Management Report
5.3 MaterialScience
| Key Data – MaterialScience | [Table 11] |
|---|
| | 2nd Quarter
2009 | 2nd Quarter
2010 | Change | 1st Half 2009 | 1st Half 2010 | Change |
| | € million | € million | % | € million | € million | % |
| Sales | 1,830 | 2,689 | +46.9 | 3,466 | 4,905 | +41.5 |
| Change in sales | | | | | | |
| Volume | -22.1% | +32.7% | | -27.7% | +36.8% | |
| Price | -12.3% | +7.8% | | -8.7% | +2.5% | |
| Currency | +3.7% | +6.4% | | +3.4% | +2.2% | |
| Portfolio | +0.5% | 0.0% | | +0.5% | 0.0% | |
| Sales by business unit | | | | | | |
| Polyurethanes | 918 | 1,321 | +43.9 | 1,762 | 2,427 | +37.7 |
| Polycarbonates | 450 | 753 | +67.3 | 824 | 1,328 | +61.2 |
| Coatings, Adhesives, Specialties | 337 | 481 | +42.7 | 613 | 894 | +45.8 |
| Industrial Operations | 125 | 134 | +7.2 | 267 | 256 | -4.1 |
| Sales by region | | | | | | |
| Europe | 726 | 1,000 | +37.7 | 1,407 | 1,878 | +33.5 |
| North America | 380 | 575 | +51.3 | 754 | 1,011 | +34.1 |
| Asia/Pacific | 480 | 773 | +61.0 | 852 | 1,390 | +63.1 |
| Latin America/Africa/Middle East | 244 | 341 | +39.8 | 453 | 626 | +38.2 |
| EBITDA* | 82 | 371 | . | (46) | 658 | . |
| Special items | (39) | 0 | | (51) | 0 | |
| EBITDA before special items* | 121 | 371 | . | 5 | 658 | . |
| EBITDA margin before special items* | 6.6% | 13.8% | | 0.1% | 13.4% | |
| EBIT* | (84) | 226 | . | (365) | 372 | . |
| Special items | (62) | 0 | | (80) | 0 | |
| EBIT before special items* | (22) | 226 | . | (285) | 372 | . |
| Gross cash flow** | 74 | 291 | . | 14 | 520 | . |
| Net cash flow** | 207 | 62 | -70.0 | 414 | 78 | -81.2 |
* For definition see “Calculation of EBIT(DA) Before Special Items.” ** For definition see “Financial Position of the Bayer Group.” |
The significant improvement in the business performance of our MaterialScience subgroup continued in the second quarter of 2010. Sales of this subgroup came in at €2,689 million, up 46.9% (Fx adj. +40.5%) against the prior-year quarter, which was impacted by the global financial and economic crisis.
The expansion of business was based above all on a considerable increase in demand in our primary consumer industries that enabled US to significantly improve volumes in all product groups and regions. We registered the largest absolute volume gains in the Europe and North America regions, which were hardest hit in the previous year by the economic downswing. There was also an increase in selling prices particularly in Asia/Pacific and Europe. MaterialScience substantially improved sales compared to the first quarter of 2010 as well (+21.3%; Fx adj. +15.9%). Here, too, all product groups contributed to the gratifying business performance with significant volume expansion while overall selling prices increased.
Sales of the Polyurethanes business unit rose by 43.9% (Fx adj. +37.1%) to €1,321 million (Q2 2009: €918 million). This was attributable especially to the significantly higher volumes in all polyurethane product groups (diphenylmethane diisocyanate (MDI), toluene diisocyanate (TDI) and polyether) and in all regions. The highest growth rates were achieved by TDI products in North America and our polyether products in the Asia/Pacific and Latin America regions. In addition, higher selling prices overall in the Asia/Pacific and Europe regions more than offset price declines in North and Latin America.
Sales of the Polycarbonates business unit increased by 67.3% (Fx adj. +59.4%) to €753 million (Q2 2009: €450 million). This substantial growth was made possible largely by the success of our polyurethane granules product group, where we succeeded in markedly raising selling prices overall in addition to the volume increases achieved in all regions. Furthermore, polycarbonate sheet/semi-finished products saw demand rise in all regions, enabling that product group to achieve higher sales despite selling price declines.
The Coatings, Adhesives, Specialties business unit also posted a pleasing business performance. Sales rose by 42.7% (Fx adj. +37.3%) to €481 million, thus substantially exceeding the prior-year level of €337 million. Significant volume increases in all product groups and regions more than offset the slight declines in selling prices.
Sales of the Industrial Operations business unit moved ahead 7.2% (Fx adj. +6.1%) to €134 million (Q2 2009: €125 million). Price declines in the two primary regional markets – Europe and North America – were more than offset by an increase in volumes.
The improved business situation was also reflected in earnings. EBITDA before special items of MaterialScience rose markedly in the second quarter of 2010 to €371 million (Q2 2009: €121 million). This success was based above all on a substantial expansion of volumes and the associated clear improvement in capacity utilization in our production facilities. Further positive effects came from the increased selling prices for our products and from efficiency improvements. By contrast, earnings were diminished by higher purchase prices on the raw material markets as a result of the global economic recovery. EBIT before special items came in at €226 million (Q2 2009: minus €22 million). There were no special charges in the second quarter of this year, compared to €62 million in the same period of 2009. EBIT came in at €226 million (Q2 2009: minus €84 million).
Half-year sales of the MaterialScience subgroup climbed by a substantial 41.5% to €4,905 million (H1 2009: €3,466 million). When adjusted for currency and portfolio effects, sales grew by 39.3%. This gratifying improvement was largely attributable to the recovery in demand following the downturn related to the financial and economic crisis in 2009. In addition, we were able to increase selling prices slightly. EBITDA before special items in the first half came to €658 million (H1 2009: €5 million). EBIT before special items amounted to €372 million (H1 2009: minus €285 million). By contrast to the prior-year period, there were no special charges in the first half of 2010; as a result, EBIT after special items also came in at €372 million (H1 2009: minus €365 million).