Functional Materials & Solutions

1st Quarter 2017

Compared with the same quarter of the previous year, sales grew considerably in the Functional Materials & Solutions segment. This was predominantly the result of a sharp rise in sales volumes, primarily driven by higher demand from the automotive industry. Sales development was also supported by the Chemetall business acquired from Albemarle in December 2016, along with slight price increases and currency effects. We considerably raised our income from operations (EBIT) before special items compared with the previous first quarter, thanks in particular to the volumes growth and the Chemetall acquisition.

Factors influencing sales, Functional Materials & Solutions 1st Quarter 2017

Catalysts

The Catalysts division achieved considerable sales growth compared with the first quarter of 2016. This was largely attributable to higher volumes, especially in the businesses with mobile emissions catalysts and chemical catalysts. Sales were additionally supported by price increases – especially for precious metals – and by currency effects. The divestiture of the polyolefin catalysts business in June 2016 had a slightly negative impact on sales. In precious metal trading, sales rose to €627 million due to the higher price levels and positive currency effects (first quarter of 2016: €499 million). EBIT before special items grew considerably, mainly as a result of increased volumes.

Construction Chemicals

Sales rose slightly in the Construction Chemicals division. This was primarily the result of acquiring the Henkel Group’s western European building material business for professional users at the beginning of 2017, in addition to the slight increase in volumes. Prices declined slightly. In Europe, the aforementioned acquisition allowed us to considerably boost sales. Sales grew slightly in North America and considerably in Asia. In the region South America, Africa, Middle East, we posted a considerable sales decline due to reduced volumes in the Middle East and to negative currency effects. EBIT before special items was considerably below the first quarter of the previous year. This resulted in part from lower margins on account of higher raw material prices.

Coatings

Sales in the Coatings division grew considerably compared with the first quarter of 2016. This was predominantly attributable to the Chemetall business acquired from Albemarle in December 2016, as well as a sharp increase in sales volumes, primarily of automotive OEM coatings. We experienced positive currency effects and slightly lower prices overall, with price developments varying by region. In the automotive OEM coatings business, volumes growth in Asia, Europe and North America led to a considerable increase in sales. Sales were also considerably up in the automotive refinish coatings and decorative paints businesses. We were able to considerably increase EBIT before special items as a result of the acquired Chemetall business and the growth in sales volumes.

Performance Materials

In the Performance Materials division, sales were considerably above the level of the first quarter of 2016. This was mostly the result of higher sales volumes arising from stronger demand from both the automotive industry and the consumer goods sector in Europe and Asia. In Asia, volumes also increased to the construction sector; higher demand in North America came from the automotive industry in particular. Worldwide, business development was especially positive for polyurethane systems, engineering plastics, thermoplastic polyurethanes and styrene foams. Rising raw material prices led to sales price increases; currency effects, too, helped support sales development. Year-on-year, we slightly raised EBIT before special items as a result of this volumes growth.