UPDATE 2-Clariant cuts sales forecast on faltering economy

Wed Oct 31, 2012 6:13am EDT

* Cuts full-year outlook; mid-term guidance confirmed

* Emerging markets fail to compensate for weak Europe

* Q3 results miss analyst forecasts

* Shares fall over 5 percent (Adds details, share price, analyst comment)

By Emma Thomasson and Catherine Bosley

ZURICH, Oct 31 (Reuters) - Swiss speciality chemicals maker Clariant posted a bigger-than-expected drop in quarterly net income and cut its full-year sales forecast, joining rivals in feeling the pain from austerity-hit European markets.

Shares in the firm, whose products put colour into plastics, fell more than 5 percent on Wednesday after it predicted flat sales in local currencies for 2012, compared with a forecast in July for some growth.

The chemical industry's dependence on highly cyclical machinery makers, car manufacturers and builders makes it especially vulnerable to economic downturns.

Earlier this month AkzoNobel, the world's biggest paint maker, plunged to a quarterly net loss.

Clariant, said third-quarter net income fell 40 percent to 49 million Swiss francs ($52.6 million), missing analysts' average forecast of 53.6 million..

Growth in emerging markets, including in Asia, was unable to offset slackness in Europe where the euro zone debt crisis weighed, the firm said.

Clariant shares were down 5.4 percent at 10.26 francs by 0955 GMT, compared with a 0.3 percent firmer European chemicals sector.

However, Chief Executive Hariolf Kottman was optimistic the group would overcome the economic trough, helped its purchase of German group Sued-Chemie and restructuring efforts.

"Although the short-term economic challenges are expected to persist, Clariant's mid-term guidance until 2015 remains intact," he said.

Vontobel analyst Patrick Rafaisz confirmed his "buy" rating on the stock.

"We may have to take our estimates down somewhat further for 2012, but with mid term goals still valid Clariant remains on track for delivering on its corporate transformation," he said.

"While the progress will now be slower than we initially hoped, this is economy related and not company specific."

Clariant expects raw material costs to be unchanged this year versus 2011, while exchange rates should remain at the levels of the start of the year.

($1 = 0.9310 Swiss francs) (Editing by Mark Potter)