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Clariant cuts jobs, moves factories as slump persists

February 16/2010
February 16 (Bloomberg) -- Clariant AG, the world’s biggest maker of printing-ink chemicals, will deepen job cuts and move some production to prepare for a year that will be “similarly difficult” to 2009.
Clariant will move its textile dyes and textile production from its headquarters in Muttenz, Switzerland to Asia, and paper-chemical production will move to Spain, it said today in a statement. The company will also partially close a factory in Brazil and shutter an Indian facility. The measures will lead to 500 job cuts in total, with 400 in Switzerland, Clariant said.
“Our performance still lags behind our peers,” Chief Executive Officer Hariolf Kottman, who took over in September 2008, said on a conference call. “Hence, we will decisively continue with our restructuring efforts in 2010, which we expect to be a similarly difficult year to 2009.”
Clariant declined as much as 5.5 percent in Zurich, the biggest drop since Feb. 5. The plan for more job cuts follows a move last year to close production sites and reduce the number of employees to 17,500 as the global recession weighed on demand for chemicals used in dyes, plastic additives and pigments.
The company reported a fourth-quarter net loss of 68 million Swiss francs ($63.3 million) today, down from 207 million Swiss francs a year earlier.
Reorganizing the company will cost 200 million francs to 300 million francs this year, Clariant estimated. Sales in local currencies will rise in the “low-single-digit” range this year, while the margin on earnings before interest and taxes and exceptional items will likely rise above 6 percent, Clariant said. The margin was 4.1 percent in 2009.
Clariant estimates it can eek 80,000 francs to 100,000 francs on average for each job that it cuts, and the reductions will happen progressively over several quarters, Chief Financial Officer Patrick Jany said in an interview in Zurich.
Raw material costs will advance by 2 percent to 3 percent this year, and the company will offset that increase by raising its selling prices, the CFO said.
The stock fell as much as 63 centimes to 10.76 francs, and traded at 11.02 francs as of 12:43 p.m. The shares have lost 9 percent of their value this year.
“The new CEO has been aggressive and pro-active in cutting costs from the group and squeezing cash from all aspects of the business,” Citigroup Global Markets analyst Andrew Benson said in a note. He recommends investors sell Clariant shares, because ‘given the structural problems the group faces, we do not see scope for these shares to deliver value to shareholders.”

Clariant cuts jobs, moves factories as slump persists

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