Performance Products

2nd Quarter 2015

• Sales rise slightly, supported by positive currency effects
• Earnings considerably down quarter-on-quarter due mainly to increased fixed costs

Sales rose slightly in the Performance Products segment. Positive currency effects in all divisions were able to more than offset lower sales prices and weaker volumes (volumes –1%, prices –5%, currencies 10%). The unscheduled shutdown of a polyisobutene plant in addition to weak demand in the oilfield chemicals business in connection with the price of oil were largely responsible for the decline in volumes. The market environment for paper chemicals remained difficult. Furthermore, our prices were negatively affected by factors such as intense competition in the vitamin E business. Income from operations before special items fell considerably. This was mostly the result of higher fixed costs arising primarily from the startup of new plants, the reduction of inventories, and negative currency effects.

Dispersions & Pigments

We observed slight sales growth in the Dispersions & Pigments division. Positive currency effects were able to more than offset an oil price-related drop in sales prices for dispersions as well as lower sales volumes of paper chemicals. Sales were also boosted by greater volumes of resins, which were particularly attributable to growing demand from the Asian coatings industry. Earnings dipped slightly below the level of the second quarter of 2014 due to higher fixed costs from the startup of new plants, such as those in Freeport, Texas, and Dahej, India.

Care Chemicals

Sales in the Care Chemicals division rose slightly as a result of positive currency effects, with volumes slightly down and a drop in prices. Due in part to lower raw material costs, this price trend particularly affected our businesses with hygiene products, oleochemical surfactants, fatty alcohols, and ingredients for the detergents and cleaners industry. Sales volumes decreased especially in formulation additives for technical applications as well as ingredients for the detergents and cleaners industry. Technical problems in European ethylene oxide production and the resulting raw material bottleneck for producing a range of Care Chemicals products contributed to the reduction in volumes. Earnings were considerably down, primarily on account of increased fixed costs. These arose mainly from negative currency effects and lower plant capacity utilization.

Nutrition & Health

Sales rose considerably in the Nutrition & Health division, supported predominantly by positive currency effects arising especially from the U.S. dollar. We raised sales volumes in our animal nutrition, aroma chemicals and pharmaceuticals businesses, while volumes remained stable in the human nutrition sector. Prices overall were below the prior second quarter’s level due to ongoing intense competition, especially in the vitamin E business. This price decline, along with a lower proportion of high-margin products, led to a considerable decrease in earnings.

Performance Chemicals

Sales in the Performance Chemicals division considerably surpassed the level of the previous second quarter, mostly through positive currency effects. Sales volumes and prices declined. The main reason for the reduction in volumes was the unscheduled shutdown of a polyisobutene production plant in Antwerp, Belgium, which lasted until the middle of the quarter. In addition, the lower price of oil substantially dampened demand in the oilfield chemicals business. Sales were furthermore weighed down by the disposal of our PolyAd services business in June 2014. Earnings were considerably below the level of the second quarter of 2014, largely because of fixed cost increases arising in part from inventory reductions and lower plant capacity utilization.