Leverkusen, Germany -- Sales at Bayer MaterialScience rose 35.0 percent to Euro 10 154 million with volumes back to pre-crisis levels overall in 2010, although new Bayer AG chairman Dr Marijn Dekkers noted that this did not yet apply to prices as a whole.
In the materials business, "we see the growth in demand from key customer industries as a major positive factor. This applies particularly to the automotive and electrical/electronics sectors, and in some regions to the construction industry as well," said Dekkers.
Business in raw materials for polyurethane expanded by 27.8 percent, said Dekkers, "thanks largely to much higher volumes in all product groups and regions."
Europe and Asia saw the largest increases, while sales of polycarbonate rose 42.9 percent, largely from considerable volume and price increases for granules.
In raw materials for coatings, adhesives and specialities, sales rose by 27.2 percent year on year as a result of significant growth in volumes.
Earnings (EBITDA) before special items of MaterialScience tripled to Euro 1356 million (2009: Euro 446 million), mainly due to much higher volumes. The unit also benefited from higher selling prices for its products, which more than offset the negative effect of increased raw material prices, Dekkers said.
For Bayer as a whole, "2010 was a good year," said Dekkers, speaking 28 Feb at the group's financial news conference in Leverkusen. "We posted sales of Euro 35 100 million, the highest figure in the company's history," and a rise of 12.6 percent. Earnings (EBITDA) - before special items - rose by 9.7 percent to Euro 7101 million, with EBIT before special items rising by 18.0 percent to Euro 4452 million.
Dekkers also noted that MaterialScience subgroup return nearly to pre-crisis levels occurred more quickly than expected. But he said, the performance of its CropScience and HealthCare units was below expectations.
"We are confident for this year, which has gotten off to a successful start," commented Dekkers, noting that Bayer plans to invest substantially over the next three years, spending Euro 15 000 million for research and development, Euro 5000 million for property, plant and equipment through 2013. Much of this would go into the BMS business to keep its facilities world class, Dekkers said, noting that BMS had already announced spending of Euro 3500 million in its facilities.
This includes the Euro 1000 million BMS recently announced it would spend in China to raise capacity for MDI (methylene diphenyl diisocyanate) to 1000 kilotonnes per annum (ktpa) in Shanghai, amongst other plans, said BMS chairman Patrick Thomas, in a separate interview at Leverkusen (see UTI Dec Jan 2010, p 3).
Thomas said that growth rates for MDI, used in insulation for construction and refrigeration, for example, are currently at 7 percent, with China's booming refrigerator manufacturing sector accounting for some of this demand. In the US, some construction recovery is evident, Thomas said, as President Obama's stimulus packages, which aim to make federal and public buildings more energy efficient, finally kick in. Another stimulus for US MDI growth is its replacement of formaldehyde as a binder in fibreboard, Thomas noted.
And the BMS chief also noted that growth of TDI (toluene diisocyanate) for flexible foams is also well above traditional levels, at about 4 percent annually
Thomas said the remainder of the Euro 3500 million investment in the MaterialScience business is for plans already announced: setting up a 250 ktpa gas-phase TDI plant in Shanghai, and a similar 300 ktpa unit in Dormagen; expanding the MDI unit there to 400 ktpa, at the same time closing smaller TDI units at Dormagen and Brunsbuettel. The plans also involve investment in the coatings materials HDI (hexamethylene diiscocyanate) and IPDI (Isophorone diiscocyanate) expansions in Germany, as well as some debottlenecking of BMS's MDI plant at Tarragona, Spain, Thomas added.
PIC: Bayer chairman Marijn Dekkers at the company's 28 Feb results meeting