2010.03.30 - Financial statements 2009: Süd-Chemie holds its own in difficult environment; Group revenue and earnings moderately lower than 2008, optimistic outlook for 2010

- Revenue fell by 10% to EUR 1.07 billion
- Marked rise in EBITDA margin to 15.3%
- Profit from operations (EBIT) better than expected, reaching EUR 103.5 million (-11%) as a result of non-recurring income
- Positive business expansion in Asia´s emerging markets
- Outlook for 2010: revenue to rise by 5%, adjusted EBIT to rise by 10%

Holding its own in a difficult environment

Süd-Chemie AG, Munich was able to hold its own comparatively well during the crisis in 2009. Due to the massive drop in demand in numerous customer segments as a result of the recession, revenue generated by the leading global specialty chemicals enterprise for adsorbents, additives and catalysts fell by 10% to EUR 1.072 billion (2008: EUR 1.191 billion). In Asia and the Middle East, which moved quickly out of the recession thanks to their dynamic emerging markets, revenue rose by approx. 10% or EUR 33.8 million. This mitigated the recession-related downturns in Europe and North America. Süd-Chemie generated 85% of total revenue outside Germany in 2009, with over a third meanwhile originating from Asia and the Middle East.

Compared with the record figure reported for the previous year (2008: EUR 116.9 million), profit from operations (EBIT) fell by 11.5% to EUR 103.5 million, which still exceeded expectations. The EBIT does however include positive non-recurring items amounting to EUR 14.9 million (2008: EUR 10.5 million), mainly as a result of non-recurring income accruing from the acquisition of a catalyst plant in China. The operating result before interest, taxes and depreciation (EBITDA) fell by only 1.2% in 2009, down to EUR 163.8 million. By improving the operating earnings margin (EBITDA margin) by 1.4 percentage points compared with 2008 to reach 15.3%, the company was able to maintain its profitability, even in the face of the economic crisis. Profit for the period dipped by 21.5% to EUR 45.4 million in 2009. The Supervisory Board and Managing Board will be proposing an unchanged dividend of EUR 1.10 per share at the Annual General Meeting to be held on 19 May 2010.

Throughout the recession, the company´s good liquidity and earnings situation was safeguarded by the effects of an austerity program, which was passed at an early stage and systematically implemented. In addition to overall cost reductions, this also included a wide-scale recruitment ban, short-time work, investment cuts and working capital reduction measures.

Ongoing innovation and growth strategy

In spite of the recession and cost-cutting measures, Süd-Chemie continued to follow its long-term growth and innovation strategy in 2009. Compared with the previous year, expenditure on research and development was for instance increased by 10% to EUR 57.7 million. Although 45% lower than in 2008, capital expenditure of EUR 67.7 million was still significantly higher than depreciation. This was used largely to set up production plants in Germany in technological fields offering high future potential, such as diesel emission control catalysis, and to finance the company´s strong growth in Asia, notably in China. The equity ratio climbed by 1.9 percentage points to reach 35.3%. Net financial liabilities rose, due to minor factoring transactions, only by a marginal 5.3% to EUR 362.5 million. The dynamic debt position, which is defined by the net financial liabilities to EBITDA ratio, deteriorated only slightly from 2.1 in 2008 to 2.2, thus providing Süd-Chemie with a sound financial structure and sufficient liquidity scope.

Segment performance

Performance varied in different Business Units. The Catalytic Technologies Business Unit avoided the downward trend in the chemical industry; thanks to growing project-based business in the petrochemical and refining sectors, especially in Asia, it reported revenue of EUR 441.2 million, almost equalling its 2008 figure (EUR 443.7 million). Industrial catalysts meanwhile account for a good 40% of Group sales. A similarly robust trend was recorded by the Performance Packaging Business Unit, its products being used for instance in the pharmaceutical industry, which remained extremely stable throughout 2009 (1.9% rise in revenue to EUR 126.3 million), and by the Water Treatment Business Unit (0.9% rise in revenue to EUR 67.6 million). In the Business Units for Adsorbents and Additives (11.3% drop in revenue to EUR 238.7 million) and for Foundry Products and Specialty Resins (32.7% drop in revenue to EUR 162.8 million), business with foundry chemicals and additives for the automobile and engineering industries, which were hard hit by the recession, led to a marked shortfall in sales. The Energy and Environment Business Unit, which operates in cyclical customer markets such as the semiconductor and chemical sectors, and whose activities are in some cases still at the start-up stage, also had to struggle with sharp drops in revenue (revenue down 23.1% to EUR 35.0 million).

Outlook for 2010

At the end of 2009, the business outlook became brighter after the deep recession. Both the world economy and the global chemical market, Süd-Chemie´s most important customer industry, are once again set for expansion. As a result, and in view of the strict economy drive in 2009, Süd-Chemie´s Managing Board is optimistic that the company will return to its course of profitable growth in 2010. The company is expected to generate consolidated revenue of EUR 1.125 billion in 2010, equivalent to an increase of some 5%. Profitability will also improve again in 2010. The EBIT adjusted for non-recurring items will increase by approx. 10%. Assuming that the economy continues to recover, Süd-Chemie will show a further dynamic improvement in business activity and profitability in 2011.

Dr. Günter von Au, Managing Board Chairman of Süd-Chemie AG, said: "In spite of the sharp economic downswing, we were able to hold our own comparatively well during a year of recession and expand our leading market positions. In view of our fairly moderate drops in revenue and earnings, we reported a respectable performance compared with the industry average. We are prepared for a global upswing during this year and beyond, and are optimistic that Süd-Chemie will once again return to its path of sustained profitable growth in 2010."

The Süd-Chemie AG consolidated financial statements for 2009 can be downloaded at www.sud-chemie.com.

Munich, 30 March 2010

Statements relating to future events

This report contains statements relating to future events which are based on current estimates made by the management with regard to prospective developments. Such statements are subject to uncertainties and risks which Süd-Chemie is neither able to control nor accurately assess, including for instance future market conditions and the economic environment, the behaviour of other market participants, the successful integration of new acquisitions and realisation of anticipated synergies, or governmental measures. Should any one of these, or other uncertain or unassessable factors take effect, or should assumptions on which the statements are based prove to be incorrect, the actual results may differ significantly from those explicitly defined or implicitly contained in these statements. Süd-Chemie neither intends nor undertakes a specific obligation to update statements relating to future events in order to adjust these in line with events or developments occurring after the date of this report.

About Süd-Chemie

Süd-Chemie (www.sud-chemie.com) is a publicly quoted (Security Identification Number ISIN: DE0007292005; WKN: 729200) specialty chemicals company headquartered in Munich, Germany and operating on a worldwide scale. Key markets served by its Adsorbents Division include the consumer goods, packaging and foundry industries, as well water treatment. Products manufactured by the Catalysts Division offer solutions for the chemical, petrochemical and refinery industries, for energy storage and hydrogen production, as well as off-gas purification. The common denominator of all Süd-Chemie products and services is the efficient and sparing use of natural resources to enhance the quality of life for humans and the environment. The Süd-Chemie Group generated sales of EUR 1.072 billion in 2009, approx. 85% of these outside Germany. At the end of 2009, the Group employed some 6,500 people in its 80 sales and production companies worldwide.