Clariant AG

Ladies and gentlemen, welcome to the Clarion's third quarter nine-month figures 2024 conference call and live webcast. I'm Sandra, the chorus call operator. I would like to remind you that all participants have been listened only mode and the conference has been recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Andreas Schwarzwald, the Head of Investor Relations. Please go ahead, sir.

Thank you, Sandra, and ladies and gentlemen, good afternoon. It's Andreas Schwarzwald, and it's my pleasure to welcome you to this call. Joining me today are Conrad Kaiser, Clarion's CEO, and Bill Collins, Clarion's CFO. Conrad will start today's call by providing a summary of the third quarter developments, followed by Bill, who will guide us through the group's financials for the period. Konrad will then conclude with the outlook for the full year 2024 and the meeting term. There will be a Q&A session following our presentation. At this time, all participants are in listen-only mode. I would like to remind all participants that the presentation includes forward-looking statements which are subject to risks and uncertainty. Listeners and readers are therefore encouraged to refer to the disclaimer on slide two of today's presentation. As a reminder, this conference call will be recorded. A replay and a transcript of the call will be available on the investor relations section of the Clarion website. Let me now hand over to Conrad to begin the presentation. Thank you, Andreas.

Good afternoon, everyone, and thank you for joining this call. In the third quarter of 2024, we delivered sales of 991 million Swiss francs. In local currency, this corresponds to a 1% decrease, with a negative currency impact of 3% in the reported figure. Pricing was stable in all business units, reflecting our well-established pricing ability in a deflationary environment, with our year-on-year raw materials down 5%. Volumes were down 3% as growth in absorbance and additives and care chemicals was offset by lower than expected catalyst volumes against a strong comparison base. Growth of Lucas Meyer cosmetics had an additional positive impact of 2% on reported sales. Uncertainties and risks remain in the chemical industry. and expectations of a recovery are shifting to 2025. According to Oxford Economics, manufacturing PMIs further deteriorated in September in all key regions except for China. All regions remained below 50. Europe declined to 45.0. The US declined to 47.3, while China increased to 49.8. The European Chemical Industry Council reported that the weak demand and declining business confidence continues to challenge the European chemical industry. The insufficient demand remains the main limiting factor to chemical production, which is up 3.6% during the first seven months of this year, albeit from a very low base and still well below pre-COVID levels. Oxford Economics projects around 3% increase in chemical production in Europe in 2024 versus 2023. In China, the largest chemical market, Oxford Economics expect chemical production to grow by almost 7% in 2024, fueling global growth of chemical production of close to 4%. According to the American Chemistry Council, in September, chemical production in the US only slightly increased by 0.2% year-on-year. Oxford Economics projects a 1.1% increase of chemical production in the US in 2024. Moving on to our performance by geography. Local currency sales in the Americas declined by 6% organically. with volume growth in care chemicals and absorbance and additives offset by lower sales in catalysts. In Europe, Middle East, and Africa, sales increased by 1% organically in local currency. Volume growth in absorbance and additives and catalysts compensated for lower volumes in care chemicals and slightly lower pricing in all business units. Local currency sales in Asia Pacific were down 5% organically, with a 13% organic decrease in China. Due to the volume decline in catalysts, more than offsetting growth in chemicals and absorbents. The lower catalyst volumes resulted from weak new-build activities in the industry in China. Pricing was slightly positive in all business units. In terms of profitability, reported EBITDA decreased by 13% year-on-year to 139 million Swiss francs, with a corresponding margin of 14%. The impact of lower catalyst volumes was only partially offset by improved operating leverage, higher volumes, and a lower cost base, particularly in additives. In addition, the reduced financial impact from sun liquids contributed positively in the quarter. Furthermore, we identified additional opportunities for restructuring in corporate functions, resulting in charges of 9 million Swiss francs against full year annual run rate savings of 6 million Swiss francs. EBITDA before exceptional items decreased by 5% to 155 million Swiss francs. This represents a resilient margin of 15.6% versus 15.9% the prior year, despite lower sales due to effective pricing and cost management and the accretive Lucas Meyer cosmetics acquisition. Last Friday, the Board of Directors nominated Ben van Beurden as a candidate for the position of the Clarion Chairman and as a member of the Board of Directors. If elected by the AGM, on April 1st next year. Ben brings an extensive background in the energy and chemical sectors. In addition, Clariant would benefit from his wealth of experience in leading a global organization. Most recently, Ben served as CEO of Shell from 2014 to 2023. Ben van Beurden would succeed Günter von Au, who would step down after serving as board and as a chairman of the Board of Directors since 2021. The board and the management team extends its sincere gratitude to Gunther Von Aue for his dedicated service and significant contributions to Clariant during his tenure. We thank Gunther for his commitment and look forward to benefit from Ben's insights and leadership as we continue to position Clariant as a leader in innovation and sustainable solutions. On Sunliquid, the restructuring and downsizing activities are mostly completed, and we have resolved related contractual relationships with a positive result. Therefore, we reversed 36 million Swiss francs of non-cash impairments related to right of use assets, which were originally booked in the fourth quarter of 2023. In 2024, we expect the total operational impact to remain unchanged, but we have reduced our exceptional and total cash outflow expectations. Bill will come back to this later. We continue to deliver on our performance improvement programs. With 7 million Swiss francs savings achieved in the third quarter, we are well on track to achieve our increased savings targets of 175 million Swiss francs by 2025, with over 90% or 162 million Swiss francs already achieved as of the third quarter 2024. With that, I now hand over to Bill for further details on our business performance in the third quarter.