Clariant announced its plan to slash up to 600 jobs after a drop in profit in 2019. The chemicals company believes the sluggish economic situation will hurt demand this year as well.
“For 2020, given the current sluggish economic environment and continued adverse foreign exchange conditions, growth will be more limited and additional efficiency measures have been defined for each of the businesses to support the margin increase,” the Swiss company said in a statement.
Shares of Clariant were up by about 1% before the market opened. The company believes the job cuts over two years will cut expenses by 50 million Swiss francs ($51 million) annually and recover profits.
Clariant also reported a net profit drop to 38 million francs, from 356 million a year before, as it put aside funds to cover an EU competition probe. High taxes and discontinued businesses also affected the profit numbers.
Sales at major operations fell to 4.39 billion francs from 4.4 billion, the company stated. Regarding the Q4, sales stalled at 1.2 billion francs, due to weaker demand in all three of Clariant’s remaining divisions.
“The Group has significantly reshaped its portfolio through the divestment of Healthcare Packaging in 2019, the announced sale of Masterbatches and the planned divestment of Pigments in 2020,” Clariant said, outlining the current structural adjustments.
Clariant has about 17,200 employees around the world. The planned job reductions correspond to 3-3.5% of the total staff.
Nearly 40% of the reported job reductions will take place in Europe, out of which 20% will affect Switzerland, where the company currently employs 522 people.
Clariant appointed a new Chief Financial Officer on February 11th, after the previous CFO left for a new job at the conglomerate company Maersk. Clariant is still looking for a new CEO after the previous Chief Executive left the job last year, leaving Chairman Hariolf Kottmann to take the acting chief position.
The company plans to resurrect the sale of its pigments business, said people familiar with the matter. The pigments unit may fetch up as much as 900 million francs.