Clariant reports Q3 improvements but still far from sustainable recovery

• Sales in Q3 down 14% in local currency and 19% in CHF

• Operating income before exceptional items decreased to CHF 107 million from CHF 178 million in the third quarter 2008, but improved from CHF 69 million in the second quarter 2009

• Cash flow from operations improved to CHF 193 million from CHF 147 million in the previous-year period

• Net debt reduced to CHF 751 million from CHF 1 209 million at year-end 2008

• Outlook: For the full year 2009, Clariant expects sales in local currencies to decrease 16-20% compared to 2008. Cash flow is expected to remain strong as a result of ongoing stringent net working capital management. In the traditionally weak fourth quarter, Clariant expects an improved operating income before exceptional items compared to the fourth quarter of 2008

4 November 2009, Muttenz - Clariant, a world leader in specialty chemicals, has today announced sales of CHF 1.691 billion in the third quarter, compared to CHF 2.094 billion during the same period in the previous year. This represents a 19% decline in Swiss Francs, and 14% in local currency.

Sales stabilized during the third quarter. Although there was a modest pick up in some businesses and regions, overall demand remained at low levels with no signs of a sustainable upward trend. Volumes declined by 11% and prices were 3% lower compared to the third quarter 2008. Raw material costs were 16% lower compared to the same period a year ago, but 1% higher compared to the second quarter 2009. The costs of capacity underutilization were lower than in the two previous quarters as a consequence of higher utilization rates, the shutting down of plants and a reduction in workforce - either temporarily or permanently.

Despite the pressure on volumes, Clariant maintained a stringent focus on managing its gross margin which increased to 30.1% from 29.4% in the previous-year period.

CFO Patrick Jany commented: “While we have mitigated the impact of the economic crisis on our gross profit, the risk of possible gross margin erosions in the months to come has risen due to increasing raw material costs. We will closely observe this unfavourable development and defend our margin. If necessary, we are ready to deal with potential volume impacts by further reducing production capacities.”

CEO Hariolf Kottmann commented: “The focus on improving cash flow, decreasing costs and reducing complexity continued to have a positive impact on our results. Sales declines of more than 20% in some businesses indicate that despite stabilization in demand we are still far from a sustainable recovery. In this environment, our cost savings have not yet been sufficient to fully compensate for the demand weakness. As we need to close the performance gap to our peers and as we don’t see a sustainable recovery in our industry in the next quarters, we will continue to implement additional restructuring and cost saving measures.”

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