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Clariant targets North America growth opportunities

August 31, 2015

Clariant says it sees strong potential in North America and is targeting above-market revenue growth of 7%/year in the region through 2020. Clariant aims to deliver North American sales of $1.8 billion in 2020, up from $1 billion in 2014.

“We are still underrepresented in North America,” Clariant CEO Hariolf Kottmann said at a press and investor briefing in San Francisco on 25 August. “We are very much convinced that we have a lot of opportunities here in North America.” In 2014, North America represented 23% of the global specialty chemicals market but only 16% of Clariant’s global sales.

Growth prospects for North America are strongest among mature regions, and Clariant moved to increase capital investment in the region following a strategic review three to four years ago, Kottmann says. Shale oil and gas, a key driver of stronger growth in the region, align well with the company’s strong position in markets such as catalysts and oilfield and mining chemicals and services. “If we compare the projects we are considering for North America, they are very similar to what we consider for China,” Kottmann says.

Ken Golder, Clariant’s head of North America, labels the region a “reemerging” market for Clariant, with expected GDP growth of 2.8%/year through 2018, more than double expected growth rates for Western Europe and Japan. “The absolute revenue growth that we expect from North America will be second only to China,” Golder says.

Clariant’s growth in North America between 2011 and 2015 has averaged about 4%/year, and the company expects portfolio changes and ongoing investments to accelerate growth to meet the target of 7%/year through the end of this decade. Planned capital investments and market expansion have the potential to incrementally grow revenue by as much as $200 million/year over the next few years, Golder says.

Capital investments include a $100-million polypropylene catalyst plant in Louisville, KY; a $50-million investment to expand ethoxylation capacity at Clear Lake, TX; a $20-million investment to expand its Houdry dehydrogenation catalysts; and $2 million to expand masterbatch specialty compounding capability at US sites. Those investments are expected to deliver more than $110 million in projected revenue at their peaks. The company also expects revenue growth of $50–100 million from market expansion in oil services activities.

In the first half of 2015, North America represented 19% of group sales, an increase of 3 percentage points versus full-year 2014 results, Golder says. “We expect to continue to attract capital to our region both to expand our capabilities and our capacity so that we can overcome this underrepresentation,” Golder says. North America’s advantaged energy and feedstock position “is expected to play a key role in this growth, and we see it as a very important initiative of ours to capture shale oil and gas opportunities that present themselves,” Golder says. “We see this happening in our oil and mining, industrial and consumer specialties, and our catalyst business units.”

By Robert Westervelt

Source: Chemical Week

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