Clariant reports progressively improving operating profitability and a strong cash flow during a challenging 2009

CEO Hariolf Kottmann commented: "During the year we have successfully focused on generating cash, decreasing costs and reducing complexity. In an economic environment that is still challenging, we will continue to focus on our restructuring efforts. The aim remains to achieve sustainable above industry-average profitability by the end of 2010 and to create a solid platform for profitable growth in the years thereafter."

Key Financial Data

* as of December 31, 2009 ** as of December 31, 2008

Clariant 2009 Performance

Muttenz, February 16, 2010 - Clariant, a world leader in specialty chemicals, today announced sales of CHF 6.614 billion in the full-year 2009, compared to CHF 8.071 billion in 2008. This represents a decline of 18% in Swiss francs or 14% in local currency.

The significant drop in sales reflected the severe economic crisis that affected all businesses across all regions. At the beginning of the year, sales were severely impacted by lower demand levels, resulting in significant capacity underutilization and leading to a depressed gross margin in the first quarter. As the year progressed, capacity utilizations rose as sales volumes improved quarter-by-quarter, therefore reducing capacity underutilization costs. In addition, the company took decisive measures to address production overcapacity such as temporary shutdowns, short time work or involuntary vacation. Through strong price management, Clariant was able to maintain sales prices at 2008 levels, while on the other hand raw material prices were lower. As a result, the gross margin for the full year was 28.2%, only slightly lower compared to the 2008 margin of 28.7%.

In 2009, Clariant focused on the reduction of Sales, General & Administration (SG&A) costs. In absolute terms, SG&A costs decreased to CHF 1.47 billion from CHF 1.64 billion in the previous year. The SG&A cost in percentage of sales increased to 22.2% from 20.3% as a result of lower sales. Consequently the operating income (EBIT) before exceptional items reached CHF 270 million compared to CHF 530 million in the previous year leading to an EBIT margin of 4.1% compared to 6.6% in 2008. Throughout 2009 the operating income before exceptional items improved quarter-by-quarter.

All divisions saw a slight recovery in demand in the second half of the year, although to varying degrees. Based on their decisive restructuring and cost cutting measures, they all contributed positively to the operational income before exceptional items.

Restructuring and impairment costs amounted to CHF 298 million, mainly related to the first phase of site closures within the global asset network optimization program (GANO), and a reduction in headcount. The number of job positions was reduced to 17,536 from 20,102 at year-end 2008. The combination of the restructuring costs and the lower operating income led to a net loss of CHF 194 million compared to a net loss of CHF 37 million in the previous year.

Cash flow from operations amounted to CHF 757 million. This was largely due to the stringent focus on net working capital - mainly inventory reduction and accounts receivable management. In the second half of the year, the progressive improvement of operating income before exceptionals increasingly contributed to the strong cash generation.

Clariant significantly strengthened its balance sheet by increasing its cash position to CHF 1,140 million compared to CHF 356 million in 2008. This included the proceeds of the CHF 300 million convertible bond launched in July. At the same time, net debt was reduced to CHF 545 million from CHF 1,209 million at the end of 2008. The company's gearing - net debt divided by equity - was at 29% by the end of 2009, significantly lower than the 61% at the end of 2008.

Clariant Q4, 2009 Performance

Clariant reported sales of CHF 1,710 million in the fourth quarter compared to CHF 1,744 million a year ago. All businesses continued to stabilize. At the regional level, Asia showed double-digit growth while all other regions remained at the depressed levels of the previous-year period.

In local currencies, fourth quarter sales rose 2% compared to a weak quarter in the previous year. While volumes increased 8%, sales prices fell 6% and raw material costs were 14% lower. The underutilization costs were also lower than in the previous year quarter as a consequence of higher capacity utilization rates.

As a result, the gross margin for the quarter reached 29.6% compared to 25.2% a year ago. The EBIT margin before exceptional items also improved to 6.3% from 2.4% in the fourth quarter of 2008.

Operating cash flow reached CHF 224 million, up from CHF 217 million a year ago. Future cash flow is expected to be increasingly generated through the operating income line as savings from tight inventory management have already been realized.

Global Asset Network Optimization (GANO) Update

In 2009 Clariant started a program to optimize its global production network. First results were communicated to the public in November. Clariant announced today a second step of this program which effects the following locations:

Clariant will transfer the Textile Dyes and the Textile Chemicals production from Muttenz, Switzerland, to locations in Asia. In addition, the Paper Chemical production will be moved to Prat in Spain.

The optimization of the Textile production in Resende, Brazil, will lead to a partial plant closure.

It will be proposed to the Board of Directors of Clariant Chemicals (India) Ltd to close the Balkum site in Thane, India.

Approximately 500 jobs will be affected by these measures, of which roughly 400 in Muttenz, Switzerland.

The closures and transfers will be completed between 2011 and 2013.

Outlook 2010

The company does not foresee a sustainable recovery of the global economy due to structural problems. Asia - in particular China - and Latin America will continue to provide positive impulses for the world economy, although it is unlikely that these impulses will be strong enough to significantly mitigate a flat or even negative development in Europe and the United States.

Clariant expects 2010 sales growth in local currencies in the low single-digit range. The continued restructuring measures will improve the company's cost position, resulting in a positive impact on the operating result. The EBIT margin before exceptionals is expected to rise above 6%. Cash flow from operations will remain strong. The projected restructuring costs will amount to CHF 200-300 million.

Reflecting the current uncertainties in the economic environment, the Board of Directors will recommend to Clariant's 15th General Assembly on March 29, 2010 to suspend dividends, grants or payouts to shareholders for 2009.

Clariant confirms its target of a sustainable above industry average return on invested capital (ROIC) by the end of 2010.

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Clariant - Exactly your chemistry.

Clariant is a global leader in the field of specialty chemicals. Strong business relationships, commitment to outstanding service and wide-ranging application know-how make Clariant a preferred partner for its customers.

Clariant, which is represented on five continents with over 100 group companies, employs around 17,500 people. Head-quartered in Muttenz near Basel, Switzerland, it generated sales of CHF 6.6 billion in 2009. Clariant is organized into ten Business Units: Additives; Detergents & Intermediates; Emulsions; Industrial & Consumer Specialties; Leather Services; Masterbatches; Oil & Mining Services; Paper Specialties; Pigments; and Textile Chemicals. .

Clariant is committed to sustainable growth, which is derived from its own innovative strength. Clariant's world-class products and services play a key role in its customers' manufacturing processes and add value to their end products. The company's success is based on the know-how of its people and their ability to identify new customer needs at an early stage and to work together with customers to develop innovative, efficient solutions.

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