Functional Materials & Solutions

2nd Quarter 2015

• Considerable sales growth thanks to positive currency effects in all divisions
• Earnings rise considerably, mainly through contribution from Performance Materials division

In the Functional Materials & Solutions segment, sales rose considerably compared with the second quarter of 2014 due to positive currency effects in all divisions. While prices dipped slightly, sales volumes matched the level of the previous second quarter. Continuing high demand from the automotive and construction industry was able to compensate for lower sales volumes, especially in precious metal trading (volumes 0%, prices –2%, currencies 11%). Income from operations before special items grew considerably. This was mainly attributable to the sharp rise in earnings in the Performance Materials division, while a considerable increase in the Construction Chemicals division also contributed.

Catalysts

Sales in the Catalysts division grew considerably compared with the previous second quarter. This increase was primarily supported by positive currency effects as well as higher sales volumes in mobile emissions and chemical catalysts. Lower prices slowed this growth. In precious metal trading, sales rose to €666 million (second quarter of 2014: €659 million); positive currency effects more than compensated for lower sales volumes and reduced prices. Earnings declined considerably as a result of higher fixed costs overall as well as weaker margins in precious metal trading. Fixed costs rose due to the startup of new plants and increased research spending.

Construction Chemicals

Positive currency effects and higher sales volumes led to considerable quarter-on-quarter sales growth in the Construction Chemicals division. In North America, we slightly raised both volumes and prices, and observed highly positive currency effects. We achieved substantial volumes growth in the region South America, Africa, Middle East. Demand was especially high on the Arabian peninsula. Higher volumes contributed to sales growth in Europe, as well. Sales volumes also rose in Asia, with currency effects making a positive contribution. We considerably improved earnings through increased sales volumes as well as positive currency effects.

Coatings

In the Coatings division, we posted considerable quarter-on-quarter sales growth, mainly as a result of positive currency effects. This development was further boosted by slightly higher prices overall as well as by improved volumes of automotive OEM coatings in Asia and Europe. Driven by currencies, we achieved considerably higher sales in the automotive refinish coatings business. In the industrial coatings business, positive portfolio and currency effects more than offset lower volumes, resulting in a slight boost in sales. The decorative paints business in Brazil saw a sales decline because of negative currency effects and lower volumes, despite higher sales prices. Earnings dropped slightly. This was primarily due to increased fixed costs arising in part from new plants that began operations in China and the associated startup costs.

Performance Materials

Sales rose slightly in the Performance Materials division, mainly through positive currency effects in North America and Asia that more than offset a slight volumes decline and reduced prices. Demand fell for styrene foams and polyurethane systems. We posted substantially higher sales volumes of Cellasto^®, engineering plastics, and our specialties. We significantly raised sales volumes to the automotive industry and slightly increased them to the construction industry. In the consumer goods sector, higher volumes in Europe and North America could not compensate for the decline in Asia and South America. Overall, earnings grew considerably compared with the previous second quarter. This was largely due to increased margins arising in part from a greater proportion of our specialties business.