Business Review

  • Sales rise 27% to €16,659 million due to growth in the Catalysts division, mainly as a result of significantly higher precious metal prices
  • EBIT before special items 33% lower at €484 million due to decreases in both divisions

Sales to third parties in the Surface Technologies segment rose by €3,517 million to €16,659 million in 2020. This was due to considerably higher sales in the Catalysts division, which rose by €4,174 million year on year to €13,570 million. In the Coatings division, sales declined by €657 million to €3,089 million.

Factors influencing sales – Surface Technologies

 

Surface Technologies

Catalysts

Coatings

Volumes

–1%

5%

–14%

Prices

32%

43%

1%

Portfolio

0%

0%

0%

Currencies

–4%

–4%

–5%

Sales

27%

44%

–18%

Sales growth was largely driven by the strong increase in precious metal prices in the Catalysts division. In precious metal trading, sales rose to €7,612 million, mainly as a result of higher prices (2019: €4,585 million). The Coatings division also achieved slightly higher prices, primarily in the decorative paints and surface treatments businesses.

Negative currency effects had an offsetting impact in both divisions.

Segment data – Surface Technologies (Million €)

 

 

2020

2019

+/–

Sales to third parties

 

16,659

13,142

27%

of which Catalysts

 

13,570

9,396

44%

Coatings

 

3,089

3,746

–18%

Intersegment transfers

 

203

212

–4%

Sales including transfers

 

16,862

13,354

26%

Income from operations before depreciation, amortization and special items

 

966

1,173

–18%

Income from operations before depreciation and amortization (EBITDA)

 

900

1,120

–20%

EBITDA margin

%

5.4

8.5

Depreciation and amortizationa

 

1,487

457

225%

Income from operations (EBIT)

 

–587

663

.

Special items

 

–1,071

–59

.

EBIT before special items

 

484

722

–33%

Return on capital employed (ROCE)

%

–4.8

5.7

Assets

 

11,691

11,773

–1%

Investments including acquisitionsb

 

585

565

4%

Research and development expenses

 

246

214

15%

a

Depreciation and amortization of property, plant and equipment and intangible assets (including impairments and reversals of impairments)

b

Additions to property, plant and equipment and intangible assets

Sales developments was also weighed down by slightly lower volumes overall. This was largely the result of weaker demand from the automotive and aviation industries due to the effects of the coronavirus pandemic, which significantly depressed volumes development in the Coatings division. Sales volumes declined significantly here, especially in the automotive OEM coatings, surface treatments and automotive refinish coatings businesses. Higher volumes in the Catalysts division for mobile emissions catalysts in Asia and in precious metal trading were unable to compensate for this. Sales volumes declined for chemical catalysts and refining catalysts in particular.

Catalysts – Sales by region

Location of customer

Surface Technologies – Catalysts – Sales by region (pie chart)
Coatings – Sales by region

Location of customer

Surface Technologies – Coatings – Sales by region (pie chart)

Income from operations (EBIT) before special items amounted to €484 million, €238 million below the prior-year level due to lower earnings in both divisions. In the Coatings division, this was mainly attributable to the development of volumes. Lower fixed costs and lower raw materials prices were unable to compensate for this. EBIT before special items declined in the Catalysts division, mainly as a result of higher fixed costs, driven in particular by growth initiatives for battery chemicals. This could not be offset by a significant improvement in earnings in precious metal trading.

EBIT decreased by €1,250 million to –€587 million. EBIT included special charges, mainly for goodwill impairments of €786 million in the surface treatments cash-generating unit, and for property, plant and equipment, primarily in the Catalysts division in Europe. This largely reflected significantly weaker demand due to the effects of the coronavirus pandemic as well as the expected slow recovery in the automotive and aviation industries.