Chemicals

2nd Quarter 2015

• Lower prices lead to considerable decline in sales
• Earnings slightly down as a result of higher fixed costs, due in part to startup of new plants

Sales in the Chemicals segment declined considerably compared with the second quarter of 2014. This was largely the result of lower prices due to decreased raw material costs, especially in the Petrochemicals division. The sale of our share in a joint operation in Singapore additionally lowered sales. Significant volumes increases in the Intermediates division and positive currency effects worked in our favor (volumes 0%, prices –15%, currencies 9%, portfolio –2%). Income from operations before special items was slightly down, primarily because of higher fixed costs in all divisions due to the gradual startup of new production facilities as well as an increased number of scheduled maintenance shutdowns.

Petrochemicals

In the Petrochemicals division, sales fell considerably due to lower prices in almost all product lines. This was mostly the result of sharp decreases in raw material prices, especially for naphtha. A plant outage at the Ellba C.V. joint operation in Moerdijk, Netherlands, at the beginning of June 2014 led to lower sales volumes. Sales were also reduced by the disposal of our share in the Ellba Eastern Private Ltd. joint operation in Singapore at the end of 2014. Currency effects positively influenced sales, however. Earnings considerably surpassed the level of the previous second quarter. Substantially higher margins in Europe, especially for steam cracker products and for ethylene oxide and glycols, were able to more than compensate for weaker margins in acrylic monomers.

Monomers

Sales in the Monomers division remained at the level of the previous second quarter. In Asia, we were able to increase volumes of MDI and polyamide-6 extrusion polymers; overall, we posted a slight volumes decline. Positive currency effects boosted sales, while falling sales prices as a result of lower raw material costs had a dampening effect. Earnings fell considerably. This was largely on account of lower margins for TDI in Asia as well as higher fixed costs due to the gradual startup of two new production plants in Asia and a plant in Ludwigshafen.

Intermediates

Sales grew slightly in the Intermediates division. Considerably higher sales volumes and positive currency effects were the main drivers here. We especially raised volumes for amines and carboxylic acids, and in our businesses with polyalcohols and specialties. Prices declined. Earnings remained considerably below the previous second quarter’s level. A higher number of scheduled maintenance shutdowns compared with the previous second quarter – primarily at the Verbund sites in Ludwigshafen, Germany; Kuantan, Malaysia; and Nanjing, China – were largely responsible for this development. The additional maintenance costs associated with these activities and the reduction of inventories raised our fixed costs.