News

LyondellBasell and ��AV Announce Permanent Closure of PO11 Unit at Maasvlakte, Netherlands

Tue, 18 Mar 2025 14:30:00 +0100

LYB and ��AV have jointly decided to permanently close the Propylene Oxide Styrene and Monomer (POSM) production unit (PO11) at the Maasvlakte site in the Netherlands. This decision comes after thorough and careful consideration and is driven by the continued pressure on Maasvlakte's profitability due to global overcapacities, a strong increase of imports from Asia and high costs of European production. Unfortunately, this situation is expected to continue, so longer-term profitable production is not anticipated.

“While the decision to shut down the PO11 is difficult, we must ensure all assets within our portfolio are a long-term strategic fit,” said Aaron Ledet, executive vice-president I&D and Supply Chain at LYB. “We are prioritizing our core assets which play a key role in our technology differentiation and circularity strategy or provide attractive returns over the cost of capital. We take our obligations towards our employees, European employee reps, councils, and unions seriously. We have engaged with them in line with these obligations and will continue to do so. We would like to thank them for the constructive dialogue. We are also in communication with customers, suppliers and other parties across the value chain and will continue to do business as usual. There is no change to our working relationship, and we continue to focus on providing an exceptional customer and supplier experience.”

"As part of our Sustainable Future corporate strategy, we’re continuously working to optimally position ��AV to be a reliable partner for our customers and to operate competitively in a challenging market environment," said Hermann-Josef Dörholt, Head of the Performance Materials Business Entity at ��AV. "Due to global overcapacities, persistently weak demand, and high costs in Europe, we have jointly decided with LYB to close the PO11 plant. We will support LYB in implementing this change as socially responsibly as possible. At the same time, we remain committed to the European market and will continue to supply customers with our renowned polyether polyols portfolio.”

The Maasvlakte site, a joint venture between LYB and ��AV, has been operational in the Rotterdam region since 2003. Between now and the end of 2026, LYB will carry out a process to safely shutdown and prepare the demolition of the asset.

In 2024, LYB announced a strategic review of European assets of its Olefins & Polyolefins (O&P) and Intermediates & Derivatives (I&D) business units. LYB has taken the next step in evaluating the option to seek alternative ownership for the O&P sites in the strategic assessment. At this time no decisions have been made and various outcomes remain possible.

��AV increases volumes sold and forges ahead with its transformation

Wed, 26 Feb 2025 07:00:00 +0100

Despite a persistently difficult market environment, ��AV rigorously continued its transformation in fiscal 2024. The company sold greater volumes worldwide thanks to targeted measures to increase plant availability. Sales fell by 1.4% to EUR 14.2 billion (previous year: EUR 14.4 billion) mainly due to low selling prices. EBITDA remained stable, falling by 0.8% to EUR 1.1 billion (previous year: EUR 1.1 billion), and was thus within the expected range. Net income amounted to EUR –266 million (previous year: EUR –198 million), while the free operating cash flow (FOCF) reached EUR 89 million (previous year: EUR 232 million). ROCE above WACC was –7.4 percentage points (previous year: –6.1 percentage points). Greenhouse gas emissions fell to 4.7 million metric tons of CO₂ equivalents (previous year: 4.9 million metric tons). The main reasons for this were lower emission factors at the production sites in Leverkusen, Dormagen, Uerdingen and Brunsbüttel (Germany) and Baytown, Texas (United States).

“We steadfastly adhered to our strategy in 2024 and forged full speed ahead with our transformation – despite the challenges the entire chemical industry once again faced,” says Dr. Markus Steilemann, CEO of ��AV. “In particular, the improvement in our plant availability enabled us to significantly increase our volumes sold. We are continuing resolutely along this path creating the basis for long-term growth with targeted investments in our competitiveness and sustainable future technologies.”

Investments in production, the circular economy, and efficiency

A key component of ��AV’s transformation is to strengthen production capacities. In 2024, the company optimized existing plans in Baytown (United States), Shanghai (China) and Tarragona (Spain), among others. Further investments to increase energy efficiency and thus competitiveness in production were also made at the TDI plant in Dormagen (Germany). ��AV also recently announced to expand its site in Hebron, Ohio (USA) with a low triple-digit million euro investment. The company aims to increase the production capacities of differentiated polycarbonates in the Solutions & Specialties segment. Construction is scheduled to begin in 2025, with operations starting by the end of 2026.

Alongside that, ��AV is continuing to transition to a circular economy in a targeted manner. In 2024, the company secured access to renewable energy from a solar farm in Spain under a long-term power purchase agreement (PPA) with bp. This will increase the share of renewables in ��AV’s electricity consumption in Spain from 10% to 30% and reduce CO₂ emissions by around 16,000 metric tons per year. Moreover, ��AV is investing EUR 100 million worldwide in innovation centers for research and development. Besides these targeted growth initiatives, ��AV is also committed to systematically optimizing internal processes. As part of its “STRONG” transformation program, ��AV thus aims to save EUR 400 million worldwide each year by 2028 by means of digitalization and structural adjustments.

“We cannot influence external market conditions – but we can control how we respond to them,” says Christian Baier, CFO of ��AV. “That is why we used 2024 to make our processes more efficient and to enhance our resilience.” Digitalization and artificial intelligence play a key role in that. We will continue to optimize our structures in 2025 to make ��AV fit for the future.”

Due to the negative net income and in accordance with ��AV’s dividend policy, no dividend will be distributed for fiscal year 2024, as was also the case in the previous year.

Takeover offer of the ADNOC Group successful

Following concrete negotiations, ��AV signed an Investment Agreement on October 1, 2024, with companies of the ADNOC Group, including ADNOC International Germany Holding AG (“Bidder”), a wholly-owned indirect subsidiary of XRG P.J.S.C. (formerly ADNOC International Limited, together with the Bidder and other companies of the ADNOC Group “XRG”). On October 25, 2024, the bidder made a voluntary public takeover offer (“takeover offer”) of EUR 62 per ��AV share to all shareholders of ��AV. Following the end of the additional acceptance period on December 16, 2024, XRG announced on December 19, 2024, that the takeover offer had been accepted for a total of 154,541,806 ��AV shares. Together with the shares previously acquired by XRG, this corresponds to a stake of 91.3% of ��AV’s existing capital stock as of the above-mentioned reporting date. As a result of further subsequent purchases of ��AV shares, XRG’s stake in ��AV’s capital stock at the end of 2024 is 91.58%.

XRG sees ��AV as a key component in its performance materials and special chemicals business and shares its strategic vision of becoming fully circular. The takeover is an important step in XRG’s strategy of becoming one of the world’s top five chemical companies.

The takeover offer is subject to the usual conditions of completion with regard to antitrust and foreign trade clearance and clearance under EU law on foreign subsidies. Completion of the transaction is not expected before the second half of 2025.

Outlook for 2025: EBITDA between EUR 1.0 billion and EUR 1.6 billion anticipated

��AV expects economic conditions to remain challenging in 2025, too. Against this backdrop, the Group anticipates EBITDA of between EUR 1.0 billion and EUR 1.6 billion for the current fiscal year. ��AV expects FOCF of between EUR 0 and EUR 300 million and ROCE above WACC of between –6 percentage points and –2 percentage points. The Group anticipates that Scope 1 and Scope 2 greenhouse gas (GHG) emissions, measured in terms of CO₂ equivalents, at ��AV’s environmentally relevant sites^[1] will be between 4.2 million metric tons and 4.8 million metric tons. The Group expects EBITDA for the first quarter of 2025 of between EUR 50 million and EUR 150 million.

Increase in sales at Performance Materials; Solutions & Specialties impacted by declining prices

Sales in the Performance Materials segment rose to EUR 7.0 billion (previous year: EUR 6.9 billion). While a successful pickup in volumes of 12% drove up sales, a weak market situation with excess supply weighed on selling prices and margins. EBITDA fell by 1.2% to EUR 569 million (previous year: EUR 576 million), while FOCF decreased to EUR 78 million (previous year: EUR 162 million).

The Solutions & Specialties segment posted a 3.6% fall in sales to EUR 7.0 billion (previous year: EUR 7.3 billion) due to lower average selling prices coupled with lower raw material prices. EBITDA fell by 9.4% to EUR 740 million (previous year: EUR 817 million). In addition to a drop in margins, the reason for this was that, unlike in the previous year, there was no non-recurring positive effect resulting from the sale of the additive manufacturing business in 2023. In addition, expenses due to implementation of the STRONG transformation program reduced earnings. The segment’s FOCF decreased by 24.3% to EUR 417 million (previous year: EUR 551 million).

Fourth quarter of 2024 with positive EBITDA and cash flow

��AV’s sales rose in the fourth quarter of 2024 by 0.9% year over year to around EUR 3.4 billion (previous year: EUR 3.3 billion). EBITDA increased by 44.7% compared to the prior-year quarter to EUR 191 million (previous year: EUR 132 million). FOCF amounted to EUR 253 million and was therefore 246.6% higher than in the prior-year period (previous year: EUR 73 million).

^[1]^{This figure relates to GHG emissions of all production sites and relevant administrative sites of ��AV. Until the year 2024, the greenhouse gas (GHG) emissions for the main production sites (responsible for more than 95% of ��AV’s energy usage) were reported.}

��AV Expands Production in Ohio

Wed, 08 Jan 2025 10:00:00 +0100

��AV invests a low triple-digit million Euro amount to expand its site in Hebron, Ohio, USA. It will construct multiple new production lines and infrastructure to manufacture customized polycarbonate compounds and blends and significantly expand its capacity in the Solutions & Specialties business for the American market.

"This investment in our U.S. compounding plant is an important component of our 'Sustainable Growth' strategy. With this expansion, we can meet our customers' growing demand for specialized polycarbonate materials, grow together with our customers, and strengthen our position as a leading provider of polycarbonate materials in North America," says CTO Thorsten Dreier. "The move also aligns with our strategy to produce in the region for the region, to manufacture close to our customers and ensure reliable supply."

The capacity expansion is an important step to meet the growing demand for high-quality materials for the automotive, electronics and healthcare industries in North America. "To be successful in these markets, you need the right portfolio, consistent quality, and supply reliability, as well as solution-oriented technical expertise,” says Lily Wang, head of the Engineering Plastics Business Entity. "The expanded production capacity for differentiated polycarbonates enables us to better serve our customers' complex needs for high-quality, high-tech materials with individualized properties.”
��AV already has an established R&D center in Pittsburgh, and is now doubling down on its U.S.-based compounding capability. In future, both facilities will work even more closely together to drive the technology transfer from lab to industrial production to support major transformation processes, such as the electrification and automation of mobility, sustainable developments and digitalization.

“This investment, which follows our recent announcement of a 40 Million Dollar investment in our R&D capabilities in Pittsburgh, underscores how critical our U.S. sites and the U.S. market are to ��AV’s global strategy,” says Samir Hifri, chairman and president of ��AV LLC. “The expanded capacity of our polycarbonate compounding capabilities in Ohio will both help us better supply our customers as well as represents a commitment to our employees, the Hebron, Ohio community, and the U.S. market as a whole.”

Construction of the new production lines is scheduled to begin in 2025, with operations starting by the end of 2026.

ADNOC takeover offer for ��AV successful

Thu, 19 Dec 2024 08:45:15 +0100

Following the end of the additional acceptance period on December 16, 2024, ADNOC International Germany Holding AG (“Bidder”), a wholly-owned indirect subsidiary of XRG P.J.S.C. (formerly ADNOC International Limited, together with the Bidder and other companies of the ADNOC Group “XRG”), announced today that a total of 172 591 806 shares in ��AV have been included in its voluntary public takeover offer (“ takeover offer”) to all shareholders of ��AV (“��AV”). Together with the shares previously acquired, this corresponds to 91.3 percent of all outstanding shares of ��AV.

At around 70 percent, the takeover offer, together with the shares previously acquired, had already significantly exceeded the minimum acceptance threshold of 50 percent plus one share by the end of the initial acceptance period on November 27, 2024.

“We are very pleased that so many of our shareholders have followed our recommendation and accepted the offer. This is very good news for ��AV, our employees and all other stakeholders. The strategic partnership with ADNOC is exactly the right step for ��AV at the right time,” says Dr. Markus Steilemann, CEO of ��AV. "With ADNOC respectively XRG as strong and long-term-oriented partner, we will be able to execute on our ‘Sustainable Future’ strategy even more consistently. As part of the XRG Group and following the closing of the transaction, we will be in a position to further accelerate our ongoing transformation.”

XRG sees ��AV as the foundational platform of its Performance Materials and Specialty Chemicals business and is convinced of ��AV's strategic perspective and its vision to become fully circular. The takeover of ��AV marks a significant milestone in XRG’s strategy to become a top five global chemicals player.

The offer will be subject to customary closing conditions in relation to merger control, foreign investment control, EU foreign subsidies clearances. Closing is not expected before the second half of 2025.

Monique Buch appointed as new Chief Commercial Officer of ��AV

Mon, 16 Dec 2024 10:00:00 +0100

��AV, a world-leading supplier of high-tech polymer materials, is announcing Monique Buch (50) as the company’s new Chief Commercial Officer (CCO). The Supervisory Board of ��AV has unanimously appointed Monique Buch who is taking over from Sucheta Govil by 1st June 2025. Sucheta Govil has been ��AV’s CCO since 2019. Her two consecutive terms with ��AV come to an end by 31st July 2025.

As the Chief Commercial Officer, Buch will be responsible for the segment of Solutions & Specialties. With this, she will be leading six business entities including the supply chain centers in the three major regions.

Dr. Richard Pott, Chairman of the Supervisory Board of ��AV said: “Monique Buch is an experienced B2B commercial executive with a strong international footprint. With her background in building sustainable, market-leading businesses she will be an ideal successor to Sucheta Govil in the Board of Management and will continue to shape the future of ��AV. Already now, we want to express our deep gratitude to Sucheta Govil who has laid the solid foundation for a successful development in commercial excellence and innovation. With her strong background in commercial operations, sales, marketing, and innovation, she has been and will be steering the transformation journey of ��AV.”

“I am very much looking forward to join the transformation journey by driving profitable growth, along with the whole ��AV team and my new colleagues on the Managing Board,” said Monique Buch.

Dedicated to sustainable growth
Monique Buch was born in the Netherlands and studied industrial engineering and management. In her last position, Buch was Executive Vice President Nonwoven at Lenzing AG. Before, she held various executive positions in international B2B companies, among them Freudenberg Performance Materials and Owens Corning.

��AV to invest in Pilot Plant for Recycling of Elastomers

Thu, 12 Dec 2024 10:00:00 +0100

��AV, a world-leading supplier of high-tech polymer materials, is announcing plans to build a pilot plant for recycling of elastomers. The investment in the double-digit million euro range is used to fund the development and construction project of the state-of-the-art pilot plant at ��AV's site in Leverkusen, Germany. The construction is estimated to take about one year until technical completion.

This technological development to recycle Vulkollan® marks an important step towards more sustainability in the elastomers industry. The technology enables to not only recycle a mass fraction of more than 90% of the end-of-life material like forklift tires, but also to reduce the carbon footprint by up to two thirds compared to virgin material.

“The pilot plant and with it our commitment to proving the feasibility of recycling for elastomers demonstrates our clear commitment for circular solutions and marks an important milestone for our elastomer products”, states Dr. Thomas Braig, Head of the Elastomers business entity. “With the successful scale-up of this new recycling process we address the demand of our customers for end-of-life solutions and carbon footprint reduction while assuring the high quality of our elastomer products. At the same time, this pilot plant is an invitation for players along the value chain to cooperate on developing a circular setup and the reverse value chain for end-of-life materials.”

Pioneering Chemical Recycling for Elastomers
��AV customers use Vulkollan® systems to mold parts for many applications with a high demand for durability and performance. Typical applications for parts made of Vulkollan® are wheels for forklifts, bumper elements in railways and vibration control elements and jounce bumpers in cars. The excellent quality of Vulkollan® allows more sustainable and cost-efficient operation of the target application through longer lifetime, longer maintenance intervals and less unplanned shutdowns. Due to the high yield of the recycling process, end-of-life Vulkollan® materials can be re-introduced into new automotive jounce bumpers and forklift tires via a mass balancing approach.

The new chemical recycling process is a game-changer for the elastomers industry. Unlike mechanical recycling methods, this approach breaks down elastomeric end-of-life material into its chemical building blocks, to obtain purified monomers that can be re-used for these materials with known and proven quality.

Driving Sustainability and Industry Collaboration
"The new chemical recycling process addresses the unique challenges of elastomer materials, which are trusted to be very resistant and long lasting. Downcycling is not an option for this high-performance application,” explains Markus Dugal, Head of Process Technology at ��AV. “This technology allows us to recycle a high mass fraction of the end-of-life material and, in this way, to reduce the environmental impact of our elastomer production. It is a testament to ��AV's innovative spirit."

The pilot plant will play a crucial role in refining the recycling process beyond lab scale, testing the process with various waste streams and with various end-of-life materials. It will also serve as a platform for ��AV to engage with potential project partners and customers, paving the way for the development of a larger commercial recycling plant in the future.

��AV's investment in elastomers recycling aligns with its broader strategic goals of reducing environmental impact, promoting circular economy principles, and maintaining its position as an innovation leader in the polymer industry. The company invites potential partners and customers interested in circular elastomer solutions to engage in discussions about future collaborations and applications and prove the environmental benefit of the solution along the value chain.

��AV and Deloitte jointly develop Monetization Framework for Circular Economy

Fri, 22 Nov 2024 10:00:00 +0100

��AV is focusing on the entire value chain to create value for customers for accelerating the circular economy and also a monetization framework that enables investments in the circular economy. Innovation Projects and Circular Solutions that receive investment must be economically viable. This can only be achieved through the interplay of consumers, producers, regulation, and technical solutions. To achieve this, new approaches to the market launch of products and solutions are needed, as well as the development of employee skills and expertise.
To this end, ��AV and Monitor Deloitte 2023 launched a joint project entitled “Monetize Circular Economy”. This collaboration enabled ��AV to incorporate relevant methods and external perspectives into the entire development process.

The project pursued two main objectives. Firstly, to develop a scalable framework for market entry and commercialization of more sustainable, circular products and solutions. Secondly, to create added value in partnership. This includes, for example, developing solutions with customers so that they in turn can create added value for their customers with more sustainable solutions. These are, for example, working out end customer-relevant purchasing arguments or jointly implementing increasing sustainability standards. ��AV's projects from various business entities formed the basis for developing a model.

A joint project team consisting of employees from various ��AV business entities and a mixed team from Deloitte led by chemicals expert Kai Göbel and
Dr. Amadeus Petzke, Head of Pricing & Monetization, initially collected concrete projects on circular solutions across the Group. Three selected pilot projects formed the basis for the development of a marketing and business development approach that serves both as a blueprint for monetizing ��AV's circular products and for new business development at Deloitte.

“Circular solutions must be profitable to be implemented. Economic incentives that motivate or demotivate stakeholders must be clearly identified and addressed. For this, we need circular thinking, deep market understanding, and the creativity of our employees. We need a robust framework that our colleagues can use as a guide to drive business development in the circular economy. We are continuously developing this framework,” says Sucheta Govil, Chief Commercial Officer at ��AV.

WirtschaftsWoche 2024 has now honored this approach with the Best of Consulting Award in the Chemicals, Pharma & Healthcare sector.

Value creation cycle as the key

A decisive factor in monetization is the integration of the entire value chain, away from individual value creation steps and towards thinking in terms of a circular economy. “It's not just about selling circular products, but about creating sustainable added value along the value chain together with partners and customers. Designing a framework based on specific ��AV industrial projects from start to finish was an exciting project. Winning the award is a great accolade and shows that we have succeeded,” says Bozidar Radner, Deloitte's global key account manager for ��AV and Sector Head Chemicals. The management consultancy Deloitte was able to draw on extensive customer experience and requests from previous projects and learnings.

Development of the framework

Over one hundred ��AV employees identified key requirements for the monetization of circular solutions. In a structured approach consisting of four lab phases with coaching and review meetings in between, the teams successfully drove the pilot projects forward; at the same time, the insights gained led to the further development of the framework. Methodologies, case studies and their importance, as well as the correct sequencing of a project's progression, were explored and refined over the course of the project, with real circular economy pilots forming the basis. An overarching project team from ��AV and Deloitte developed an internal platform for ��AV that provides resources, best practices, and tools such as ideas for customer outreach and legal guidelines for all ��AV business entities.

The result: a structured approach to accelerate the commercialization of circular solutions. This also includes raising awareness among the workforces. An accompanying webinar series, for example, promotes global exchange with internal circular economy (CE) experts and drives the further development of the market entry and commercialization strategy. In concrete terms, implementing the monetization approach in the operational business also means incorporating the circular economy mindset into the initial customer exchange and jointly identifying added value and developing solutions in partnership-based customer discussions. For example, there are “Monetize CE Pioneers”, a group of employees at ��AV who are available to colleagues around the world and who exchange information on their specialist areas and contribute their knowledge of various industries.

The vision of the circular economy and successful monetization are thus continuously developed.

Board of Management and Supervisory Board of ��AV support ADNOC International’s public takeover offer

Thu, 07 Nov 2024 13:20:00 +0100

Today, the Board of Management and the Supervisory Board of ��AV (“��AV”), have published their joint reasoned statement pursuant to Section 27 WpÜG on the voluntary public takeover offer, which was issued on October 25, 2024 by ADNOC International Germany Holding AG, a subsidiary of ADNOC International Limited (together “ADNOC International”).

After thorough consideration, the Supervisory Board as well as the Board of Management of ��AV welcome and support the takeover offer by ADNOC International. Both bodies regard ADNOC International as a strong and long-term oriented partner, with whom ��AV will be able to further drive its successful ‘Sustainable Future’ strategy. It is the view of the Board of Management and the Supervisory Board that ��AV, with the strategic support of ADNOC International, will be able to build on an even stronger foundation for sustainable growth in highly attractive sectors and can therefore make an even greater contribution to the green transformation.

“We have thoroughly reviewed the offer document published by ADNOC International in accordance with our obligations under stock corporation law”, says Dr Markus Steilemann, CEO of ��AV. “Together with the Supervisory Board we have concluded that based on the broad commitments made by ADNOC International, a strategic partnership is the right step. We are also convinced that the partnership is in the best interest of ��AV, our shareholders, our employees and all other stakeholders of ��AV. We are pursuing a long-term growth strategy and will be able to execute on it even more consistently with the support of ADNOC International. We therefore support the offer and recommend our shareholders to accept it.”

Key aspects of the offer document

��AV and ADNOC International have agreed on a long-term strategic partnership. The basis for this partnership is the Investment Agreement signed on October 1, 2024, which runs until the end of 2028. In the Investment Agreement, both companies have agreed on the main cornerstones of the partnership. In particular, the agreement contains several commitments on the part of ADNOC International to maintain ��AV's existing business activities, corporate governance and organizational business structure.

The Investment Agreement expresses ADNOC International's utmost trust and confidence in ��AV's management team. On this basis, ��AV's Board of Management in its current composition will continue to be responsible for the operational management and strategic direction of the ��AV.

Additionally, ADNOC International has assured ��AV in the offer document of its full support for the further execution of its “Sustainable Future” strategy. To this end, ADNOC International shall subscribe to new ��AV shares issued in connection with an increase of the ��AV’s share capital by 10 percent under simplified exclusion of subscription rights upon the completion of the transaction at the offer price, resulting in an amount of €1.17 billion proceeds at an offer price of €62.00. This will enable ��AV to consistently foster the further implementation of its growth strategy.

In the Investment Agreement, ADNOC International also commits to recognizing the German governance regulations and to retaining the co-determined Supervisory Board. An important component is also the commitment that two members of the Supervisory Board on the shareholder representatives' side will remain independent of ADNOC Group after the takeover offer has been completed. The Investment Agreement also contains ADNOC International's explicit recognition of the existing general works agreements, collective bargaining agreements and the rights of the works councils in Germany. The same applies to speaker committee agreements and the rights of speaker committees.

As part of the transaction, there are no plans to sell, close or significantly reduce ��AV's business activities and ADNOC International has undertaken in the Investment Agreement not to initiate any such actions. The Investment Agreement also contains a commitment to protect ��AV's technology and intellectual property.

Furthermore, ADNOC International has also undertaken in the Investment Agreement that ��AV will continue to be managed as a stock corporation and that no domination and/or profit and loss transfer agreement will be concluded with ��AV.

Evaluation of adequacy of the offer price

The Board of Management and the Supervisory Board of ��AV, together with their respective advisors, have also thoroughly reviewed ADNOC International’s offer with regard to the adequacy of the offer price of €62.00 per share.

The offer price offered by ADNOC International implies an equity value for ��AV of approximately €11.7 billion and represents a premium of approximately 54 percent to the unaffected closing price on June 19, 2023 (the day prior to any media coverage of a potential transaction), as well as a premium of 61 percent on the unaffected, volume-weighted three-month average share price on Jun 19, 2023.

In their assessment, the Board of Management and Supervisory Board, as further explained in the joint reasoned statement, have considered the results of a range of valuation approaches.

In addition, the Board of Management and the Supervisory Board have given consideration to the results of the fairness opinions of the respective investment banks engaged by them. In these opinions, the respective banks have confirmed their assessment that the offer price is fair from a financial perspective.

The offer made by ADNOC International therefore provides shareholders with an attractive opportunity to realize significant value already upon completion of the transaction.

Against this background, the Board of Management and the Supervisory Board of ��AV consider the offer price to be adequate and jointly recommend to ��AV’s shareholders to accept the offer.

Acceptance period runs until November 27, 2024

Following the approval by BaFin (Bundesanstalt für Finanzdienstleistungsaufsicht), ADNOC International published the offer document on the website on October 25, 2024. The offer period will run from October 25, 2024, until 24:00 hrs (Frankfurt am Main local time) or 18:00 hrs (New York local time) on November 27, 2024. The potential additional offer period of two weeks is expected to commence on December 3, 2024, and will run until 24:00 hrs (Frankfurt am Main local time) or 18:00 hrs (New York local time) on December 16, 2024.

The offer will be subject to a minimum acceptance level of 50 percent plus one share and customary closing conditions, including merger control, foreign investment control, EU foreign subsidies clearances. Currently, closing is not expected before the second half of 2025.

Increased profits in challenging market environment

Tue, 29 Oct 2024 07:00:00 +0100

In the third quarter of 2024, ��AV continued to increase its volumes sold, particularly in the EMLA and APAC regions. Compared to the same quarter of the previous year, Group sales remained stable at around EUR 3.6 billion, as lower raw material prices led to lower selling price levels (previous year: EUR 3.57 billion). Compared to the third quarter of 2023, the Group’s EBITDA increased by 3.6 percent to EUR 287 million (previous year: €277 million), thus falling within the expected range of EUR 250 million to EUR 350 million. Net income reached
EUR 33 million (previous year: EUR –31 million). Free operating cash flow decreased to EUR 112 million (previous year: EUR 308 million), primarily due to lower operating cash flows.

“We concluded the third quarter of the year with higher sales volumes and improved earnings,” said Dr Markus Steilemann, CEO of ��AV. “Nevertheless, the current market environment remains challenging. Our focus is therefore clear: We continue to do our homework, focus on the levers we can control and consistently implement our ‘Sustainable Future’ strategy. In doing so, we not only lay the foundation for future success and sustainable growth, but also make steady progress towards becoming fully circular.”

Guidance for 2024 further narrowed within given ranges

In light of the continued challenging economic environment, ��AV has narrowed its guidance for the 2024 fiscal year regarding expectations for EBITDA and ROCE above WACC.

The Group now anticipates EBITDA between EUR 1.0 billion and EUR 1.25 billion (previously: between EUR 1.0 billion and EUR 1.4 billion). For ROCE above WACC, ��AV now expects a range between –7.0 and –5.0 percentage points (previously: between –7.0 and –4.0 percentage points) for the financial year 2024. Regarding GHG emissions (measured as CO2 equivalents), ��AV continues to expect a figure between 4.4 and 5.0 million metric tons. ��AV also continues to expect a Free Operating Cash Flow between EUR –100 and EUR 100 million.

“Overall, global demand is intact but remains at a low level. We continue to face challenges in various industries and regions,” says Christian Baier, CFO of ��AV. “Nonetheless, we were able to slightly increase our EBITDA, indicating that our measures for efficiency and plant reliability are working. However, the economic environment remains challenging, and we have therefore narrowed our guidance for the full year accordingly.”

Investment Agreement with ADNOC supports execution of ‘Sustainable Future‘ strategy

As announced in an ad-hoc release on October 1, 2024, ��AV has on that day signed an Investment Agreement with entities of the ADNOC Group, including ADNOC International Limited (“ADNOC International”) and its indirect subsidiary ADNOC International Germany Holding AG (“Bidder”). The agreement stipulates, among other items, that the Bidder will make a public takeover offer for all outstanding shares of ��AV at a price of €62.00 per share. In addition, ADNOC International is committing itself to fully supporting the ��AV's "Sustainable Future" strategy and intends to fully support ��AV in further executing on this strategy. To this end, the Bidder shall subscribe to new ��AV shares at the offer price via an increase of the ��AV’s share capital by 10% under simplified exclusion of subscription upon the completion of the transaction. This will result in an amount of €1.17 billion proceeds at an offer price of €62.00 which ��AV will use to foster the further implementation of its growth strategy.

On October 25, 2024, the Bidder, following approval by BaFin, has published the corresponding offer document in relation to all outstanding ��AV shares at an offer price EUR 62.00 per ��AV share. The Board of Management and the Supervisory Board of ��AV will now carefully review the offer document and issue a reasoned statement pursuant to Section 27 WpÜG in due course. Subject to the review of the offer document, the Board of Management and the Supervisory Board assume that they will recommend the acceptance of the offer to the ��AV’s shareholders.

Further milestones on the road to climate neutrality achieved

In the third quarter of 2024, ��AV further increased the share of renewable energies in its energy mix, thereby achieving another important milestone on the road to operational climate neutrality by 2035. In July 2024, ��AV signed a long-term power purchase agreement (PPA) with bp to supply its sites in Spain with solar energy. The contract has a term of ten years and increases the share of renewable energy from less than ten percent to around 30 percent. As a result, a significant share of the electricity consumption of ��AV's main production site in Tarragona, Spain, is now also covered by renewable sources.

EBITDA in the Performance Materials segment significantly increased

In the Performance Materials segment, ��AV increased its sales by 4.1 percent to EUR 1.78 billion (previous year: EUR 1.71 billion) in the third quarter of 2024. This was primarily driven by higher volumes, especially in the EMLA region. These higher volumes contributed to a significant increase in EBITDA of 47.1 percent to EUR 125 million (previous year: EUR 85 million). Free Operating Cash Flow amounted to EUR 111 million (previous year: EUR 317 million) due to a significantly lower release of funds from working capital compared to the same quarter of the previous year.

In the Solutions & Specialties segment, sales in the third quarter of 2024 decreased by 2.0 percent to EUR 1.77 billion (previous year: EUR 1.81 billion). This was primarily due to a demand-related decline in average selling prices, which higher volumes were unable to offset fully. As a result, the segment's EBITDA fell 15.4 percent to EUR 208 million (previous year: EUR 246 million). Free Operating Cash Flow was EUR 101 million (previous year: EUR 185 million), primarily due to cash being tied up in working capital, as opposed to a release of funds in the same quarter last year, and lower EBITDA.

Challenging environment weighs on results in the first nine months of 2024

In the first nine months of 2024, ��AV's sales remained largely stable at EUR 10.8 billion compared to the same period of the previous year (previous year: EUR 11.0 billion). The increase in volumes across the Group did not offset the demand-related decline in average selling prices in the first nine months. That is also reflected in the EBITDA for the first nine months of 2024, which fell by 7.2 percent to EUR 880 million (previous year: EUR 948 million). Net income fell to –€74 million (previous year: –€11 million). Free Operating Cash Flow for the nine-month period amounted to –€164 million (previous year: €159 million).

��AV signs an Investment Agreement with ADNOC and supports ADNOC’s public takeover offer to all ��AV shareholders

Tue, 01 Oct 2024 08:42:46 +0200

��AV (“��AV” or “��AV”) today signed an Investment Agreement with certain entities of the ADNOC Group, including ADNOC International Limited (“ADNOC International”) and its subsidiary, ADNOC International Germany Holding AG (“Bidder”). The agreement stipulates, among other items, that the Bidder will make a public takeover offer for all outstanding shares of ��AV at a price of €62.00 per share. In addition, ADNOC International is committing itself to fully supporting the ��AV's "Sustainable Future" strategy. At the same time, the Board of Management and the Supervisory Board of ��AV decided today that upon completion of the transaction, the ��AV's share capital shall be increased by 10% (18.900.000 shares) and that, at and subject to closing, the new shares shall be issued to the Bidder against payment of a price per share equal to the offer price, thus, based on an offer price of €62.00 against a total amount of €1.17 billion, under simplified exclusion of subscription rights.

Dr. Markus Steilemann, CEO of ��AV, said: “We are convinced that the agreement reached today with ADNOC International is in the best interest of ��AV, our employees, our shareholders, and all other stakeholders. With ADNOC International's support, we will have an even stronger foundation for sustainable growth in highly attractive sectors and can make an even greater contribution to the green transformation. We regard ADNOC International as a financially strong and long-term oriented partner with whom we will further drive our successful “Sustainable Future” strategy in all market conditions. Our complementary growth strategies, shared commitment to advanced technologies, innovation and sustainability are key cornerstones of our partnership.”

His Excellency Dr. Sultan Ahmed Al Jaber, ADNOC Managing Director and Group CEO, said: “As a global leader and industrial pioneer in chemicals, ��AV brings unmatched expertise in high-tech specialty chemicals and materials, using advanced technologies including AI. This strategic partnership is a natural fit and aligns seamlessly with ADNOC’s ongoing smart growth and future proofing strategy and our vision to become a top 5 global chemicals company. It represents a pivotal step for both organizations and embodies our disciplined approach to investing in strategic assets that drive long-term value and unlock new growth opportunities, while reinforcing our commitment to diversifying ADNOC’s portfolio. Our aligned strategies uniquely position us to meet the growing global demand for energy and chemical products, while accelerating the transition to a circular economy.”

Key transaction details
The Bidder intends to make a cash offer to ��AV shareholders of €62.00 per share. This price implies an equity value for ��AV of approximately €11.7 billion and represents a premium of approximately 54 percent to the unaffected closing price on June 19, 2023, the day prior to any media coverage of a potential transaction, and a premium of 21 percent to the closing price on June 23, 2024, the last share price prior to ��AV announcing the beginning of the confirmatory due diligence and the start of concrete negotiations.

The offer will be subject to a minimum acceptance level of 50 percent plus one share and customary closing conditions, including merger control, foreign investment control, EU foreign subsidies clearances.

In compliance with the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz, WpÜG), the offer document, which is expected to be available within six weeks, and other information pertaining to the Bidder’s public takeover offer will be made available on the following website after approval by BaFin (Bundesanstalt für Finanzdienstleistungsaufsicht): www.covestro-offer.com.

After thorough consideration, the Supervisory Board and the Board of Management of ��AV welcome and support the Bidder’s announced takeover offer. Both boards will carefully review the offer document after its publication and will issue their reasoned statements pursuant to Section 27 WpÜG shortly after. Subject to the review of the offer document, the Board of Management and the Supervisory Board assume that they will recommend the acceptance of the offer to the ��AV’s shareholders.

Partnership enables expansion of ��AV's excellent position in attractive growth markets
��AV has a clear growth strategy and is already making significant progress in its strategic transformation that will further expand its excellent position in attractive growth markets. ADNOC International sees ��AV as the foundational platform of its Performance Materials and Specialty Chemicals business and is convinced of ��AV's strategic perspective and its vision to become fully circular.

In the joint Investment Agreement, which runs until the end of 2028, ��AV and certain entities of the ADNOC Group, including ADNOC International, have agreed on the main cornerstones of the partnership. In particular, the agreement contains several obligations on the part of ADNOC International to maintain ��AV's existing business activities, corporate governance and organizational business structure.

ADNOC International has assured ��AV of its full support for ��AV's “Sustainable Future” strategy and intends to fully support ��AV in further executing on this strategy. To this end, the Bidder shall subscribe to new ��AV shares at the offer price via an increase of the ��AV’s share capital by 10% under simplified exclusion of subscription upon the completion of the transaction, this will result in an amount of €1.17 billion proceeds at an offer price of €62.00 which ��AV will use to foster the further implementation of its growth strategy.

In the agreement, ADNOC International commits, among other items, to recognizing the German governance regulations and to retaining the co-determined Supervisory Board. An important component is also the commitment that two members of the Supervisory Board on the shareholder representatives' side will remain independent of ADNOC Group after the takeover offer has been completed.

The Investment Agreement also contains ADNOC International's explicit recognition of the existing general works agreements, collective bargaining agreements and the rights of the works councils in Germany. In addition, there are no plans to sell, close or significantly reduce ��AV's business activities as part of the transaction and ADNOC International undertakes in the Investment Agreement not to initiate any of the above. The Investment Agreement also contains a commitment to protect ��AV's technology and intellectual property.

Furthermore, ADNOC International undertakes in the Investment Agreement that ��AV will continue to be managed as a stock corporation and that no domination and/or profit and loss transfer agreement will be concluded with ��AV.

The Investment Agreement and ADNOC International's commitments therein express ADNOC International's utmost trust and confidence in ��AV's management team. ��AV's Board of Management in its current composition will, therefore, continue to be responsible for the operational management and strategic direction of the ��AV.

��AV’s Board of Management has agreed, subject to its fiduciary duties, to support a delisting offer and/or squeeze-out if ADNOC International intends to execute either. However, the Investment Agreement stipulates that even after a potential delisting and/or a squeeze-out, ��AV will continue to be managed as a stock corporation under German law with the same governance as before, a co-determined Supervisory Board with two Supervisory Board members who are independent of ADNOC International and its registered headquarters in Leverkusen.

In connection with the conclusion of the Investment Agreement, the Board of Management, with the support of the Supervisory Board, has also decided to not propose a dividend payment until the transaction has been completed or until the expiration of the period for regulatory approvals or a termination of the Investment Agreement.

Goldman Sachs and Perella Weinberg are acting as financial advisors to ��AV’s Board of Management on the transaction, with Linklaters acting as legal advisor. For ��AV’s Supervisory Board, Rothschild & Co and Macquarie Capital are acting as financial advisors, and SZA Schilling, Zutt & Anschütz as legal advisors.

Rebounding volumes in a challenging environment

Tue, 30 Jul 2024 07:00:00 +0200

��AV increased its volumes sold, in particular in the APAC and EMLA regions, year on year in the second quarter of 2024. Group sales remained stable at EUR 3.7 billion (previous year: EUR 3.7 billion) due to the fact that selling price levels were lower for demand-related reasons. EBITDA at Group level fell by 16.9 percent to EUR 320 million (previous year: EUR 385 million), corresponding to the middle of the previously forecast range of between EUR 270 million and EUR 370 million. Lower raw material prices only partially offset the demand-related decline in average sales prices. Net loss in the second quarter of 2024 was EUR 72 million (previous year: net income of EUR 46 million), while the free operating cash flow (FOCF) was EUR –147 million (previous year: EUR –10 million).

“The market environment remains very challenging,” says Dr. Markus Steilemann, CEO of ��AV. “Our sharp rise in volumes sold shows that we’re prepared for the market recovery. In addition, our transformation program STRONG is creating the necessary conditions for us to further expand our leading position in the global market and secure our competitiveness.”

In view of a rapidly changing market environment, ��AV launched the global transformation program STRONG in June 2024. The Group is therefore making itself even more effective and efficient and is systematically driving its digitalization. As part of STRONG, ��AV is planning to realize global annual savings in material and personnel costs of EUR 400 million by 2028, of which EUR 190 million will be in Germany.

Full-year 2024: Earnings guidance narrowed

��AV continues to expect challenging economic conditions in the remainder of the year. ��AV has therefore narrowed its guidance for EBITDA and ROCE above WACC and adjusted its forecast for the free operating cash flow for fiscal 2024. The company now anticipates EBITDA between EUR 1 billion and EUR 1.4 billion (previously: between EUR 1 billion and EUR 1.6 billion). ��AV now expects a free operating cash flow of between EUR –100 million and EUR 100 million (previously: between EUR 0 million and EUR 300 million). For ROCE above WACC, ��AV now anticipates a range between –7.0 percentage points and –4.0 percentage points (previously: between –7.0 percentage points and –2.0 percentage points). ��AV projects that GHG emissions measured as CO2 equivalents will still be between 4.4 million metric tons and 5.0 million metric tons. The Group anticipates EBITDA for the third quarter of 2024 will be EUR 250 million to EUR 350 million.

“We were able to keep our sales stable in the second quarter and reached the middle of our EBITDA guidance. That’s positive news and proof of our resilience,” says Christian Baier, CFO of ��AV. “In view of the continuing challenging economic environment, we have narrowed our earnings guidance for the year as a whole accordingly."

Confirmatory due diligence with ADNOC has started

Based on the open-ended talks held up to then with the Abu Dhabi National Oil ��AV (ADNOC), the Board of Management of ��AV resolved in June 2024 to enter into concrete negotiations about a possible transaction and the possible conclusion of an investment agreement and to enable an adequate exchange of corporate information to confirm assumptions (confirmatory due diligence). The starting point for the negotiations is a potential offer price of EUR 62 per ��AV share indicated to ��AV by ADNOC, which is subject to, among other things, the results of the confirmatory due diligence as well as agreement on the content of an investment agreement.

��AV systematically advances its aim to become fully circular

In May 2024, ��AV announced its authorization as a waste trader at IFAT, the world’s leading trade fair for the waste and disposal industry. The Group has created the legal conditions to become a purchaser and recycler of plastic waste itself, thereby securing independent access to the valuable resource of waste. ��AV has secured further access to recycled materials through a partnership announced in June 2024 with Neste and Borealis to enable the recycling of discarded tires into high-quality plastics for automotive applications.

With the aim of continuously enhancing chemical recycling, ��AV also invested a mid single-digit million euro amount in the Dutch company BioBTX in June 2024. With this partnership, ��AV is enabling construction of the world’s first demonstration plant for an innovative technology that makes it possible to produce valuable chemicals such as benzene, toluene and xylene from organic and mixed plastic waste and then use them in plastics production.

Increase in volumes sold in both segments

In the Performance Materials segment, ��AV significantly increased volumes sold despite the difficult market situation in the second quarter of 2024, in particular in the EMLA and APAC regions. Sales thus have increased year on year by 2.5 percent to EUR 1.83 billion (previous year: EUR 1.79 billion). At the same time, lower raw material prices only partially offset the demand-related decline in selling prices, with the result that EBITDA fell by 35.1 percent year on year to EUR 196 million (previous year: EUR 302 million). The free operating cash flow was EUR –89 million (previous year: EUR –77 million).

��AV has also increased volumes sold in the Solutions & Specialties segment in the second quarter of 2024, especially in the APAC region. Again, this increase only partially offset the lower selling prices, meaning that sales declined by 3.3 percent year on year to EUR 1.81 billion (previous year: EUR 1.88 billion). EBITDA fell by 21.3 percent to EUR 174 million (previous year: EUR 221 million). This decline is attributable in particular to a non-recurring positive effect from the sale of the additive manufacturing business in the second quarter of 2023, which had increased earnings by EUR 35 million. In addition, expenses in connection with implementation of the transformation program STRONG had a negative impact in the low double-digit million euro range in the second quarter of 2024. The free operating cash flow in the past quarter was EUR 36 million (previous year: EUR 150 million), with the fall being the consequence of higher funds tied up in working capital and a decline in EBITDA.

First half of the year impacted overall by low sales prices

Group sales in the first half of the current fiscal year 2024 declined by 3.5 percent to EUR 7.2 billion (previous year: EUR 7.5 billion). The Group’s EBITDA fell by 11.6 percent to EUR 593 million in the first half of the year compared to the first six months of 2023 (previous year: EUR 671 million). The free operating cash flow in the first half of the year was at EUR –276 million (previous year: EUR –149 million), while net loss fell to EUR 107 million (previous year: net income of EUR 20 million).

��AV and bp sign long-term supply agreement for solar power in Spain

Thu, 04 Jul 2024 10:00:00 +0200

Polymer materials manufacturer ��AV and bp have signed a long-term power purchase agreement (PPA) for renewable energy from a solar power plant in Spain. The 10-year agreement increases the share of renewable energy in ��AV’s total electricity consumption in Spain from less than 10 percent to approximately 30 percent. ��AV is thereby taking another important step towards achieving operational climate neutrality by 2035.

The deal builds on ��AV’s announcement in 2022 around its three smaller production sites in Spain - in the Zona Franca in Barcelona, Parets del Vallés and Santa Margarida i els Monjos – which started running on 100 percent renewable electricity. With the new agreement, a significant portion of the electricity consumed by the company's main production site in Tarragona can now also be supplied by renewable sources, enabling ��AV to cut its CO₂ emissions by approximately 16,000 tonnes per year ^[1].

"With the PPA, we are demonstrating that we at ��AV are using every opportunity to consistently increase the proportion of energy from renewable sources at our sites worldwide," says Thorsten Dreier, CTO at ��AV. "Because we are convinced that our vision of a complete focus on the circular economy and climate neutrality is the only way to ensure the long-term success of our company."

Olvido Moraleda, president of bp Energía España, said: “This agreement is a significant milestone for bp in Spain, enabling us to provide renewable energy through a PPA to a key industrial customer. This deal enables bp and ��AV to work together in delivering lower carbon energy to a traditionally hard-to-abate sector, as part of bp’s strategy to become an integrated energy company.”

Andrea Firenze, General Manager at ��AV Spain, said: "Commitment to sustainability is a non-negotiable part of everything we do, and this agreement allows us to take a further step in our mission to make energy use as efficient and sustainable as possible throughout our value chain. In the same way, through this alliance with bp, we will continue to promote the strategic positioning of our Tarragona site through a more stable, more predictable and, above all, more sustainable long-term energy supply."

Jason Tate, head of European power trading and origination at bp, said: “This agreement highlights not just bp’s commitment to Spain. It’s an example of how bp is continuing to invest in developing our expertise and capability to support European commercial and industrial customers to help meet their decarbonization goals.”

Under the terms of the power purchase agreement, bp has agreed to supply ��AV with a high double-digit GWh volume of renewable electricity for a period of 10 years, backed by an equivalent volume of Guarantees of Origin (GoO). The current plan is to source the renewable power from an already operational solar photovoltaic (PV) farm, in Teruel, in the Aragon region of eastern Spain, with which bp has an offtake agreement in place.

��AV aims to convert its production to 100 percent renewable energy as part of its climate goals until the end of 2035. At the end of 2023, ��AV fulfilled approximately 16 percent of its global electricity needs from renewable sources.

bp has been active in the Spanish natural gas market for more than 20 years, through management of their LNG portfolio, and supply to C&I customers. In the power and renewables space, bp manages a portfolio of solar offtake and also supplies renewable power, a key growth area for the bp trading business in Europe.

^{[1] Estimate based on a calculation of Scope 2 market-based CO}_²^{emissions user may have had to report if buying the same amount of grey electricity from their current local supplier.}

Ensuring competitiveness in a challenging environment

Tue, 25 Jun 2024 08:00:00 +0200

��AV is paving the way for the enhancement of its already leading competitive position. In view of a rapidly changing market environment, ��AV has launched the global transformation program STRONG. The program makes the company even more efficient and drives digitalization forward. By the end of 2028, ��AV plans to achieve annual global savings of 400 million euros in material and personnel costs. 190 million euros of these will be in Germany.

To maintain and expand its strong global competitive position, ��AV is consistently focusing on continuing its transformation. To achieve this goal, ��AV is working continuously to further improve existing structures and processes. This includes making production, administrative units and other areas as efficient as possible and continuously expanding the innovation pipeline. ��AV thereby continues the successful implementation of its strategy.

Dr. Markus Steilemann, CEO of ��AV says: “The last few years have been challenging for the chemical industry and for ��AV. Despite all the challenges, we have continued to drive forward our 'Sustainable Future' strategy. With STRONG, we are systematically continuing our transformation, making the company even more efficient and accelerating digitalization. I am convinced that STRONG will not only help to secure ��AV's leading position in the global market on the basis of competitive structures and processes and an impressive innovation pipeline, but also to expand it.”

Initial cost savings as part of STRONG have already been initiated. ��AV is also driving forward the use of Artificial Intelligence (AI) to continue increasing efficiency and productivity in the future.

“Right now, our four focus areas remain central to our success, namely reliable production, better plant utilization, full customer focus on high-margin demand and a high level of cost awareness,” says Christian Baier, Chief Financial Officer at ��AV. “STRONG will help us to unleash the full potential of our company and to further strengthen our competitiveness.”

��AV enters into concrete negotiations with Adnoc regarding a potential transaction

Mon, 24 Jun 2024 11:31:00 +0200

Based on the open-ended talks held so far with Abu Dhabi National Oil ��AV („Adnoc“) the Board of Management of ��AV ("��AV") after consultation with the Supervisory Board has today decided to enter into concrete negotiations with Adnoc regarding a potential transaction and the potential conclusion of an investment agreement as well as to allow for an adequate exchange of company information to confirm assumptions (confirmatory due diligence).

In the view of the Board of Management, the discussions so far have shown that ��AV and Adnoc can generally reach a common understanding regarding core aspects of a possible transaction including support for ��AV’s further growth strategy.

Starting point for the negotiations is a possible offer price of € 62 per ��AV share that Adnoc has indicated to ��AV, which is subject, among other things, to the results of the confirmatory due diligence and agreement on the content of an investment agreement.

”We have made good progress in our discussions with Adnoc. Therefore, we have decided to enter into concrete transaction negotiations with Adnoc”, said Markus Steilemann, CEO of ��AV.

Adnoc and ��AV both intend to proceed with the negotiations about a potential transaction and the confirmatory due diligence in a timely manner. At this time, there is no certainty whether the upcoming negotiations will lead to an agreement. There is also no certainty as to the final terms of any such agreement.

Any potential transaction would, in addition to mutual agreement on the commercial and legal transaction parameters, among other things, be subject to the approval of the respective boards of the parties and clearance by the competent authorities.

In light of the recent developments, the Capital Markets Day scheduled for June 27, 2024, will be postponed until further notice.

��AV becomes a shareholder in company BioBTX

Mon, 03 Jun 2024 10:00:00 +0200

^{��AV invests in the chemical recycling technology as a promising way of using waste to recover raw materials for production. © ��AV}

By participating as a strategic partner in the company BioBTX, ��AV is enabling the construction of the world’s first innovative demonstration plant for the BioBTX ICCP-Technology in the Netherlands. The technology makes it possible to produce chemicals such as benzene, toluene and xylene from organic and mixed plastic waste. These aromatics are essential building blocks for the chemical industry and are used in plastics production, among other things.

��AV is investing a mid-single-digit million Euro amount in the scale-up from the Netherlands. In addition to ��AV, the financial investors Invest-NL and Infinity Recycling are also involved in the project. Once operational, the demonstration plant will convert 20 kilotons of mixed plastic waste per year. Following successful upscaling of the technology over the past years, the demonstration plant is a crucial intermediate step for the technology to be implemented on an industrial scale.

"Our vision is to fully align with the circular economy and climate neutrality, and we are pursuing all innovative solutions that bring us closer to this goal," says Thorsten Dreier, CTO of ��AV. "Chemical recycling can make a significant contribution to closing the loop and the BioBTX ICCP technology is a promising way of using waste to recover raw materials that we use in production." Unlike other recycling technologies, this technology also makes mixed waste from different source materials suitable for the process.

^{Following successful upscaling of the technology over the past years, the demonstration plant is a crucial intermediate step for the technology to be implemented on an industrial scale. © ��AV}

The investment in BioBTX is part of ��AV's venture capital program, in which the company invests in young start-ups and scale-ups with innovative products, solutions or business models and thus promotes entrepreneurial activities in and alongside its core business. The partnership with BioBTX also includes two joint development agreements. In the development projects, ��AV is researching further possibilities for recycling its own products and contributing know-how in the field of digitalization to improve plant performance.

��AV has been cooperating with BioBTX for more than four years and, together with the company, has launched the EU-funded Circular Foam project, which is working on the recycling of rigid polyurethane foam using pyrolysis.

"We are pleased that we can contribute our expertise in the areas of application development, digital research and development and chemical recycling to the project and thus provide impetus for a new, Europe-wide circular ecosystem for plastic waste," explains Torsten Heinemann, Head of Group Innovation and Sustainability at ��AV.

"With its participation in BioBTX and the construction of the demonstration plant, ��AV is enabling an important step towards a sustainable chemical industry," says Ton Vries, CEO of BioBTX. "The production of renewable aromatics from plastic waste and biomass is a prerequisite for circular chemistry."

The demonstration plant is scheduled to go into operation by early 2027. Further information on the project can be found .

��AV gets off to a solid start in fiscal year 2024

Tue, 30 Apr 2024 07:00:00 +0200

��AV has started the fiscal year 2024 on a positive note. The Group was able to increase its sales volumes, in particular within the EMLA and APAC regions, with the former benefiting from higher plant availability. Due to lower average selling prices associated with lower raw material prices being passed on to customers, Group sales fell slightly by 6.2 percent to EUR 3.5 billion (previous year: EUR 3.7 billion). The Group’s EBITDA fell by 4.5 percent to EUR 273 million (previous year: EUR 286 million). This was primarily a result of lower margins, although the impact was somewhat mitigated by reductions in raw material and energy costs, partially offsetting the decline in selling price level. Net income fell by 34.6 percent to EUR –35 million (previous year: EUR –26 million) in the first quarter of 2024, whereas the free operating cash flow (FOCF) improved by 7.2 percent to EUR –129 million (previous year: EUR –139 million).

“Our start to 2024 shows that we’re focusing on the right things,” says Dr Markus Steilemann, Chief Executive Officer of ��AV. “Our goal for the rest of the year is to further increase production, sales volumes and margins without losing sight of our costs. This balance drives our comprehensive transformation while solidifying the foundation for our commitment to becoming fully circular and climate neutral.”

Full-year guidance for 2024 confirmed

Despite a solid start and positive volume development in the first quarter, ��AV expects macroeconomic conditions to remain volatile throughout the remainder of the year. The Group is thus confirming its full-year guidance and still expects EBITDA of between EUR 1.0 billion and EUR 1.6 billion. ��AV anticipates FOCF of between EUR 0 and EUR 300 million and ROCE above WACC of between –7 percentage points and –2 percentage points. The Group’s greenhouse gas emissions measured as CO₂ equivalents are expected to range between 4.4 million metric tons and 5.0 million metric tons. The Group anticipates EBITDA between EUR 270 million and EUR 370 million for the second quarter of 2024.

“Our volumes have remained buoyant since the turn of the year and we’ve made a solid start to 2024 despite the current global challenges,” says Christian Baier, CFO of ��AV. “In view of the economic uncertainties, however, we remain cautious for the rest of the year. We continue to focus our efforts on creating a sustainable basis for growth through targeted capital expenditure and thus on strengthening ��AV’s future viability.”

Progress in driving the circular economy and climate neutrality

The Group remains focused on driving its vision of becoming fully circular and achieving climate neutrality. ��AV presented climate neutrality targets for Scope 3 emissions at its Annual Press Conference in February 2024 and finalized its climate neutrality strategy: By 2035, the Group aims to decrease its Scope 3 emissions by 10 million metric tons of CO₂ equivalents, using 2021 as baseline. ��AV likewise aims to make its operations climate neutral in terms of its Scope 1 and Scope 2 emissions by 2035 and to be completely climate neutral by 2050.

To achieve these goals, ��AV is focusing on expanding renewable energies and cross-industry partnerships for joint solutions along the value chain, among other things. The Group is also committed to research and development. For instance, ��AV has produced a wide range of polycarbonate copolymers on an industrial scale in a new plant at its site in Antwerp, Belgium, since March of this year. The new technology developed by ��AV allows for the integration of new functionalities and properties into existing materials, such as enhanced flame retardancy.

Another example of an innovative research success lies in the development of a new process for producing the chemical aniline entirely based on plant biomass, marking the first ever departure from traditional petroleum-based production. ��AV put a special pilot plant into operation for this purpose in February 2024. German Chancellor Olaf Scholz visited ��AV’s Asia-Pacific Innovation Center in Shanghai in April 2024 to witness the Group’s global innovativeness for himself. There, the company develops future-oriented, sustainable products, technologies and solutions geared towards future-important sectors, including electromobility, wind energy and photovoltaics, consumer electronics and construction.

Higher sales volumes in both segments support sales development

The Performance Materials segment posted a 5.7 percent decrease in sales to EUR 1.7 billion in the first quarter of 2024 (previous year: EUR 1.8 billion). In line with the overall Group trend, this was attributable in particular to the decline in average selling prices associated with lower raw material prices being passed on to customers. However, the increase in volumes sold, especially in the APAC and EMLA regions, contributed positively to sales. The segment’s EBITDA fell by 40.5 percent from the prior-year quarter to EUR 103 million (previous year: EUR 173 million), whereas the free operating cash flow was EUR –73 million (previous year: EUR –57 million).

Sales in the Solutions & Specialties segment fell by 6.2 percent to EUR 1.8 billion (previous year: EUR 1.9 billion) in the first quarter of 2024, a reduction, mainly driven by lower selling price levels, yet there was an increase in sales volumes. The segment’s EBITDA rose to EUR 208 million, marking a 26.1 percent increase over last year’s first quarter (previous year: EUR 165 million). This increase was primarily driven by higher sales volumes. The free operating cash flow improved to EUR 22 million (previous year: EUR –48 million).

��AV publishes climate neutrality targets for scope 3 emissions

Thu, 29 Feb 2024 07:20:00 +0100

��AV has published its climate neutrality targets for scope 3 emissions, completing its climate strategy for reducing greenhouse gas emissions. As a short-term goal, the company plans to reduce greenhouse gases by 10 million metric tons by 2035. This corresponds to a drop in emissions of 30 percent compared to the base year 2021, with some growth-related emissions through 2035 included in the calculation. In the long-term, ��AV plans to be climate-neutral in terms of scope 3 emissions by 2050.

��AV previously published ambitious targets for scope 1 and scope 2 emissions in 2022, which included achieving operational climate neutrality by 2035. Scope 1 emissions come from ��AV's own production processes, while scope 2 emissions result from purchased energy sources. Scope 3 emissions include all other greenhouse gases produced in the upstream and downstream supply chains. These make up around 80 percent of the company's total greenhouse gas emissions. Raw materials purchased by ��AV are responsible for the greatest share of scope 3 emissions.

Reducing scope 3 emissions will require a transformation of the entire supply chain. A variety of factors influence one another – including the availability of alternative raw materials, renewable energies, technological advancements and new processes, as well as market transformations – and play a key role in this process. To achieve net zero emissions, ��AV expects to make targeted investments amounting to several hundred million euros over the next 10 years.

“Our Scope 3 targets are both ambitious and realistic supported with aconcrete implementation plan. This is an essential building block of our climate strategy. Completing our climate neutrality targets is another major milestone in aligning all of our activities with our vision of becoming fully circular. In this way, we are demonstrating once again that we take a leading role in transforming the chemical industry” says Dr. Markus Steilemann, CEO of ��AV.

Four levers for achieving our target and reducing scope 3 greenhouse gases

In its climate strategy, ��AV is concentrating on four scope 3 categories in the short to medium term^[1]. By managing these four categories, which together make up 21.3 million tons of greenhouse gases per year (as of 2021), ��AV will be able to reduce scope 3 emissions by 10 million metric tons by 2035. To do so, ��AV has identified four key levers. Projects related to these are already ongoing, with additional concrete implementation measures to follow.

“Calculating scope 3 emissions is challenging for us as a chemical company. This is because such emissions are generated both upstream, when we purchase raw materials and downstream, after we sell our products. Because of this, measures to reduce scope 3 emissions impact our suppliers as well as our customers and will require a transformation of the entire supply chain,” explains Dr. Torsten Heinemann, Head of Innovation and Sustainability at ��AV. “ Through innovation, cooperation with our partners along the supply chain, and a detailed plan of action involving all four levers, we will achieve our scope 3 targets”, Heinemann continues.

- The first lever requires suppliers to reduce their scope 1 and scope 2 emissions. Many of ��AV's raw material suppliers have already defined their own scope 1 and scope 2 targets, which in turn can count towards ��AV's scope 3 targets. ��AV is continuing its discussions with its suppliers on this issue, for example during a scope 3 supplier event the company will hold on March 4, 2024. Additionally, the company recently executed a long-term supplier agreement for chemically recycled raw materials with Encina. The January 2024 agreement covers the supply of raw materials produced from end-of-life plastics, which reduce ��AV's scope 3 emissions. Other important short-term changes include, for instance, electrification, improving efficiency, and carbon capture and storage (CCS) in supplier production processes.

- The second lever is the profitable sale of products made from alternative raw materials. ��AV already has circular solutions in its product portfolio under the CQ (circular intelligence) label. CQ products are made of at least 25 percent alternative, non fossil-based raw materials.

- ��AV's third lever to reduce scope 3 emissions are its MAKE projects. These are investment projects in which ��AV manufactures alternative raw materials with a smaller carbon footprint. These projects include, for instance, manufacturing bio-based aniline or using proprietary recycling technologies to make it possible to use recycled raw materials. Another example of a MAKE project is ��AV's Evocycle CQ technology, which is used to recycle mattresses.

- The fourth lever encompasses a large number of different factors that help to reduce scope 3 emissions. These include, for instance, increasing recycling rates to reduce emissions from waste incineration, and changes to logistics and primary energy extraction. In addition, ��AV will accelerate innovation processes through digital research and development and artificial intelligence.

Climate neutrality can only succeed through close cooperation along the entire supply chain. ��AV’s scope 3 climate neutrality targets are an important part of this and will be implemented alongside customers and suppliers.

^[1]Raw materials (part of category 3.1); end-of-life (EoL) handling (category 3.12); fuel and energy-related (category 3.3); upstream transportation (category 3.4)

Transformation consistently advanced in challenging fiscal year

Thu, 29 Feb 2024 07:00:00 +0100

��AV’s business performance in fiscal year 2023 was significantly affected by what was once again a challenging economic environment. While geopolitical crises had a lasting negative impact on global demand and selling prices, energy and raw material costs, especially in Europe, remained well above the historical average.

The lower than average selling prices and decreased sales volumes, resulting from weak global demand, led to a decline in Group sales. Compared to the previous year, 2023 saw a decrease in sales by EUR 3.6 billion (–20%) to EUR 14.4 billion (previous year: EUR 18 billion). EBITDA fell by EUR 537 million (–33.2%) to EUR 1.1 billion (previous year: EUR 1.6 billion). Although net income in fiscal year 2023 remained negative at EUR –198 million, it nevertheless improved slightly compared to the previous year (EUR –272 million). In addition, thanks to consistent working capital management, ��AV again generated a positive free operating cash flow (FOCF) of EUR 232 million (previous year: EUR 138 million). ROCE above WACC was –6.1 percentage points (previous year: –5 percentage points). Greenhouse gas emissions for Scope 1 and 2 rose slightly to 4.9 million metric tons of CO2 equivalents (previous year: 4.7 million metric tons). This is among others due to a more emission-intensive energy mix for purchased power and steam in the United States and Germany last year.

“2023 was one of the most difficult years for the chemical industry in recent decades with ongoing geopolitical tensions, an ailing global economy and high energy prices, especially in Europe. In addition, there are a number of structural problems, especially in Germany. The overall weak demand for our core industries is reflected accordingly in our earnings,” says Dr. Markus Steilemann, Chief Executive Officer of ��AV. “That is why we have been even more resolute in driving the implementation of our strategy “Sustainable Future” in the past year. For this, we are relying on four key levers: We are permanently getting more out of our facilities, we are boosting sales volumes and optimizing capacity utilization, we are focusing on high-margin demand and, last but not least, we will continue to be cost-conscious. In doing so, we continue to put all our energy into ��AV’s transformation in 2024.”
With a negative net income in 2023, the ��AV Board of Management made the decision not to distribute any dividend for the fiscal year 2023. This decision was made in keeping with the Group’s dividend policy, which calls for a payout ratio of between 35% and 55% of net income. ��AV has created a stronger link to the Group’s overall business situation.

Foundation for sustainable growth expanded

“2023 was again defined by a weak global economy. As a result, although we closed the fiscal year in line with our estimates, we want to get back on track for growth, particularly with regard to our volumes and EBITDA performance,” says Christian Baier, CFO of ��AV. “To that end, in 2023, as part of our growth strategy, we implemented important principles: We are cutting costs, continuing to invest in the right places, ensuring that our plants have the right capabilities to deliver, and leveraging efficiencies. We are therefore taking the right steps to position ourselves for long-term sustainable growth.”

Despite the very challenging environment in 2023, ��AV has continuously worked on optimizing its production processes in the past fiscal year. For example, the company improved the energy efficiency of its production facilities in Shanghai, China, and Dormagen, Germany. In addition, the Group reduced its fixed costs by a mid three-digit million euro amount in 2023.

At the same time, ��AV invested in the expansion of its sustainable product range and production capacities, which also included commissioning a polycarbonate compounding plant for mechanical recycling at its site in Shanghai, China last year. ��AV will thus be able to supply more than 60,000 metric tons of high-quality polycarbonates made from mechanically recycled materials annually in the Asia-Pacific region by 2026.

Climate neutrality target for Scope 3 emissions announced

The efficiency measures implemented and initiated last year have allowed ��AV to further strengthen its foundation for sustainable growth and make more progress towards a circular and climate neutral economy.

In this context, ��AV has now completed its climate strategy to reduce greenhouse gas emissions. In 2022, ��AV announced ambitious targets for scope 1 and scope 2 emissions with the aim of making its operations climate neutral by 2035. ��AV is now taking the next step and, as a short-term goal, plans to reduce its scope 3 emissions by 10 million metric tons by 2035. That corresponds to a drop in emissions of 30% compared to the 2021 base year. In the long term, ��AV aims to be climate neutral in its scope 3 emissions by 2050.
��AV also made further progress in the use of renewable energy in 2023 and concluded a virtual power purchase agreement (vPPA) for its third-largest production site worldwide in Baytown, Texas, United States. That will result in around 70,000 metric tons of CO2 emissions being offset starting from the end of 2024. This follows several power purchase agreements that ��AV already signed in recent years for its sites in Europe and Asia. In total in 2023, ��AV covered around 16% of its global electricity demand with renewable sources (previous year: 12%).

Outlook 2024: EBITDA between EUR 1.0 billion and EUR 1.6 billion anticipated

��AV expects economic conditions to remain challenging in 2024. The company will therefore pay special attention to leveraging its own potential in 2024 to achieve even greater efficiency. Against this backdrop, the Group expects EBITDA of between EUR 1.0 billion and EUR 1.6 billion for fiscal year 2024. ��AV anticipates FOCF of between EUR 0 and EUR 300 million and ROCE above WACC of between –7 percentage points and –2 percentage points. The Group’s greenhouse gas emissions measured as CO2 equivalents are expected to be between 4.4 million metric tons and 5.0 million metric tons. The Group anticipates that EBITDA for the first quarter of 2024 will be between EUR 180 million to EUR 280 million.

Weak demand impacts sales development in both segments. Lower costs support EBITDA in Solutions & Specialties

The weak global demand situation is also evident in the segment breakdown: Sales in the Performance Materials segment in fiscal year 2023 fell by 24.4% to EUR 6.9 billion (previous year: EUR 9.1 billion). This decline can mainly be attributed to a lower selling price level and lower volumes sold. Due to lower margins, EBITDA fell by 39.4% to EUR 576 million (previous year: EUR 951 million). As a result, FOCF fell by 70.2% to EUR 162 million (previous year: EUR 544 million).

Sales in the Solutions & Specialties segment fell by 15.1% to EUR 7.3 billion in fiscal year 2023 (previous year: EUR 8.6 billion), again mainly due to lower average selling prices and lower sales volumes. EBITDA still remained slightly lower at EUR 817 million (previous year: EUR 825 million). This was primarily due to the positive trend in margins, since lower raw material and energy prices more than compensated for the decline in selling prices. Lower fixed costs and the sale of the Additive Manufacturing business also had a positive effect. The segment’s FOCF increased by 182.6% to EUR 551 million (previous year: EUR 195 million).

Fourth quarter 2023 with positive EBITDA and cash flow

��AV’s sales decreased in the fourth quarter of 2023 by 15.6% to around EUR 3.3 billion (previous year: EUR 4.0 billion). This development is primarily due to the lower price level in the fourth quarter of 2023. EBITDA amounted to EUR 132 million in the last quarter of 2023 (previous year: EUR –38 million). FOCF amounted to EUR 73 million and was therefore also positive in the fourth quarter of 2023 (previous year: EUR 550 million).

World’s First Pilot Plant for Bio-Based Aniline

Tue, 13 Feb 2024 11:30:00 +0100

��AV is moving forward with the implementation of a unique process for producing the important chemical aniline entirely based on plant biomass instead of petroleum for the first time. At its Leverkusen site, the plastics manufacturer has now put a special pilot plant into operation for this purpose. Initially, large quantities of bio-based aniline will be produced there, so that the new technology can be further developed for production and transferred to an industrial scale. In the plastics industry, aniline is used to produce MDI, among other things. This in turn is used for insulating foam, for example, which saves energy in buildings and reduces the CO₂ footprint. ��AV believes it will contribute to the promotion of the Circular Economy, which the company is aiming to become fully aligned with.

In attendance at the opening ceremony were North-Rhine Westphalia’s Deputy Minister President Mona Neubaur as well as Professor Walter Leitner, Managing Director of the Max Planck Institute for Chemical Energy Conversion in Mülheim an der Ruhr. Together with Dr. Thorsten Dreier, Chief Technology Officer of ��AV, they discussed the significance of bio-based raw materials for a sustainable chemicals industry of the future.

"Among other things, aniline is a key raw material for foams used to insulate buildings and refrigerators," Dreier explained the importance of the basic chemical. "Until now, aniline has been produced from fossil raw materials such as crude oil. With our new process, we are helping to build a circular economy with a lower carbon footprint, and I am very proud that we have now succeeded in making the leap to the next technological level."

��AV developed the process, which has already won several awards, together with partners in the scientific community. Compared to conventional technology, the process leads to a greatly improved CO₂ footprint of aniline. ��AV has made a seven-digit investment in the pilot plant at the Chempark Leverkusen.

"Sustainable innovations from North Rhine-Westphalia are making a decisive contribution to the transformation of Germany as a chemical location. The world's first pilot plant for bio-based aniline is an impressive example of this," emphasized Neubaur, who is also the State Minister for Economic Affairs, Industry, Climate Protection and Energy. "In order for the industry to continue on its path towards a circular economy and climate neutrality, it needs planning and investment security above all. As the state government, we are therefore working hard to ensure that North Rhine-Westphalia remains an attractive business location and becomes the first climate-neutral industrial region in Europe."

Professor Leitner also underlined the importance of partnerships. “The project illustrates the cooperation between research-based industry and application-oriented science. There are many intersecting partnerships like these, especially in NRW. Germany needs more of this in order to assert itself as a research and technology location.”

Use of biotechnology

The project also clearly showcases the potential contribution of the industrial (“white”) biotechnology to plastics production: in the new process, a customized microorganism helps convert an industrial sugar extracted from plants into an intermediate product through fermentation. This takes place under milder and thus more environmentally compatible conditions than in conventional processes. In a second step, chemical catalysis of the intermediate product then creates the aniline with one hundred percent plant-based carbon.

The research on bio-based aniline will also continue to be funded by the German government. The German Ministry for Food and Agriculture is funding a follow-up project (Bio4PURDemo) from ��AV and partners, which started in March 2022 and runs until 2025.
The RWTH Aachen with the CAT Catalytic Center and the University of Stuttgart, as well as the technology transfer initiative located there, are also participating in the project.

Around six million tons of aniline are currently produced worldwide, with the volume growing by approximately three to five percent per year on average. With a production capacity of more than one million tons per year, ��AV is one of the leading aniline producers.

��AV and Encina reach an agreement for a long-term supply of circular raw materials

Wed, 17 Jan 2024 10:00:00 +0100

��AV, a global leader in high performance polymers, and Encina, a US-based producer of ISCC PLUS certified circular chemicals, reached a long-term supply agreement for chemically recycled, circular feedstock derived from post-consumer end-of-life plastic. Specifically, Encina will supply ��AV with benzene and toluene pending the completion of Encina´s world-scale production facility, anticipated to come online at the end of 2027.

Building upon previous sustainable sourcing efforts, this marks the first major procurement agreement involving chemically recycled, circular-based raw materials for ��AV, a major step in the company’s journey towards full circularity. It also helps reduce scope 3 emissions for ��AV and its customers.

"The ability to source raw materials from used plastics for the manufacture of our products makes a decisive contribution to realizing our vision of a circular economy," said Thorsten Dreier, Chief Technology Officer at ��AV. "This is because such raw materials not only enable the reuse of used plastics, but also have a lower carbon footprint, which leads to more sustainable end products."

Benzene and toluene are important raw materials in ��AV’s manufacturing processes used for the production of methylene diphenyl diisocyanate (MDI) and toluene diisocyanate (TDI), respectively. MDI and TDI are critical raw materials used to produce rigid and flexible polyurethane foams, which are used in applications such as household appliance and building insulation as well as furniture and car seats.

Benzene can also be used for the synthesis of phenol and acetone – raw materials for making polycarbonate plastics such as Makrolon®, which are used in high-quality applications for the automotive, electronics, IT and other industries.

Encina’s proven proprietary catalytic technology produces circular feedstock with a lower carbon footprint when compared to those based on fossil fuels and an exceptionally high yield.

"Encina is proud to be working with ��AV, a company with a long track record of innovation and commitment to sustainability. This agreement represents the beginning of what we hope to be a long-standing partnership between our companies as we work to create a truly circular economy and realize a future in which nothing is wasted," said David Roesser, Chief Executive Officer of Encina.

��AV’s vision to become fully circular is predicated on four key drivers: the use of alternative raw materials, innovative recycling and renewable energy, as well as engaging in joint solutions. The agreement with Encina represents a pioneering milestone for incorporating innovative recycling technologies, in this case chemical recycling of end-of-life plastic, into ��AV’s production.

��AV achieves EBITDA guidance for third quarter

Fri, 27 Oct 2023 07:00:00 +0200

��AV’s third quarter of 2023 was characterized by a persistently difficult market environment with continued low demand in all regions. ��AV’s Group sales declined by 22.7 percent to EUR 3.6 billion (previous year: EUR 4.6 billion), mainly as a result of lower selling prices and a slight reduction in volumes sold. The Group’s EBITDA fell by 8.3 percent to EUR 277 million (previous year: EUR 302 million). In addition to exchange rate movements, this was attributable, inter alia, to a decrease in volumes sold due to lower demand. In contrast, higher margins had a beneficial effect on EBITDA, since the decline in the selling price level was more than offsetby lower raw material and energy prices compared to the extremely high raw material prices in the prior-year quarter. Lower selling and administrative expenses and a decrease in fixed cost of goods thanks to the Group’s strong focus on efficiency also had a positive effect. Net income in the third quarter was EUR –31 million (previous year: EUR 12 million), and the free operating cash flow (FOCF) rose to EUR 308 million (previous year: EUR 33 million).

“Again, there was no significant revival of the economic activity in the third quarter, with global demand remaining at a very weak level,” says Dr. Markus Steilemann, CEO of ��AV. “��AV is thus all the more committed to creating the right framework: we are operating efficiently and with a high degree of cost consciousness. We are also investing in the global expansion of our capacities using innovative technologies. We are thus continuing to consistently orient ourselves towards the circular economy and are expanding the foundations for sustainable growth.”

Guidance for 2023 narrowed at the lower end of the ranges

��AV has narrowed its guidance published in April this year at the lower end of the given corridors, in line with the statements made on the half-year report in August 2023. The Group thus anticipates EBITDA of around EUR 1.1 billion and a free operating cash flow of between EUR 0 million and EUR 200 million. ��AV anticipates a ROCE above WACC of around –6.0 percentage points. ��AV’s GHG emissions measured as CO2 equivalents are projected to still be between 4.2 million metric tons and 4.8 million metric tons.
“��AV is operating in a challenging environment: Economic activity is weak, demand is low and the outlook for our core industries has deteriorated further, with the exception of the automotive industry,” says Christian Baier, CFO of ��AV. “Accordingly, we have narrowed our guidance at the lower end of the given ranges. At the same time, the Group stands on a very stable foundation with a global presence and strong balance sheet. I am therefore very much looking forward to continuing to drive ��AV’s transformation forward.”

Christian Baier has been in office as ��AV’s new Chief Financial Officer since the beginning of October 2023. He succeeds Dr. Thomas Toepfer, who left the company as of August 31, 2023. Baier has since been responsible for the areas of Accounting, Controlling, Finance & Insurance, Information Technology & Digitalization, Investor Relations, Law, Intellectual Property & Compliance, Portfolio Development and Taxes. He is also responsible for country-specific topics in the United States and China.

In addition, the Board of Management decided to terminate the remaining ongoing share buyback program ahead of schedule on October 26, 2023. This decision has been taken due to the current overall situation and the limited time remaining until the end of the program on February 28, 2024 and the authorization of the Annual General Meeting expiring on April 11, 2024. As such, EUR 199 million of the intended EUR 500 million share buyback were executed. ��AV bought back 4.7 million shares with an average price of EUR 42.50 per share. ��AV plans to seek for a renewal of the authorization during the Annual General Meeting in 2024 to continue share buybacks in the future.

Investment in a sustainable and circular future

To achieve its vision of becoming fully circular, ��AV is committed to delivering products and solutions that contribute to a more climate-neutral and circular world. One example of that is the new Elastomers plant, which the Group put into operation at its site in Shanghai, China, this August. The new plant is part of a series of investments in high-performance elastomer business made by the company worldwide in recent years. The polyurethane elastomer systems produced there are used, among other things, for applications in the field of renewable energies, such as in manufacturing photovoltaic panels. In addition, they themselves consist partly of alternative raw materials, meaning that they contribute to a more sustainable future in two ways.

The use of alternative raw materials is one of the cornerstones of the Group’s efforts to become fully circular. To be able to further explore and expand this field, ��AV is also committed to dovetailing its financing and sustainability strategies to a greater extent. As part of that, the Group issued a green bond for the first time in November 2022. A move that has already produced a positive impact: after just the first year of the total six-year term, the funds raised were already used in full in sustainable expenditures and projects. Around 34 percent of the issuing proceeds were used, for example, to expand alternative raw materials, resulting in a reduction of 250 kt of CO₂ equivalents.

A further focus on the path toward a circular economy is the recycling of used plastics. ��AV has also made further progress in this area, announcing this August that it had achieved a major milestone by developing an innovative process for the chemical recycling of polycarbonates. The Group is now commencing technical implementation of chemical recycling on a pilot scale at its site in Leverkusen, Germany, and will invest millions of euros into it over the next few years.

Economic weakness weighs on both segments; lower fixed costs have positive impact

The selling price level and volumes sold at both of the Group’s segments declined in the third quarter, particularly in the EMLA region. Nevertheless, the Group’s strong focus on efficiency as part of implementation of its Sustainable Future strategy had an impact. In the third quarter, fixed costs were again reduced by a high double-digit million euro amount compared to the previous year. For the year as a whole, ��AV expects lower fixed costs in the mid three-digit million euro range compared to the prior-year period.

Sales in the Performance Materials segment were down 26.7% to EUR 1.7 billion (previous year: EUR 2.3 billion) in the third quarter of 2023, in particular due to considerably lower average selling prices. The segment’s EBITDA increased by 60.4 percent year over year to EUR 85 million (previous year: EUR 53 million), mainly because of higher margins and lower fixed costs. The free operating cash flow rose to EUR 317 million (previous year: EUR 93 million).

The Solutions & Specialties segment registered a 17.6 percent decrease in sales to EUR 1.8 billion in the third quarter of 2023 (previous year: EUR 2.2 billion). That was mainly attributable to a decline in average selling prices due to weak demand worldwide, exchange rate movements and a fall in volumes sold. The segment’s EBITDA fell by 12.1 percent year over year to EUR 246 million (previous year: EUR 280 million), but has shown a steady, sequential increase since the fourth quarter of 2022. The segment’s free operating cash flow improved to EUR 185 million (previous year: EUR 65 million).

Results in the first nine months of 2023 below previous year; significant increase in FOCF

The Group’s sales in the first nine months of the year fell by 21.2 percent to EUR 11 billion (previous year: EUR 14 billion). Weak economic activity and low global demand throughout the year resulted in a lower average selling price level and lower volumes sold overall. ��AV’s EBITDA in the first nine months of 2023 declined by 42.7 percent to EUR 948 million (previous year: EUR 1.7 billion), while net income fell to EUR –11 million. However, the FOCF rose to EUR 159 million (previous year: EUR –412 million), in particular due to higher cash flows from operating activities. Less cash tied up in working capital, mainly due to the development of inventories, and lower income tax payments more than compensated for the drop in EBITDA.

��AV launches mechanical recycling polycarbonate compounding line in China

Wed, 18 Oct 2023 13:12:12 +0200

��AV has commenced operations at its first dedicated mechanical recycling (MCR) compounding line for polycarbonates at its integrated site in Shanghai, China. This line is set to produce over 25,000 tons of premium-quality polycarbonates and blends containing mechanically recycled materials annually, in response to the growing demand for post-consumer-recycled (PCR) plastics, particularly in applications within the electrical and electronic products, automotive, and consumer goods sectors.

"The launch of our MCR production line marks another significant stride in our journey towards achieving a circular economy and operational climate neutrality by 2035," said Sucheta Govil, Chief Commercial Officer of ��AV. "Plastic waste recycling is pivotal in realizing this vision, and through the expansion of our recycled plastics production capacity, we aim to lead the way in driving sustainability across diverse industries."

��AV is committed to supplying over 60,000 tons of recycled-content polycarbonates annually in the Asia Pacific region by 2026, in response to robust market demand. Recently, the company also transformed an existing compounding line at its Map Ta Phut site in Thailand for mechanically recycled polycarbonate.

"These investments enable us to meet the rising demand for PCR polycarbonates, enhancing our capacity and efficiency. With new or repurposed capacity now operational, we are better positioned to assist our downstream customers in their journey towards more sustainable products, expediting the transformation of industries towards a circular and climate-neutral future," said Lily Wang, Head of ��AV’s Business Entity Engineering Plastics.

A broad range of PCR portfolio

The demand for such materials is surging on a global scale, driven by regulatory initiatives like the European Union’s proposed Directive on end-of-life vehicles (ELV Directive), which sets strict benchmarks for the utilization of recycled plastics. Furthermore, industries like consumer electronics are poised for increased demand for recycled materials, especially those with a substantial recycled content.

These market dynamics underscore the significance of ��AV’s recent developments in providing PCR polycarbonates. Earlier this year, the company unveiled a polycarbonate boasting 90 percent recycled content. This grade not only attains outstanding whiteness and highly saturated colors but also touts a sustainable feature – a 70 percent reduction in carbon footprint compared to its fossil-based virgin plastic counterpart. Achieving this remarkable accomplishment requires a meticulous selection of high-quality recycled materials and precise optimization of material composition during the compounding process.

Furthermore, ��AV is actively engaged in pioneering the chemical recycling of polycarbonates. Having successfully developed an innovative process within the laboratory, the company is now embarking on the technical implementation of this breakthrough at a pilot scale.

Expansion of polycarbonate production capacity in Asia Pacific

After debottlenecking multiple production lines at the Map Ta Phut site in Thailand, ��AV is nearing the final stages of a program to enhance polycarbonate production capacity and capabilities across the Asia-Pacific region. This program also includes the addition of new production lines at sites in Shanghai and Guangzhou, China, as well as Greater Noida, India, in recent times. The combined additional capacity now exceeds 100,000 metric tons annually. These strategic projects, aimed at optimizing the regional production network, have been supported by using digital tools, which also reduced investment costs.

"In this way, we aim not only to meet the growing demand for polycarbonate in Asia, but also to offer our customers there an improved product quality," says Dr. Nicolas Stoeckel, Head of Operations in the Engineering Plastics segment. "Depending on demand, the upgrades can be used for compounding recycled or conventionally produced polycarbonate." Therefore, both projects are also about improving ��AV´s ability to produce more plastics with higher recycled content.

��AV expands capacity for TPU films in Germany

Fri, 13 Oct 2023 10:00:00 +0200

��AV has expanded its production capacities for thermoplastic polyurethane (TPU) films in the Platilon® range, as well as the associated infrastructure and logistics in Bomlitz, Lower Saxony, Germany.

This site of Epurex Films, a wholly owned subsidiary of ��AV, houses research & development, application development and production for the semi-finished products. The company has invested a low double-digit million Euro amount in the expansion of the center of excellence for TPU-Films.

The new capacity is intended to meet the growing global demand for multilayer TPU films. They are used in automotive interiors and construction, among other applications. Breathable, water-impermeable specialty films have also proven their worth in wound care and outdoor clothing.

"With this capacity expansion, we are strengthening our Bomlitz site and our position as a leading supplier of technical specialty films," said Dr. Thorsten Dreier, ��AV's Chief Technology Officer, at the inauguration. "At the same time, we are investing in promising technologies and applications and creating new jobs."

For Aleta Richards, global head of the Specialty Films business entity, the expansion offers opportunities to respond even better to individual customer needs and offer more sustainable products. "For some time now, we have also been developing customer-specific solutions with films made from alternative raw materials, as we are also seeing increasing demand in this area. The development and production of partially biobased products is therefore to become a new focus at the Bomlitz site."

��AV is fully geared toward the circular economy and aims to become climate-neutral by 2035. In 2022 the Bomlitz site has switched its power supply completely to green electricity. Epurex Films is one of ��AV's three competence centers for specialty films in Germany, along with Leverkusen and Dormagen.

��AV confirms decision to enter into open-ended discussions with Adnoc

Fri, 08 Sep 2023 19:31:24 +0200

The Board of Management of ��AV has today decided, in view of the interest in ��AV expressed by Abu Dhabi National Oil ��AV (Adnoc), to enter into open-ended discussions with Adnoc. Whether, in which form and, if applicable, at which conditions an agreement between the parties will be reached is open and will depend on the course of the forthcoming discussions. During the discussions, ��AV’s Board of Management will in particular also address the safeguarding of the further implementation of its future- and sustainability-oriented corporate strategy, including corresponding corporate governance provisions.

Dr. Markus Steilemann, Chief Executive Officer of ��AV, said: “The interest of Adnoc in our company underlines our strong position as one of the world’s leading manufacturers of high-quality polymer materials and as a leader in the shift towards a circular economy. Beyond current headwinds in our industry, we are optimally positioned to unlock significant long-term value in highly attractive industries underpinned by strong secular growth trends. Regardless of the talks with Adnoc, we will remain fully focused on pursuing our successful “Sustainable Future” strategy in order to unfold our full potential and further drive the transformation towards the circular economy.”

Any agreement would, in addition to mutual consent on the commercial and legal transaction parameters, require the approval of the respective boards of the parties and the approval of the competent authorities.

��AV presently does not intend to comment on this matter any further unless and until changed circumstances or events require publication by ��AV to comply with applicable disclosure rules.

��AV appoints Christian Baier as new CFO, Dr. Thorsten Dreier to become Labor Director

Mon, 21 Aug 2023 07:30:00 +0200

The Supervisory Board of ��AV has unanimously appointed Christian Baier as its new Chief Financial Officer (CFO). He will take over from Dr. Thomas Toepfer on October 1, 2023. Dr. Toepfer will leave the company as of August 31, 2023, and ��AV’s Chief Executive Officer Dr. Markus Steilemann will act as CFO on an interim basis during September. Dr. Thorsten Dreier will take over the position of Labor Director in addition to his duties as Chief Technology Officer from September 1, 2023.

“Christian Baier is an accomplished top manager with a longstanding experience in the capital markets. We are delighted that, as a member of the Board of Management, he will be actively involved in shaping ��AV’s transformation to the circular economy and in the implementation of our Sustainable Future strategy,” says Dr. Richard Pott, Chairman of the Supervisory Board of ��AV. “We are also pleased that Dr. Thorsten Dreier, with his long-standing knowledge of the company, will be shaping the future of ��AV and its employees in his additional role as the new Labor Director.”

“I am very much looking forward to driving ��AV’s transformation and creating sustainable growth together with all ��AV employees and the Board of Management,” says Christian Baier.

Born in Freiburg/Breisgau (Germany), Baier has been a member of the Management Board (Chief Financial Officer) of METRO AG since 2016; this was preceded by various executive positions at the international wholesaler from 2011. Prior to that, his experience also includes working for Permira, a global investment firm, from 2006 to 2011.

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Board of Management and Supervisory Board of ����AV support ADNOC International’s public takeover offer

Increased profits in challenging market environment

����AV signs an Investment Agreement with ADNOC and supports ADNOC’s public takeover offer to all ����AV shareholders

Rebounding volumes in a challenging environment

����AV and bp sign long-term supply agreement for solar power in Spain

Ensuring competitiveness in a challenging environment

����AV enters into concrete negotiations with Adnoc regarding a potential transaction

����AV becomes a shareholder in company BioBTX

����AV gets off to a solid start in fiscal year 2024

����AV publishes climate neutrality targets for scope 3 emissions