Clariant AG Reports Decline in EBITDA and Sales for Q3

Specialty chemicals company Clariant AG announced a 13% decrease in EBITDA for the third quarter, with sales falling by 4%. The report also notes challenges ahead, affecting investor sentiment.

Date: 29-10-2024

AI Rating: 4

The report indicates that Clariant AG is facing several challenges that could negatively impact its stock price.

First, the third-quarter Group EBITDA saw a decrease of 13% to 139 million Swiss francs, down from 159 million francs in the previous year. Coupled with this, the EBITDA margin dropped to 14%, below last year's margin of 15.4%. This reduced profitability could be a significant concern for investors focused on earnings performance.

Furthermore, the underlying EBITDA, which excludes exceptional items, also declined by 5% to 155 million francs from 164 million francs a year ago. The underlying EBITDA margin similarly fell to 15.6% from 15.9%, indicating a consistent weakening in earnings quality.

Additionally, total sales for the quarter decreased by 4% to 991 million francs compared to 1.03 billion francs in the previous year, while local currency sales experienced a 1% decline. The decline in volume by 3% further exacerbates the pressure on revenues, despite stable pricing across all business units.

The report shares a cautious outlook as Clariant anticipates a low single-digit decline in local currency sales for fiscal 2024, revised from a previously expected flat growth. This shift signals an ongoing struggle to maintain sales performance in a challenging economic environment.

The acquisition of Lucas Meyer Cosmetics contributed positively by 2% to Group sales, illustrating some organic growth. However, growth in Care Chemicals, fueled by the aforementioned acquisition, and Adsorbents & Additives is expected to be insufficient to offset the anticipated decline in Catalysts sales.

Looking ahead, Clariant's reaffirmation of medium-term targets suggests a commitment to long-term recovery despite short-term challenges. They project a continued improvement in profitability for 2025, with an expected EBITDA margin of 17% to 18% based on localized sales growth between 3% and 5%. However, uncertainties in the macroeconomic environment may hinder these prospects.

Stocks: CLZNY