Management Report
5.3 MaterialScience
| Key Data – MaterialScience | [Table 11] |
|---|
| | 3rd
Quarter
2009 | 3rd
Quarter
2010 | Change | First Nine
Months
2009 | First Nine
Months
2010 | Change |
| | € million | € million | % | € million | € million | % |
| Sales | 2,038 | 2,665 | +30.8 | 5,504 | 7,570 | +37.5 |
| Change in sales | | | | | | |
| Volume | -6.5% | +12.7% | | -20.6% | +27.8% | |
| Price | -15.3% | +10.3% | | -10.9% | +5.4% | |
| Currency | +1.7% | +7.8% | | +2.8% | +4.3% | |
| Portfolio | +0.1% | 0.0% | | +0.3% | 0.0% | |
| Sales by business unit | | | | | | |
| Polyurethanes | 1,011 | 1,321 | +30.7 | 2,773 | 3,748 | +35.2 |
| Polycarbonates | 526 | 726 | +38.0 | 1,350 | 2,054 | +52.1 |
| Coatings, Adhesives, Specialties | 383 | 475 | +24.0 | 996 | 1,369 | +37.4 |
| Industrial Operations | 118 | 143 | +21.2 | 385 | 399 | +3.6 |
| Sales by region | | | | | | |
| Europe | 825 | 1,046 | +26.8 | 2,232 | 2,924 | +31.0 |
| North America | 395 | 540 | +36.7 | 1,149 | 1,551 | +35.0 |
| Asia/Pacific | 546 | 754 | +38.1 | 1,398 | 2,144 | +53.4 |
Latin America/Africa/
Middle East | 272 | 325 | +19.5 | 725 | 951 | +31.2 |
| EBITDA* | 227 | 409 | +80.2 | 181 | 1,067 | . |
| Special items | (11) | 0 | | (62) | 0 | |
| EBITDA before special items* | 238 | 409 | +71.8 | 243 | 1,067 | . |
| EBITDA margin before special items* | 11.7% | 15.3% | | 4.4% | 14.1% | |
| EBIT* | 85 | 260 | . | (280) | 632 | . |
| Special items | (15) | 0 | | (95) | 0 | |
| EBIT before special items* | 100 | 260 | . | (185) | 632 | . |
| Gross cash flow** | 180 | 297 | +65.0 | 194 | 817 | . |
| Net cash flow** | 129 | 254 | +96.9 | 543 | 332 | -38.9 |
* For definition see "Calculation of EBIT(DA) Before Special Items." ** For definition "Financial Position of the Bayer Group." |
The business situation for MaterialScience improved significantly in the third quarter of 2010 compared to the prior-year quarter, which was weak due to the economic situation. Sales came in at €2,665 million (Q3 2009: €2,038 million), which was 30.8% (Fx adj. +23.0%) ahead of the prior-year period. This growth was primarily attributable to significantly higher demand in our main customer industries. We registered the largest increase in absolute terms in the construction and automotive industries. The improved demand situation led to considerably higher volumes in all product groups and regions. Selling prices also rose significantly overall. Contributing to this were price increases in Europe, Asia/Pacific and North America, while selling prices in Latin America held steady at the prior-year level.
Sales of the Polyurethanes business unit came in at €1,321 million, up 30.7% (Fx adj. +22.7%) from the prior-year figure of €1,011 million. This increase resulted primarily from significant volume growth in all polyurethane product groups (diphenylmethane diisocyanate (MDI), toluene diisocyanate (TDI) and polyether). Volumes rose in all regions, with especially strong gains recorded both in the Asia/Pacific region, which was stable in the prior-year period, and in the Europe region, which last year was still weighed down by the economic crisis. We were also able to implement price increases in all product groups, particularly in Europe and North America.
The Polycarbonates business unit also posted a pleasing business performance, with sales advancing by 38.0% (Fx adj. +28.7%) to €726 million (Q3 2009: €526 million), chiefly as a result of higher selling prices and volumes worldwide in our granules product group. Our product group “polycarbonate sheet/semi-finished products” benefited from higher demand, enabling us to grow sales through steady selling prices coupled with higher volumes.
Sales of the Coatings, Adhesives, Specialties business unit climbed by 24.0% (Fx adj. +17.6%) to €475 million (Q3 2009: €383 million). This was largely due to significant volume increases in all product groups and regions. Demand picked up noticeably, especially in Aia/Pacific and Europe. We also achieved a slight increase in selling prices in nearly all product groups and regions.
Sales in the Industrial Operations business unit climbed by 21.2% (Fx adj. +17.5%) to €143 million (Q3 2009: €118 million). We registered volume increases in all regions, especially Europe and North America. Selling prices were down slightly overall.
The markedly improved business situation was also reflected in earnings. EBITDA before special items of MaterialScience rose significantly in the third quarter of 2010 to €409 million (Q3 2009: €238 million). This success was the result of substantial volume gains, higher selling prices and efficiency improvements. On the other hand, earnings were hampered by the increase in raw material costs accompanying the global economic recovery. EBIT before special items came in at €260 million (Q3 2009: €100 million). In contrast to the prior-year quarter, third-quarter EBIT was not diminished by any special charges (Q3 2009: €15 million). EBIT therefore also came in at €260 million (Q3 2009: €85 million).
In the first nine months of 2010, MaterialScience lifted sales by a substantial 37.5% to €7,570 million (9M 2009: €5,504 million). Adjusted for currency and portfolio effects, sales grew by 33.2%. This pleasing development was chiefly due to significant volume growth. In this respect we benefited from the recovery in demand following the sharp decline caused by the financial and economic crisis in the previous year. We also were able to raise selling prices. EBITDA before special items came in at €1,067 million (9M 2009: €243 million). EBIT before special items amounted to €632 million (9M 2009: minus €185 million). While EBIT in the first three quarters of 2009 was diminished by special charges of €95 million, there were no special charges in the corresponding period of 2010. EBIT came in at €632 million (9M 2009: minus €280 million).