“In a low demand environment, the focus on generating cash and cost savings had the expected results,” Harriolf Kottmann, CEO of Clariant (Muttenz / Switzerland; www.clariant.com) said, commenting on the Q1 2009 performance. Kottmann said strong cash flow further strengthened liquidity and increased the financial headroom for restructuring. At the same time, inventory devaluations and the cost of operating underutilised capacity led to an EBIT loss of CHF 13m (EUR 8.6m) that was mitigated by cost savings. Quarterly sales of CHF 1.6 bn were down 24% against the 2008 period.

As management does not expect “a sustainable recovery in demand” in the short- to medium term, Clariant will focus its ongoing restructuring efforts on the most severely affected divisions, including Pigments & Additives, which posted a quarterly EBIT loss of CHF 40m on the back of a sales decline to 38% to CHF 328m. This compares with a profit of CHF 59m in the “extraordinarily strong” period of last year. Even though order intake “showed a stabilising trend” toward the end of the quarter, a turnaround is not in sight, forcing the group to implement temporary plant closures and “further cost-saving measures.”

The Clariant Masterbatch division, hit by “an unprecedented plunge in demand – especially in Germany” – also posted losses in Q1, with EBIT a negative CHF 3m compared with a profit of CHF 30m a year earlier. Sales shrank by 24% to CHF 260m. This division, too, was impacted by low capacity utilisation and inventory reductions. In the coming months, masterbatch capacity will continue to be reduced and cost-savings moves accelerated, Clariant said.