Clariant AG

Ladies and gentlemen, good afternoon, Sandra Zandra. My name is Andreas Schwarzwälder, and it's my pleasure to welcome you to this call. Joining me today are Konrad Kaeser, Clarion's CEO, and Bill Collins, Clarion's CFO. Konrad will start today's call by providing the 2020 for fourth quarter and full year key messages and financial highlights, followed by Bill, who will guide us through the business unit results and performance improvement programs. Konrad will then conclude with the outlook for the full year 2025. 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 uncertainties. Listeners and readers are therefore encouraged to refer to the disclaimer on slide two of today's presentation. As a reminder, the conference call is being recorded. A replay and transcript of the call will be available on the investor 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 all for joining this call. We are pleased to present Clarion's performance for the fourth quarter, full year 2024. Overall, this was a year where we showed our resilience, delivering a robust set of numbers despite a challenging environment. Let me start by highlighting our key achievements. We delivered on our full-year guidance with sales of 4.152 billion Swiss francs. This represents a low single-digit percentage decline against the prior year. Our reported EBITDA margin was 15.8%, or 16% before exceptional items. Again, in line with our guidance. I'm also particularly proud that we delivered a solid cash conversion of 32%, despite the cash outflows related to Sunliquid. Our 2024 performance enables us to propose a stable distribution to shareholders of 42 Rappen, 0.42 Swiss francs per share. Looking ahead for 2025, we face an environment with limited indications of a strong economic recovery. Uncertainties remain, including potential tariffs and trade tensions. However, we are firmly committed to deliver our innovations and savings initiatives that we presented at our investor day last November. I'm pleased to announce that the Lucas Meyer cosmetics integration and business performance remain well on track. We delivered high single-digit growth in an environment where luxury cosmetic brands faced some weakening demands. Our performance improvement programs are firmly on track. We have already achieved 96% of savings from our 175 million Swiss francs cost savings program. And in November 2024, we announced a new savings programme which is set to deliver 18 million Swiss francs by 2027. We expect a significant contribution from these measures to flow through during this year. In 2025, we expect to book around 75 million Swiss francs restructuring charges related to this new savings programme. We executed the closure and downsizing activities related to Sunliquid, and we do not expect any further negative impacts from this activity in 2025. We made significant progress towards our non-financial and sustainability targets in 2024. Our DART rate declined by 19% and the 2024 rate of 0.17 reflects a top quartile performance in the chemical industry. Underscoring our commitment to sustainability, we achieved a 9% reduction in Scope 1 and 2 emissions and a 5% reduction in Scope 3 compared to 2023. Our sustainability ratings reflect strong progress in this area. In the latest Carbon Disclosure Project score, Clarion achieved an upgrade from B to an A- rating in climate. Regarding our outlook for 2025, we are guiding to the lower end of the 3% to 5% local currency sales growth, with an underlying EBITDA margin improvement to 17% to 18% before exceptional items. We will provide more detail on this later. Now, looking at our fourth quarter performance. We delivered sales of around 1.1 billion Swiss francs. In local currency, this corresponds to a 5% year-on-year increase. In Swiss francs, the reported growth was 3%. We maintain pricing discipline across our portfolio, with year-on-year increases in catalysts and adsorbents and additives. Care chemicals pricing stabilized, driven by formula-based pricing in a deflationary environment. Volumes grew 1% overall as grossing catalysts and adsorbents and additives offset a flat performance in care chemicals, where the relatively mild weather in Europe impacted the seasonal aviation and refinery businesses. The acquisition of Lucas Meyer Cosmetics had a positive scope impact of 2%. Turning to profitability, our reported Q4 EBITDA increased by 69% to 179 million Swiss francs, corresponding to a 16.4% EBITDA margin. This represents a 640 basis point improvement versus the fourth quarter of 2023, when we incurred restructuring expenses of 43 million Swiss francs, mostly relating to sun liquid. The improvement was also driven by a strong revenue performance in catalysts and in adsorbents and additives, offsetting the lower volumes in chemicals. EBITDA, before exceptional items, increased by 1% to 160 million Swiss francs, representing an underlying margin of 14.7% in line with prior year. This result demonstrates the resilience of our portfolio and the hard work of our teams who succeeded to maintain our profitability in a challenging environment. With that, I now head over to Bill for further details on our business performance in the fourth quarter.

Thank you, Conrad, and good afternoon, everyone. I will now discuss our fourth quarter development by business unit, starting with Care Chemicals. We recorded flat organic growth in local currency with a slight organic decline in volumes due to lower seasonal businesses and stable pricing year on year. Including Scope, sales grew by 4% in local currency, driven by the positive contribution of Lucas Meyer Cosmetics. On a quarterly sequential basis, sales increased by 10% in local currency due to volume growth. We recorded strong double-digit organic sales growth in Crop Solutions, with strong volume growth as inventory levels across the value chain normalized. Industrial application sales grew at a mid-single-digit percentage rate organically, with both price and volumes up. Personal and home care sales saw slight organic growth, driven by volumes as pricing was flat. Sales in base chemicals declined due to lower seasonal sales in aviation and refinery. Oil services sales declined against a strong comparison base due to lower volumes. In mining solutions, increased pricing did not fully offset the impact of lower volumes. Regionally, sales increased organically in the Americas and Asia Pacific, while sales in EMEA decreased at a low single-digit percentage rate. We recorded EBITDA of 90 million Swiss francs versus 110 million Swiss francs in the fourth quarter of 2023. This translated into a margin of 16.1% versus 20% in the prior year. Lucas Meyer Cosmetics positively contributed to EBITDA. We had a negative impact from lower seasonal sales and lower fixed cost absorption due to networking capital management and maintenance. Integration costs related to Lucas Meyer Cosmetics acquisition and hyperinflation effects also negatively impacted profitability. Catalyst sales increased by 7% in local currency and 5% in Swiss francs as the refill cycle normalized in the fourth quarter. We don't expect underlying improvements in the short term as the economic environment remains challenging with utilization rates below long-term averages. Pricing was up 2% with growth in all segments while volumes grew by 5%. Sequentially, Sales increased by 34% in local currency. We recorded strong sales in propylene, increasing at a low 60s percentage rate, driven by cataphan sales in China. Specialty also recorded growth at a high single-digit percentage rate, while syngasin fuels and ethylene sales declined. Regional dynamics were driven by the project nature of the business, with strong volume growth in Asia-Pacific, including pronounced growth in China. In Europe, Middle East, and Africa, sales grew at a low single-digit percentage rate, while sales in the Americas declined as growth in specialty was more than offset by volume-led declines in other businesses. In the fourth quarter, the reported EBITDA margin increased to 25.1% from negative 3.9% in the prior year when profitability was negatively impacted by costs relating to the closure of the SunLiquid plant. Our performance in the fourth quarter was supported by effective margin management and operating leverage. We also recorded a lower operational impact from Sunliquid of negative 2 million Swiss francs and an additional positive impact related to a reversal of provisions resulting from our downsizing efforts, progressing faster than anticipated. For 2025, we don't expect any P&L impact or cash out related to Sunliquid. On an underlying basis before exceptional items, EBITDA margin improved to 18.8% versus 15.9% in Q4 2023, mainly driven by higher sales. Moving to absorbance and additives, sales increased by 4% in local currency and by 2% in Swiss francs. Pricing was up 3%, driven by coatings and adhesives, while volumes increased by 1%. Sequentially, sales in the business unit increased by 2% in local currency, driven by volumes as pricing was stable. By segment, absorbent sales declined slightly as positive pricing was offset by lower volumes. This was due to the continued muted industrial demand in Europe and Asia, in particular from the automotive industry in Europe. In the additives segments, we recorded double-digit sales growth, as key end markets showed some improvement against the prior year. Regionally, we recorded strong sales growth in the Americas of 15% driven by positive pricing. In Asia Pacific, sales grew at a low single-digit percentage rate, with China growing at mid-single digits. Sales in Europe, Middle East, and Africa were stable year-over-year. Reported EBITDA margin increased to 13.1%, compared to 6.3% in the prior year, which was impacted by restructuring charges. Profitability levels were positively impacted by pricing and volume growth, as well as the performance improvement programs implemented in the prior year. On an underlying basis before exceptional items, EBITDA margin was 12.7% compared to 8.2% in the fourth quarter of 2023. Moving on to our cost savings initiatives. In the fourth quarter, we delivered cost savings of 6 million Swiss francs. We remain fully on track to deliver our savings target of 175 million Swiss francs by the end of 2025, with 7 million Swiss francs remaining this year. For the new savings program that we announced at our investor day back in November of last year, we expect full run rate savings of 80 million Swiss francs from business unit and corporate actions to be delivered by the end of 2027. We expect significant contribution to be realized from these initiatives in 2025 and expect to book a corresponding restructuring charge of 75 million Swiss francs in 2025. And with this, I close my remarks and hand back to Conrad.