Leverkusen, Germany -- Sales at Bayer MaterialScience's polyurethanes, polycarbonates and coatings/adhesives/sealants (CAS) unit dropped 22.8 percent to Euro 7500 million ($10 145 million) for 2009, a fall which Patrick Thomas, BMS chairman, said was 50 percent attributable to lower sales prices and 50 percent to lower volumes.
In its polyurethanes business alone, sales were 25.4 percent down at Euro 3783 million, in Coatings, Adhesives and Sealants they dropped 17.2 percent to Euro 1364 million, while polycarbonate sales dropped 21 percent to Euro 1873 million.
BMS's priority has been to focus on "value over volume," commented Bayer AG chairman Werner Wenning, at the group's 26 Feb annual results press conference.
The main sales slump occurred in a sharp decline at the start of 2009, Wenning said, but, "recovered markedly," as the year progressed,
Pretax profit for BMS also fell considerably - to Euro 341 million (Euro 1041 million in 2008), but again the group's performance improved towards the end of the year, the Bayer chairman noted.
In Q4 2009, sales were down only two percent compared to those in Q4 of 2008, and pretax profit rose to Euro 160 million in Q4 2009, from only Euro 20 million in the same period in 2008.
Investing more in gas-phase TDI
Thomas said BMS will invest Euro 495 million in the business in 2010, some on preliminary work for its 300 ktpa gas-phase TDI (toluene diisocyanate) plant at Dormagen, Germany, (see separate story) and some to finish off the 250 ktpa Caojing, China, gas-phase TDI unit, due on stream mid-2011.
Discussing isocyanates supply and demand, Thomas said TDI capacity globally is almost fully occupied, whilst supply of MDI (methylene diphenyl diisocyanate) is longer.
BMS' new 350-ktpa MDI unit in China, which started up at the end of 2008, is now running flat out, he revealed. Last year, Thomas said BMS would ramp up production at this site up slowly, since demand was slack as a result of the recession
Thomas also indicated that a bonus with the new isocyanates plants BMS is putting up is that they can operate successfully at down to a third of their nameplate capacity -- a situation that has not been enjoyed before. This gives Bayer a lot more flexibility in isocyanate production, Thomas said, in a press briefing for journalists, following the Bayer results meeting.
Thomas also revealed that Bayer is also bringing its 125 ktpa MDI unit at Brunsbuettel, Germany, back on stream soon, in anticipation of a planned maintenance shut-down at its 150-ktpa MDI plant at Tarragona in Spain.
Long-term, the group plans to build a 400 ktpa MDI unit at Brunsbuettel, and then close the existing MDI unit at the site.
Thomas also noted that BMS will carry out more work on its Russian systems house this year.
Price over volume
Asked why BMS's results look poor compared with those of its competitors, Wenning indicated that the results need to be compared carefully. "Let's just analyse the winners and losers," he continued, saying that in its main product fields, BMS, as market leader, was "one of the first to withdraw capacity from the market to keep prices at a reasonable level." In doing so, "We may have lost a couple of points in market share," he said.
Targets for BMS this year are to raise the earnings and sales volumes considerably - by ten percent, Wenning said, noting that Bayer expects "continuing economic recovery in the relevant markets. It is also targeting a "substantial increase" in earnings (EBITDA) before special items in 2009.
Asked if Bayer had any plans to divest the BMS business, Wenning said "no portfolio changes are envisaged," and that the composition of the Bayer group was determined by "future growth expectations, and the need to ensure long term competitiveness."
BMS is underpinned by strong technology in isocyanates and polycarbonate (PC) Wenning noted. It has a "leading market position," particularly as its gas-phase technology for TDI (toluene diisocyanate) comes into play this year, which will give it "the lowest-cost production across the business," Wenning said.