care Chemicals, Catalysis, and Natural Resources. As of 1 January 2023, the Group conducts its business through the three newly formed Business Units Care Chemicals, Catalysts, and Adsorbents & Additives and will report accordingly as of the first quarter of 2023.View entire glossary Catalysis. The Business Unit AdsorbentsAdsorbentsUsually solid substances which are able to selectively accumulate certain substances from adjacent gaseous or liquid phases.View entire glossary & Additives is a combination of the former Business Units Functional Minerals and Additives (both previously part of the former Business AreaBusiness AreaFor the financial reporting, Clariant grouped its businesses in three core Business Areas: Care Chemicals, Catalysis, and Natural Resources. As of 1 January 2023, the Group conducts its business through the three newly formed Business Units Care Chemicals, Catalysts, and Adsorbents & Additives and will report accordingly as of the first quarter of 2023.View entire glossary Natural Resources).

From a macroeconomic perspective, Clariant anticipates a soft recessionary environment in the first half of 2023, compared to a very strong first half of 2022, and expects to see an economic recovery in the second half of 2023 while uncertainties and risks related to the economic environment remain. For the full year 2023, Clariant expects to achieve sales of around CHF 5 billion, including a net negative top line impact of around CHF 130 million from divestments and the bolt-on acquisition. Clariant aims to slightly improve its year-on-year reported EBITDAEBITDAEarnings before interest, taxes, depreciation, and amortization.View entire glossary margin due to a continued recovery in Catalysts, which is expected to offset lower sales volumes in the other business units. Clariant expects an increasing negative annualized sunliquid® impact and a continued inflationary environment given the current economic outlook, counterbalanced by savings benefits from the restructuring programs.

Q&A

Bill Collins

Chief Financial Officer (CFO)

Member of the Executive Steering CommitteeExecutive Steering CommitteeThe Executive Steering Committee (ESC) is authorized by the Board of Directors to steer the company. It has overall strategic and financial responsibility, including for our profit and loss statement. The ESC consists of the Chief Executive Officer (CEO), the Chief Financial Officer (CFO), and the three Business Presidents.View entire glossary

You joined Clariant in July 2022. What have been your first impressions in the last months?

Prior to joining, I had heard many great things about Clariant as part of my due diligence, and I’m happy to say that the reality matches my expectations. It’s an exciting time to be at Clariant – we can focus on building a structure and culture truly focused on serving our customers and thus growing the company.

Joining Clariant also meant moving to Switzerland from the US. Have you settled in yet?

Absolutely. As our recent relocation to Switzerland is now our tenth international move, we’re becoming experts in the process. Plus, having lived in Switzerland before, coming to Basel has been an easy transition.

In your first months here at Clariant, you already achieved a significant success by placing a green bond in the amount of CHF 175 million. What does this mean to you personally?

This transaction shows how the finance function can contribute to sustainability across the Group. The bond allowed sustainability-driven investors to participate in the sustainability leadership of our company. We use these proceeds to finance assets for the transition toward a low-carbon and environmentally sustainable society. So, the bond allows us to make clear progress toward our 2030 emission targets. And our investors profit from the fact that these assets will make Clariant an even more future-proof bond issuer.

What is your opinion of Clariant’s financial performance in 2022?

I consider it to be a significant accomplishment that Clariant grew sales so notably over the year, by 24 % in local currency. Despite the tough inflationary environment, we achieved strong operating performance and full year EBITDAEBITDAEarnings before interest, taxes, depreciation, and amortization.View entire glossary margin of 16.4 % – excluding restructuring charges of CHF 40 million related to the implementation of the new operating model – slightly exceeding the full year 2022 guidance we previously communicated. We increased the free cash flow conversion rate to 36 % due to the strong operating cash flow and disciplined capital expenditures. In my view, these solid results have brought us a step closer to achieving Clariant’s financial targets for 2025.