Last Update: 03/11/2010
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Part of the audited Consolidated Financial Statements and Management´s Analysis

Performance Chemicals

  • Growth in sales resulted from the integration of Ciba businesses in the division
  • After a difficult start, demand recovered continuously toward the end of the year
  • Earnings significantly below the previous year’s level and negative due to high integration costs
  • Outlook 2010: despite ongoing uncertainties about the economic environment, we expect sales to grow significantly; earnings to improve considerably due mainly to lower integration costs and the realization of synergies from the rapid integration of Ciba; positive earnings contribution

Performance Chemicals – Sales by region
(location of customer)

Performance Products – Performance Chemicals – Sales by region (pie chart)

Sales to third parties in 2009 were €2,180 million, an increase of €917 million compared with the previous year (volumes –11%, prices –4%, portfolio 87%, currencies 1%). Established BASF businesses contributed €1,080 million to sales, while the newly consolidated Ciba businesses contributed €1,100 million.

As a result of the economic crisis, which affected all of our customer industries, demand declined in all business sectors compared with 2008. The acquired Ciba businesses – in particular plastic additives – were also negatively impacted by the difficult economic environment. However, demand recovered continuously toward the end of the year. We improved margins despite strong price pressure. The integration proceeded rapidly.

In the leather and textile chemicals business, we were able to counteract the downturn that had started at the end of 2008 and to implement price increases. Thanks to the rapid implementation of restructuring measures, we were able to increase margins and reduce fixed costs.

Sales in the business with automotive and refinery chemicals were lower than in the previous year, due both to lower volumes as well as lower prices resulting from raw materials-based sales contracts. However, we were able to prevent margin erosion.

In 2009, the division was negatively impacted by high costs resulting from the integration of the Ciba businesses. Income from operations was therefore significantly below the previous year’s level and was negative due to high special items.

Despite uncertainty about macroeconomic developments, we expect sales to increase significantly in 2010 compared with 2009. Earnings should improve considerably as a result of lower integration costs, the realization of synergies from the acquisition and expected higher sales. We will continue to counter pressure on margins by applying strict price and cost management. In 2010, we will continue to pursue measures previously introduced to improve efficiency along the entire value-adding chain. Furthermore, we are concentrating on optimizing the acquired Ciba businesses and further advancing the restructuring program for the leather and textiles chemicals business. Overall, we expect earnings to be clearly positive.

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