Specialty chemicals company Clariant swung to profit in 2007 on lower costs and higher prices, and CFO Patrick Jany said strong demand was likely to keep up this year.
Shares in Clariant, which makes pigments for products from textiles to cars, jumped more than 10 percent.
The company said it expected an improved operating margin in 2008 and continuing strong cash flow from operations, but saw a further rise in raw material costs of 5 percent in 2008.
"We had actually quite a strong level of demand and we would expect as well that for the year 2008 we will continue with the good level of demand," Jany told CNBC.
The company posted a 5 million Swiss franc ($4.54 million) profit for 2007, bang in line with 10 analysts' average forecast, and compared with a 78 million franc loss in 2006.
Full-year sales rose 5 percent to 8.53 billion francs, just pipping analysts' average forecast of 8.50 billion.
Its shares closed 6.3 percent higher, the lead gainer in Switzerland's blue-chip SMI index.
"Clariant is progressing well to achieving its objectives," Zuercher Kantonalbank analyst Nina Baiker said.
Specialty chemicals firms like Clariant and its local rival Ciba have struggled to maintain their margins in the face of rocketing raw materials costs and lower-cost competition from Asia.
In a restructuring effort, Clariant has so far cut 800 jobs to curb costs, closed nine smaller sites and trimmed more than a fifth of its product lines.
Price rises will also contribute to an increase in the company's profitability, Jany said.
"The environment is very well aware that raw materials costs are going up, our customers are aware as well," he told "Squawk Box Europe."
The company would adjust its portfolio to boost its position in stronger units while exiting other businesses, Chief Executive Jan Secher said on Thursday, without giving further details.
"We have to make certain strategic choices, where do we want to go deeper?" Secher told Reuters. "In certain cases you will have to step out in order to step in deeper in other areas."
Clariant trades at about 6 times forecast 2008 earnings, and Ciba, which last week reported unchanged fourth-quarter net profit, trades at 8.5 times. The European chemicals sector trades at 13.7 times forecast 2007 earnings, according to Reuters data.
-- Reuters contributed to this report