Q&A with our CFO Bill Collins

Given the difficult business environment in 2023, which measures did you take as CFO to steer the financial performance of Clariant?

Steering the results of the company during such a difficult macroeconomic environment can be quite a challenge. But I am very pleased with how Clariant performed in 2023. We implemented clear accountabilities around market segmentation including internal segment margin targets. Also, we looked closely at the volume impacts on our plant manufacturing costs and adjusted accordingly. And we realigned our functional cost structures to top quartile external benchmarks. Last but not least, we focused on working capital management. All of these measures have significantly impacted our EBITDA margins as well as free cash flow.

How did the shutdown of the sunliquid? plant in Podari impact the 2023 results?

The shutdown costs total CHF 53 million. And there is an CHF 80 million impairment, which does not impact EBITDA.

That is a lot of money.

Indeed, but you need to consider that the negative operational impact in 2023 added up to CHF 43 million. It is critically important that we took the right decision to resolve a significant issue that has been negatively impacting our Group results.

In October 2023, Clariant announced the agreement to acquire Lucas Meyer Cosmetics for a total consideration of about CHF 720 million. How will this change the financial performance of Clariant?

Lucas Meyer Cosmetics has an impressive track record in terms of financial performance, profitability, and cash generation. It is also an asset-light business with outsourced production. We see a strong strategic fit and high complementarity to our current Care Chemicals business, which is why we want to increase Lucas Meyer Cosmetics’ annual sales from around USD 100 million currently to USD 180 million by 2028.

And how will this create value for Clariant’s shareholders?

Lucas Meyer Cosmetics is accretive to Clariant’s growth, margin, and cash flow profile. We expect the transaction to be mid-single digit percentage accretive to our earnings per share from year one onwards.

How will you finance this planned acquisition?

The funding is secured by a fully committed bridge facility, which is intended to be refinanced soon after completion.

Growth by acquisitions is one element of Clariant’s growth strategy. Organic growth is another. What about Clariant’s CAPEX?

In 2023, we continued our investment program in China to develop capacity specifically to serve the Chinese market while reducing the reliance on imports. Being a local player is a significant element of our growth strategy. But it is also important to note that we do not always have to invest more CAPEX to drive higher volumes. We have capacity available in a number of plants around the world to satisfy local demand.