Performance Polymers

Overview of Key Data
  2012 2013 Change
  € million Margin % € million Margin % %
Sales 5,176   4,486   (13.3)
EBITDA pre exceptionals 817 15.8 389 8.7 (52.4)
EBITDA 808 15.6 372 8.3 (54.0)
Operating result (EBIT) pre exceptionals 608 11.7 135 3.0 (77.8)
Operating result (EBIT) 599 11.6 (117) (2.6) < (100)
Cash outflows for capital expenditures 434   385   (11.3)
Depreciation and amortization 209   489   > 100
Employees as of Dec. 31 5,348   5,379   0.6

Business in our Performance Polymers segment declined in 2013 compared to the strong prior year. Sales decreased by 13.3% to €4,486 million. A persistently difficult market environment coupled with significantly lower and volatile prices for raw materials, especially the key raw material butadiene, resulted in a negative price effect of 15.1%. This was mitigated by a volume effect of 3.5%, due in part to capacity expansions. The acquisition of Bond-Laminates GmbH, Brilon, Germany, in September 2012 produced a positive portfolio effect of 0.3%, which was outweighed by negative exchange rate developments.

All business units in this segment were impacted by declining selling prices, whereas volumes developed differently. The Butyl Rubber business unit posted higher volumes, due in part to the capacity added by the completion of the butyl rubber facility in Singapore. By contrast, the Performance Butadiene Rubbers business unit, which, like Butyl Rubber, has close ties to the tire industry and thus to the replacement tire and original equipment manufacturer markets, registered a drop in selling prices driven by raw material prices as well as slightly lower volumes. Our High Performance Materials business unit saw a positive volume trend that was attributable to, among other things, the expansion of its compounding activities. Sales were also supported by portfolio effects resulting from acquisitions. The Keltan Elastomers and High Performance Elastomers business units were impacted by lower selling prices. The exchange rate effect was negative in all of the segment’s business units. Sales declined, in part substantially, in all reporting regions but especially in North America, Latin America and Germany, where decreases were in the double-digit percentage range.

EBITDA and EBITDA Margin Pre Exceptionals
Graphic: Performance Polymers - EBITDA and EBITDA Margin Pre Exceptionals

EBITDA pre exceptionals in the Performance Polymers segment decreased by €428 million, or 52.4%, to €389 million. Increasing competition and lower raw material prices resulted in declining selling prices. The cost relief derived from lower raw material prices and the positive development of the segment’s volumes could not compensate for the effects of lower selling prices. Earnings were additionally hampered by inventory devaluations, destocking, start-up costs for a new plant and shifts in exchange rates. This was mitigated by a slight portfolio effect from Bond-Laminates GmbH, Brilon, Germany, which was acquired in September 2012. The segment’s EBITDA margin pre exceptionals declined from 15.8% to 8.7%.

Exceptional items amounted to €252 million, €17 million of which impacted EBITDA. Most of the exceptional charges were impairment charges recognized by the Keltan Elastomers and High Performance Elastomers business units. The exceptional charges that impacted EBITDA were largely related to measures associated with the Advance program. The exceptional charges of €9 million from the previous year that fully impacted the segment’s EBITDA included expenses relating to the integration of acquired business activities.