Functional Materials & Solutions

3rd Quarter 2018

In the Functional Materials & Solutions segment, sales rose slightly compared with the third quarter of 2017. This was primarily attributable to higher prices in all divisions, especially in Catalysts and Performance Materials. Volumes also increased, while sales were weighed down by currency effects. Despite volumes growth, income from operations (EBIT) before special items was considerably below the level of the prior-year quarter, mainly due to higher fixed costs and lower margins in almost all divisions. However, we increased earnings from quarter to quarter over the course of 2018 and continuously reduced the gap to the prior-year quarter.

Factors influencing sales, Functional Materials & Solutions 3rd quarter 2018

Factors influencing sales, Functional Materials & Solutions 3rd quarter 2018 (bar chart)

Catalysts

Sales in the Catalysts division grew considerably year on year due to higher prices and volumes. The higher selling prices were mainly a consequence of the increase in precious metal prices. Volumes grew in precious metal trading as well as for chemical catalysts, battery materials and refining catalysts. In precious metal trading, sales rose to €719 million (third quarter of 2017: €532 million) due to higher prices and volumes. EBIT before special items improved considerably as against the third quarter of 2017, mainly as a result of volumes growth.

Construction Chemicals

The Construction Chemicals division recorded a slight increase in sales compared with the prior-year quarter. This was attributable to volumes growth, higher prices and the acquisition of Grupo Thermotek, Monterrey, Mexico, in September 2017. Negative currency effects had an offsetting impact. We achieved slight sales growth in Europe and in the region South America, Africa, Middle East as a result of higher volumes and prices. Sales rose considerably in North America due to the acquisition of Thermotek as well as higher volumes and prices but remained at the prior-year level in Asia. Income from operations (EBIT) before special items was considerably lower as a result of higher fixed costs and the increase in raw materials prices.

Coatings

Sales in the Coatings division declined slightly as against the third quarter of 2017. Negative currency effects could not be offset by slightly higher prices and sales volumes. We recorded volumes growth for surface treatments and decorative paints in particular; sales volumes of automotive refinish coatings also rose slightly. EBIT before special items decreased considerably year on year, primarily due to higher fixed costs and raw materials prices.

Performance Materials

In the Performance Materials division, sales improved slightly compared with the prior-year quarter. This was due to higher sales prices, particularly for engineering plastics and polyurethane systems in all regions. Currency effects had a negative impact. Sales volumes also declined slightly, largely as a result of much weaker demand for polyurethane systems. EBIT before special items was slightly below the figure for the third quarter of 2017. This was mainly attributable to higher fixed costs.

Segment data Functional Materials & Solutions (million €)

 

 

3rd quarter

January–September

 

 

2018

2017

Change in %

2018

2017

Change in %

1

Amortization of intangible assets and depreciation of property, plant and equipment (including impairments and reversals of impairments)

2

Additions to intangible assets and property, plant and equipment

Sales to third parties

 

5,238

4,975

5

15,917

15,434

3

of which Catalysts

 

1,738

1,506

15

5,358

4,869

10

Construction Chemicals

 

645

618

4

1,853

1,824

2

Coatings

 

922

951

(3)

2,857

2,948

(3)

Performance Materials

 

1,933

1,900

2

5,849

5,793

1

Income from operations before depreciation and amortization (EBITDA)

 

506

527

(4)

1,492

1,799

(17)

Amortization and depreciation1

 

169

170

(1)

504

494

2

Income from operations (EBIT)

 

337

357

(6)

988

1,305

(24)

Special items

 

(10)

(40)

75

(30)

(45)

33

EBIT before special items

 

347

397

(13)

1,018

1,350

(25)

Assets (September 30)

 

17,673

17,135

3

17,673

17,135

3

Investments including acquisitions2

 

217

285

(24)

511

642

(20)

Research and development expenses

 

103

106

(3)

311

315

(1)