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Performance Chemicals

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Performance Chemicals
                     
  Q2 2011 Q2 2012 Change HJ 2011 HJ 2012 Change
                     
  € million Margin % € million Margin % % € million Margin % € million Margin % %
                     
Sales 561   585   4.3 1,117   1,143   2.3
EBITDA pre exceptionals 95 16.9 78 13.3 (17.9) 185 16.6 161 14.1 (13.0)
EBITDA 95 16.9 63 10.8 (33.7) 185 16.6 146 12.8 (21.1)
Operating result (EBIT) pre exceptionals 76 13.5 57 9.7 (25.0) 148 13.2 119 10.4 (19.6)
Operating result (EBIT) 76 13.5 40 6.8 (47.4) 148 13.2 102 8.9 (31.1)
Cash outflows for capital expenditures1) 14   21   50.0 28   32   14.3
Depreciation and amortization 19   23   21.1 37   44   18.9
Employees as of June 30 (previous year: as of Dec. 31) 5,819   6,015   3.4 5,819   6,015   3.4
1) Intangible assets and property, plant and equipment

Sales in our Performance Chemicals segment moved ahead by 4.3% in the second quarter of 2012 to €585 million. Selling prices rose by a modest 0.6% due to the increase in raw material prices, while volumes receded by 4.1%. A positive portfolio contribution of 3.0% from recent acquisitions and favorable exchange rate movements of 4.8% contributed to the overall sales growth.

Volumes receded for the segment as a whole from the high level of the prior-year quarter, but the picture varied from one business unit to another. The Ion Exchange Resins business unit increased volumes compared to the same period a year ago and also raised selling prices. The Leather business unit suffered from lower chrome ore prices and instability of the CO2 supply at the site in Newcastle, South Africa. The Material Protection Products business unit recorded lower volumes, but a positive portfolio effect from the biocide businesses acquired in the previous year more than made up the difference. The same applied to the Functional Chemicals business unit, where a positive portfolio effect more than offset weaker demand, particularly from the construction and electrical/electronics industries. The drop in demand from the tire and automotive industries had a similar effect on volumes in the Rubber Chemicals and Rhein Chemie business units, although the latter benefited from a small portfolio effect. The Inorganic Pigments business unit experienced a decline in demand, particularly in Europe and Asia. The segment’s regional growth drivers were North America and Latin America, where sales posted the strongest increases in absolute and relative terms.

EBITDA pre exceptionals in the Performance Chemicals segment receded by €17 million from €95 million in the prior-year period to €78 million. Higher raw material prices were fully passed along to the market at the segment level. Earnings were held back by the lower capacity utilization compared with the high level of the prior-year quarter. This was largely the result of the drop in demand already mentioned and of maintenance shutdowns. Quarterly earnings were also impacted by expenses associated with these scheduled shutdowns. In addition, the Material Protection Products business unit had higher costs to bear for product registrations. The positive portfolio contribution from the recently acquired businesses, along with currency effects, had a favorable impact on earnings. The segment’s EBITDA margin decreased from 16.9% to 13.3%.

The Performance Chemicals segment posted sales of €1,143 million in the first half of 2012, up 2.3% from the same period a year ago. A positive price effect of 1.7% contrasted with a 5.6% decrease in volumes. A portfolio contribution of 2.9% and favorable exchange rate movements of 3.3% led to a slight sales increase overall.

The segment generated EBITDA pre exceptionals of €161 million in the first six months of 2012, against €185 million in the prior-year period. The EBITDA margin declined from 16.6% to 14.1%.

The segment’s exceptional items of €17 million, of which €15 million impacted EBITDA, primarily related to facility consolidations in the Rubber Chemicals business unit.

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