Segment Information
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| Advanced Intermediates | 2006 | 2007 | Change | ||
|---|---|---|---|---|---|
| € million | Margin % | € million | Margin % | in % |
Sales | 1,140 |
| 1,204 |
| 5.6 |
EBITDA pre exceptionals | 174 | 15.3 | 174 | 14.5 | 0.0 |
EBITDA | 174 | 15.3 | 174 | 14.5 | 0.0 |
Operating result (EBIT) pre exceptionals | 136 | 11.9 | 137 | 11.4 | 0.7 |
Operating result (EBIT) | 136 | 11.9 | 137 | 11.4 | 0.7 |
Capital expenditures1) | 38 |
| 52 |
| 36.8 |
Depreciation and amortization | 38 |
| 37 |
| (2.6) |
Number of employees (December 31) | 2,493 |
| 2,450 |
| (1.7) |
1) intangible assets and property, plant and equipment
Business in the Advanced Intermediates segment was driven by solid demand that gave a considerable boost to underlying volume growth. Sales increased by 5.6% to €1,204 million. Volumes rose by 8.7%, while prices were almost flat, decreasing by 0.5%. Currency effects cost the segment 2.6% of sales. The Basic Chemicals business unit posted strong growth in volumes in the agricultural and other businesses, and raised prices slightly. Volume increases reinforced this business unit's position in the challenging North American market, despite the considerable impact of the decline in the U.S. dollar. The fastest-growing products in the Saltigo business unit were pharmaceutical and agrochemical intermediates. The decline in prices in this business unit must be seen in the context of the project-related nature of the Saltigo business. In a number of projects, for example, the transition from the pilot phase to the delivery phase with agreed standard volumes pulled prices down, though this was compensated by significant volume growth.
EBITDA pre exceptionals for the Advanced Intermediates segment was unchanged from the previous year's high level, at €174 million. The Basic Chemicals business unit benefited from the cost-cutting measures adopted in recent years, a diversified product portfolio, and higher volumes. Its earnings were, however, diminished by raw material and energy price increases and adverse exchange rates. Earnings of the Saltigo business unit also benefited from the restructuring initiated in prior years. Here too, as with sales, the project-related nature of this business must be borne in mind. The segment's EBITDA margin edged downjust 0.8 percentage points, to 14.5%.
| Performance Chemicals | 2006 | 2007 | Change | ||
|---|---|---|---|---|---|
| € million | Margin % | € million | Margin % | in % |
Sales | 2,205 |
| 1,970 |
| (10.7) |
EBITDA pre exceptionals | 291 | 13.2 | 285 | 14.5 | (2.1) |
EBITDA | 290 | 13.2 | 271 | 13.8 | (6.6) |
Operating result (EBIT) pre exceptionals | 201 | 9.1 | 199 | 10.1 | (1.0) |
Operating result (EBIT) | 200 | 9.1 | 183 | 9.3 | (8.5) |
Capital expenditures1) | 62 |
| 69 |
| 11.3 |
Depreciation and amortization | 90 |
| 88 |
| (2.2) |
Number of employees (December 31) | 5,056 |
| 5,223 |
| 3.3 |
1) intangible assets and property, plant and equipment
Earnings of Performance Chemicals improved significantly, partly on the strength of the portfolio adjustments. Sales in this segment were down 10.7% from the prior year, to €1,970 million, because of portfolio changes and negative currency effects. Adjusted for the 3.2% negative currency effects and the 9.7% decrease due to the divestment of the Paper and Textile Processing Chemicals business units, sales rose 2.2%. Volume effects were positive at 2.4%, with prices down just 0.2%.
Volumes in the Material Protection Products business unit did not match the high level of the previous year, which was marked by unusually high sales of the cold sterilization agent Velcorin in summer 2006. The Inorganic Pigments business unit recorded pleasing sales growth in the EMEA region, especially in central and eastern Europe. This made up for the slump in demand from the U.S. construction industry. Price increases were implemented mainly in the Leather and Rhein Chemie business units, both of which benefited from a positive market environment in Asia-Pacific. The Leather business unit also lifted volumes, particularly in sodium dichromate. This unit's acquisition of the 50% interest in South Africa-based Chrome International South Africa (Pty) Ltd. (CISA) from its former joint venture partner, the Dow Chemical Group, was completed effective February 1, 2007, which means we now control all production of sodium dichromate at the Newcastle site in South Africa. The full integration of this company into our leather chemicals production activities is having a favorable effect on the development of the Leather business unit. Since the Rhein Chemie business unit made a conscious decision to forego unprofitable business, volumes remained at the previous year's level. The dip in prices in the Functional Chemicals and Rubber Chemicals business units was compensated in both cases by higher volumes.