ZURICH - Clariant is bracing for a sluggish start to the year, the Swiss specialty chemicals maker said on Wednesday when it posted a sharper-than-expected drop in fourth-quarter profit.

Net profit fell to 10 million Swiss francs ($11 million) from 47 million in the 2010 period, compared with a forecast for 40.5 million as the strong franc and higher raw material prices took their toll.

Clariant said its first-half performance was likely to be worse than in 2011, with an improvement in the second half as the economy picks up.

For 2012 as a whole, Clariant forecast sales growth in local currencies and sustained profitability.

Clariant, whose products put colour into plastics, was hit in the fourth quarter by slower demand in Europe, where it posted a double-digit fall in sales.

Softening demand in the plastics industry also weighed on its masterbatches and pigments unit, while it also saw tough conditions in its textile chemicals, leather services and paper specialties units.

Fourth-quarter sales rose 13 percent to 1.9 billion francs. Sales prices rose 9 percent while raw material costs were 10 percent higher.

Clariant, which also makes chemicals that add resilience to a new range of Levi commuter jeans, said raw material costs were expected to rise in the mid-single-digit range in 2012. Exchange rates were seen remain stable compared with the start of the year.

Clariant's comment come after U.S. group Dow Chemical posted weaker-than-expected quarterly profit and revenue on weaker demand for electronics, plastics and coatings.

German rivals BASF and Bayer will shed more light on the health of the industry when they post results at the end of the month. ($1 = 0.9202 Swiss franc) (Reporting by Katie Reid; Editing by Dan Lalor)