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Clariant reported a strong profitability improvement, which was supported by some cost cutting. The rate of the profitability increase broadly reflects Clariant’s position in the value chain. Nevertheless, the recovery was held back by the weaker, but explained, performance in Catalysis. All in all, a good set of figures coming in above 2019 levels. Consequently, management raised the guidance for the top line. Reported figures were +4.5% above consensus at the top line and +7.8% ahead in the
Companies: Clariant AG (0QJS:LON)Clariant AG (CLN:SWX)
AlphaValue
Clariant’s H1 result was quite positive based on a stronger than expected acceleration of business growth in Q2. This led to a consensus beat (top line: +2.0%; profitability: +4.0%). The recovery was driven by Natural Resources, due to the pick-up in automotive. All three divisions contributed to the higher profitability. We positively value the provided guidance.
Positive as well as negative weather-related effects showed up in Clariant’s Q1 results, but the reported figures came in above street expectations. This was based on the strong rebound in Europe and Asia-Pacific. However, compared to some of its competitors, Clariant’s development in Asia-Pacific was far weaker in the region. Running an automotive-independent Catalysis business, the division reported unexpected strong growth.
In our view, Clariant’s FY figures on the profitability line came in much stronger than expected as we had expected much higher restructuring costs on the profitability line and also assumed higher idling costs in the business segments. Consensus was slightly beaten. The core message of 2020 is that Clariant is now in a position to stabilise its profitability margin, which is different to previous downturns. In the analysts call, management made some strong statements regarding a greener fut
Companies: Clariant AG
Clariant is heading for more difficult times after a crack in the Supervisory Board has become visible. We had already speculated back in 2018 that the new entrant, Sabic, would cause difficulties, especially after the quasi acquisition by Saudi Aramco. We value the two new items for the AGM’s agenda as a kind of fundamental opposition to Mr Kottmann and his supporters. This (new?) situation will put any strategic plan by the designated CEO at risk as the support of the Supervisory Board may be
The new Clariant’s business model is relatively stable even in a pandemic setting. Margins were pretty stable at group level with mixed trends for the individual divisions. The strong reporting currency had some negative effects. The management guidance points to a weaker Q4, which looks reasonable in the light of recent news on the spread of the virus. The Q3 figures were weaker than our expectations but beat the consensus.
Companies: 0QJS CLZNF CLN CLRN
Clariant did quite well in the pandemic as speciality chemicals have offerings to help manage the crisis better. This does not necessarily mean they are “bullet proof” chemicals but their their margins can be managed quite well. The question will be whether management can do it again in Q3. The reported figures were weaker than expected and missed consensus at many levels.
Clariant’s reporting currency did not help to cushion a not very strong business performance, but some businesses did quite well. Reported figures broadly fit into our picture but they were a bit stronger than consensus.
Clariant reported a conciliatory ending after a challenging and bumpy 2019. But it happened in more than ‘just’ some businesses. With the management adjustments, two former members of the management board may have been expelled but the last to leave looks more voluntary. There was no strategy update available. Reported FY came in above our quite cautious expectations, but also above the street’s estimates.
Anticipation is the greatest joy and the announcement of the Masterbatch divestment is just this. The sales price is quite generous, with closing sometime next year. We view the distribution of 2/3rds of divestment proceeds as a shareholder’s goody bag. The divestment is a consequence of the implementation of a still quite unclear company transformation plan, where the distribution of the special dividend clearly limits future options.
Being caught up in the chemicals’ uncertainties, Clariant has also some additional home-made issues generated by a foggy business strategy as the distribution of the divestment proceeds still remains unclear: investments (e.g. acquisition of Lonza Specialty Ingredients) or self-liquidation of the company in little slices. Here we add the demanding shareholder structure. The €-231m provision in the context of the investigation by the European Commission in the ethylene purchasing market looks qui
Clariant has started to challenge investors by introducing EBITDAaei. Written out, EBITDA after exceptional items, looks to us like old-school EBITDA. Currently, we are struggling with this move. Clariant’s start to the year was as expected despite the fact that the effects from the creation of the new division High Performance Material were not yet visible. Plastics & Coatings’ development in the first quarter can be taken as justification.
So the new CEO took over the helm in mid October 2018 and stepping into Mr Kottmann’s shoes is a challenge. But the 100-day-period of grace is more than over and investors could expect something more than a continuation, meaning unchanged targets as well as habits. Currently, a change in management can not really be confirmed. However, the business has made some progress, clearly beating our expectations and strongly meeting consensus.
Clariant’s Q3 sales and EBITDA before one-offs confirmed our view on the company and nearly met consensus. However, a second look reveals some strengths and weaknesses and it looks to us that the divestment of the lower-margin areas of Plastics & Coatings needs to be rethought as parts of the businesses earmarked for divestment look sustainable and worth retaining in the new, combined division.
It looks to us as if Clariant has become the cue ball in the Arabian strategy game as Saudi Arabian Sabic looks to be attracting Saudi Arabian Aramco. With its close to 25% stake in Clariant, Sabic has become the dominating shareholder with strategic ambitions. The announced creation of High Performance Materials, the new CEO and Mr Kottmann’s re-appointment as Chairman of the Board look more like a must rather than a may.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Clariant AG. We currently have 1 research reports from 5 professional analysts.
Supreme’s FY24 trading update confirms a record performance in the 12 months to 31 March 2024. Organic revenue and profit growth across all four divisions has driven Group revenue +45% YOY to £225m, with FY24 adj. EBITDA almost doubling to ‘at least £38m’, driving record levels of cash generation. Supreme is actively exploring complementary M&A, supported by a debt free balance sheet. Trading on an undemanding FY25 PE of just 6.7x, with a 3.4% yield, we believe downside risks are more than price
Companies: Supreme PLC
Zeus Capital
Companies: FOG PHC FEN BBSN ELIX
Cavendish
Shore Capital
Companies: MPE TRI VNET BVXP HVO
Vianet has published a positive trading update for FY24 with turnover up 7.6% to £15.18m, a 3.5 percentage point increase in gross margin YoY, and adjusted EBITA ahead of market expectations. Net debt continues to fall and closed FY24 at £1.52m (£2.1m at 30 September 2023), demonstrating strong free cash flow generation, even without the benefit of the £0.9m tax receipt received in 1H24, which augers well for a final dividend. The company reported a new contract with Wilcomatic Wash Systems, the
Companies: Vianet Group plc
Capital Access Group
Companies: James Latham Plc
SP Angel
Vianet’s FY24 trading update shows FY24 revenue +1% ahead of our previous forecast, adjusted EBITA +2% ahead, EFCF and net debt +£0.6m ahead, and a strategic new customer win with prominent forecourt operator Wilcomatic. A robust FY25 pipeline and outlook leads us to reiterate our FY25E forecasts at this point, with the update highlighting: strong progress renewing and winning new customers on 3-5 year contracts as they migrate from 3G to Vianet’s advanced 4G LTE solutions; the successful integr
Renewi’s FY24 trading update was in line with management’s expectations and its improved cash generation is reassuring for investors. Attention is now likely to turn the strategic review of the UK Municipals with management stating that they remain on track to update markets by the end of June. This could lead to an exit of key liabilities and leave Renewi as an attractive circular economy investment with strong market positions and organic growth plans, which should assist in generating value,
Companies: Renewi Plc
Edison
Headlam Group has laid out an ambitious long-term revenue target of between £900m and £1bn, as it seeks to grow its share of the UK floor coverings distributor market. Despite a challenging backdrop due to the low level of residential housing transactions, management is seeking to expand each of its sales channels: Trade Counters, Larger Customers, Regional Distribution and Europe & Other. The FY23 results reflected the more challenging environment and the group trades at a discount to its long-
Companies: Headlam Group plc
Norcros has announced the sale of its Johnson Tiles UK business to the current management team for a consideration of £1.0m, with a further modest earnout based on the equity value of the business, both payable in April 2028.
Companies: Norcros plc
The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no
Companies: AEIT ROOF DGI9 INPP GSF SEIT USFP HICL ORIT BSIF TRIG NESF SEQI HEIT GRP GCP FSFL 3IN AERI PINT RNEW BBGI GSEO DORE TENT GRID CORD HGEN AEET
Hardman & Co
Companies: CLA STM GLN FXPO KAV GWMO CEY BHP THX EEE
24th April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi
Companies: FTC AGL SRT SOU G4M AOM SUP
Hybridan
Companies: Ilika plc
Liberum
Norcros’s disposal of Johnson Tiles is the latest strategic activity taken by management to better allocate capital to fit with priorities. Last year it closed its UK adhesives operation. Norcros has a compelling investment case, where its new product development initiatives, market positioning and self-help initiatives allow it to take market share in both the UK and South Africa. Its rating is low at 6.0x FY24e P/E, which is attractive, especially when compared to its yield of 5.4% on its well
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