Management Report
5.3 MaterialScience
| Key Data – MaterialScience | [Table 11] |
|---|
| | 1st Quarter 2009 | 1st Quarter 2010 | Change |
| | € million | € million | % |
| Sales | 1,636 | 2,216 | +35.5 |
| Change in sales | | | |
| Volume | -33.5% | +41.2% | |
| Price | -4.9% | -3.3% | |
| Currency | +3.0% | -2.4% | |
| Portfolio | +0.5% | 0.0% | |
| Sales by business unit | | | |
| Polyurethanes | 844 | 1,106 | +31.0 |
| Polycarbonates | 374 | 575 | +53.7 |
| Coatings, Adhesives, Specialties | 276 | 413 | +49.6 |
| Industrial Operations | 142 | 122 | -14.1 |
| Sales by region | | | |
| Europe | 681 | 878 | +28.9 |
| North America | 374 | 436 | +16.6 |
| Asia/Pacific | 372 | 617 | +65.9 |
| Latin America/Africa/Middle East | 209 | 285 | +36.4 |
| EBITDA* | (128) | 287 | . |
| Special items | (12) | 0 | |
| EBITDA before special items* | (116) | 287 | . |
| EBITDA margin before special items* | (7.1)% | 13.0% | |
| EBIT* | (281) | 146 | . |
| Special items | (18) | 0 | |
| EBIT before special items* | (263) | 146 | . |
| Gross cash flow** | (60) | 229 | . |
| Net cash flow** | 207 | 16 | -92.3 |
* For definition see “Calculation of EBIT(DA) Before Special Items.” ** For definition see “Financial Position of the Bayer Group.” |
MaterialScience got off to a successful start in 2010. Sales of this subgroup came in at €2,216 million in the first quarter of 2010, up 35.5% (Fx adj. 37.9%) from the very weak prior-year quarter (€1,636 million), in which business was weighed down by the global financial and economic crisis. MaterialScience also achieved further gains compared to the fourth quarter of 2009 (+9.9%), with higher volumes and increased prices in all business units.
The growth in sales against the first quarter of 2009 was attributable to significant increases in demand from our principal customer industries. The greatest relative increase in demand came from the automotive industry. Volumes moved distinctly higher overall in all product groups. The growth engine was once again the Asia/Pacific region, where we also succeeded in implementing price increases. Volumes also rose appreciably in the Europe and North America regions, which last year were the hardest hit by the economic crisis.
Sales of the Polyurethanes business unit rose by a gratifying 31.0% (Fx adj. +33.4%) to €1,106 million (Q1 2009: €844 million). Sales of all polyurethane product groups (diphenylmethane diisocyanate (MDI), toluene diisocyanate (TDI) and polyether) increased by double-digit percentages, with all product groups posting significantly higher volumes in nearly every sales region. However, the price increases achieved mainly in the Asia/Pacific region did not fully offset the price declines in North and Latin America.
The Polycarbonates business unit saw sales rise by a substantial 53.7% year on year (Fx adj. +56.9%), from €374 million in the prior-year period to €575 million in the first three months of this year. Here as well, both product groups (granules and polycarbonate sheet/semi-finished products) benefited from higher demand in all regions, posting substantial volume increases. Selling prices also rose overall. Here we more than offset the slight price declines in Europe, North America and Latin America with selling price increases in the Asia/Pacific region.
The business situation also improved considerably in the Coatings, Adhesives, Specialties business unit. Sales rose by 49.6% (Fx adj. +52.6%) to €413 million (Q1 2009: €276 million). Selling prices fell slightly, but all product groups considerably increased their sales worldwide on account of higher volumes.
Sales of the Industrial Operations business unit moved back 14.1% (Fx adj. -13.6%) to €122 million (Q1 2009: €142 million). Although volumes increased in both the relevant sales regions (Europe and North America) due to higher demand, selling prices fell significantly against the above-average levels of the prior-year quarter. This was mainly the result of lower prices for sodium hydroxide solution in North America compared with the very high level of the previous year.
The gratifying recovery in business also had a positive impact on earnings. EBITDA before special items of MaterialScience improved markedly in the first quarter of 2010 to €287 million (Q1 2009: minus €116 million), thanks mainly to considerably higher volumes and the related increase in capacity utilization at our production facilities. On the raw materials side, market prices began to rise again due to the global recovery in demand following the economic and financial crisis. However, raw material costs eased somewhat compared with the prior-year quarter. Here it should be kept in mind that in the first quarter of 2009 we were still selling products manufactured with higher-priced raw materials. Lower energy prices and savings resulting from our restructuring measures also made positive contributions to earnings. EBIT before special items came in at €146 million (Q1 2009: minus €263 million). There were no special items in 2010, while earnings for the prior-year period were diminished by special charges of €18 million. EBIT came in at €146 million (Q1 2009: minus €281 million).