2014 annual report en
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Annual Report2014
Annual Report2014
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FinancialSUMMARY
KEY FIGURES in CHF m
Sales
EBITDAbeforeexceptionals
EBITDAmarginbeforeexceptionals()
EBITbeforeexceptionals
Netincome
Basicearningspershare
Adjustedearningspershare
Operatingcashflow
Investmentinpropertyplantandequipment
Research&Developmentexpenditures
Totalassets
Equity
Equityratio()
Netdebt
Gearingratio()
Employees
Continuing operations
SALESBYBUSINESSAREA in CHF m
Total
CareChemicals %
Catalysis&Energy %
NaturalResources %
Plastics&Coatings %
SALESBYREGIONin CHF m
Total
Europe %
AsiaPacific %
MiddleEast&Africa %
LatinAmerica %
NorthAmerica %
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APPRE-
CIATION
Performance.Growth.Innovation.WHAT MAKES CLARIANT SPECIAL?
WE HAVE A BALANCED
PORTFOLIO WITH HIGH PROFITABILITY,LOW CYCLICALITY, AND SIGNIFICANT
GROWTH POTENTIAL
WE APPLY A VALUE SYSTEM WITH A FOCUS
ON PERFORMANCE, PEOPLE, AND PLANET
Sustainable company successes and value generation can only
be realized in a corporate culture that is embraced by everyone
involved, and which achieves a balance between business per-
formance, social interests, and environmental targets.
WHERE WE WANT TO GO – OUR VISION
We aim to be the global leading company for specialty chemicals
and to stand out through above-average value creation for all of
our stakeholders.
HOW WE AIM TO GET THERE – OUR MISSION
We build leading positions in the businesses we are active in,
and we adopt functional excellence as part of our culture.
We create value through appreciating the needs of:
· our customers – by providing competitive and innovative
solutions
· our employees – by adhering to our corporate values· our shareholders – by achieving above-average returns
· our environment – by acting sustainably
CARE CHEMICALS
Sales 2014 in CHF m 1 511
Growth potential + 4 – 5 % p.a.
EBITDA* margin 2014 17.1 %
CATALYSIS & ENERGY
Sales 2014 in CHF m 729
Growth potential + 6 – 7 % p.a.
EBITDA* margin 2014 23.5 %
NATURAL RESOURCES
Sales 2014 in CHF m 1 297
Growth potential + 6 – 7 % p.a.
EBITDA* margin 2014 14.7 %
PLASTICS & COATINGS
Sales 2014 in CHF m 2 579
Growth potential global GDP
EBITDA* margin 2014 14.0 %
1. 2.
* before exceptional items
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FROM AVERAGE TO THE TOP – ADVANCING INTO
THE TOP TIER IN SPECIALTY CHEMICALS
EBITDA* – – mid-term
* before exceptional items
CLARIANT
CLARIANT
CLARIANT
%
– %
– %
%
1Increase Profitability
2Reposition Portfolio
3Add Value with Sustainability
4Foster Innovation and R&D
5Intensify Growth
STRATEGY TO INCREASE
PERFORMANCE
WE HAVE A CLEARLY DEFINED CORPORATE
STRATEGY BASED ON FIVE CENTRAL
PILLARS
3.WE MEASURE OUR PROGRESS BASED ON
SPECIFIC TARGETS FOR THE FUTURE
Clariant’s key performance indicators (KPIs):
Our aim is to make Clariant one of the most profitable specialty
chemicals companies by continuously improving the EBITDA*
margin.
MID-TERM TARGETS
Organic sales* > global GDP growth
EBITDA** margin 16 – 19 %
ROIC > peer group average
* in local currencies
** before exceptional items
4.
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»We steered Clariant onto a profitable course«
InterviewwithRudolfWehrliandHariolfKottmann
One Clariant
MinisMomentum
The Clariant Story
HowClariantCreatesValue
FinancialTargets
TheFive-Pillar-Strategy
Operational Implementation
in the Four Business Areas
CareChemicals
Catalysis&Energy
NaturalResources
Plastics&Coatings
Financial Review
BusinessPerformancein
SegmentAnalysis
SummaryofFinancialStatements
ClariantStock
Outlook TheExecutiveCommittee
Corporate Governance
Compensation Report
Financial Report
CONSOLIDATED FINANCIAL STATEMENTS
OF THE CLARIANT GROUP
ConsolidatedBalanceSheets
ConsolidatedIncomeStatements
ConsolidatedStatementsofComprehensiveIncome
ConsolidatedStatementsofChangesinEquity
ConsolidatedStatementsofCashFlows
NotestotheConsolidatedFinancialStatements ReportoftheStatutoryAuditor
REVIEW OF TRENDS
Five-YearGroupOverview
FINANCIAL STATEMENTS OF
CLARIANT LTD MUTTENZ
ClariantLtdBalanceSheets
ClariantLtdIncomeStatements
NotestotheFinancialStatementsofClariantLtd
AppropriationofAvailableEarnings
ReportoftheStatutoryAuditor
Forward-lookingStatements
Financial Calendar
IndexANNUAL REPORT 2014
1CLARIANT ANNUAL REPORT 2014
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Mr. Kottmann, how would you sum up last year?
—
HARIOLF KOTTMANN The year 2014 was heterogeneous. Surpri-
singly strong months in terms of sales and results were followed
by weaker ones – we had fluctuations in both directions and some-
imes even within one quarter. This was mainly caused by external
factors. We set more ambitious targets and lagged behind our
expectations. Yet, we were able to increase the EBITDA margin to
4.2 % compared to 14.1 % in the previous fiscal year. Therefore,
we are currently at the highest level seen in recent years.
—
RUDOLF WEHRLI Indeed, the international financial and econom-
c crisis could not be overcome completely in 2014. In addition,
we had to cope with the political crises in the Middle East and in
Russia. The market participants responded accordingly. For severalyears we have observed stagnation in the European region. Even
n China, growth fell below general expectations. In addition, the
negative currency effects affected us primarily during the first
six months.
How does this affect your medium-term targets – your intended
EBITDA margin lies in the range of 16 – 19 % starting in 2015?
—
HARIOLF KOTTMANN This target is still valid. The range is ambi-
ious but absolutely realistic as it reflects the strength and the quali-
y of our portfolio. Since 2010 we have been progressing every year
owards this target, despite sometimes quite adverse circumstances.
For 2015 we will make another step towards an EBITDA profitabili-
y margin of 16 – 19 %. Given however the increased volatility in
he economic environment, as exemplified with the Swiss franc's
appreciation and the significant oil price reduction, we will not
reach this profitability range in 2015 but will certainly further im-
prove when compared to the 14.2 % we achieved in 2014.
»We steered ClariantONTO A PROFITABLE COURSE«
So, you continue to focus on increasing profitability?
—
HARIOLF KOTTMANN Yes, but the margin is only one aspect.
It has developed well over the past years. Now, we are able to pur-
sue other financial goals. These include an annual low to mid single-
digit growth in local currencies and a significant increase in cash
flow generation. In 2015 and the following years, we will establish
the foundation for the long-term development of the company.
Therefore, we cannot only focus on optimizing profits in the short
term. We must increase our competitiveness in general and we
must invest specifically in research and development as well as in
the development of new markets in China, India, Latin America,
and in the United States.
—
RUDOLF WEHRLI According to the International Monetary Fund,in 2015 developing and emerging markets can expect a growth
of 4.3 % and those in Asia even 6.4 %. The US continues its positive
development. Here, we will benefit from the expected growth
of 3.6 %.
How do you distribute investments in order to ensure future
growth?
—
HARIOLF KOTTMANN We invest increasingly in regions with
above-average growth rates and a high result potential. In 2014, we
invested 54 % in emerging markets and in North America compared
to only 36 % in 2013. In our fields of operation, we take a similar
course of action: During the previous fiscal year, we only invested
34 % in profitable areas with growth potential; in 2014, we already
invested 52 %. This is also our strategic course for the future.
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—RUDOLF WEHRLI
Chairman of the Board of Directors
—HARIOLF KOTTMANN
Chief Executive Officer
3CLARIANT ANNUAL REPORT 2014
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s this adjusted investment strategy also reflected in the figures
for 2014?
—
HARIOLF KOTTMANN Yes, you can see it in the example of growth
n Asia and Latin America. The figures of 2014 prove that we have
expanded in a timely and strategically sensible manner. In the Asia/
Pacific region, sales in local currencies increased by 9 % and in Latin
America even by 18 %. The reason for this is not only the general
ocal economic growth, which was actually not all that great in Brazil
during the year under review, but because we are able to serve the
needs of local customers through local production capacities and
good products.
How do you know that your research and development activities
will meet the future needs of your customers?
—
HARIOLF KOTTMANN Instead of conducting research behind
closed laboratory doors, we focus on the dialogue with our custom-
ers and within the company. The secret of successful innovation
is the precise knowledge of the needs and desires of customers. We
have not offered any of our average off-the-shelf products for a long
time. Instead, we offer solutions which we develop together with
the customer. This generates added value for the customers and for
Clariant. We follow this purpose with a clearly defined strategy.
In this context, the continuous review of the portfolio is just as im-
portant as the ability to transfer new applications interdepartmen-
tally to other work areas.
»Generating valuefor our customers, our employees,
our companyand our share-holders is our toppriority.«Rudolf Wehrli
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Added value through sustainability became part of your strategy
in September. Can you earn money with it?
—
HARIOLF KOTTMANN Yes, of course, you can make money with it.
For years, sustainability has ranked high with us. And I am con-
vinced that in five to ten years, companies will no longer be able to
conduct business without being sustainable. In addition to the soci-
etal aspects, we profit operationally on two levels: On the one handwe have costs. The more efficient use of resources, the consumption
of less energy and the lower environmental costs are reflected
by lower expenses. On the other hand, we already show a significant
growth by offering sustainable products. Today, you cannot be
innovative and grow without sustainability. Our customers world-
wide expect sustainability from us just like we expect it from our
suppliers.
—
RUDOLF WEHRLI Our vision is to become the global leading
company for specialty chemicals. Furthermore, it is our goal to raise
awareness of us being a leader in sustainability. Both complement
one another excellently. Sustainability not only contributes to prof-
itable growth, but more so to the reputation of Clariant. We are very
much aware of the responsibility we have toward society and the
environment and we want to fulfill it with exemplary conduct and
with the greatest possible transparency. In addition, we would like
to position ourselves as an attractive employer. For this reason,
we invest in our employees and we fulfill our social responsibility at
the local level. Our efforts are internationally acknowledged and
honored. We are proud to have been accepted in the Dow JonesSustainability Index (DJSI) also in 2014. This time, we even made
the DJSI World among the top 10 % of the chemical industry.
Give us an outlook for 2015. What can we expect from Clariant?
—
HARIOLF KOTTMANN In 2015, we will continue on the course we
have taken. As I said before, we want to keep the growth in local
currencies on a high level and we want to increase the cash flow
significantly. Just as in 2014, our focus is increasingly on innovation
excellence in research and development, technical application as
well as on commercial excellence in marketing and sales. The cus-
tomers and their needs are in the focus of our work.
»Today, you can-not be innovativeand grow withoutsustainability.«Hariolf Kottmann
5CLARIANT ANNUAL REPORT 2014
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—
RUDOLF WEHRLI The world around us will continue to change
apidly and we as a company must keep pace. In recent years we were
able to create a more stable and profitable Clariant. We have risen
o midfield from the lowest level of profitability in the specialty
chemical industry. We are not at the finishing line. In 2015 another
milestone will be accomplished on the way to the top tier.
—
HARIOLF KOTTMANN Clariant has undergone multiple changes
and we have achieved much of which we can be proud. But this
change does not stop. We have started a new corporate culture,
which has not yet taken root everywhere in the company. We do not
need industry servants but people with the ability to think and act
as entrepreneurs. Yet, I do not see this across all levels of the com-
pany. Particularly middle management must change its views. The
ilo mentality must now come to an end. With Clariant Excellencewe have the tools on board; we now have leaner structures and a
eaner portfolio. Therefore, we have become more flexible and we
have a unique innovation culture. Now, it’s time to live our company
values even if it is unpleasant and takes some people out of their
comfort zone.
Finally, one quick question: Why should anyone buy Clariant
stocks precisely now?
—
RUDOLF WEHRLI Clariant is a very solid company with a promis-
ing potential to increase in value. It is a company that expands
and advances continuously. We have taken a course, which is seen
positively also by the financial markets. Today, we have significantly
more investors who focus on the long term. Generating value for
our customers, our employees, our company and our shareholders
is our top priority. During the past two years, we enjoyed an in-
crease in share price of 35 %. In 2015 we want to continue to create
value by delivering an above-average growth, increasing profita-
bility and improving cash flow generation.
HARIOLF KOTTMANN
Born in 1955
Chief Executive Officer (CEO) since 1 October 2008
Member of the Board of Directors since 10 April 2008
RUDOLF WEHRLI
Born in 1949
Chairman of the Board of Directors since 27 March 2012
2008 – 2012 Vice Chairman of the Board of Directors
2007 – 2012 Member of the Board of Directors
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One CLARIANTMini's momentum. Everyday life resumes quicklywhen one returns from a long trip; it hits like a whirl-
wind. This turns out to be the case for the woman inthe pumpkin-colored blouse, whose plane from Parishas just landed at Mumbai's International Airport.She has the style and the attitude of a globe-trotting ladywho likes to be noticed: Sunglasses pushed back inraven-black hair, chin resolutely stretched out to greetthe morning.
Concept and photography by Jo Röttger
Text by Bertram Job
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Mini Nair has numerous messages waiting for her in the mailbox of her smart-
phone and she listens to them as she sinks back into the seat of the car, surrounded
by the familiar chaos of the streets. Hooting motor rickshaws and taxis, heaving
buses and whole families on scooters. Most of the messages are the usual office
gossip, as she calls it. The stuff that is always circulated in a global company where
decision-makers pop up at every level.
In the Paris office, her international boss, Andy, has news about a French-Indianoint venture project. A colleague from Paris asks if she could be at an upcoming
appointment in Slovenia in order to possibly initiate a very promising business
deal. In New Mexico, USA, there are a few details about regulatory aspects of the
products indented by pharmaceutical companies in India. And here in Mumbai,
her Indian boss, Ketan, would like to hear how it went in Paris.
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So the woman in the back of the white car immediately decides to return the
calls in order to get a clearer picture of things. But waiting until the driver
brings her to somewhere with a landline could last the good part of an hour at
this time of the day. But she knows this Moloch of a megacity better than
anyone else. It might get on her nerves and she might curse it regularly, but she
never despairs.
Mini Nair was born into this seething mass and isn’t going to leave it volun-tarily. »This city created me«, she says, »it is my spirit and my energy. Mumbai
gets to everyone, invokes a reaction but never lets anyone give up.« And the
building sites between time zones, that seem to be almost incessantly under-
way – in fact, quite correctly: »That is the best thing about my job. I love it!«
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DEALING with issues as they arise across all borders, contacts and customers, car-
ing for and maintaining alliances: That is just part of the description of Mini Nair's
ob as Global Topic Expert & Sales Manager. She is said to be quite talented in this
ob. This is because she is never rigid or dogmatic, but appears conciliatory and
flexible. Therefore, all parties concerned quickly get the impression they are posi-
tively and directly linked with her.
Strategic empathy is also part of the game, when the qualified chemist worriesabout the product turnover in her business line ›Medical Specialties‹: this includes
tubes, canisters and stoppers as well as desiccants that protect the drugs from
moisture. A business line where a significant increase is anticipated.
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For nine years Nair carried out a similar mandate for Süd-Chemie. After the ac-
quisition of the company she was the first face of Clariant Chemicals (India) Ltd
in her business division. It was more modern and with more amenities. The
people in the headquarters continue to be engaged in driving change forward.
Dare more, wait less; higher efficiency through flatter hierarchies. And last but
not least, well educated women who are keen to take on challenges.
»I think differently and creatively«, she says emphatically, »my out-of-the-boxthinking and my determination to get things done, however great the obstacles
may be.«
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So what is still traditional here, and what is modern? Mini Nair prefers to switch between
the two, depending on mood and situation. Just like her appearance: One day she might
wear a folksy blouse from the Kashmir region and then the next a designer shirt with fad-
ed jeans. Sometimes she finds herself humming a kitschy Bollywood tune and at othersshe’ll sing old Beatles favorites. »Yesterday, all my troubles seemed so far away...«
And when she needs time for reflection she takes advantage of the many options avail-
able: a Hindu temple, a mosque, a Sufi shrine, an old synagogue. She doesn’t believe
in any one God she says, »But I do believe in the power of work.« In this sense her post-
modern life is a cornucopia of cultures and styles, in which the qualified chemist picks
and chooses: »We are less dogmatic about this than anywhere else in the world.«
Definitely further along than 15 or 20 years ago. Whilst the West was mesmerized byChina, the subcontinent quietly developed into one of the twelve most important indus-
trial nations in the world. With annual growth rates of between four and nine percent
and a new, predominantly urban, middle class, which in ten years is estimated to repre-
sent 130 million households. This represents not just buying-power but also a middle
class that is receptive to the rest of the world.
Mini Nair is already in the second generation of this middle class, and she has a serious
hobby. She writes, as often as she can find time for it. Her first book was a children’s story
which was followed by a biography of the Indian pharmacologist B. V. Patel. Then therewas a novel in 2011 ›The Fourth Passenger‹: A story of four women who overcome funda-
mentalism and riots during the clashes between the Hindus and the Muslims in Bombay
in 1992. In addition she writes a blog (http://minieatsinbombay.blogspot.com), in which
she can be almost anything: socialist from a sense of justice, fashion icon, poet, patriot,
feminist and passionate cook.
Colleagues and lecturers, companies and publishing houses: these are all very different
worlds that she flits between, but this isn't a problem for her. On the contrary: »As an
author I can read the subtext of what isn't said in negotiations. That’s a distinct advantagefor me in my job.« And what does it mean to her apart from the salary? »A platform for
me to prove myself, to express myself... effectively where I can be myself.«
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BOM BAIA, good bay – this is what the Portuguese sailors are believed to have
named the area with the seven islands off Maharashtra's coast. The marshland
between the islands was reclaimed and later the British were to found a complete
city on it, from where they shipped what effectively turned into gold to the rest of
the world: Ginger, silk, saffron and tea. The first global trade was with very one-
sided preferential treatment. Over time this has grown into the largest city in the
subcontinent, with more than 18 million inhabitants. This is where the heartbeat
of the world's largest democracy beats: 1.2 billion people in 36 states includingunion territories. Only now it’s no longer spices, but software, pharmaceutical and
entertainment that drive the pulse.
The chemical engineer T. N. C. Nair also tried his luck when he moved here in
the 60s with his wife. From Kerala, the state with the green landscape and red soil,
he brought with him an excellent education and the original spirit of the south.
He passed both on to his daughter, who grew up in central Bombay with all the
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privileges of a son: school, college, university. A »pampered only child,« she
admits with a laugh in order to deflect possible criticism. »My father taught me
to break all the barriers«, she says. »He was also the person who said to me, the
world is your oyster...«
The early years come flooding back when Mini Nair travels through her old
stomping ground of South Mumbai (her index finger still bears the mark that she
was given that morning when her vote for Maharashtra’s regional assembly wasregistered). She points out the ›Metro‹ and ›Regal‹ cinemas with their art deco
facades, where she saw her first films on Sunday afternoons, her favorites being
those of Charlie Chaplin. Or Kyani & Co, the spacious café with the wooden
framed vitrines that the Parsis (followers of the old Parsi religion) opened more
than a century ago: College girls with a few rupees could sit around here for
hours over their masala chai.
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And on to the promenade on Marine Drive with its numerous benches where she
devoured so many books from Dickens to Dostoyevsky, caressed by the gentle
sea breeze. Then on to the Rhythm House in Kala Ghoda, the first port of call for
every record from Pink Floyd to movie soundtracks. Her taste has always been
›eclectic‹, she explains, before she dons the headset. As if it weren't already abun-
dantly clear that this is her guiding principle.
From an early age Mini Nair lived in numerous worlds, a true Mumbaikar, whichhas given her the ability to switch levels so effortlessly today. And as for languag-
es: first English then Marathi, then four further Indian idioms and a smattering of
French. She seems to be perfectly cut out for India's ›new way‹ which aims at
breaking down barriers. It is a path to the future but at the same time harks back
to the maxim of Mahatma Gandhi: »Think globally, act locally.« But the city in
which she now spends the vast majority of her time is no longer on the peninsula.
It lies east of it.
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NAVI MUMBAI, new Mumbai: Founded in the 70s under the direction of a state
company. On the mainland beyond Thane Creek, one of the world's largest
planned cities was built, intended to relieve some of the density of the population
of Mumbai, which was full to bursting. It has separate city districts and industrial
parks for sunrise industries which are accessible via two interchanges and several
railway lines.
Vashi quickly developed into the most popular district. With its tree-lined streetsand small parks it offers a safe, nevertheless, lively retreat. This is where Mini
Nair and her husband, who works at a bank, have set up home with their eight-
year old twin daughters Aaliyah and Aaria, and a household help. The day often
begins there in the dark when Mini gets ready to jog in the park.
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After breakfast, mother and daughters jump into the car that is waiting for them
in the street. The girls are dropped off at the Delhi Public School, a vast institution
with riding arenas and British-style hockey pitches, whilst their mother is driven
further northwards to Airoli. There, in one of the industrial parks, is where
she works: She has a separate office on the eighth floor, which is full of dynamic
open-plan offices and laboratories. On her desk there are a few paintings and
pieces of craft work made by her kids next to her thermos. From the window, the
foothills of the Western Ghat are visible, before which lies a settlement of impro-vised huts.
Four men form her staff. Together they account for the diversity of faith that is
tradition in the Indian republic. At best, groups with the same objectives could
only benefit from this diversity. »If you respect people’s dignity, teamwork be-
comes incredibly finely tuned«, she believes. »You don't make the person at the
bottom of the hierarchy aware of his position, nor do you make the person at the
top of the hierarchy aware of his position. This egalitarian way of dealing with
people makes teamwork totally undogmatic.«
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However, a lot of the time it is difficult for her to maintain her noble outlook. This
is when everything moves too slowly, with too much bureaucracy and red tape.
At the end of the day – and of the quarter – it is not a case of gender or belief, as
she knows, but about targets and the bottom line. What is fundamentally important
for her: »I would prefer to be remembered as the lady who broke a new turnover
limit rather than just a woman.«
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HOWEVER, there is still another India, and Mini Nair finds it of great impor-
tance that her visitors get acquainted with it. The car hardly takes up speed as it
negotiates the potholes of the small streets beyond Navi Mumbai towards the
south of Maharashtra. It drives along the gently undulating Sahyadhri Hills andthrough towns on the coast that were founded by the French and the Portuguese.
Green fields with the lushest rice in the country, white beaches populated with
happy young people.
It takes almost four hours to reach Murud, a sleepy little town by the sea. This
is where Mini and her husband had their modest house built over ten years ago
by a German architect. In the center of a slope covered with mango trees and
coconut palms, some of which were uprooted in the last storm. The lady of the
house wants to check just how many these are.
»This is where I would like to put my feet up one day«, she says. Until then it’s
a question of good, honest, hard work. To be carried out by them all, when they
are there for the weekend (and not just relaxing), as well as primarily by Sandeep
and Supriya – the long-established couple who manage three fields further on
and who take care of the house and the orchard throughout the year.
It is precisely such farmers, with their lives of hard labor, who contribute to the
national well-being. Thanks to them India is still able to provide enough food forits population and so retain its independence. In addition, her twins get a taste
of a modest lifestyle here from time to time. In Vashi they are too often caught
up in a bubble of luxury, »and I'm not particularly happy about that.«
This time only three trees were blown down on the plantation. The lady of the
house can visit Sandeep and Supriya with a light heart and leave them some
money for their hard work, and also admire the refrigerator, which is the mag-
nificent new arrival in the little house. Supriya beams as she relates how she
no longer has to bother her neighbors when her husband asks for a glass of coldwater in the evening. The academic in blue jeans thinks this is also a sign of the
times. But there are millions and millions of Supriyas and Sandeeps who now
want to have electrical appliances and televisions in their homes. A domestic
market is therefore growing which will be highly interesting for many compa-
nies and sectors: Like an elephant that suddenly rises at a secret signal.
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MINI NAIR is wearing her pumpkin-colored blouse again, as she once more runs
through Mumbai’s Airport terminal a couple of days later. The plane for Ahmed-
abad, the city in the state of Gujarat with seven million, already leaves shortly
before six in the morning. That is no problem for the declared ›High Performer‹:
The main thing is that she can stay in contact with the resident pharmaceutical
company for which her company supplies various pharmaceutical packaging so-
lutions.
An important customer, she notes, and lets her long fingers slide over the smart-
phone again until she finds the page about the Ashram where Gandhi lived for
12 long years. It was long ago developed into a memorial in Ahmedabad. She wants
to sit on the bench there between the buildings and meditate again today before
business begins. Because here, peace and tranquility reign that could be infectious.
»This is my favorite place,« she says while she shows the photo. Then she disap-
pears in the direction of the gate, with the confident stride of a lady who wants to
make a difference.
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»Think globally, act locally.« This is part of Mini’s momentum, just as it is the mo-
mentum of the country that can no longer be stopped. »We have our own spirit and
we fear nothing,« she says with palpable pride, »we are the creeping tiger.«
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One Clariant»THINK GLOBALLY,
ACT LOCALLY.«Mahatma Gandhi
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THREE PHASES OF STRATEGY IMPLEMENTATION since 2009
2009 2010 2011 2012 2013 2014 2015
PROFITABLE GROWTH
CLARIANT EXCELLENCE
Comprehensive restructuring
Change has already been present at all levels in the last six years:
the Group structures were optimized and programs were initiated
for continued improvements. This enabled the restructuring of the
company, which led to a profitable growth trajectory. The corporate
culture has also been radically changed with a new brand appear-
ance and the definition of a new corporate mission and vision were
unified. Meanwhile, the corporate strategy is based upon five cen-
tral pillars: the increase in profitability, the repositioning of the
portfolio, focus on innovations and research & development and the
maximization of growth potential. Furthermore, the increase in value
by sustainability became a central building block of the company.
Clariant succeeded in the turnaround of the Group with profitable
growth. The reputation of the company has clearly improved. The
foundation was thereby laid to make Clariant into one of the leading
specialty chemical companies worldwide, like it was defined in
the corporate vision. In order to bring the company to the next level,
a further acceleration of change is necessary.
»Accelerate Change« is this year’s motto. With this slogan, the company is linked tothe central strategic target of top management, which was given to all employees
by Hariolf Kottmann: We have to change the way we operate in order to successfullymaster the challenges of the dynamically changing global world economy.
The Clariant Story
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CARE CHEMICALS
NATURAL RESOURCES
CATALYSIS & ENERGY
PLASTICS & COATINGS
THE FOUR BUSINESS AREAS of Clariant
The achieved successes just in the recent past and the clearly im-
proved reputation of the company are based on a unique strategic
positioning: Clariant generates value by focusing on sustainability
and innovation. In order to reach this goal, all stakeholders with
heir specific wishes and needs must be equally addressed; on the
one hand the customers and shareholders, on the other hand the
employees and society as a whole. Only this way can the differen-
iation from other companies and the announced above-average
value generation succeed.
Which Demands Do Clariant's Customers Make?
Added value, innovations, profitability, sustainability, safety, part-
nership, as well as communication and interchange – the demands
of the Clariant customers are so different, just like the markets in
which they are active. Therefore, the decisive question to the cus-omers is always: »What is precious to you?« In order to satisfy
hese challenges, it is fundamentally important to listen to the cus-
omers, to develop and deliver answers to their questions and wishes.
For this purpose, Clariant has expanded its corporate Research &
Development into a true think tank, from which about more than
300 projects, thereof 63 important (Class 1) projects, have currently
evolved with a total sales potential of CHF 1.8 billion (Net Present
Value = NPV of CHF 1.2 billion). Understanding the projects is
ust as important as the permanent further optimization and con-
ideration of the total value chain, including all suppliers. This
s a key prerequisite for a successfully accelerated change.
Clariant's Focused Portfolio
After the successfully executed optimization in the 2014 reporting
year, Clariant possesses a focused portfolio that distinguishes
itself by an above-average growth rate, promising future prospects
and high profitability with upside potential.
What Drives Clariant? Toward Which Values Is the
Company Oriented?
Besides the Group’s transformation at all operative levels, Clariant
has designated a change to a new corporate culture by the introduc-
tion of a new brand and value system in 2012, a »change in mindset.«
This made it possible to establish a newly united corporate culture
after the years of restructuring and important changes to the
portfolio.
How Clariant Creates ValueTHROUGH APPRECIATION AND
UNIQUE POSITIONING
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ENTERPRISE VALUES AS A FOUNDATION
or sustainable value creation
Drive for
EXCELLENCE
Courageous
and DecisiveLEADERSHIP
Sustainable
VALUE CREATION
Deliver to
PROMISE
Lived
APPRECIATION
Corporate
RESPONSIBILITY
Disciplined
PERFORMANCEManagement
Turning Appreciation into Value Creation
The main objective for all of Clariant’s implemented activities is
ustainable value creation for all stakeholders and the company.
That requires the alignment of the actions of everyone in the com-
pany on the basis of six values: drive for excellence, disciplined
performance management, deliver to promise, courageous and de-
cisive leadership, lived appreciation, corporate responsibility.
The Goal of a Long Journey:
Clariant as the Global Leading Company
for Specialty Chemicals
The Vision of Clariant is to be the global leading company for
specialty chemicals, which stands out through above-average value
creation for all stakeholders.
In order to achieve this, a clearly defined Mission was formulated
that is based upon building up leading positions and fostering a
high functional excellence as part of the corporate culture for the
businesses in which Clariant is active. Added value will be created
for the customers by providing competitive and innovative solu-
tions, for the employees by adhering to the consistent life of corpo-
rate values, for the environment by sustainable actions on all levels,
and for the shareholders by achieving above-average returns.
The vision shall be achieved by the implementation of the Mission
Five-Pillar-Strategy : Increase in profitability, repositioning of
the portfolio, adding value through sustainability, focus on innova-
tion and research & development, as well as generation of growth
potentials.
Continuous Improvement connected to cultural change is the
foundation for a sustainable value creation. Therefore, the Clariant
Excellence initiative was started in 2009. It is oriented towards
optimizing competitiveness through efficiency savings and the cre-
ation of added value for the customers. Clariant Excellence com-
prises the areas of Operational Excellence, Commercial Excellence,
Innovation Excellence, and People Excellence.
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EBITDA* MARGIN in %
14.2
0 5 10 15
Financial TargetsON THE SPRINGBOARD TO THE NEXTLEVEL OF PROFITABILITY
Clariant's profitability has been raised step by step through cost ef-
ficiency, innovation, growth and portfolio restructuring. By the
2014 reporting year the EBITDA margin (before exceptional items)
has improved to 14.2 % and the portfolio is expected to generate
a target range of 16 – 19 %. In 2015 the company will make signifi-
cant steps in this direction.
Growth Initiatives Will Enable a Sales Increase ofApproximately 5 % AnnuallyBased on the growth initiatives already implemented, the success-
ful portfolio adjustments and the launch of more than 300 innova-
tion projects, thereof 63 Class 1 projects, with a sales potential of
approximately CHF 1.8 billion (NPV CHF 1.2 billion), Group sales is
excpected to increase in the coming years by about 5 % annually inlocal currencies, under the assumption of a steady development of
the global economy. Clariant further maintains its objective to raise
the return on invested capital (ROIC) above that of the peer group.
HOW WILL THE TARGETED EBITDA* MARGIN RANGE
OF 16 – 19 % BE ACHIEVED?
· 1 – 2 percentage points margin increase from growth in above-average
profitability businesses and the introduction of innovations
· 1 – 2 percentage points through cost efficiency measures and productivity
improvements throughout the Group
*before exceptiontal items
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Mr. Jany, is Clariant financially
well-prepared for future growth?
—
PATRICK JANY Our balance sheet is
very healthy. Since the acquisition-driven
high indebtedness of 2012, we have again
reduced our net financial debts from
CHF 1.8 billion to less than CHF 1.3 billion.
The equity ratio of 34.5 % and the gear-
ing of 46 % are also more than solid.
How will it continue from the CFO’spoint of view?
—
PATRICK JANY From a financial per-
spective, we are focusing on a conservative
financing policy. We have a well-distrib-
uted debt maturity profile throughout
2024, and starting in 2015 we will strive
toward significantly improved free cash
flow generation.
What is the use of this cash flow?
—
PATRICK JANY As the company be-
comes more profitable and turns towards
profitable growth the use of cash is logi-
cally distributed between investment in
growth, further reduction of debt and
increased dividend to our shareholders.
What does an increased dividend mean
specifically?
—
PATRICK JANY We want to distribute
25 to 35 % of the available earnings
before restructuring expenses to share-
holders. Since 2011 we have increased
the dividend per share steadily to CHF
0.36. With the expected earnings trend,
there will surely be room for further
improvement.
You mentioned future investments.
How much are you allocating for them
in the future?
—
PATRICK JANY Our investments in
tangible assets have risen in 2014 to
CHF 310 million, which is almost twice
than in 2009. The research and devel-
opment expenses have increased to CHF
213 million, or about 3.5 % of sales; this
is paying off. We strictly focus on the al-
location of investments in areas with
high growth potential and in promising
markets world-wide.
With the portfolio having been shaken
up considerably, how are the invest-
ment flows being directed?
—
PATRICK JANY Very definitely, our
portfolio has been restructured to enable
growth and profitability. Accordingly,
we are directing our investments more
toward attractive future markets. There-
fore, 52 % of the money went to high-
growth areas in 2014, compared to only
34 % the previous year. The same is true
for the regional allocation: 54 % of ourinvestments flowed into emerging coun-
tries and North America during the 2014
reporting year.
—PATRICK JANY
Clariant’s Chief
Financial Officer
»Our focus will be on the generation of free cash flow to
be used for debt reduction, investment and distribution toshareholders.«
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generate
business
THE FIVE-PILLAR-STRATEGY of Clariant
1Increase
Profitability
2Reposition
Portfolio
3Add Value with
Sustainability
4Foster
Innovation
and R&D
5Intensify
Growth
STRATEGY TO INCREASE PERFORMANCE
Performance, growth and innovation characterize thinking and ac-
tion at Clariant. In the specialty chemical industry, Clariant should
be a synonym for businesses with above-average profitability (per-
formance) in attractive, fast growing markets (growth), as well as
for innovative technologies, products and applications (innovation).
These three themes are the driving forces for a sustainable success,
that ultimately benefits customers, employees, the environment and
shareholders alike, and helps to generate value. In order to accom-
plish this mission Clariant has implemented the five-pillar-strategy:
Increase profitability, reposition portfolio, add value with sustain-
ability, foster innovation and R&D, intensify growth.
The Five-Pillar-StrategyACHIEVING FINANCIAL TARGETSAND SUSTAINABLE SUCCESS
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NET BENEFITS CREATED BY CLARIANT EXCELLENCE in CHF m
125
0 25 50 75 100 125
PILLAR 1: INCREASE PROFITABILITY
The Group-wide focus on cost discipline is an important strategic
element for the improvement of the EBITDA margin (before excep-
ional items) by 1 to 2 percentage points. At the end of 2008, this
became a clear priority in order to optimize the cost structure on all
evels. »Project Clariant« 2009 and 2010 initiated the change in
mindset (»Change«) for all employees by focusing on cash genera-
ion and cost reduction. At the same time, the number of locations
has been reduced in the course of the so-called Global Asset Net-
work Optimization (GANO) by the middle of 2012. A multitude
of measures has thus led to a reduction of personnel costs, and
herefore, the break-even point of the Group by a total of CHF 180
million.
Clariant Excellence as the Foundation for Sus-tained Profitable Growthn parallel Clariant Excellence (CLNX) – an initiative for further
ustained improvement – has been implemented in 2009. This ini-
iative focuses on the continuing improvement and the cultural
change. Originating from the LeanSigma approach – a method for
efficiency improvement and quality management – Clariant Excel-
ence is geared toward optimizing competitiveness through effi-
ciency gains and the creation of added value for the customers. En-
repreneurial thinking is paramount here. Clariant Excellence
encompasses the four areas of Operational Excellence, Commercial
Excellence, Innovation Excellence and People Excellence.
Positive Effects from Continuing ImprovementClariant Excellence has become a complete success for the com-
pany. Together with the added value in the amount of approxi-
mately CHF 125 million that was generated in 2014, positive effects
from cost reduction, additional sales due to increased efficiency and
optimization of the net working capital in the amount of CHF 475
million have been achieved within the past five years. In 2015 anadditional CHF 100 million should be added to this. In 2014 more
than 9 000 projects were under way, more than 4 300 employees
have been trained in Clariant Excellence programs.
The key for the success of the initiative is a comprehensive training
of as many employees as possible to so-called »Belts«. By the end
of 2014, there were more than 75 Black Belts, more than 800 Green
Belts and more than 2 600 Yellow Belts. As project managers or as
project team members, they are responsible for carrying out the op-
timization measures in all organizational areas.
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OPERATIONAL IMPROVEMENT through the Linkage of the Functional Excellence Programs
3 Accelerated Business Transformation
2 Explore Growth
1 Intensify Lean Management
Operational Excellence Commercial Excellence Innovation Excellence
Linking the Four Areas of ExcellenceA cross-linking of all four areas of Clariant Excellence is critical for
its success. While Operational Excellence mainly deals with effi-
ciency improvements in all operative areas, Innovation Excellence
focuses closely on the establishment of Clariant as a global driver of
innovation in the specialty chemicals industry. Design Thinking,
ideation jointly with customers and suppliers translates unmet cus-
tomer needs into future Clariant offerings. Therewith and support-
ed by a stringent Idea to Market process, 1 – 2 % of annual topline
growth will be achieved. Commercial Excellence is focused on
strengthening sales processes and strategic marketing. In this con-
text for example, after conclusion of the pilot phase the previous
year, the implementation of Marketing Excellence as a key building
block for all Business Units began worldwide in 2014. Marketing
Excellence systematically assesses possible markets for Clariant
and finally defines market growth plans. Afterwards, these market
growth plans are converted into sales opportunities by the entire
sales force. At this stage Marketing Excellence and Clariant Cus-
tomer- and Sales Management play together to accelerate the con-
version of sales opportunities into sales. Enabling Clariant people
to stringently manage organizational performance is the key
purpose of People Excellence. People Excellence strives to make
Clariant Excellence possible for all employees in the first place by
translating all Clariant Excellence content into capability building
programs comprising leadership as much as content skills.
»The cumulated positive effects of
Clariant Excellence will markedly surpass
the CHF 500 million threshold in 2015.«
BERND HÖGEMANN
Head of the Clariant Excellence initiative
45
The Clariant Story
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OPTIMIZED PORTFOLIO for Sustainable Profitability
Süd-Chemie(Germany)
Acquisitions
Plastichemix
Industries
(India)
VitaPac
(HongKong)
Aerochem
(Sweden)
CRM(France)
ChampionGulfofMexicoOil
Business(USA)
BayInk(Germany)
OrganicPigmentsBusiness
JiangsuMulticolor(China)
Divestments
TextileChemicals
PaperSpecialtiesEmulsions
Detergents&Intermediates
LeatherServices
WaterTreatment(SouthAfrica)
ASKChemicals JointVenture
EnergyStorageBusiness
2011 2012 2013 20152014
Companhia
Brasileirade
Bentonita
(Brazil)
PILLAR 2: REPOSITION PORTFOLIO
Clariant has significantly changed its company portfolio by active
portfolio management, commencing with the major acquisition of
Süd-Chemie in 2011. The strategic goal is always the establishment
of a leading market position in highly profitable growth markets.
The achievement of this goal results on the one hand from acquisi-
ions of businesses with a high return of investment and growth
potential, and on the other hand, by means of selling businesses
with low returns and growth potentials. Altogether, business activi-
ies with a sales volume of about CHF 1.6 billion and an EBITDA
return of over 15 % were purchased, whereas the company separat-
ed itself from a total sales share of almost CHF 2.0 billion and a
profitability of under 8 %. The profitability has risen over the past
three years by improving the quality and the strategic positioning of
the portfolio. After the new structures and the corporate strategy
within the Clariant Group will be fully established, the earning dy-
namics resulting from the portfolio restructuring should again be
accelerated. Thereby, Clariant also benefits from the lowered cycli-
cality caused by these transactions and the focus on global trends
such as environmental protection and energy efficiency.
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MILESTONES OF CLARIANT'S COMMITMENT to Sustainability
2009 2011 20122010 2013 2014
RESPONSIBLE
CARE® GLOBAL
CHARTER
signed
FIRST SUSTAIN-
ABILITY REPORTpublished
ENVIROMENTAL
TARGETS 2020
established
SUSTAINABILITY
REPORT
rated at GRI A+
UN GLOBAL
COMPACT
signed
DJSI INDEX
EUROPE
entered
DJSI INDEX WORLD
AND EUROPE
top ranking
SUSTAINABILITY
anchored in Corporate
Strategy
FIRST RSPO
CERTIFICATION
received
TOGETHER FOR
SUSTAINABILITY
(TFS)
membership
GRI4 REPORTING
STANDARD
applied
PILLAR 3: ADD VALUE WITH SUSTAINABILITY
Clariant extended the corporate strategy to an additional pillar
at the beginning of September 2014: add value with sustainability.
This theme plays a key role in reaching the Group’s growth objec-
ives. On the one hand, sustainability is an important element of
he innovation process and therefore meets global trends like envi-
ronmental protection and conservation of resources; on the other
hand, it ensures that costs are saved and Clariant and customers are
positioned as positive companies in public awareness, and this dur-
ng the entire value creation. In summary, one can say: For Clariant,
sustainable economic practices mean the creation of long-term
added value and benefits for all interested groups – in economic,
ecological and social respects. The entire organization and all em-
ployees have been sensitized for this purpose; sustainability com-
mittees were established in all regions that would again report
to a central sustainability council, which is personally led by CEO
Hariolf Kottmann. This is also a further building block to
»Accelerate Change«.
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Involvement in Numerous Sustainability Initiativesand ProjectsClariant obligates itself to an ethical and sustainable strategy,
whether it is related to the environment, social responsibility, gov-
ernance criteria, health and safety, sustainability in the value chain,
product responsibility, up to personnel development. The signing of
the »Responsible Care® Global Charter« was the start signal. This
and the 2013 initiated »UN Global Compact« – containing the ten
respective fundamental principles of the topics of human rights,
work and environmental protection, as well as combating corrup-
tion – function worldwide as central operational principles for the
topic of sustainability for Clariant. In addition to this, the company
has imposed self-initiated obligations beyond the»Code of Con-
duct« and the »Code of Conduct for Suppliers«. The respective cor-
porate function has herein defined binding policies for all employeesand suppliers for business conduct. For example, these include the
topics of fair competition, anti-corruption policies, prevention of
discrimination and child labor. Moreover, numerous initiatives and
projects were started; for example, the »Sustainability@Clariant
Portfolio Value Program«, established in 2012/13. In this program,
clear sustainability criteria for the product portfolio were estab-
lished. On this basis, company products and solutions are classified
as sustainable. Upon this, measures for communication, the market-
ing, but also strategic decisions are being built. Products with an
outstanding sustainability profile will be identified with the Eco-
Tain® label. In order to make development projects comparable and
to be able to assess their advantages Clariant has also introduced
the »Corporate Sustainability Index« for research and development
projects (CSIR&D ). In the social area, Clariant joined the chemical
industry initiative »Together for Sustainability« in 2014, which has
the common goal of improving sustainability in the supply chain
of the industry. Therefore, delivery evaluations and audits by inde-
pendent experts, among other things, will be conducted, which
all participating companies have access to.
Sustainability on All LevelsClariant has defined its key areas of sustainability activities follow-
ing an intensive exchange with various stakeholders. Over 150
internal and external stakeholders helped to identify and prioritize
material areas by analyzing external market trends and business
drivers. These areas include employment opportunities, environ-
mental targets, emissions, resource and water management, as well
as efforts in the community as part of the company’s commitment
to corporate responsibility. These topics are regularly reviewed by
Clariant’s Sustainability Council and adapted where necessary. The
materiality matrix lists the key areas of Clariant's sustainability
activities based on this assessment. The examples above show how
for two of these aspects Clariant is monitoring its success against
concrete targets and how this creates value for the whole company.
ACCIDENT PREVENTION PAYS OFF
Work safety is one of the top priorities for Clariant. The company
takes all necessary measures to convey the corporate culture andachieve the goal of »Zero Accidents«. In this manner, accident and
absenteeism figures have decreased to a historic level over the past
years. This is not only for the benefit of employees, but also for the
company as for example lost work days (LWD) saved in the past
eight years correspond to the performance of 50 employees during
the same period.
Sustainability Report 2014
OPTIMIZED PRODUCTION PROCESSES PROTECT
THE ENVIRONMENT AND SAVE COSTS
A great number of individual measures merge together with the
optimization of the production process to create a whole. In
particular, Clariant celebrates energy efficiency’s great success, and
with the in-house program eWatch alone, saves approximately
CHF 6 million from year to year thanks to targeted investments
and employee training.
Sustainability Report 2014
49
The Clariant Story
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· Human rights
· Social engagement
· Water
· Biodiversity
· Demographic changes
· Food security
· Urbanization
· Wealth & consumption shifts
· Employee training & development
· Logistics
· Occupational health & safety
· Process safety
· Waste
· Business ethics & Compliance
· Corporate Governance
· Emissions
· Employment conditions
· Energy
· Life-cycle integration
· Product Stewardship
· Renewable raw materials
· Stakeholder dialogue
· Substitution & alternatives for hazardous substances
· Sustainable innovation
· Sustainable supply chains
· Transparency
· Value chain collaboration
RELATIVEIMP
ORTANCETO STAKEHOLDERS
RELATIVE IMPACT ON CLARIANT
moderate
m o d e r a t e
high
h i g h
MATERIALITY MATRIX by Clariant
The area work safety is reflected by the figures of industrial acci-
dents with at least one day of absenteeism in relation to 200 000
work hours. This is represented in the so-called LTAR-quota (Lost
Time Accident Rate), which dropped since 2007 from 0.92 to 0.23
n 2014.
n the area compliance, employees worldwide are trained periodi-
cally on topics related to the code of conduct such as corruption or
bribery. A multitude of training programs take place at the Clariant
Academy to prepare the employees optimally for their tasks. The
firm’s own Product Stewardship organization ensures that the total
product portfolio complies with international safety and environ-
mental criteria, such as REACH (Registration, Evaluation, Authori-
zation of Chemicals) or the »Global Product Strategy« (Internation-
al Council of Chemical Associations, ICCA).
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New Environmental Targets until 2025In 2011, Clariant had, for the first time, exactly defined environ-
mental targets by 2020 (2005 baseline), on which the company al-
lowed itself to be measured. In view of the fact that these targets
were already expected to be not only met but exceeded in 2014 due
to the comprehensive portfolio restructuring, Clariant has decided
to define new targets at the beginning of 2015, which take into ac-
count these circumstances. These refer to reference values of the
2013 business year and focus on the following six main criteria with
regards to emission values of the Group:
In these guidelines, the clear commitment of management to trans-
parency and credibility regarding the topic of sustainability mani-
fests itself both internally and externally. Only with continuous opti-
mization of the production system and employee training can the
ambitious goals be reached.
Clariant Again in the Dow JonesSustainability IndexA confirmation that Clariant has succeeded in establishing itself
successfully among the most sustainable specialty chemicals com-
panies worldwide was the renewed inclusion of the company in one
of the globally most prestigious sustainability indices, the Dow
Jones Sustainability Index (DJSI). After the first listing in DJSI Eu-
rope in September 2013, Clariant was one year later additionally
included in the DJSI World. As a result, analysts from RobecoSAMacknowledged the outstanding role of Clariant in economic, ecolog-
ical and social respects and graded the company within the top 10 %
of companies in the chemical industry.
– 40– 35
– 35
– 35
– 30 – 30
Reduce
Energy Consumption
Reduce
Water Consumption
Reduce
Direct CO2 Emissions
Reduce
Volume of Waste
Water
Reduce
Emissions fromGreenhouse Gases
Reduce
Volume of Waste
ENVIRONMENTAL TARGETS by 2025 in %
51
The Clariant Story
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INNOVATION FIGURES
~ 1 050People in R&D in 8 global R&D centers &
> 50 Technical Application Centers
3.5 %of Group sales 2014 R&D expenditures (CHF 213 m)
> 7 000patents
> 130scientific collaborations
NNOVATION PIPELINE FILLED TO CAPACITY
Sales Potential at maturity of Clariant Innovations in CHF m
Jan 2013
1 100
Jan 2012
540
Jan 2014
1 600
End of 2014
1 800
PILLAR 4: FOSTER INNOVATION AND R&D
The Capital Markets and Media Days took place at the end of June at
he Clariant Innovation Center (CIC), the newly constructed center
for research & development (R&D) in Frankfurt am Main. Clariant's
management presented the Group's strategies and objectives for the
ubject of innovations. A sales growth of 1 – 2 percentage points
hould be generated with the introduction of new innovations year
by year. The current innovation pipeline of more than 300 projects,
hereof 63 Class 1 projects, shows that these numbers were not
pulled out of the air, but based on facts, which have a sales potential
of more than CHF 1.8 billion. This can be converted into a total net
present value of clearly over CHF 1.2 billion. The sales potential
of the innovation pipeline climbed compared to 2012 by more than
a billion Swiss francs.
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GLOBAL INNOVATION NETWORK global coordination* – regional presence
R&D Center for Biotechnology
R&D Center for Chemistry & Materials
R&D Center for Process Technologies > 50 Technical Centers**
(Application Development)
*R&D at Clariant is globally coordinated
via Clariant International Ltd in Switzerland.
**Not all shown.
R&D Center for Catalysis
BUSINESS UNIT FUNCTIONS
GROUP TECHNOLOGY & INNOVATION (GTI)
GROUP FUNCTIONS
FRANKFURT | GENDORF | HEUFELD | MUNICH
Germany
MUMBAI
India
SHANGHAI
China
LOUISVILLE
USA
PALO ALTO
USA
Innovation and Sustainability Closely InterwovenIn order to also reach these ambitious goals for the coming year,
around 1 050 employees work in approximately 60 research and de-
velopment facilities of the Group. All R&D activities at Clariant are
globally coordinated via Clariant International Ltd in Switzerland.
CHF 213 million flowed into this area in 2014, which corresponds
to about 3.5 % of Group sales. In research intensive areas such
as Catalysts, the investment is above 7 %. Clariant focuses on the
current global trends when it comes to R&D: environmental protec-
tion, globalization and urbanization, as well as resources and ener-
gy efficiency. For example, the main focus of research themes are
on the future markets of biotechnology, efficient catalysts for coal-
to-gas and coal-to-chemicals transformations, functional packaging,
oil and gas production as well as nutrition and medical products.
Innovation and sustainability are nowadays driven by steadily in-
creasing consumer and customer requirements across the entire
value chain of products.
Value Creation at All Levels of theInnovation Process Value creation also stands in strategic focus on the subject of inno-
vation. Here every innovation passes through a four-stage process
covering the entire value creation. Project leaders of all important
(Class 1) projects are supported by Clariant Innovation Excellence.
The starting point here is the necessary understanding of existing
and emerging needs and requirements of the global markets and
customers. A structured developmental concept is then drafted that
transforms these needs into value-added products and solutions.
Crucial for the commercial success is the period of time between
the idea and the market launch, and must be correspondingly mini-
mized. In order to be able to guide the available resources efficiently
into the very promising markets and areas of operation, it further
requires a permanent screening for the trends that will drive growth
in the future. Finally, coordinated technology and application plat-
forms are important to be able to obtain synergies over the respec-
tive areas of application.
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The Clariant Story
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Trend analysisunmet need
analysis
Piloting andtesting with
lead customers
Launchfeedback
monitoring
Needinterviews
(detailed)
Customer
sampling
CLARIANT’S IDEA-TO-MARKET PROCESS – Example Glucamide
CUSTOMER& MARKET
NPUT
Ideation workshops with
technology and market expert
participation
Technology platforms, project management,
coaching and workshop moderation
NNOVATION
EXPERT &
TECHNOLOGY
NPUT
PROCESS
IDEATION GATE REVIEW GATE REVIEW MARKET LAUNCH
FULL
PRODUC-
TION
CSIR&D project assessment is mandatory at stage gate from Scope to Execute phaseince 2013 for all Class 1 projects and projects with NPV > CHF 10 m and therefore
drives R&D projects towards more sustainability already in early stages.
Nov 2010 Jan 2011 Oct 2012 Oct 2014 Q1 2016
SCOUT SCOPE EXECUTE COMMERCIALIZE
Conduct
Opportunity
Ideation
Monitor
Market
Introduction
Evaluate
Oppor-
tunity
Develop
Offering
Conduct
Deep
Dive
Pilot
Offering
Establish
Proof of
Concept
Prepare
Launch
Develop
Business
Opportunity
Close
Project
Cooperation between Customers and Clariant R&DThe example of Glucamide demonstrates a typical model for the
nnovation chain from the generation of an innovative idea to the
market launch of the finished product. Glucamide refers to novel,
ugar-based surfactants with performance advantages for multiple
market applications. Close collaboration with customers and early
product sampling were key to validate the potential of this new
product class. The development process lasted from 2010 until
October 2014, and showed that Glucamides clearly promise more
application possibilities than originally planned. So Glucamides
are the foundation of new Clariant products for the application
fields of Personal Care (GlucoTain®), Industrial & Home Care
(GlucoPure™), as well as Crop Solutions (Synergen GA®).
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Mr. Kohlpaintner, why was the subject
of innovation the main focus of your
Capital Markets and Media Days this
year?
—
CHRISTIAN KOHLPAINTNER Long-
term growth and profitability of a spe-
cialty chemicals enterprise can only
be secured by a well filled and success-
fully executed innovation pipeline.
Describing and explaining our efforts
and status in this regard provides orien-
tation and comfort to our shareholders,
so that they know, what they can expect
from Clariant.
What facts do you have to support
your assertion?
—
CHRISTIAN KOHLPAINTNER Our inno-
vation pipeline is well filled with a total
sales potential at maturity of 1.8 billion
CHF. We have focused our project
portfolio and put the proper resources
behind. Also our track record in the
past years was quiet successful here.
A typical R&D project takes several
years, so how do you avoid the risk of
losing money here?
—
CHRISTIAN KOHLPAINTNER Clariant
applies a clearly structured Idea-to-Mar-
ket-Process. During project selection we
pay utmost attention to the unmet needsof our customers by involving them very
early in the development process. The
same applies to other relevant internal
functions which get involved at well de-
fined stages to guarantee a smooth and
speedy commercialization process.
Cross-functional discussions ensure that
we capture the full potential of a new
idea, even in market segments we had
not originally targeted.
—CHRISTIAN
KOHLPAINTNER
Member of the
Executive Committee
»Our innovation pipeline is well filled with a sales potential
at maturity of CHF 1.8 billion.«
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The Clariant Story
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Industry Attractiveness
Harvest**
%
Watch List**
%
* Distribution of growth Capital Expenditure 2014
** Share of revenues 2014
Grow**
%
Improve**
%
C o m p e t i t i v e P o s i t i o n
ALLOCATION OF INVESTMENTS in Growth Areas (Total CHF 310 m)
%of 2014 investments*
%of 2014 investments*
%of 2014 investments*
PILLAR 5: INTENSIFY GROWTH
n order to achieve an average sales growth of approximately 5 %
per year, Clariant focuses on the allocation of investments in areas
with excellent growth potential and on expanding regions with
he most promising sales potential worldwide.
Based on these growth areas, the following businesses promise high
potential: catalysts, crop protection, solutions for the mining and
oil industry, personal care and biotechnology. This is also increasingly
reflected in the allocation of investments. The comprehensive
portfolio realignment which took place in the last couple of years
helped as well. Thus, 52 % of the total investments of CHF 310 mil-
ion were channeled into growth areas in 2014, compared to only
34 % the previous year, and 23 % (2013: 21 %) of the expenditures
went into areas where the improvement of structures were pre-
dominant, and only 25 % (compared to 39 % the previous year) wentnto cash flow-oriented activities during the reporting year.
Future Growth Will Come from Asia and NorthAmericaThe predictions of the International Monetary Fund (IMF) make
it clear that the bulk of global economic growth in 2015 and beyond
will happen in emerging countries. The growth forecast for 2015
is 4.3 % in those countries. On the other side, it only reaches 2.4 % in
the industrialized countries with exception of the U.S., that has been
predicted a comparatively solid growth of 3.6 %. Clariant's high in-
vestments in previous years are reflected in the shift of the propor-
tion of sales in these regions. During the reporting year, Clariant
invested about 54 % of its total investments in emerging countries
and North America.
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INDIA KEY FACTS
> 900employees
CHF 141 m2014 sales
7locations
SALES SHIFT to Emerging Markets continues
2005
15 %
49 %
13 %
6 %
17 %Asia/Pacific North America
Europe
Middle East/Africa
Latin America
2014
16 %
37 %16 %
8 %
23 %Asia/PacificNorth America
Europe
Middle East/Africa
Latin America
Clariant in the Promising Market of IndiaAs second most populous country, India is one of the markets with
the largest future potential. Accordingly, the strengthening of its
market position in this country is one of Clariant’s strategic goals.
In this context, the acquisition of Plastichemix was completed in2014, which ensured Clariant a leading position in the Indian mas-
terbatch market. Furthermore, the production capacities for pig-
ments will be expanded considerably at the sites in Roha and Cud-
dalore. The new regional Group headquarters in Mumbai was
opened in June. The location has room for 400 employees and in-
cludes a regional innovation center with space for about 100 em-
ployees in chemical research, application development and analytics.
(see also pages 7 – 36: »One Clariant« with main emphasis on India)
»With over 1.2 billion inhabitants India promisesenormous potential. With seven locationsClariant is well-positioned in India to profit fromthe dynamic growth.«
DR. DEEPAK PARIKH
Region Head India
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SALES BY BUSINESS AREA EBITDA BY BUSINESS AREA
Care Chemicals CHF 1 511 m 25 %
Catalysis & Energy CHF 729 m 12 %
Natural Resources CHF 1 297 m 21 %
Plastics & Coatings CHF 2 579 m 42 %
Group Sales: CHF 6 116 m
Care Chemicals CHF 259 m
Natural Resources CHF 191 m
Plastics & Coatings CHF 360 m
Group EBITDA (before exceptional items) 2014: CHF 981 m; including corporate costs: CHF 867 m
Catalysis & Energy CHF 171 m
THE RIGHT PORTFOLIO FOR FUTURE GROWTH
Serve Global Trends with Innovative SolutionsCan you help us build a car that drives in the most environmentally
compatible way possible? What ingredients do I need for a skin creamthat addresses allergies in children? What should I pay attention to
if I want to successfully reach consumers in India? These are exam-
ples of questions that our employees receive daily from our custom-
ers. One can only become the world’s leading specialty chemicals
company if one is able to meet these customer needs with the right
products and solutions. Under this assumption, Clariant has aligned
its company portfolio and is focusing on markets with good future
prospects, above-average growth and Business Units where the
Group has substantial price-setting power due to a leading compet-
itive and technology position. In this context, the global trends mo-
bility, resource conservation and energy efficiency are just as
much in the forefront as the consequences implied by increasing
urbanization in emerging markets.
The four Business Areas of Care Chemicals, Catalysis & Energy,
Natural Resources and Plastics & Coatings reflect this claim perfect-
ly. Each of these areas has a significant growth potential, above-
average profitability, strong innovative capacity and a clear commit-
ment to sustainability.
CARE CHEMICALS combines Industrial & Consumer Specialties
(ICS) with the activities of the New Business Development and the
innovative biotechnology business.
CATALYSIS & ENERGY represents Catalysts and Energy Storage.The Business Area offers a broad portfolio of catalysts and adsor-
bents for many chemicals and fuels processes, including those that
enable the use of alternative raw materials, such as natural gas,
coal, and biomass. In addition, the start-up business Energy Stor-
age, which will be sold in the first half of 2015, provides solutions
for battery materials.
NATURAL RESOURCES consists of Oil & Mining Services and
Functional Minerals. Oil & Mining Services offers products and ser-
vices for oil extraction on land and in deepwater environments.
Refinery Services additives help customers to operate their diesel
vehicles in extreme temperatures. Mining Solutions provides
chemical additives to enable the efficient extraction of minerals and
metals worldwide. Functional Minerals provides specialized puri-
fication solutions for various industrial processes, for example the
purification of edible oils.
PLASTICS & COATINGS comprises Additives, Pigments and
Masterbatches. This Business Area designs products for customers
from various industries – from the packaging industry, the electro
and electronics industry to paints & coatings.
59CLARIANT ANNUAL REPORT 2014
Business Areas
AT A GLANCE
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ORIENTATED TO GLOBAL TRENDS
With a margin of 17.1 % with regard to EBITDA before exceptional
items, the Care Chemicals Business Area already meets the target
for the Clariant Group. However, the yardstick for Care Chemicals
is even higher at 18 – 19 %. How will the gap between these ambi-
tious numbers be closed?
The key is expansion of market shares in the consumer products
business as well as in crop solutions for agriculture. It will be
crucial to have a good hunch for global trends. This can be accom-
plished through close customer relationships and a corresponding
innovation pipeline. Thereby, regional growth focus lies with
emerging markets, particularly in Latin America, India and China.
Here, the surge in disposable income of the growing middle classincreases consumer behavior in a sustainable manner. Soaring
urbanization, diminishing agricultural areas and correspondingly
higher demand for more productive agriculture are important
growth drivers for Care Chemicals. This is also true for the dynami-
cally growing demand for environmentally compatible applications
and innovations from renewable substances and raw materials.
Furthermore, the positive impact on margins will be complemented
by Clariant’s efforts to reduce the importance of activities with
weaker margins in 2015.
The success story of the Business AreaCare Chemicals is based mainly on
the aspirations of mankind all over theworld for a higher standard of livingand an improved lifestyle. The globalpopulation is growing and the averagelife expectancy is rising while wealthand purchasing power are increasing,particularly in the aspiring emergingregions. Therefore, it is no surprise thatthe relevant market for Clariant, esti-
mated for the Consumer Care Area aloneto be considerably above CHF 42 billion,is supposed to increase by 4 – 5 % annu-ally. Clariant customers expect innova-tive products and solutions that depictthe requirements of sustainability andefficiency. Clariant delivers just that!
Business AreaCARECHEMICALS
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STRATEGIC FOCUS ON PROFITABLE GROWTH
18 – 19 %EBITDA target margin (before exceptional items)
17.1 %Current EBITDA margin (before exceptional items)259 + 3 %EBITDA* in CHF m in local currencies
* before exceptional items
KEY FINANCIAL FIGURES
1 511 + 1 %Sales in CHF m in local currencies
INCREASING WEALTH
60 %BELONGING TOMIDDLE CLASS
INCREASINGENERGY DEMAND
+ 40 %
WORLD POPULATION
8.3 BILLION
PEOPLE AGED 65+
1 BILLION
INCREASING FOODCONSUMPTION
+ 50 %
URBANIZATION
60 %LIVE IN CITIES
GLOBAL TRENDS AS A DRIVER FOR INNOVATION
Data source: KPMG, Future State 2030: The global megatrends shaping governments, 2014, KPMG International Cooperative
· Expansion of market shares for consumer products
and crop solutions
· Increased demand for personal and home care
products
· Need for sustainable and efficient crop protection
· Chemicals based on renewable raw materials
· Future market biotechnology
· Increased demand for sustainable building
materials
· Expansion of the innovation pipeline
· Reduction in the importance of activities with
smaller margins
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Clariant has proven together with Haltermann and Mercedes in fleet testing how the fuel of the futuremight look. Cellulose ethanol is obtained from wheat straw with help from the Clariant Sunliquid®
process. One-fifth of the newly designed Sunliquid®20 fuel consists of cellulose ethanol. This is manu-
factured in a demonstration plant in Straubing, Germany, from agricultural residue materials and con-
tributes to lowering the greenhouse gas emissions in the Mercedes vehicles tested by 20 %.
»We are proud to perform the pioneering work
of responsible use and procurement of rawmaterials.«
ANDRE KOLTERMANN,
Head of Group Biotechnolgy
· Clariant supports sustainability of care products
· EcoTain® concept expanded to the care
product area· 25 innovative cosmetic active substances awarded
with EcoTain® label
· Clariant incorporates certified sustainable palm
oil-based materials into its assortment
· Broad portfolio with RSPO (Roundtable ofSustainable Palm Oil) certified ingredients
· Application for sustainable procurement of palm-
based oleo chemicals
GROWTH THROUGH SUSTAINABILITY
SUNLIQUID®20 – FUEL THAT LOWERS GREENHOUSE GAS EMISSIONS BY ~20 %
LOCALLY RESOURCED
Imports can be replaced by
local fuel production.
ENERGY SELF-SUFFICIENT
The Sunliquid® process
is energy self-suffcient, as no
additional energy is needed.
MORE GREEN JOBS
Sunliquid® can create more
green jobs and additional income
f
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