• Performance Rubber: Strong market position underscored
• Engineering Plastics: Broad-based improvements
• Chemical Intermediates: Earnings stable at a high level
• Performance Chemicals: Portfolio effects take hold

In 2006, the Performance Rubber segment increased sales again over the previous year’s high level by 5.8% to €1,776 million. Substantial price increases of 10.2% more than offset the 3.8% decline in volumes and the marginal negative currency effect of 0.6%. Price increases in all of the segment’s business units served to pass on the in part considerably higher costs of raw materials to the market. In the Butyl Rubber business unit, the large inventories held by our customers and a strike at a major customer prevented further volume growth. However, the business unit maintained its market position. As expected, the Polybutadiene Rubber business unit reported a decline in volumes in the Americas region. With the start of a market consolidation process, we adjusted production capacities at the U.S. site in Orange, Texas, in early 2006. However, the business unit was unable to match the sales of the previous year due to the difficult market environment in the United States. Volumes in the Technical Rubber Products business unit remained at the previous year’s level.

The segment’s EBITDA pre exceptionals jumped by 15.9%, to €248 million, with cost containment and efficiency enhancements also helping to improve earnings throughout the segment. In the Butyl Rubber business unit, plant consolidation and process optimization measures were initiated at the site in Zwijndrecht, Belgium, while at the facility in Sarnia, Ontario, Canada, we completed certain capacity expansion activities. In addition to the above-mentioned capacity adjustments in the United States, the Polybutadiene Rubber business unit also modified the production units at Port Jérôme, France, to manufacture the product grades required by the market. Nonetheless, this business unit’s earnings remained below the prior-year level due to the adverse demand situation. The restructuring and cost-cutting measures that were initiated in the Technical Rubber Products business unit during 2005 became fully effective in 2006, helping to compensate for the rise in energy prices and contributing to a significant improvement in earnings. The EBITDA margin pre exceptionals for the segment as a whole improved 1.2 percentage points, to a pleasing 14.0%.

Exceptionals in this segment, at €2 million, related to expenditures for the aforementioned settlements in the context of antitrust investigations involving the Technical Rubber Products business unit. Provisions for such settlements gave rise to exceptional charges of €43 million in the previous year.