Performance Products

3rd Quarter 2015

• Sales slightly below prior third-quarter level, particularly owing to price declines
• Earnings decrease considerably due to higher fixed costs, especially from plant startups

The Performance Products segment saw a slight sales decline compared with the prior-year quarter due to lower prices, weaker volumes and the lack of sales from our textile chemicals business, which was sold in June 2015. Currency effects had a positive influence on sales in all divisions (volumes –2%, prices –4%, portfolio –1%, currencies 6%). Decreased volumes were brought about by lower volumes in the pigments business as well as weak demand in the oilfield chemicals business in connection with the price of oil. Intense competition in the vitamin business put pressure on our prices. The market environment for paper chemicals remained difficult. Income from operations before special items declined considerably owing to higher fixed costs, which arose particularly from the startup of new plants as well as negative currency effects.

Dispersions & Pigments

In the Dispersions & Pigments division, positive currency effects were the main driver behind a slight increase in sales. Prices fell as a result of the lower price of oil; volumes were slightly down. While demand weakened for paper chemicals and pigments, we achieved volumes growth in the dispersions business. Earnings declined slightly. This was a consequence of higher fixed costs arising mainly from the startup of new plants in Freeport, Texas, and Dahej, India, in addition to negative currency effects.

Care Chemicals

Sales in the Care Chemicals division rose slightly compared with the third quarter of 2014. Positive currency effects and slightly higher volumes were able to more than compensate for the decline in prices. The lower price levels were mostly due to decreased raw material costs, in addition to intense competition. This primarily concerned the hygiene business. Earnings fell considerably despite overall higher margins. Significant factors here were increased fixed costs stemming from the startup of new plants, especially in Camaçari, Brazil, and from negative currency effects, as well as lower plant capacity utilization compared with the previous third quarter.

Nutrition & Health

Despite positive currency effects, sales decreased slightly in the Nutrition & Health division as a result of lower volumes and prices. More intense competitive pressure in the pharmaceutical business was largely responsible for the decline in volumes. The reduction in prices was mostly attributable to ongoing pressure on vitamin prices, particularly for vitamin E, as well as lower raw material costs in the aroma chemicals business. Narrower margins and the decline in volumes led to a considerable decrease in earnings. We were able to slightly reduce fixed costs through rigorous cost management.

Performance Chemicals

Sales in the Performance Chemicals division were slightly below the level of the previous third quarter. Highly positive currency effects were counterbalanced by a decline in volumes and prices; the disposal of our textile chemicals business in June 2015 additionally reduced sales. Demand fell sharply in the oilfied chemicals business due to the lower price of oil. Earnings rose slightly. This was primarily the result of improved margins in all business areas following a decline in raw material costs.