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Clariant Chemicals SWOT & PESTLE Analysis

ID : 52416053| Jul 2018| 15 pages

COMPANY PROFILE -Clariant Chemicals

Business Sector :Manufacturing (Speciality Chemical)

Operating Geography :Switzerland, Europe, Global

About Clariant Chemicals :

Clariant Chemicals is a Switzerland based company which specializes in chemical manufacturing. The business units are divided into four segments namely, Care Chemicals, Natural Resources, Catalysis and Plastics, and Coatings. The primary focus of the company is addressing the key areas like energy efficiency, renewable raw materials, emission-free mobility and conserving finite resources. The Clariant Group, headquartered in Muttenz, Switzerland, is widespread across the world with operations in 52 countries. The company has its presence in North America, Asia-Pacific, Europe, Middle-East and Africa as well as in Latin America. The Care chemicals mainly deal with industrial and consumer specialties like automotive fluids, the catalysts deal with products like custom catalysts, Natural resources deal with functional minerals, Oil, and mining services while the Plastics and coatings deal with products like additives and pigments. The company has an employee strength of 18135 as of beginning 2018. Clariant Chemical’s USP or unique selling proposition lies in being a legacy brand in the production of care chemicals (consumer and industrial), catalysis, natural resources (oil & mining, minerals) and plastics & coatings. Clariant has a focused vision and mission - “Clariant aspires to be the globally leading company for specialty chemicals, and to stand out through above-average value creation for all stakeholders. To bring this vision to fruition, Clariant builds and maintains leading positions in its businesses and has adopted functional excellence as part of its corporate culture. Clariant’s mission is to create value by appreciating the needs of: “customers – by providing competitive and innovative solutions employees – by adhering to corporate values shareholders – by achieving above-average returns the environment – by acting sustainably”.

Clariant Chemicals Revenue :


6377 million CHF – FY ending 31st Dec 2017 (y-o-y growth 9%)
5847 million CHF – FY ending 31st Dec 2016

Competitive Analysis of Clariant Chemicals

SWOT
PESTLE
The SWOT analysis for Clariant Chemicals is presented below:
Strengths
Weaknesses
1. Strong Financial Performance and Growth Strategy
2. Strong global presence
3. Strong brand value
4. Strong innovation and creativity platform
5. Strong R&D capability
1. Failed Mergers
2. Opposition from activist investors
Opportunities
Threats
1.Growing demand for pigments and paint industry
2. Expanding to new markets
3. Evolving Catalyst industry
1.Highly Volatile economic environment
2. Intense competition
3. Exchange rate and currency fluctuations
SWOT & PESTLE (combined)
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Detailed SWOT Analysis of Clariant Chemicals

Strength

1. Strong Financial Performance and Strategy: Clariant has been a consistent performer in terms of revenue with operating income in FY 2016 being 5,847 million CHF and growing to 6377 million CHF in FY 2017. The reported growth over 2016 is 9%. The company experienced the best growth in North America and Middle East & Africa of about 16%. In Asia, the growth was around 13%. Sales in Europe were seen to have grown by 8%. The Catalysts and Care Chemicals experienced growth of about 19% and 9% respectively. The sales in Natural Resources and Plastics & Coatings increased by 18% and 5%. The company follows a growth strategy which is focussed on Innovation and Sustainability. The primary Strategy is in line with three strategic implementations namely comprehensive restructuring, clariant excellence, and profitable growth.

2. Strong global presence: Clariant has developed its global presence over the years. Clariant has been expanding its global footprint by engaging in strategic acquisitions and partnerships. The company has diversified its presence across strong markets like United States, Europe, North America, Middle East and Africa, Asia Pacific. The company is diversified to 156 companies in 52 countries. The sales in North America was recorded at 1241 million CHF, in Asia 1632 million CHF, in Europe 2194 million CHF, in the Middle East 480 million CHF while in Latin America it was 630 million CHF. Recently the company has also shown interest to expand its market in China by opening up a catalyst office. The company has also opened up its new plastic plant in Maine.

3. Strong brand Value: Clariant overall global presence and reputation across various countries has led to its brand development over the years. The brand ranked 46 in “Switzerland 50”- The most valuable Swiss brands of 2017. Clariant is also a major player when it comes to color, additive concentrate and innovative performance solutions for plastics. The company is well recognized in major countries like India, North America, in European countries. The main strength of the company lie along the lines of performance, growth, and innovation. The company further invests to strengthen its brand portfolio across the world through innovative new product offerings. For example, recently Clariant launched a new brand Eqius for humidity control.

4. Innovation and creativity: Clariant has always kept themselves at par with the market needs and developed their product and service offerings over the years across different segments. The company has always focused on research and development and innovation as its key strategy. The company has invested 211 million in R&D expenditures in FY 2017. The company has 8 R&D centers and more than 50 technical application centers. These figures show the amount of dedication the company has shown in research and innovation. The company holds more than 6600 patents as of now. The company is focussed on its growth by improving its product and brand portfolio through innovation. Recently, the company developed a range of new catalyst products for steam methane, a neutralizer for eco-labeled plants and many more.

5. Strong R&D capability: Clariant chemicals is a part of 125 scientific and research partnerships across the world. Along with own research facilities, the company has tied up with Technical University of Munich to form a Catalysis alliance MuniCat. In this Strategic partnership, the company has led to many ground breaking research in catalytic solutions. The company has developed many solutions related to recovery of CO2. Apart from research centres the company has an innovation centre with a total area of 36 000 sqm. The greenhouse is divided into three sections which broadly represent three principal areas of research: bio herbicides, foliar fertilizers, and plant growth regulators, or PGRs. One essential part of the greenhouse is called moving fields. Use of conveyor belts to move crates, robotic arms to guide them through computers and use of UV lights and 3D scanners for examinations are some of the technology used by Clariant, unique to the industry.

Weakness

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Opportunity

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Threat

1. Intense market competition: The specialty chemical industry is facing stiff competition from international players. With upcoming new technologies, new format products are entering the market. With the economic slowdown and slowing demand of pigment industries, the competition becomes even more fierce. Companies like BASF, Huntsman, DuPont are continuously diversifying their markets and innovating their product pipeline to match the market needs. Ink Pigment industry shows high growth potential and there is a lot of scope for innovation with low entry barrier. For example, BASF has been continuously innovating in its ink pigment operations. Another example is that of Sun chemicals which has been expanding its operations at US, Japan, Europe in the form of acquisitions, thus strengthening their position in Ink pigment industry.

2. Exchange rate and currency fluctuations: Foreign exchange rate changes can affect the CHF value of assets and liabilities of the Group's overseas companies because Clariant group’s consolidated financial statements are presented in Swiss Franc. In addition, products sold by the Group include products that are sourced overseas and affected by changes in foreign exchange rates. Accordingly, foreign exchange rate fluctuations wields an impact on its business performance and financial condition. Also, many of the Clariant subsidiaries are present overseas which makes them susceptible to interest rate fluctuations as well as exchange rate fluctuations. For example, On 31 December 2016, with an increase/decrease of Euro by 6% from 22% in 2015 against the Swiss franc with all other variables held constant, pre-tax profit for the year would have gone CHF 26 million higher/lower mainly as a result of foreign exchange gains/losses on translation of the euro-denominated financing, cash and cash equivalents, intragroup financing and third-party trade receivables and payables. Similarly, if the US-dollar had increased/decreased by 8% (2015: 23%) against the Swiss franc with all other variables held constant, pre-tax profit for the year would have gone CHF 32 million higher/lower.

3. Highly volatile economic environment:With increasing prices and slow demand the economic environment has not been stable in recent times where the chemical industry is concerned. The Chinese economic slowdown has been one of the major factors which affect the specialty chemical industry. As per the report by ATkearney, the growth in the chemical industry is predicted to be a very slow one with just 1% growth estimated in Europe. Apart from this the stringent policies in India and China with respect to chemicals and pigments causing an impact on the environment are one of the major factors which will add to the slowdown of growth of the industry. Clariant should be more focused on producing product lineage which are environmentally safe and support green technologies to align itself with the growing environmental needs of the planet.

Key Business Segments / Diversification :

Clariant Chemicals
Care chemicals (consumer and industrial) Catalysis Natural resources (oil & mining and minerals)
Plastics & Coatings
SWOT & PESTLE (combined)
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References used in Clariant Chemicals Analysis Report

1. Clariant_Corporate_%20Presentation_2018_EN.PDF
2. http://reports.clariant.com/2017/integrated-report/company/at-a-glance.html
3. https://www.clariant.com/en/Corporate/News/2016/06/Clariant-supports-Carbon2Chem-project-for-the-reduction-of-industrial-CO2-emissions
4. https://www.clariant.com/en/Corporate/News/2017/12/Clariant-intensifies-support-for-Chinese-refining-chemical-industries-with-new-Catalysts-office-in-Shandong

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Clariant Chemicals SWOT and PESTLE analysis has been conducted by Saumya Adhikari and reviewed by senior analysts from Barakaat Consulting.

Copyright of Clariant ChemicalsSWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

Clariant Chemicals SWOT & PESTLE Analysis
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