Chemicals

1st Quarter 2016

• Sales considerably below prior first-quarter level, mainly owing to price decreases
• Considerable earnings decline from smaller margins and higher fixed costs for new plants

Sales in the Chemicals segment were considerably below the level of the previous first quarter. This was largely due to falling prices on account of further decreases in raw material prices (volumes –3%, prices –16%, portfolio 0%, currencies 0%). Sales volumes especially declined in the Petrochemicals division in North America. Income from operations before special items was considerably down compared with the first quarter of 2015, which had been marked by high margins. In addition to lower margins, this reduction was also attributable to increased fixed costs arising mainly from the startup of production plants.

Petrochemicals

Sales fell considerably in the Petrochemicals division. Sharp drops in raw material costs, especially for naphtha, led to declining sales prices in all product lines. Despite the additional volumes provided by new plant startups, sales volumes decreased, mainly as a result of lower capacity utilization of the condensate splitter in North America. Because of lower margins and higher fixed costs, earnings were considerably below the high level of the prior first quarter. An improved margin situation, especially for steam cracker products in Europe and Asia, was contrasted by substantially weaker margin development in North America. Fixed costs rose primarily from new production plant startups.

Monomers

Compared with the previous first quarter, sales in the Monomers division declined considerably. This was largely an effect of lower prices resulting from decreased raw material costs and of intensified competition in the isocyanates business. Our volumes fell, particularly due to lower sales volumes of caprolactam: The startup of our polyamide-6 extrusion plant in Shanghai, China, in May 2015 meant that more caprolactam was required for internal use. We were able to raise volumes of MDI. Earnings declined considerably, predominantly owing to higher fixed costs from the gradual startup of our new production plants and to lower margins, especially for MDI.

Intermediates

In the Intermediates division, volumes remained stable while we posted a considerable sales decline. This was mostly a consequence of lower sales prices resulting from a sharp drop in prices for many raw materials, along with intense competition, especially for standard products, which put higher pressure on our margins in all regions. Fixed costs rose due to plant startups as well as unscheduled shutdowns. Our earnings were therefore considerably below the high level of the previous first quarter.