EBITDA

In Decorative Paints, EBITDA was 20 percent behind last year (19 percent in constant currencies), mainly driven by the increases in raw material prices (specifically TiO₂ ) and unfavorable product mix effects including down trading. EBITDA margin ended at 8.3 percent in 2011 (2010: 11.0 percent). We started to restructure operations in Europe and announced restructuring activities in the US in 2012.

Margins in Q4 were negatively impacted by the increased costs of raw materials and stock write-offs (€17 million) in the US resulting in an EBITDA of 0.9 percent (2010: 5.5 percent).

In Performance Coatings, raw material price increases had a negative impact on the full-year results in all businesses. Margin management programs – including selling price increases and restructuring efforts in mature markets – are ongoing and continue to support performance. Full-year EBITDA ended at €611 million (2010: 647 million), with an EBITDA margin of 11.8 percent (2010: 13.5 percent).

Signs of a reduction in the rate of raw material price increases were evident in Q4, although margins were still impacted by the increased prices. As a result, EBITDA in the quarter was €141 million (€147 million in 2010).

While most businesses in Specialty Chemicals recorded their best-ever profitability, Functional Chemicals saw its earnings decrease after a very strong 2010 performance, due primarily to the Ethylene Amines product line. With effective margin management and cost control, unit margins remained at the 2010 level offsetting significant raw material price increases and adverse currency impacts. The energy market in the Netherlands remained unattractive for energy producers as “spark spreads” (the difference between gas input costs versus electricity sales prices) adversely impacted our results. The overall portfolio shows strong profitability in these difficult economic circumstances, with EBITDA at €906 million (2010: €939 million) and EBITDA margin at 17.0 percent (2010: 19.0 percent).

Q4 showed lower volumes in most segments, due to lower demand and customer stock control. EBITDA was €207 million (2010: €221 million) and EBITDA margin at 16.1 percent (2010: 17.6 percent).