Last Update:
Mar. 10, 2011
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Part of the audited Consolidated Financial Statements and Management´s Analysis

Paper Chemicals

  • Substantial sales growth; higher demand in all regional business units
  • Considerable reduction in fixed costs thanks to restructuring measures and strict cost management
  • Earnings far above previous year’s level and positive
  • Outlook 2011: sales in continuing operations higher than previous year’s level; strong increase in earnings

Paper Chemicals – Sales by region
(location of customer)

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

In 2010, we posted sales to third parties of €1,713 million, an increase of €387 million compared with the previous year (volumes 5%, prices 8%, portfolio 11%, currencies 5%). Demand rose noticeably in all regional business units.

In Europe and North America, we benefited from the general economic upturn. Sales improved due to higher volumes and prices. In Asia, our product sales volumes increased considerably, particularly in the growth markets China, India and Indonesia. Demand for our products also grew in South America and positive currency effects there helped to boost sales growth.

Sales volumes and sales of kaolin minerals, particularly for industrial applications, increased thanks to a good market situation.

We were able to considerably reduce our fixed costs thanks to restructuring measures, such as adapting European production structures for paper dispersions to market conditions and exiting the starch business. Our strict cost management also helped us further reduce fixed costs. Income from operations was sharply higher than the previous year’s level and was positive. Compared with 2009, there was less of a negative impact on earnings from special items.

Despite the positive business development in 2010, the paper industry, particularly in Europe and North America, continues to operate in a difficult economic environment. In addition to long-standing overcapacities, changing consumer behavior is also having a negative effect on the paper business. This is exacerbating structural problems along the entire value-adding chain. We expect that paper production in Europe and North America will not reach pre-crisis levels again. In contrast, growth opportunities are mainly concentrated in the Asian market. Therefore we are planning to construct two plants in China, which will start operations in 2012. We anticipate that sales in our continuing operations will increase in 2011. Thanks to the realization of synergies from the Ciba integration and as a result of ongoing restructuring measures, we expect a strong increase in earnings in 2011.

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