Clariant Q3 2025 slides: Margin boost offsets sales decline amid challenging market

Clariant AG (SWX:CLN) shares rose 4.24% following its third-quarter 2025 results presentation on October 30, which revealed a significant profitability improvement despite ongoing sales challenges in a difficult economic environment.

Introduction & Market Context

The Swiss specialty chemicals company reported a 3% sales decline in local currency for the third quarter, but delivered a substantial 230 basis point improvement in EBITDA margin before exceptional items, reaching 17.9%. This performance demonstrates Clariant’s ability to enhance profitability through cost management and operational efficiency while navigating weak industrial production and consumer demand globally.

"We delivered a significant margin improvement of 230 basis points to 17.9% in a continued challenging environment," said Conrad Keijzer, Clariant’s CEO, according to the recent earnings call.

Quarterly Performance Highlights

Clariant’s Q3 2025 sales reached CHF 906 million, down 3% in local currency and 9% in Swiss francs due to a significant negative currency translation impact of 5%. Despite lower volumes, the company achieved EBITDA before exceptional items of CHF 162 million, representing a margin of 17.9% compared to 15.6% in the same period last year.

As shown in the following chart breaking down Q3 sales performance:

The sales decline was primarily driven by lower volumes (-3%), partially offset by price increases (+1%), while currency effects (-5%) significantly impacted the reported figures in Swiss francs.

All three business units contributed to the margin improvement, with corporate functions also delivering significant savings:

Care Chemicals, Clariant’s largest division, reported sales of CHF 491 million in Q3, down 8% in Swiss francs and 3% in local currency. Despite the sales decline, the division improved its EBITDA margin before exceptional items to 18.9%, up from 17.4% in Q3 2024.

The Catalysts business faced the most significant challenges, with sales declining 16% in Swiss francs and 8% in local currency to CHF 171 million. Nevertheless, the division managed to improve its EBITDA margin before exceptional items to 19.3%, up from 18.7% in the previous year.

Adsorbents & Additives was the only division to achieve sales growth in local currency, with a 1% increase, though sales declined 3% in Swiss francs to CHF 244 million. The division’s EBITDA margin before exceptional items improved to 17.2% from 15.9%.

Detailed Financial Analysis

Clariant’s geographic performance reveals regional variations, with Asia-Pacific showing modest 1% growth in local currency, while the Americas (-3%) and EMEA (-6%) experienced declines. China remained particularly challenging with a 10% sales decrease.

The company’s cost dynamics show mixed trends, with raw material costs decreasing 1% year-over-year in Q3, while energy costs increased 2%. Logistics costs declined significantly, down 15% compared to the previous year.

Clariant has strategically shifted its portfolio toward consumer markets, which now represent 47% of sales compared to 36% in 2021. This transition has reduced exposure to more cyclical industrial markets, which decreased from 47% to 38% of sales during the same period.

Strategic Initiatives

A key driver of Clariant’s margin improvement is its Investor Day 2024 savings program, which aims to deliver CHF 80 million in cost reductions by 2027. The program is progressing ahead of schedule, with CHF 31 million in savings already realized in the first nine months of 2025.

The savings program includes headcount reduction of approximately 340 full-time employees, footprint optimization with two site and two production line closures, and procurement savings of CHF 15 million. Clariant has incurred CHF 63 million in restructuring charges year-to-date out of an expected CHF 75 million for the full year.

Additionally, the company announced a reduction in board size from eleven to eight members, with five current directors voluntarily not standing for reelection. Two new independent members will be proposed ahead of the 2026 Annual General Meeting to address independence, tenure, and gender diversity.

Forward-Looking Statements

Clariant confirmed its guidance for 2025, expecting sales growth at the lower end of the 1-3% range due to continued weak industrial production and consumer demand. The company maintains its profitability target of 17-18% EBITDA margin before exceptional items.

For the medium term, Clariant remains committed to its targets of 4-6% compound annual growth rate in sales, EBITDA margin between 19-21%, and free cash flow conversion of around 40%, to be delivered by 2027 at the latest.

The company’s outlook considers several external factors, including global GDP driven by AI investments and services, tariffs and trade tensions, weakened industrial production and consumer sentiment, continued high interest rates, and slowing growth in China’s industrial production.

CFO Oliver Ripke emphasized the company’s strategic focus: "Capital allocation is very much focusing on a triangle of growth, margin, and cash," highlighting Clariant’s balanced approach to creating shareholder value despite challenging market conditions.

Full presentation:

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