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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 40 research reports from 3 professional analysts.
The FY24 year-end update is very upbeat signalling trading being materially ahead of expectations, with a better-than-expected profit out turn and stronger cash generation. It continues to strengthen margins through efficiencies and investment in modern equipment. The order book remains close to record levels providing a robust view of future forecasts. In FY24E we upgrade EPS by 11% and in FY25E a significant upgrade of 27.6%. It looks capable of declaring a dividend in FY25 as well as manageme
Companies: Renold plc
Cavendish
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FY23 results show very strong growth over FY22, driven by strong Structural Steel activity, with results slightly ahead of upgraded profit expectations, while stronger than expected cash flow resulted in an unexpectedly generous dividend of 33p (offering a FY23 yield of 7.0%). The group now has net cash of £22.1m and is debt free and is therefore in a strong position for potential M&A activity. Following the recent £90m of new orders to increase the order book to record levels we conservatively
Companies: Billington Holdings Plc
Another Good Year of Diversified Growth with More to Come in 2024 CCapital have released their Q1 operating results. Overall, revenue has come in slightly lower than expected at $80.2m vs TamE of $85.9m but is largely tracking in line with our FY24 annual estimate and we note the company has maintained guidance. Drilling revenue for this quarter was impacted by a fall in utilisaztion rates as well as general remobilisation geographically but we expect a strong recovery throughout the year as k
Companies: Capital Limited
Tamesis Partners
Plant Health Care announced it has signed a distribution agreement with AMVAC, an American Vanguard Company, to support commercialisation of novel fertiliser products incorporating Plant Health Care's Harpinαβ in China starting in 2024. The novel product combines Harpinαβ technology with an AMVAC fertiliser and is expected to help growers improve crop quality and yield as part of an integrated and environmentally responsible crop production programme. AMVAC continues to evaluate Plant Health Car
Companies: Plant Health Care PLC
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Severfield’s trading update indicates that FY23 results are expected to slightly exceed market expectations and the company ends the year with a record UK and Europe order book. Furthermore, with a positive trading outlook and net debt coming in lower than expected, Severfield has announced a £10m share buyback, highlighting the cash-generative nature of the company and management’s confidence in its position. The stock trades on an FY25 P/E of less than 6x and yields 7%, which we believe appear
Companies: Severfield Plc
Edison
discoverIE’s March year-end update confirms a strong operational performance in challenging markets. Following two years when sales increased by +48%, FY 2024 Group sales were +1% ahead of 2023 at CER (reported -3%) driven by a +2% contribution from acquisitions and organic -1%. As expected, organic growth returned in the later part of the year (Q4 +2%, +11% sequentially) and the order book has reverted to normalised levels of c.4.5 months’ sales, which – combined with a continuing strong pipeli
Companies: discoverIE Group PLC
Companies: Iofina plc
Canaccord Genuity
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SP Angel
Acquisitions have been an important element of Severfield management’s growth strategy, with the aim of adding new products, sectors and regions to what we have identified as exciting long-term organic opportunities. In this Spotlight report, we focus on the group’s targeted M&A approach, highlighting three significant deals.
Progressive Equity Research
Liberum
Invinity’s update on discussions with strategic investors reveals interest from multiple parties. While this has slightly delayed finalising an agreement it increases the potential for a better outcome. Although details are unknown at this stage, we think there is enough in the statement to be comfortable that any agreements will be consistent with the company’s strategy of growing market share in core markets and using a licencing and royalty model in other markets.
Companies: Invinity Energy Systems PLC
Longspur Clean Energy
Severfield’s full-year results to March will be ‘slightly above’ the Board’s expectations, according to today’s trading update, with net debt significantly better. We maintain our PBT estimates for both forecast years, which are ahead of consensus, but reduce our net debt for FY24E. Record orders were boosted by the steel specialist’s European operations, after last year’s Voortman acquisition, while the Indian JV has seen ‘another step up in profitability’. The group has also launched its first
Companies: ATOME PLC
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