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Clariant's third quarter 2019 results demonstrate ‘resilience’
FINANCIALS
from E45.63 million in 1H 2018/2019 to E52.26 million for the same period of its current financial year, while the company’s operating result rose by 32.5% from E4.64 million to E6.15 million. During the six-month period ended 30 September 2019, revenue growth was achieved in all three of Holland Colours’ strategic focus segments (packaging, building and construction, and coatings and sealants), with packaging showing the highest growth, and across its three geographically based divisions as well. The strength of the US dollar was responsible for 2.5% of the revenue increase, the company notes. Sales in Europe accounted for 53% of the half-year total for 2019/2020 at E27.81 million, up 13% compared to the same period of the previous year. The increase was largely due to higher volumes, Holland Colours reports. Each focus market contributed to the growth. The division’s gross margin improved accordingly and, although operating costs also increased, the operating result reached E2.08 million, up some 55% compared to E1.34 million in 1H 2018/2019. Revenue for the Americas division (31% of total) was E16.35 million, which represents an 8% rise year on year when measured in US dollars, the division’s reporting currency. Packaging was the strongest contributor, Holland Colours reports. The operating result improved by 40% to E1.4 million. In Asia (almost 16% of total revenues), sales climbed by 14% compared to the 2018/2019 half-year to reach E8.11 million; the division’s operating result increased by 36% to E1.7 million. In its discussion of the half-year results, the company also noted on-going shortages in the market for certain raw materials, which is putting pressure on related prices, and a significant increase in capital expenditure (from E0.8 million in 1H 2018/2019 to E2.2 million) due to investments in new products and capacity expansions [e.g. ADPO, November 2019, p. 7]. More information: www.hollandcolours.com
Clariant’s third quarter 2019 results demonstrate ‘resilience’
S
witzerland’s Clariant reported sales from continuing operations of CHF1.043 billion (c. E960 million) for the third quarter of 2019, a decline of 1% from sales of CHF1.054 billion in 3Q 2018 but an increase of 2% in local currency terms. The sales
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Additives for Polymers
growth was achieved despite a weakening economic environment, the company comments, with higher volumes and pricing both contributing. While Clariant’s sales in developing markets grew during the quarter those in the largest regional markets declined. Thus, sales weakened by 3% in Europe, by 5% in North America and by 8% in China, although increasing by 4% in Asia as a whole. In the Middle East & Africa sales grew by 15% and in Latin America by 13%. The company’s continuing operations EBITDA before exceptional items fell slightly by 1% year on year to CHF169 million, with the associated margin unchanged at 16.2%. However, EBITDA after exceptional items increased by 6% in Swiss francs to CHF151 million in 3Q 2019 as a result of higher operating profitability and lower exceptional costs, with the associated margin increasing to 14.5% from 13.5% in 3Q 2018, the company reports. According to Clariant’s executive chairman Hariolf Kottmann, the results reflect the ‘resilience and quality’ of the company’s continuing businesses, particularly ‘in light of the worsening economic environment’ in the third quarter. With Clariant pursuing separate divestments for its Pigments and Masterbatches businesses [ADPO, November 2018, pp. 5–6, & September 2019, p. 6] these are now classed as discontinued operations, while the Additives business has been absorbed into the Natural Resources Business Area (BA). The company reported significantly weaker sales for the Additives business in 3Q 2019 compared to a record-high level the previous year because of challenging market dynamics; however, sales for Natural Resources as a whole remained unchanged in local currency at CHF454 million against the strong 2018 third quarter. The business area’s EBITDA after exceptional items increased by 11% year on year to CHF71 million in 3Q 2019 and the related margin likewise increased significantly to 15.6% from 13.6% in 3Q 2018, due to targeted growth in higher margin segments in Oil Services and lower exceptional items, the company says. For the first nine months of 2019, the Natural Resources BA generated sales of CHF1.401 billion, level with the same period of 2018 in Swiss francs but up 4% in local currency terms. Additives sales were unable to match the high level achieved during the same period of 2018, which Clariant notes was largely due to ‘less dynamic’ automotive and electrical & electronics sectors. EBITDA after exceptional items was 5% higher at CHF219 million in 3Q 2019 while the margin rose to 15.6% from 14.8% year on year, due in part to the inten-
December 2019
HEALTH & SAFETY
sified focus on more value-added applications. Additives partly compensated for volume losses via strict cost-control measures, according to Clariant. Although they are being sold separately, results for the company’s Masterbatches and Pigments units are currently reported together, alongside Healthcare Packaging, as discontinued operations. In both the three- and ninemonth periods to the end of September 2019, sales for these operations fell 2% year on year in local currencies – to CHF528 million and CHF1.617 billion, respectively – due to the sluggish economic situation. EBITDA after exceptionals also decreased year on year in both reporting periods due to the sales contraction and increased onetime costs required by the separation and carve-out of the discontinued businesses, Clariant comments. The divestments of the Masterbatches and Pigments operations are expected to be concluded by the end of 2020. [NB: As this issue went to press, Clariant announced that agreement had been reached to sell the Masterbatches business to US company PolyOne. Further details will be provided in a later issue.] More information: www.clariant.com
ENVIRONMENT, HEALTH AND SAFETY ISSUES European Commission to classify powdered TiO2 as a suspected carcinogen
T
he European Commission (EC) decided in October to proceed with plans to classify titanium dioxide (TiO2) in powder form as ‘suspected of causing cancer in humans’ due to concern over potential inhalation hazards. In addition to this Category 2 carcinogen classification, the pigment
December 2019
is being added to the list of substances under the Regulation on Classification, Labelling and Packaging of Substances and Mixtures (CLP). The decision comes despite September’s Competent Authorities Meeting for REACH and CLP Regulations (CARACAL), at which a majority of experts for the European Union (EU) member states reportedly rejected the proposed regulatory package, as a procedural change earlier this year now allows so-called ‘delegated acts’ to be fast-tracked by the EC without obtaining the approval of the experts. Unless an objection were raised by either the European Parliament or Council of Ministers within two months of the EC’s October decision, the classification will come into force after a transitional period of 18 months, presumably from the summer of 2021. This would mean that all products, including PVC window profiles, laminate flooring and cans of paint, incorporating powdered TiO2 and intended for sale in the EU would have to be labelled as carcinogenic. Liquid mixtures such as coatings, paints and printing inks would also have to carry a warning on their packaging regarding spray applications. The classification is strongly opposed by industry bodies, including the Titanium Dioxide Manufacturers Association (TDMA) and Der Verband der Mineralfarbenindustrie (VDMI; the German association representing mineral pigment and masterbatch producers), who argue that TiO2 is not toxic but hazardous due to its particulate nature, which should be addressed instead via harmonized, Europe-wide occupational exposure limits. They maintain that applying the Category 2 classification is disproportionate to the risks and will result in products including plastics and paints being labelled as hazardous even where there is no likelihood of TiO2 inhalation. Recycling and waste are areas of critical concern, says the VDMI, as any product containing more than 1% of TiO2 would become a hazardous waste and therefore no longer recyclable. This would affect the disposal of about half of all plastic products and building rubble. More information: www.tdma.info
Additives for Polymers
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from E45.63 million in 1H 2018/2019 to E52.26 million for the same period of its current financial year, while the company’s operating result rose by 32.5% from E4.64 million to E6.15 million. During the six-month period ended 30 September 2019, revenue growth was achieved in all three of Holland Colours’ strategic focus segments (packaging, building and construction, and coatings and sealants), with packaging showing the highest growth, and across its three geographically based divisions as well. The strength of the US dollar was responsible for 2.5% of the revenue increase, the company notes. Sales in Europe accounted for 53% of the half-year total for 2019/2020 at E27.81 million, up 13% compared to the same period of the previous year. The increase was largely due to higher volumes, Holland Colours reports. Each focus market contributed to the growth. The division’s gross margin improved accordingly and, although operating costs also increased, the operating result reached E2.08 million, up some 55% compared to E1.34 million in 1H 2018/2019. Revenue for the Americas division (31% of total) was E16.35 million, which represents an 8% rise year on year when measured in US dollars, the division’s reporting currency. Packaging was the strongest contributor, Holland Colours reports. The operating result improved by 40% to E1.4 million. In Asia (almost 16% of total revenues), sales climbed by 14% compared to the 2018/2019 half-year to reach E8.11 million; the division’s operating result increased by 36% to E1.7 million. In its discussion of the half-year results, the company also noted on-going shortages in the market for certain raw materials, which is putting pressure on related prices, and a significant increase in capital expenditure (from E0.8 million in 1H 2018/2019 to E2.2 million) due to investments in new products and capacity expansions [e.g. ADPO, November 2019, p. 7]. More information: www.hollandcolours.com
Clariant’s third quarter 2019 results demonstrate ‘resilience’
S
witzerland’s Clariant reported sales from continuing operations of CHF1.043 billion (c. E960 million) for the third quarter of 2019, a decline of 1% from sales of CHF1.054 billion in 3Q 2018 but an increase of 2% in local currency terms. The sales
10
Additives for Polymers
growth was achieved despite a weakening economic environment, the company comments, with higher volumes and pricing both contributing. While Clariant’s sales in developing markets grew during the quarter those in the largest regional markets declined. Thus, sales weakened by 3% in Europe, by 5% in North America and by 8% in China, although increasing by 4% in Asia as a whole. In the Middle East & Africa sales grew by 15% and in Latin America by 13%. The company’s continuing operations EBITDA before exceptional items fell slightly by 1% year on year to CHF169 million, with the associated margin unchanged at 16.2%. However, EBITDA after exceptional items increased by 6% in Swiss francs to CHF151 million in 3Q 2019 as a result of higher operating profitability and lower exceptional costs, with the associated margin increasing to 14.5% from 13.5% in 3Q 2018, the company reports. According to Clariant’s executive chairman Hariolf Kottmann, the results reflect the ‘resilience and quality’ of the company’s continuing businesses, particularly ‘in light of the worsening economic environment’ in the third quarter. With Clariant pursuing separate divestments for its Pigments and Masterbatches businesses [ADPO, November 2018, pp. 5–6, & September 2019, p. 6] these are now classed as discontinued operations, while the Additives business has been absorbed into the Natural Resources Business Area (BA). The company reported significantly weaker sales for the Additives business in 3Q 2019 compared to a record-high level the previous year because of challenging market dynamics; however, sales for Natural Resources as a whole remained unchanged in local currency at CHF454 million against the strong 2018 third quarter. The business area’s EBITDA after exceptional items increased by 11% year on year to CHF71 million in 3Q 2019 and the related margin likewise increased significantly to 15.6% from 13.6% in 3Q 2018, due to targeted growth in higher margin segments in Oil Services and lower exceptional items, the company says. For the first nine months of 2019, the Natural Resources BA generated sales of CHF1.401 billion, level with the same period of 2018 in Swiss francs but up 4% in local currency terms. Additives sales were unable to match the high level achieved during the same period of 2018, which Clariant notes was largely due to ‘less dynamic’ automotive and electrical & electronics sectors. EBITDA after exceptional items was 5% higher at CHF219 million in 3Q 2019 while the margin rose to 15.6% from 14.8% year on year, due in part to the inten-
December 2019
HEALTH & SAFETY
sified focus on more value-added applications. Additives partly compensated for volume losses via strict cost-control measures, according to Clariant. Although they are being sold separately, results for the company’s Masterbatches and Pigments units are currently reported together, alongside Healthcare Packaging, as discontinued operations. In both the three- and ninemonth periods to the end of September 2019, sales for these operations fell 2% year on year in local currencies – to CHF528 million and CHF1.617 billion, respectively – due to the sluggish economic situation. EBITDA after exceptionals also decreased year on year in both reporting periods due to the sales contraction and increased onetime costs required by the separation and carve-out of the discontinued businesses, Clariant comments. The divestments of the Masterbatches and Pigments operations are expected to be concluded by the end of 2020. [NB: As this issue went to press, Clariant announced that agreement had been reached to sell the Masterbatches business to US company PolyOne. Further details will be provided in a later issue.] More information: www.clariant.com
ENVIRONMENT, HEALTH AND SAFETY ISSUES European Commission to classify powdered TiO2 as a suspected carcinogen
T
he European Commission (EC) decided in October to proceed with plans to classify titanium dioxide (TiO2) in powder form as ‘suspected of causing cancer in humans’ due to concern over potential inhalation hazards. In addition to this Category 2 carcinogen classification, the pigment
December 2019
is being added to the list of substances under the Regulation on Classification, Labelling and Packaging of Substances and Mixtures (CLP). The decision comes despite September’s Competent Authorities Meeting for REACH and CLP Regulations (CARACAL), at which a majority of experts for the European Union (EU) member states reportedly rejected the proposed regulatory package, as a procedural change earlier this year now allows so-called ‘delegated acts’ to be fast-tracked by the EC without obtaining the approval of the experts. Unless an objection were raised by either the European Parliament or Council of Ministers within two months of the EC’s October decision, the classification will come into force after a transitional period of 18 months, presumably from the summer of 2021. This would mean that all products, including PVC window profiles, laminate flooring and cans of paint, incorporating powdered TiO2 and intended for sale in the EU would have to be labelled as carcinogenic. Liquid mixtures such as coatings, paints and printing inks would also have to carry a warning on their packaging regarding spray applications. The classification is strongly opposed by industry bodies, including the Titanium Dioxide Manufacturers Association (TDMA) and Der Verband der Mineralfarbenindustrie (VDMI; the German association representing mineral pigment and masterbatch producers), who argue that TiO2 is not toxic but hazardous due to its particulate nature, which should be addressed instead via harmonized, Europe-wide occupational exposure limits. They maintain that applying the Category 2 classification is disproportionate to the risks and will result in products including plastics and paints being labelled as hazardous even where there is no likelihood of TiO2 inhalation. Recycling and waste are areas of critical concern, says the VDMI, as any product containing more than 1% of TiO2 would become a hazardous waste and therefore no longer recyclable. This would affect the disposal of about half of all plastic products and building rubble. More information: www.tdma.info
Additives for Polymers
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