Functional Materials & Solutions

2nd Quarter 2016

• Lower sales prices mainly responsible for slightly reduced sales
• Considerable increase in EBIT before special items in all divisions, especially Performance Materials

Sales in the Functional Materials & Solutions segment were slightly down compared with the second quarter of 2015 (volumes 5%, prices –6%, portfolio 0%, currencies –3%). This was largely the result of lower sales prices, especially for precious metals. Negative currency effects dampened sales in all divisions. Continuing high demand from the automotive and construction industries led to greater sales volumes. We considerably improved income from operations (EBIT) before special items in all divisions, especially Performance Materials.

Catalysts

Sales in the Catalysts division decreased considerably year-on-year, primarily as a result of lower precious metal prices. Currency effects also weighed down sales. We achieved volumes growth overall, predominantly supported by sharply increased sales volumes of mobile emissions catalysts. Lower precious metal prices led to a sales decline in precious metal trading to €554 million (second quarter of 2015: €666 million). The volumes growth allowed us to considerably raise our EBIT before special items.

Construction Chemicals

In the Construction Chemicals division, we posted slight sales growth compared with the second quarter of 2015. This was largely attributable to considerably higher sales volumes, especially in North America. Volumes rose in Europe, as well, while they declined slightly in Asia and the region South America, Africa, Middle East. Currency effects had a negative impact, particularly in Asia and in South America, Africa, Middle East. Prices fell slightly. We were able to considerably improve EBIT before special items as a result of increased sales volumes and positive margin development.

Coatings

Compared with the second quarter of 2015, sales declined slightly in the Coatings division. This was predominantly the result of negative currency effects in all business areas. Volumes and prices rose slightly. We achieved considerable volumes growth for automotive OEM coatings in Europe and North America, as well as in the industrial coatings business. Volumes of automotive refinish coatings slightly exceeded the level of the previous second quarter. The difficult environment in Brazil led to a significant decline in demand for decorative paints. Thanks especially to increased volumes of automotive OEM coatings, we were able to considerably raise EBIT before special items.

Performance Materials

The Performance Materials division’s sales were slightly below the level of the second quarter of 2015. This was largely due to declining sales prices brought about by lower raw material costs as well as to negative currency effects. We were able to improve sales volumes, however. Our businesses with styrene foams, thermoplastic polyurethanes, engineering plastics and Cellasto^® saw especially positive development. Demand from the automotive industry grew significantly. Our businesses with the construction industry remained at prior second-quarter levels, whereas sales volumes declined in the consumer goods sector. EBIT before special items rose considerably thanks to higher margins and lower fixed costs.