Functional Materials & Solutions

1st Quarter 2015

• Positive currency effects in all divisions significantly influence sales growth
• Earnings improve considerably, especially through contribution from Performance Materials division

Sales in the Functional Materials & Solutions segment grew considerably compared with the previous first quarter, on account of positive currency effects in all divisions. Volumes and prices declined slightly (volumes −1%, prices −1%, currencies 10%). Higher demand, especially from the automotive industry, was not able to offset lower sales volumes in precious metal trading. We considerably improved income from operations before special items despite a slightly smaller contribution from the Catalysts division. The Performance Chemicals division provided major support for this growth.

Catalysts

Sales in the Catalysts division grew considerably compared with the same quarter of the previous year. Lower volumes and prices were more than offset by positive currency effects. We increased sales volumes of mobile emissions catalysts and chemical catalysts. Despite positive currency effects, the reduced volumes led to decreased sales in precious metal trading of €612 million (first quarter of 2014: €626 million). Earnings declined slightly. This was mainly a consequence of lower margins in precious metal trading, higher fixed costs due to the startup of new plants, and increased research expenses.

Construction Chemicals

We posted a considerable quarter-on-quarter sales increase in the Construction Chemicals division. Together with positive currency effects, slightly higher prices and volumes contributed to this development. In Europe, price increases were unable to offset lower demand. We achieved considerable volumes growth in North America. Positive currency effects led to higher sales in Asia. Stronger margins enabled us to considerably improve earnings.

Coatings

Sales rose considerably in the Coatings division compared with the first quarter of 2014. This was mainly the result of positive currency effects in all business areas and the higher sales volumes of automotive OEM coatings in Asia and Europe. In the automotive refinish coatings business, currency effects more than compensated for a slight volumes decline. We observed a primarily currency-driven sales increase in industrial coatings and achieved slightly higher volumes. In the decorative paints business in Brazil, sales dipped slightly due to lower volumes. Earnings improved considerably overall, thanks in part to a more favorable product mix.

Performance Materials

We considerably increased sales in the Performance Materials division, despite the decline in sales prices arising from lower raw material costs. Positive currency effects were largely responsible for this sales growth. Higher volumes in the business areas for engineering plastics, Cellasto^®, TPU and specialties compensated for lower sales volumes of styrenic foams and polyurethane systems. Demand from the construction industry was down, primarily in Europe, while sales volumes to the automotive industry improved sharply in Asia, North America and Europe. We also increased sales to the consumer goods industry in North America and Europe. We posted a considerable, margin and currency-driven boost in earnings despite higher fixed costs from the startup of new plants. Margins rose as a result of lower raw material prices as well as higher sales volumes of specialties.