The managing directors responsible for Specialty Chemicals (photo)

It was another good year for our Specialty Chemicals business, despite a less than favorable macro-economic environment. Following a good first quarter, conditions weakened as the year progressed, particularly in areas such as construction, while lower economic activity in the upstream petrochemical sector and a slowdown in China’s manufacturing industry also impacted our performance. However, the resilience of our portfolio – combined with effective cost leadership and our strong market and technology positions – enabled us to increase revenues and post solid results, helped by a weaker euro.

Although trading conditions weren’t quite as severe as in recent years, 2012 still presented a number of notable challenges. The construction industry continued to struggle, which hit sales at our Functional Chemicals business, while the economic slowdown in Europe also took its toll in terms of volume. Another ongoing issue in Europe is the lack of competitively-priced energy and feedstocks. The North American chemical industry is benefiting from large-scale use of shale gas. Gas prices there are only a fraction of what they are in Europe, so businesses there have a clear advantage when it comes to energy pricing and access to competitively priced petrochemical raw materials such as ethylene.

Looking briefly at our activities, Surface Chemistry achieved a record year, building on its leadership positions and clearly benefiting from the acquisition of Boxing Oleochemicals. In addition, we announced a series of investments to further strengthen the business’ presence in China. Pulp and Performance Chemicals also recorded a record year, despite some weakness in demand. The business has streamlined its portfolio to focus on key strategic markets and is well positioned to maintain its growth momentum, with the Chemical Island concept proving to be particularly successful.

It was a more challenging year for Functional Chemicals, mainly due to softer demand and an imbalance in supply/demand in certain markets. But the business continued to launch innovative products – notably groundbreaking oil/gas well stimulation technology Dissolvine StimWell – and further developed its activities in Ningbo, China, where additional strategic investments were made during the year. Industrial Chemicals again proved resilient and was less affected by the downturn in Europe due to its strong positioning in the downstream value chain. It continued to commercialize its mTA anti-caking technology and strengthen its global leadership positions in electrolyses salt and MCA in Europe. We divested our Pakistan-based activities to better align the Specialty Chemicals portfolio with our global strategy.

We were particularly proud to receive the Dutch Responsible Care Award and the European Responsible Care Award during 2012. The former was presented by the Dutch Chemical Industry (VNCI) and the latter by the European Chemical Industry Council (Cefic). Both awards were given in recognition of new DME-based DeMythe LDD technology, which is helping to revolutionize the leather and protein industries. It was developed by our Industrial Chemicals business along with a Spanish partner. Also notable was the achievement of our best ever safety records, underlining our focus on continuous improvement in all areas.

“The resilience of our portfolio enabled us to increase revenues and post solid results”

Werner Fuhrmann
Executive Committee member responsible for Specialty Chemicals

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