Swiss specialty chemicals manufacturer Clariant has posted improved sales for the first quarter of 2007. The company reported growth of 6% in local currency terms and 5% in Swiss franc terms to reach CHF2.156 billion ($1.77 billion) from CHF2.048 billion in the comparable prior-year period, driven by higher selling prices and acquisitions made in 2006.

Sales prices rose 1% on average with strong increases in Functional Chemicals and Masterbatches, whilst gross margin remained stable at 31.1%, despite a 3% increase in raw material prices during the period. Operating income before exceptionals declined to CHF152 million from CHF160 million, impacted by increased freight costs, an 11% rise in energy costs, unfavourable currency movements and one-time costs related to the integration of Ciba’s masterbatches business. As a result, net income from continuing operations fell to CHF86 million from CHF96 million.

The Pigment & Additives Division reported organic growth of 5%, with strong demand in the coatings business. Conditions remained challenging for the printing business, whilst sales in plastics were stable. Operating margins declined to 11.3% from a strong 13.4% a year earlier, mainly driven by price erosion, rising raw material prices, negative currency effects and higher freight and energy costs.

Masterbatches saw sales growth of 11% in local currency terms, supported by the successful integration of Ciba’s masterbatches business. Organically, the business grew 5%, boosted by price increases and strong demand from Asia and Latin America.

Operating margins before exceptionals declined to 8.9% from 10.8%, mainly due to integration costs related to the acquisition, as well underperformance from the Australian business, which has subsequently been sold.

The Textile, Leather & Paper Chemicals Division posted organic growth of 5% in the first three months of 2007. Prices remained stable over the period. Textiles saw moderate growth, with a mixed picture across the regions. Underperformance in the USA was countered by the exit of some businesses there. Operating margins remained stable at 5.9%.

On a regional basis, Asia posted the strongest organic growth of 11%, driven by a 27% increase from China. India and Pakistan also contributed to the strong growth rate. Europe achieved 3% growth in local currency terms. The Americas meanwhile, achieved a robust 3% growth with a solid contribution from Latin America offsetting a 2% drop from the United States.