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Clariant sets new financial targets for 2025 and announced accelerated growth and improved profitability

Company News > Clariant sets new financial targets for 2025 and announced accelerated growth and improved profitability

Clariant, a specialty chemical company, announced new financial targets for 2025 and a new purpose-driven corporate strategy at its recent capital Markets Day. With its high-growth, high-margin specialty product portfolio, Clariant has undertaken strategic initiatives to accelerate sustainably driven innovation, expand its global reach with a focus on China, and make potential bolt-on acquisitions on a compliant basis to create value and achieve profitable growth. As a result, Clariant expects sales to grow 4-6 per cent a year by 2025, earnings before interest, tax, depreciation and amortisation to reach 19-21 per cent and a free cash flow conversion rate of about 40 per cent.

"Our new tenet of 'innovative chemistry creates harmony between man and nature' is at the heart of all our work. Our leadership in sustainability, together with our customer-centric philosophy and sustainability-focused innovation pipeline, make us the rightful leader in specialty chemicals." Conrad Keijzer, Clariant's chief executive, said: "We are committed to increasing shareholder value and believe that by implementing our new corporate strategy and taking advantage of great business opportunities, we will be able to outperform the market and further improve our profitability."

Achieve above-market growth through sustainably driven innovation pipelines and regional expansion

Sustainable development and innovation are the two strategic engines of Clariant. Clariant's approximately 1% annual growth is attributed to sustainably driven innovation, particularly in bio-based products, decarbonization and recycling. One of the key drivers of this growth is Clariant's EcoTain® label, which is awarded for products with market-leading sustainability characteristics.

The company reaffirmed its 2030 targets to reduce greenhouse gas emissions in range 1 and 2 by 40% and in range 3 by 14%. To this end, Clariant will increase its investment, investing about 30 million Swiss francs a year in sustainable development, with a focus on greenhouse gas reduction. A focused investment in bio-based products and achieving decarbonization and recycling will create above-market growth for the company in the coming years.

Following increased investments in projects such as the SunLiquid ® second-generation bioethanol plant, Clariant's capital expenditure will return to SFR280 to SFR320 million by 2025, with a focus on supporting growth and expansion in China. The Group will spend more than one-third of its growing capex in China to promote sustainable solutions in the world's largest and fastest growing specialty chemicals market. With a new facility producing catalysts and halogen-free flame retardants and an advanced innovation centre in Shanghai, Clariant will increase the proportion of local production from 35 per cent to more than 50 per cent, aiming to generate about 14 per cent of group sales in China by 2025.

New Group financial targets to increase shareholder value by substantially increasing sales, Group EBITDA and free cash flow conversion by 2025 - enhancing earnings growth and synergies projects

Stephan Lynen, Clariant's chief financial officer, said: "Based on our transformed and highly attractive specialty product portfolio, sustainably guided differentiated development strategy, innovation-driven growth, and further synergies, we have set new financial targets of 4-6% cagR and 19-21% EBITDA margin by 2025. Given our earnings growth and constrained capital, our free cash flow conversion target increased to around 40%."

Growth will boost EBITDA margins by about two-thirds, while synergies will contribute about a third. Clariant is currently engaged in one of the largest and most comprehensive efficiency programs in its history. These projects reduced costs by a total of 240 million Swiss francs. Excluding redundant costs and savings from non-continuing operations, savings from continuing operations were approximately CHF 110 million, including further savings of CHF 60 million over the next few years, which will contribute to the expected improvement in EBITDA. Following a significant investment expansion phase, Clariant will meet its new financial targets through sales growth, cost containment, efficiency improvements and the normalization of capital expenditure.

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Clariant sets new financial targets for 2025 and announced accelerated growth and improved profitability

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