• Performance Polymers: steady positive trend
• Advanced Intermediates: solid demand
• Performance Chemicals: margins significantly improved
• Engineering Plastics: business activities divested
  
  

The Performance Polymers segment showed a steady positive trend in fiscal 2007. Sales rose by 4.2% to €2,680 million in all business units on the back of solid price and volume growth. Prices were raised by 3.4%, while volumes advanced by a substantial 5.2%, more than offsetting the 4.4% negative currency effects. Additional production capacity in the Butyl Rubber and Semi-Crystalline Products business units and the recommissioning of a production line in the Polybutadiene Rubber business unit for neodymium poly-butadiene rubber (NdPBR) production in Orange, Texas, met with good demand. In the Butyl Rubber business unit, significant capital expenditures to expand capacity and enhance efficiency were made at our sites in Sarnia, Canada, and Zwijndrecht, Belgium, where prices and especially volumes were driven up. Business in the Butyl Rubber unit had been hit in 2006 by a strike at a major customer. Helped by targeted marketing activities, the Polybutadiene Rubber business unit outpaced market growth in Asia and also in Latin America. It attracted new customers for its performance rubber grades, safeguarding and expanding established international business with bulk customers through long-term contracts. An example is the long-term delivery contract concluded with Hankook Tire in May 2007 for high-performance solution-polymerized SBR and polybutadiene rubber. Volumes moved higher and prices were slightly raised. By contrast, selective expansion by the Technical Rubber Products business unit led to price hikes in many cases though comparatively little volume growth. We initiated capacity expansions in this business unit, too, focusing on the production of carboxylated nitrile-butadiene rubber (XNBR) at the site in La Wantzenau, France. Debottlenecking and modernization were also carried out in Marl and at the Uerdingen and Antwerp sites of the Semi-Crystalline Products business unit, which also boosted prices and volumes.

EBITDA pre exceptionals of the segment improved by 10.6% to €376 million. Its overall margin rose by a further 0.8 percentage points to 14.0% thanks to our ability to pass on the higher raw material costs that arose in some areas. The weak U.S. dollar put pressure on earnings. In the Butyl Rubber business unit, earnings improved as sales growth outpaced cost increases. During the year, the Polybutadiene Rubber business unit was sometimes unable to pass along higher raw material costs through selling price increases, though the situation improved as the year progressed. The effects of efficiency enhancement measures and plant consolidations in the Technical Rubber Products business unit were apparent. The business line structure introduced in this business unit at mid-year enabled more flexible responses to changing market conditions. The Semi-Crystalline Products business unit benefited from this unit's high capacity utilization and the various measures implemented to increase productivity.