“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.”&�Բ�����;

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.”&�Բ�����;

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 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). 

“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.”&�Բ�����;

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.

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.

Since 2020, ����AV has been partnering with Ausell to recycle 1 million 19-liter polycarbonate water barrels annually, converting them into high-performance post-consumer recycled (PCR) polycarbonates for various industries such as electronics, home appliances and automotive. With this strengthened collaboration, Ausell will supply recycled polycarbonates derived from discarded automotive headlamps, which ����AV will then process into high-quality PCR materials for automotive engineering applications. This partnership marks a further step to effectively closing the plastics recycling loop within the automotive sector, reducing waste and carbon emissions while enhancing resource efficiency.

Lily Wang, Global Head of the Engineering Plastics Business Entity at ����AV, said: “We are excited to deepen our partnership with Ausell as we work closely with our value chain partners to accelerate the circular transformation of the automotive industry. Together, we are committed to pioneering sustainable solutions that will lead the way toward a circular and climate-neutral future.”

Xia Wenjun, CEO of Ausell, added: “Our enhanced collaboration with ����AV represents a significant step toward achieving our shared vision of a circular economy. By turning end-of-life automotive components into valuable resources, we are not only reducing waste but also contributing to the development of sustainable materials for future vehicle production.”

The automotive industry, facing increasing regulatory pressures for sustainability, as well as following their own roadmap to “close the loop” of materials, is looking for robust and adapted solutions to their challenges.

This collaboration positions ����AV and Ausell at the forefront of efforts to develop compliant, high-performance materials while addressing the challenges of plastic waste management and resource utilization in the automotive industry. The recycled polycarbonates will not only enhance the sustainability of automotive components but also demonstrate the potential for high-value recycling solutions.

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.”&�Բ�����;

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). 

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): . 

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. 

����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 a concrete 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 term¹. 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)}

Mr. Uchimura will take over the position in addition to his current role as President of Japan Fine Coatings Co., Ltd.. Kimiyasu Yonemaru (currently, Country Representative for ����AV in Japan and President of ����AV Japan Ltd..) will retire from ����AV, effective June 30, 2023.

¹ Japan Fine Coatings Co., Ltd. is a wholly owned subsidiary of ����AV Japan Ltd.

“We will have to cope with this unprecedented environment for the time being. We’re therefore using all the levers available to us to steer ����AV through the current situation,” said Dr. Markus Steilemann, CEO of ����AV. “In particular, the unparalleled price increases for fossil fuels show that ����AV’s strategic focus on becoming fully circular is the right path. Our products are vital in paving the way for a fossil-free future.”&�Բ�����;

In view of the energy crisis in Europe and a weakening global economy, ����AV is systematically ensuring its economic ability to maneuver. The company is taking short- and medium-term cost-cutting measures, for example. ����AV has also initiated various measures to reduce its gas requirements in Germany and continues to work on making its processes even more energy-efficient. Technical optimization measures, for instance, are helping to improve energy efficiency in production. One example is the use of digital sensors to monitor steam traps, enabling ����AV to use steam as efficiently as possible in production. 

Full-year guidance for 2022 narrowed 

“The further significant weakening in overall economic conditions is also affecting our business performance. Despite the significant burdens from very high energy and raw material prices, we achieved our EBITDA forecast for the third quarter,” said Dr. Thomas Toepfer, CFO of ����AV. “Based on these results, we still expect to achieve the targets we have set ourselves for the full year as well.”&�Բ�����;

����AV has narrowed the full-year guidance for 2022 that it issued on July 29, 2022, and now anticipates that EBITDA will be between EUR 1.7 billion and EUR 1.8 billion (previously: between EUR 1.7 billion and EUR 2.2 billion) and that the FOCF will be between EUR 0 million and EUR 100 million (previously: between EUR 0 million and EUR 500 million). Return on capital employed over the weighted average cost of capital is expected to be between minus two percentage points and minus one percentage point (previously: between minus two and plus two percentage points). GHG emissions measured as CO₂ equivalents are projected to be between 5.0 million metric tons and 5.4 million metric tons (previously: between 5.3 million metric tons and 5.8 million metric tons). 

Further milestones on the path to a circular economy 

����AV continued to press ahead with its vision of becoming fully circular in the third quarter of 2022 and achieved further milestones. As part of that, the Group is committed among other things to expanding its sources for alternative raw materials and thus eliminating the use of fossil resources, such as crude oil and natural gas, in the long term. 

Since September 2022, SOL Kohlensäure GmbH & Co. KG has supplied ����AV’s Lower Rhine sites with biogenic carbon dioxide (CO₂) under a supply partnership. This gas, which among other things is obtained as a by-product from the treatment of plant residues, is used by ����AV to produce plastics such as MDI (methylene diphenyl diisocyanate) or polycarbonate. SOL will supply up to 1,000 metric tons of biogenic CO₂ this year, enabling ����AV to save the same amount of CO₂ from fossil sources. The supply volume is to be increased substantially from 2023 on. 

����AV was also able to expand its portfolio of sustainable products in the third quarter. The launch of climate-neutral MDI and renewable TDI (tolulene diisocyanate) was followed in September 2022 by bio-circular polyether polyols – a sustainable component for polyurethane foams. ����AV uses renewable precursors such as organic waste or other residual materials to produce them, thus rounding out its range of components based on alternative raw materials for making rigid and flexible foams. These are used among other things as an efficient means of thermal insulation for buildings and refrigerators or, for example, in mattresses, upholstered furniture, car seats and shoes. 

Full circularity and cross-industry collaboration throughout the value chain are also the focus at the world’s largest plastics trade show , which ends on October 26th. ����AV is presenting innovative ideas and new technologies there in the fields of electrification, smart design, sustainable living and the circular economy – such as a new process to enable different materials in multilayer film packaging to be separated completely from each other, or a new, more sustainable concept for wallboxes, which are used to charge electric vehicles. 

Increase in sales in both segments 

Sales in the Performance Materials segment in the third quarter of 2022 rose by 6.6 percent compared to the prior-year quarter and were EUR 2.3 billion (previously: EUR 2.2 billion). The reasons for that were exchange rate movements and a higher selling price level. In contrast, a drop in total volumes sold – driven primarily by a downturn in demand – had a negative effect. The segment’s EBITDA fell by 92.5 percent to EUR 53 million (previously: EUR 708 million). This is mainly due to lower margins, since higher selling prices were able to offset the rise in raw material and energy prices only to a small extent. FOCF fell by 64.0 percent to EUR 93 million (previously: EUR 258 million), in particular due to the decline in EBITDA. 

Sales in the Solutions & Specialties segment in the third quarter of 2022 rose by 6.1 percent compared with the prior-year quarter to EUR 2.2 billion (previously: EUR 2.1 billion), mainly due to exchange rate movements and a higher selling price level. In contrast, the total volumes sold – due in particular to a downturn in demand – had a negative effect. The segment’s EBITDA rose to EUR 280 million, or by 26.7 percent compared to last year’s third quarter (previously: EUR 221 million). One of the reasons for this was lower provisions for short-term variable compensation. Margins remained stable at the last year’s level since higher selling prices were able to offset the rise in raw material and energy prices. FOCF increased by 25.0 percent to EUR 65 million (previously: EUR 52 million) due to the higher EBITDA. 

High price level in the first nine months of 2022 

Group sales in the first nine months of 2022 increased by 21.1 percent to EUR 14.0 billion (previously: EUR 11.6 billion). The main reasons for that were a high selling price level and exchange rate movements. The Group’s EBITDA in the first three quarters of 2022 fell by 31.7 percent to EUR 1.7 billion (previously: EUR 2.4 billion), mainly due to lower margins. This resulted from a considerable rise in raw material and energy prices, which could only be partly offset by a higher selling price level. Compared to the previous year, net income in the first nine months of 2022 fell by 52.3 percent to EUR 627 million (previously: EUR 1.3 billion). FOCF declined to EUR –412 million (previously: EUR 1.1 billion). This can be predominantly attributed to a lower EBITDA and an increase in funds tied up in working capital, especially given the payment of short-term variable compensation for the successful fiscal year 2021.

More information

• Please find a table showing key data for the third quarter 2022 in the sidecolumn.
   
• You can find the Quartely Statement Q3 2022 at
   
• The Annual Report 2021 is available at

With the transaction, ����AV further strengthens its position in the attractive field for fiber optical coatings. "The ����AV Coatings & Adhesives business already has an outstanding position in the field of fiber optical coatings. By fully purchasing JFC, we can now develop the business independently," explains Thorsten Dreier, Head of the business entity Coatings & Adhesives at ����AV. "The market segment has tremendous growth potential, especially due to the roll-out of future 5G technology."

JFC's UV-curable coatings for optical fiber materials are mainly used in the telecommunications industry. Today’s strong demand for connectivity is creating a surge in bandwith demand for fixed and mobile network opertations. High-performance fiber optical cables are needed here to enable the reliable transmission of high data rates. In addition, the increasing roll-out of 5G technology is driving demand. Cell towers are being connected to the network via fiber optic cables to fully exploit the capabilities of the new mobile communications standard.

"Japan plays an important role in the global fiberglass market. We appreciate JSR’s long-term support in establishing JFC’s presence. In combination with ����AV's global network, we are using this strong base for future growth potential," explains Kimiyasu Yonemaru, President of ����AV Japan. "This also underlines ����AV's clear commitment to the Japanese market."

In April 2021, ����AV had already taken over 70 percent of the shares in JFC as part of the acquisition of DSM's Resins & Functional Materials business. Overall the JV has already been prepared for operational independence for several years, as JSR had already shifted its focus on its other strategic business areas. At JFC’s business sites, both production in Tsukuba as well as research and development activities in Kanagawa will continue unchanged. In total, JFC employs around 65 people (calculated as full-time equivalents).

“The acquisition of RFM significantly contributes to the implementation of our new Group strategy. With this transaction, we are taking another important step towards sustainability, while at the same time generating sustainable growth,” said Dr. Markus Steilemann, CEO of ����AV. “We are looking forward to meeting our new colleagues and warmly welcoming them to ����AV.”

With the transaction, ����AV is expanding its business in several areas. The Group is already one of the leading global providers of water-based polyurethane dispersions. The acquisition of RFM adds a complete range of water-based polyacrylate resins, as well as strong brands in terms of sustainability such as Niaga®, solutions for additive manufacturing, and an advanced solar coatings business. In addition, ����AV is enhancing its technology portfolio to include water-based hybrid technologies, powder coating resins as well as radiation curing resins.

Sucheta Govil, Chief Commercial Officer at ����AV: “With this transaction, we are strengthening our extensive portfolio with further innovative products and technologies that will enable us to meet our customers’ needs in optimal fashion. Now our focus is on integrating the teams, leveraging talent and providing the best possible support for our new and existing customers.”

Following a comprehensive analysis, ����AV expects permanent (“run-rate”) synergy effects to build-up to about EUR 120 million per annum from full integration by 2025. These consist of approximately two-thirds of cost and one-third of revenue synergies.

DIC ����AV Polymer Ltd.
Head Office

KDX Hamamatsucho Place 7F,
1-7-6, Shibakoen, Minato-ku,
Tokyo 105-0011

Tel. 03-6403-9107
Fax. 03-3433-0533

Opening Date:

Monday, December 14, 2020
Note: Regular business operations will continue at the current 
premises until Friday, December 11, 2020

3 min. walk from Daimon Station (Exit A6) - Toei Subway Asakusa / Oedo line
4 min. walk from Onarimon Station (Exit A2) - Toei Subway Mita line
7 min. walk from Hamamatsucho Station (North exit) - JR Yamanote / Keihin Tohoku line
8 min. walk from Tokyo Monorail Hamamatsucho Station

Dr. Markus Steilemann, CEO of ����AV: “This acquisition is an important step for our corporate strategy. RFM enhances the growth trajectory of our business. By combining our strong innovation capabilities, sustainable product portfolios as well as complementary technologies and customer industries, we will unlock significant value. At the same time, it is also a key step to drive innovation for the transition towards a circular economy.“

Complementary technologies and customer industries

The integration of RFM will create a business of enhanced scale and technological capability, benefitting existing and future customers as well as its employees through a stronger growth platform. ����AV is already one of the leading providers of water-based polyurethane dispersions. With the acquisition of RFM, the company will add a complete range of water-based polyacrylate resins and will expand its technology portfolio to include water-based hybrid technologies, powder coating resins as well as radiation curing resins. RFM includes strong brands in terms of sustainability such as Niaga®, as well as additive manufacturing, and an advanced solar coatings business.

The acquisition diversifies ����AV’s industry exposure and also significantly strengthens the company’s positioning in attractive high-growth markets. Amongst others, ����AV will become one of the leading suppliers in the field of optical fiber coatings – a market segment with enormous future potential, including the future technology of 5G – and in the attractive high-growth segment of 3D-printing materials, showing an average growth rate of more than 20%. Furthermore, the optimal fit of the combined geographic footprint is strengthening ����AV’s proximity to customers in all key markets and is expanding its global production network by more than 20 sites.

Both businesses are committed to ambitious ESG (Environment, Social, Governance) goals and have an excellent and complementary research pipeline, especially in the area of sustainable high-performance raw materials for the coatings industry. Combining them will allow ����AV to be even more innovative in the field of coating resins and become an even more attractive R&D partner for its customers. Thereby, ����AV will be able to drive innovation and to advance sustainability across the integrated customer industries as well as to pursue the transition to a circular economy even faster.

Significant potential for value creation

Integrating RFM into the CAS segment of ����AV creates significant opportunities to unlock incremental value. The company expects permanent (“run-rate”) synergy effects to build-up to about EUR 120 million per annum from full integration by 2025. These consist of approximately two-thirds of cost and one-third of revenue synergies and are generated amongst others through the alignment of purchasing, sales and administrative structures in the integrated business as well as cross-selling and the joint development of new high-performance products.

Attractive valuation and financing structure

Considering cash equivalents at RFM, the total purchase price of EUR 1.61 billion corresponds to a net enterprise value of approximately EUR 1.55 billion, representing a valuation of RFM at about 5.7x EV/EBITDA 2021 including pro-forma run-rate synergies. Excluding run-rate synergies the EV/EBITDA multiple would be 10.3x. Financing is secured through a financing agreement which ����AV intends to refinance with a combination of equity, debt instruments and own cash generation, consistent with the company’s commitment to maintaining a solid investment grade rating. For this purpose, ����AV is planning to utilize its currently existing authorized share capital for an equity issuance in order to raise approximately EUR 450 million.

“The acquisition is strategically and financially a perfect opportunity for us to pursue our long-term growth strategy at highly attractive conditions and tangible synergies. With the chosen financing structure, we are striking the right balance between equity and debt,” says Dr. Thomas Toepfer, ����AV CFO and Labor Director. “We look forward to welcoming our new colleagues under the ����AV roof soon. Together, we will work towards bringing our joint potential to life.”

Closing of the transaction is expected for the first quarter of 2021 and is subject to regulatory approvals, including antitrust clearance.

“Given the many global challenges, plastics are vital to create a truly sustainable future and to make the circular economy the new guiding principle,” said Steilemann. “In this context, it is important to use end-of-life materials and waste as a resource for new products. Under no circumstances should they continue to enter the environment uncontrolled. In addition, plastics as particularly sustainable material must be used in as many areas as possible. This is how our industry can and will help Europe move towards sustainability.”

In addition to his new position at PlasticsEurope, Steilemann has also recently been elected as vice-president of the German Association of Chemical Industries (VCI). He is also a member of the board of the European Chemical Industry Council (Cefic) and Chairman of SusChem, the European Technology Platform for Sustainable Chemistry. PlasticsEurope, with centers in Brussels, Frankfurt, London, Madrid, Milan and Paris, represents around hundred companies that produce more than 90% of polymers in the 27 EU member states, as well as Norway, Switzerland, Turkey and UK.

Specifically, the company plans to convert its production facilities worldwide to alternative raw materials and renewable energy. In addition, over 20 projects are researching new ways for more and better recycling. In the end, ����AV could be not only a producer and solution provider, but also an innovative recycler. The products are to be increasingly tailored for later recycling and aligned even more closely with the UN sustainability goals. Furthermore, ����AV wants to cooperate with partners in all areas of the value creation cycle and also to take advantage of new business opportunities of mutual interest.

Circular economy as global guiding principle

“The circular economy will lead the world as a whole to a sustainable future. It must become the global guiding principle to achieve climate neutrality and protect the dwindling resources of our planet,” emphasized ����AV CEO Dr. Markus Steilemann on Tuesday in front of international media during a live broadcast on the Internet.

“Produce, consume, throw away – single use leads to a dead end, business and society urgently need to rethink”, added the CEO. ”Our industry and our company can and wants to support this transformation. Because plastics are used practically everywhere and are the key to solving many pressing challenges. Helping to master them is ����AV's main concern to make the world a brighter place.”

����AV launched a strategic program in 2019 to anchor circularity in all areas of the company in a holistic approach. It is now being successively implemented and backed up with concrete and measurable goals. The focus is on four topics:

• Alternative raw materials: biomass, CO₂ as well as end-of-life materials and waste replace fossil raw materials such as oil; carbon is circulated.
• Innovative recycling: energy-efficient new technologies ensure increased and effective recycling of end-of-life materials and waste.
• Common solutions: to advance the circular economy, ����AV pursues cross-sector cooperation.
• Renewable energies: the circular economy is only really sustainable if electricity from alternative sources is also used.

����AV has long been offering innovative products based on alternative raw materials. These include bio-based components for car and furniture paints as well as materials made with CO₂, which are used in mattresses, sports floors and textiles. The company sees great potential in research, particularly in chemical recycling, i.e. the reconversion of plastics into their molecules and their reuse.

Plastic waste as a sustainable resource

����AV is also active in numerous collaborations, for example to use blockchain technology to increase transparency in the supply chains in the sense of the circular economy. As part of the Alliance to End Plastic Waste, a globally active company network, ����AV is also working to ensure that used plastics will no longer be disposed of in an uncontrolled manner. "Plastic should no longer get into the environment," emphasized CEO Steilemann. "Plastics are far too valuable to be thrown away and must be understood and used as a sustainable resource."

In addition to alternative raw materials such as end-of-life materials, CO₂ and biomass, renewable energy is necessary to achieve a truly resource-efficient circular economy. ����AV will therefore gradually switch its production to this. In a first major step, the company will source a considerable part of its electricity for its plants in Germany from 2025 from a wind farm in the North Sea being built by Danish energy supplier Ørsted.