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Comparison of forecast and actual business

Fiscal 2012 was dominated by opposing developments in the mobility and agriculture megatrends. While mobility was affected by lower business volumes for the automotive industry and its suppliers, agriculture recorded dynamic growth due to the rising demand for agricultural products.

At the beginning of 2012, we had assumed that our key customer industries would continue to perform well, albeit with regional differences. In retrospect, our business with the automotive industry and its suppliers trended positively in North America, in particular, but negatively in Europe. Agrochemicals profited from stable demand in all regions. The construction sector performed satisfactorily in North America and parts of Eastern Europe, but was depressed especially in those countries severely affected by the European public debt crisis.

In our half-year financial report, we had confirmed the forecast quantified in our reporting for the first quarter of an increase in EBITDA pre exceptionals of 5% to 10% for 2012 compared with 2011. We had also assumed that EBITDA pre exceptionals in the second half of 2012 would match the level of the second half of 2011. A result of €1,225 million was posted in the year under review, which is about 7% higher than the prior year and within the guidance range.

Our segments posted a gratifying performance, which was driven largely by positive price, portfolio and currency effects and negative volume effects.

Based on the assumption that the trend toward higher procurement costs, especially for petrochemical raw materials, would also continue beyond 2012, we had forecast volatile raw material prices. While raw material prices initially rose in the first months of the year, this trend reversed toward the end of the second quarter, with the result that the weighted index of our raw material prices was just below the level seen at the end of December 2011. Declining prices for the raw material butadiene drove this development, while other raw materials were slightly more expensive. Developments thus far are therefore consistent with our initial assumptions as we still expect raw material prices to increase over the long term.

In connection with our focused research and development activities, which are designed to facilitate our own customer- and market-oriented innovations and process improvements, research and development spending increased by 33% during the year. This percentage growth is below what was expected for the full year, because the costs for some projects accrued at different points in time than originally planned. The focus was on the Performance Polymers segment, with a share of about 59%.

In fiscal 2012, the cash outflow for capital expenditures totaled €696 million, which was at the upper end of the range of €650 million to €700 million we had forecast in the 2012 half-year financial report. Due to the implementation of a number of strategic investment projects and the launch of promising new growth initiatives, cash outflow for capital expenditures was thus €96 million higher in the reporting year than the figure of €600 million projected in the Annual Report 2011.

Comparison of Forecast and Actual Business 2012
         
  Forecast for 2012 in Annual Report 2011/ Q1 Interim Report Forecast for 2012 in H1 Interim Report Forecast for 2012 in Q3 Interim Report Actual 2012
         
Business development: Group        
EBITDA pre exceptionals 5% to 10% increase 5% to 10% increase 5% to 10% increase €1,225 million ( = +7%)
Business development: segments        
Performance Polymers solid business performance solid business performance solid business performance Sales +2%
Advanced Intermediates solid business performance solid business performance solid business performance Sales +8%
Performance Chemicals solid business performance solid business performance solid business performance Sales +3%
Raw material prices volatile, long-term trend upward volatile, long-term trend upward volatile, long-term trend upward volatile, in some cases higher
Research and development        
Research and development expenses +40% +40% +40% +33%
Financial condition: Group        
Cash outflows for capital expenditures €600 million €650 – 700 million €650 – 700 million €696 million
 

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