EFTA00598642.pdf

ANNUAL REPORT 2015 INDUSTRIES EFTA00598642 Key figures for the Evonik Group Key figures in million 2011 2012 2013 2014 2015 Nutrition & Care Sates 14,540 13,365 12,708 12,917 13,507 Adjusted EBITDA' 2,768 2,467 1,995 1,882 2,465 Key figures Adjusted EBITDA margin 19.0 18.5 15.7 14.6 18.2 in million 2015 2014 Adjusted EBIT° 2,099 1,887 1,404 1,256 1,752 ROCE` in % 18.7 20.4 15.1 12.5 16.6 External sales 4,924 4,075 Net Income 1,011 1,165 2,054 568 991 Adjusted EBITDA 1,435 847 Adjusted net Income 1,256 1,076 806 782 1,128 Adjusted EBITDA margin In % 29.1 20.8 Earnings per share in 2.17 2.50 4.41 1.22 2.13 Adjusted EBIT 1,214 685 Adjusted earnings per share in 2.70 2.31 1.73 1.68 2.42 ROCE In % 41.5 27.1 Total assets as of December 31 16,944 17,166 15,883 15,685 17,005 No. of employees 7,165 6,943 Equity ratio as of December 31 in% 35.8 31.9 43.0 41.6 44.6 Prior-year figures restated. Cash ow from operating activities 1,309 1,420 1,055 1,066 1,971 Capital expenditures° 830 960 1,140 1,123 877 Depreciation and amortization d 647 580 585 606 700 Resource Efficiency Net nand& debt/assets as of December 31 843 1,163 571 400 1,098 No. of employees as of December 31 33,556 33,298 33,650 33,412 33,576 Key figures Figures for 2012 and 2013 contain the former Real Estate segment as a diso:ntinued operation. 2014 figures restated. in million 2015 2014 Earnings before financial result, taxes, depreciation and amortization, after adrustments. b Earnings before financial result and taxes, after arnustrnents. External sales 4,279 4,040 < Return on capital employed. Adjusted EBITDA 896 836 4 Intangible assets. property, plant, equipment and investment property. Due to rounding, sane figures in this report may not add up exactly to the totals stated. Adjusted EBITDA margin in % 20.9 20.7 Adjusted EBIT 675 642 ROCE In % 24.8 25.9 No. of employees 8,662 7,835 prior-year figures restated. Sales by region' Performance Materials Other 3% Germany 10% Key figures in million 2015 2014 Central and External sales 3,435 3,827 South America 7% Adjusted EBITDA 309 325 Other European Countries 31% Adjusted EBITDA margin in % 9.0 8.5 North America 20% Adjusted EBIT 174 204 ROCE In % 11.9 14.6 No. of employees 4,380 4,353 • Elylocation of customer. prior-year figures restated. EFTA00598643 EFTA00598644 6 HER MOM'S THINKING: Doesn't she look sweet? When she grows up, HER BROTHER'S THINKING: she'll be a movie star! Hey, that's my shovel! EFTA00598645  7 bse Kieflerte "1 tur 'ma. A ' I ta cp. • • • ft r$ • t 01 OIS t AT • • SeEittorig ts" • . t& .H. "- bil.. „tr , a .5 4,...400~0010.01SOM Mr. • OUR CUSTOMER'S THINKING: That's really impressive! Even though that diaper is so thin, it can absorb and contain liquid that's many times its own weight. I bet it could absorb all the Water in the wading pool! EFTA00598646 8 NUTRITION& CARE THE INNOVATIVE CORE Today baby diapers are a high-tech product that's From Shanghai to Sao Paulo, a growing middle class attracting new customer groups all he world. with increasing disposable income is buying more and Companies are therefore competing more fiercely to more modern diapers that promise dry baby bottoms, make the best diapers. Evonik supplies the key ingre- quieter nights and happier children. As a result, diaper dient and special know-how to stay in the running. manufacturers in new markets are competing to win over a growing number of customers. Increasing prosperity and rising local birthrates are driving this business. Away from cotton and cellulose, toward superabsorbing Whereas the diaper market in Western Europe and North polymers: That would be a good way to describe the America is growing by less than two percent, and in Japan development of modern diapers—but it wouldn't even be incontinence products and baby diapers are being sold in close to the whole story. Since the 1980s, when diaper equal numbers, the rest of the Asian market is growing by manufacturers started using superabsorbers, there have about eight percent annually—and the Chinese market is been transformations on babies' changing tables and in increasing by an impressive ten percent a year. this fiercely competitive market. Today superabsorbers of the latest generation can absorb 500 times their own In these growth markets the manufacturers are trying to weight in liquid. Almost every diaper manufactured today beat the competition by means of clever marketing and contains a few grams of these granulates. And the granu- especially high-quality diapers. In many cases, the keys to late in every fifth diaper comes from Evonik Industries. success are materials that are very similar to textiles and powerful superabsorbers that make diapers even thinner A great deal of know-how has led to modern diapers and more absorbent. Children enjoy the wearing comfort, and their superabsorbers. Back in the early 1980s, the and parents enjoy having to change diapers less often. first-generation superabsorbers merely absorbed liquid Manufacturers and dealers benefit too, because thinner especially well and then retained it under pressure. diapers take up less of the fiercely contested space on Second-generation superabsorbers could expand against supermarket shelves. And the environment also benefits, pressure—that is, even when the baby was sitting on the because more diapers fit into each delivery truck. diaper. In the third generation the transport of liquid was optimized, so that the entire diaper could be used even if In general, the environmental balance sheet is playing it didn't contain much cellulose. Today the primary goal is an increasingly important role for the customers and to make diapers that absorb liquid even faster and require manufacturers of consumer goods. Evonik is therefore even less material to guarantee long-lasting dryness. continuing to work on environmental issues and giving its customers extensive information about its products' CO2 That's why Evonik is continuing to do research aimed at footprint, which has shrunk by 15 percent in the past four finding new and improved superabsorbers, and why it's years. Thanks in part to yet another hidden piece of high analyzing diaper designs from all over the world in its tech in every fifth diaper that is sold. application laboratories. Why is it expending so much effort? Because of a demanding and steadily growing group of customers—not the children themselves, but their parents. Baby diapers are the biggest market for superabsorbers, followed by incontinence and hygiene products. But superab- sorbers can do much more: They protect undersea cables from invasive seawater. And they absorb and bind the moisture that forms inside the packaging of poultry, meat, fish, fruit and vegetables. These foods stay fresh longer. As water storage media in the soil, superabsorbers also make reliable harvests possible even in regions with a dry climate. EFTA00598647  9 IP Even though it's not always obvious, diapers are a high-tech product. We provide the core ingredient and the key know-how. STEFAN NOWICKI PP Strategic Marketing Director Bay Cate Burinen Line EFTA00598648 10 THE POLICEMAN'S THINKING: That's a novel way to slow THE SHEEPDOG'S THINKING: down traffic. Woof, woo/7 EFTA00598649  11 OUR CUSTOMER'S THINKING: all It shows that there are situations where even the most modern, fuel- efficient, and environmentally friendly lightweight engineering is useless. SI EFTA00598650 12 RESOURCE EFFICIENCY FAR-REACHING CHANGES New materials and manufacturing methods are formance materials, Evonik offers solutions in just about making vehicles not only lighter but also better. every area here. For example, the company has devel- Solutions from Evonik will make just about every oped joining technology systems that use very powerful car more efficient in the future. adhesives instead of weld seams, bolts, and rivets. This not only improves bonds between various materials such as metals and plastics; it also makes possible completely The automotive industry currently faces major challeng- new component concepts and enables thinner materials es, as legislators and associations around the world are to be used to achieve the same degree of component mandating that vehicles should be made more efficient strength, which also reduces weight. Evonik supplies as part of the effort to combat climate change. In other additives for the special adhesives needed here and words, mobility must become cleaner and more econom- also offers a hot melt adhesive system that withstands ical. At the same time, drivers continue to demand a level high stress loads and can thus meet the strictest safety of comfort and safety that requires the inclusion of more requirements in crash tests. and more equipment and systems. For decades, this led to an increase in vehicle weight with every new model Plastics are playing an increasingly important role in generation, and this development basically negated the efforts to make mobility more efficient. They can be numerous advances that had been made with efficient used in place of heavier metal parts and also enable the drive systems, improved aerodynamics, and cleaner fuels. creation of new functions. Even components such as A broad range of innovations is needed to ensure that air intake pipes, which are mounted close to the engine ever more sophisticated equipment can be efficiently and exposed to high levels of stress, can now be manu- put on the road. Such innovations involve everything factured using temperature-resistant high-performance from lightweight designs and materials to more efficient plastics from Evonik. In this case, the weight benefit is powertrains. As a specialist for exceptionally high-per- accompanied by an optimized air flow. EFTA00598651  13 Modern low rolling-resistance tires offer an important efficiency benefit today. These tires contain the silica-silane system from Evonik, which reduces rolling resistance even as it ensures optimal traction on wet roads. The result: longer range and lower fuel consumption and emissions. Evonik is also conducting practical tests with many other powertrain—where up to 20 percent of a vehicle's ener- solutions—for example, in an ultra-lightweight sports car gy is lost—needs to be optimized. Evonik is currently Evonik designed with Roding Automobile, a small-batch establishing a center of competence for such optimization. manufacturer from Bavaria. The vehicle is being used The facility will channel key areas of expertise at to test materials for composites, structural foams, plastic the Group to develop new powertrain technologies. glazing, and oil additives under tough racing conditions. For example, plastics and new coatings in transmissions, combined with specially optimized lubricant additives, At the same time, new series production processes are could help reduce the loss of engine performance during needed if racing innovations are to be transferred to vehide operation. the mass market. Evonik has already accomplished a great deal in this regard with composites. For example, re- Even with 130 years of development experience, there's searchers in Evonik's Composites Project House have still plenty of potential for improving automobiles. The developed systems and processes that enable composites road to climate-friendly mobility will be marked not so to be manufactured more quickly and simply, and less much by leaps in technology as by the combination of a expensively. In the course of their work, they also com- large number of individual improvements. Evonik, with bined properties that were long considered impossible its innovations for everything from vehicle roofs to tires, for plastic materials. This feat was achieved with new fuels, lubricants, and paints, is present just about every- combinations of polymers, crosslinkers, and catalysts, for where in automobiles, which means the company is well example, and it ensures that the potential of composites equipped to participate in every step of the problem's can be exploited more effectively. solution. However, lightweight design alone is not enough to make cars significantly more climate-friendly. In particular, the ii More varied materials are being used in cars —and not just because of lightweight design. We offer solutions that enhance efficiency in numerous ways. ECKART MAN IP Ilead or the Automotive IndustriesTeam (AIT) at Evonik Industries EFTA00598652 14 THE ART LOVER'S THINKING. THE SCHOOLGIRL'S THINKING, Fantastic! Why can't Incredible! That painting is __... I paint like that? older than my parents! EFTA00598653  17 Hair care is a business that also involves emotions. We enable our customers to fulfill very individual needs in terms of hair care and beauty. DR. WOLFGANG GOMM Global Business Director Specialties & Business Director BMA Personal Care Business Line Brazil, Singapore, and China in order to develop new and more precise solutions, such as special formulations, that meet local customers specific needs. In addition to the familiar hair needs, new consumer de- mands must also be taken into account. For example, the latest products also protect the hair from ultraviolet ra- diation and other external influences, thanks to additives from Evonik. This feature is increasingly demanded by customers in China's megacities and elsewhere. There's also a global trend toward natural raw materials, as well as concerns about specific ingredients that are under Natural raw materials in hair and scrutiny even if the reasons are not always scientifically body care products are very popular. justified. Brazilian people love natural extracts, while Consumers are increasingly making many people of the Asian population are buying more sure the products they buy are sustain- and more silicone-free products and people from France ably produced. Accordingly, Evonik tend to choose products without parabens. Evonik has some of the production plants for follows a clear strategy in achieving sustainable targets cosmetics ingredients certified— and creating solutions for our customers. for example, according to the standard of the Roundtable on Sustainable Palm Oil (RSPO). EFTA00598654 16 THE GIRLFRIEND'S THINKING: Always eating fries and still THE CAR LOVER'S THINKING: so slim—how does she do it?! No eating in my car! EFTA00598655  19 OUR CUSTOMER'S THINKING: ...we'll take the usedgrease for the French fries to make biodiesel— !1 that's goodfor the environment and there's no need to grow extra canola. EFTA00598656 20 PERFORMANCE MATERIALS As a world market leader, we contribute to the conservation of resources with our alkoxides. HENRIK HELLMANNS 9! I lead of the Alkox Ides Product line FROM DEEP-FRYING FAT TO BIODIESEL Alkoxides act as catalysts that help to convert natural few years. For example, the share of biodiesel raw mate- oils and fats into biodiesel. Evonik's specialty products rials accounted for by used cooking oils and other waste make it possible to use highly sustainable raw materi- has nearly doubled since 2011. als more extensively. The European Union is also supporting the use of biofuels made from waste products because, unlike raw materials They're greasy and not very healthy, really—but hardly that are especially cultivated for fuel applications, such anyone can resist a portion of crispy French fries. What products do not take up fields that could otherwise be many people don't know is that the deep-frying fat used to grow food crops. Moreover, the recyclability they're made in can be reused in a productive way. How- of such waste products means their use can significantly ever, this fact might soon become common knowledge, reduce greenhouse gas emissions. The importance of because such grease is a perfect raw material for the waste•based biofuels continues to grow even in Brazil large•scale production of environmentally and dimate- and the USA, both of which produce large amounts friendly biofuels for automobiles. biodiesel made from of soybean. old cooking oils and other waste products produces 80 percent lower emissions of the greenhouse gas carbon Companies around the world that produce biodiesel dioxide than does diesel from fossil sources. Moreover, use alkoxides from Evonik Industries. Here, sodium the supply of old cooking oils seems virtually inexhaust- methylate and potassium methylate serve as catalysts ible. For example, Germany's restaurants alone produce for the transesterification of vegetable oils and animal around 200,000 tons of used grease per year and private fats that is needed to produce biodiesel. households offer similar potential. Sodium methylate is the most extensively used catalyst Although most biofuels today are based on renewable worldwide and has been successfully supporting the raw materials such as rapeseed or soybean, the use of production of biodiesel from renewable raw materials for waste•based biodiesel has expanded rapidly over the last many years now. Potassium methylate is the catalyst of EFTA00598657  21 I Evonik supplies its high-perfor- mance alkoxides to numerous growth markets. The products are utilized in the pharma- ceutical industry, for example, in order to synthesize active ingredients. They can also be found in health care products such as Omega-3 and Omega-6 fish oil capsules. choice for the production of biodiesel from used cooking Potassium methylate might actually be on the verge of oils. That's because such oils contain a high share of a spectacular career, as a study has shown that many free fatty acids that form a soap residue, which makes the other types of waste materials could be used to produce manufacturing process more difficult. However, the use of biofuels. If all such waste in the European Union were to potassium methylate leads to the formation of potassium be converted into biofuels, the resulting volume would soaps, which are easier to manage. The production pro- cover around 16 percent of the entire fuel requirement in cess with potassium methylate is therefore more robust, the EU by 2030. This would also make it possible to lower yields are higher, and the quality of the resulting fossil fuel consumption by up to 37 million tons per year— biodiesel is better. which would be a real treat for the environment as well. EFTA00598658 THE MANAGER'S THINKING: THE STUDENT'S THINKING: When I was a little That's weird. Why is boy, I dreamed ofbeing this making me think of a cowboy too. a cigarette ad? EFTA00598659 OUR CUSTOMER'S THINKING: Worldwide meat consumption is stillincreasing. We urgently need to do something to make meat production more friendly to climate and the environment. EFTA00598660 24 NUTRITION& CARE IT'S ALL IN THE MIX Adding correctly dosed amino acids from Evonik to amino acids are optimally metabolized only if they are animal feed makes meat production more efficient consumed in the right mixing ratio. In order to constantly and more environmentally friendly. But the Group's guarantee the correct mixing ratio for every animal spe- animal feed experts are delivering far more than cies and every fodder plant in spite of natural fluctuations, these valuable nutrients in themselves. expert knowledge is required. Evonik Industries therefore supplies not only the four In agricultural meat production, everything revolves most important amino acids for animal feed but also com- around livestock and animal feed. Animal feed accounts plete systems for their targeted dosing. To accomplish for between 60 and 70 percent of the total cost of meat this, the Group also employs its own animal feed spe- production, and it also accounts for most of its environ- cialists and carries out cooperative research with around mental footprint. For example, the cultivation of pro- three dozen universities and research institutes all over tein-rich fodder plants such as soybeans requires vast the world. The objective of this research is to find out amounts of arable land, while other protein sources such what pigs, chickens, dairy cows, fish, and shrimps each as fish meal are accelerating overfishing in the oceans. require in order to thrive. After all, every animal species, every farming method, and every new breed has If animals are not optimally metabolizing their feed, much different requirements. of it is excreted without being used. The additional animal waste pollutes water sources, among other things, and it In order to apply this knowledge in practice, Evonik also wastes environmental as well as economic resources. supports all wholesale producers of mixed animal feed, Today farmers and feed producers are responding to this for example through special analyses, consultation, and challenge by adjusting the nutrients in their animal feed to dosing systems. For example, on behalf of its customers precisely meet the needs of particular animal species. Evonik is using near-infrared spectroscopy (NIR) to regularly check the actual nutrient content of well over Essential amino acids are an important aspect of this 100 different raw materials for animal feed that are sold effort. Amino acids are among the basic building blocks of all over the world. Hundreds of thousands of such all living things. Human beings and animals need to take analyses are integrated into Evonik's advisory service. in amino acids through the food they consume. However, Whether it's Pekin ducks, brood carp or shrimps, Evonik knows the optimal amino acid profile for almost every animal species and has a number of specialized products in its port- folio. Dairy cows, for example benefit from Nlepron2, a methi- onine product that was developed especially for the digestive tract of these ruminants. It moves through the cow's rumen without decomposing and thus can be utilized especially well. EFTA00598661  25 66 We supply a package solution consisting of product and service. That's the only way our customers, and ultimately their animals, can optimally utilize the feed. PP STEFAN MACK Head of the nlethionine &Derivatives Product Line - Evonik employees provide on-site consultation in The addition of between a few hundred grams and a few 120 countries—wherever raw materials for animal feed kilograms of methionine, lysine, threonine or tryptophan grow and meat is produced. Together with their custom- per ton of feed makes a crucial difference. That's why ers, they look at the actual nutrient content of animal the dosage should be extremely precise so that valuable feed, the animals' requirements, current feed prices on nutrients are not wasted once again. Here too, Evonik is the world market, and recently also the environmental a leader when it comes to customer service. For example, footprint, in order to determine how to mix the optimal it provides dosing systems for its customers mixing animal feed in terms of nutritional biology, cost-effective- operations to make sure the feed always contains exactly ness, and environmental friendliness. the nutrients the animals need. EFTA00598662 26 S THESTUDENT'S THINKING: THE GRANDMOTHER'S THINKING: How can a person be so Now you can see what I used awake at 7:30 .?! to go through! EFTA00598663 OUR CUSTOMER'S THINKING: Someone's had a good night's sleep! Latex mattresses are not only robust but also ideally suitedfor many different kinds of sleepers—even people with allergies. EFTA00598664 28 PERFORMANCE MATERIALS BETTER BEDDING More affordable, more ergonomic, and even more suffer from irritation of the eyes and the respiratory tract; sustainable—latex mattresses based on Evonik if you're sensitive to cold, you'll shiver throughout the products promise more comfortable sleep even for winter; and if you have back problems, you'll be kept demanding sleepers. They also apply a chemical by- awake by pain or wake up with stiff muscles. And if you're product useful and efficiently. overweight, you'll tend to sink into your mattress instead of relaxing on top of it. A latex mattress can help you avoid all of these problems. We spend about a third of our lives in bed. That's already reason enough to select materials carefully when you're However, natural latex is expensive, and some of the buying a mattress. After all, the wrong choice can cause regions where latex-producing rubber trees are grown countless problems. If you're allergic to house dust, you'll are under criticism because rain forests are being logged EFTA00598665  29 Evonik products can be found not only in mattresses but also in upholstery cushions and insulation foams. A variety of foams for industry are made especially robust, fine- pored, and evenly textured through the use of additives from Evonik. to make room for rubber tree plantations. Evonik offers a more economical raw material for latex production: butadiene. This chemical is used to produce synthetic latex, which is cheaper and, by contrast to natural latex, does not become brittle when it is exposed to ultraviolet radiation. And because butadiene is a byproduct of the processing of crude oil, its use is practical and sustainable. Most mattress producers use a combination of natural and synthetic latex, in a ratio of up to 40 percent natural with the remainder synthetic latex. Butadiene makes about 40 percent of synthetic latex, but there are also production processes that use an even higher proportion of butadiene. For many people, latex mattresses are a good choice. They are especially appreciated by people who are aller- gic to house dust mites. Latex mattresses have an antibac- terial coating and are therefore more hygienic and easier to keep clean. There's practically no opportunity for dust mites to settle in. When it comes to comfortable sleep, latex mattresses generally also get excellent marks. They For decades, butadiene has been feel pleasantly warm and efficiently filter off moisture. People who are tall and heavy or suffer from backaches an important raw material in the appreciate the high degree of point elasticity, which tire, paper, and plastic industries. results in greater comfort. Who wouldn't be tempted to stay in bed just a little longer? The demand for synthetic rubber will boost growth. DR. GERHARD HIMMEL Vire President Marketing & Sales, Rubber & Plasiles Marketing Area, Performance Intermediates Business Line EFTA00598666 so S THE YOUNG MAN'S THINKING: THE MARRIED COUPLE'S THINKING: A cool party—I wish I could Remember when we were be there right now. young? Those were the days... EFTA00598667  31 OUR CUSTOMER'S THINKING: Beer will also stay fresh longer once those new oxygen-absorbing bottle caps make it to the market. EFTA00598668 fa RESOURCE EFFICIENCY APPETITE FOR MORE Foods and beverages stay fresh with the help of Food products such as meats, sausages, milk and dairy protective "active packaging" on the inside of the products, and beverages react very sensitively to oxygen, normal packages. This helps reduce the amount of traces of which remain even in shrink-wrapped packages. food that's thrown away. Scientists at Evonik develop This oxygen triggers an oxidation process that accelerates the key raw materials for this "active packaging: the growth of microorganisms that cause fresh foods to start tasting and smelling bad—and also lose their vitamin content. In other words, the food spoils. Foods that look tasty and fresh and are attractively pack- aged as well—modern supermarkets have a huge amount A new trend has therefore developed that involves the of products on offer, and this sometimes causes shoppers use of 'active packaging° in which a chemical absorber to buy more than they can consume over a given period. is integrated into the packaging material, where it bonds The problem here is that the food products don't last with the remaining oxygen. Scientists from Evonik de- forever: At some point, sausages will go bad even in the velop such additive•based concentrates, which not only refrigerator, where yoghurt can also turn sour and cheese absorb oxygen but also ensure that transparent packaging moldy. A lot of food therefore ends up in the garbage. foils remain transparent. This is important, because most Germany's Ministry of Food and Agriculture reports that oxygen absorbers on the market change their color to an every German throws away around 82 kilograms of unpleasant-looking yellow as they protect food products. food each year on average, although 64 percent of this amount really doesn't have to go to waste. One third of all the food produced is thrown away, according to the United Nations. Our innovative solutions for the food industry can help ensure that resources are used more efficiently. DR. STEFAN NOROHOFF IP Vice President Active Packaging, Strategy Er NeveGrowth Business, Resource Efficiency Segment EFTA00598669  33 Many companies in the food and packaging industries have already expressed interest in the newly developed VISPARENT° product, despite the fact that it's still being examined by the authorities for approval. The market here harbors great potential—for example, demand for such packaging is very high in Europe, the USA, and Japan. Evonik is already working with leading manufac- turers on the development of formulations that can offer the right solution for each type of packaging. That's be- cause regardless of whether it's transparent foils, plastic containers, or bottle caps—the new oxygen absorber Additive concentrates from Evonik keep cheese, can basically be used with all types of packaging. This will meat, and other foods fresh for a longer period give it a unique standing on the market and very likely of time. Drinks in PET bottles and milk also last ensure that it will make its way into a large number of longer —and bottle caps with oxygen absorbers supermarkets. on the inside extend the shelf life of beer and other beverages as well. EFTA00598670 34 MOTHER'S THINKING. FATHER'S THINKING. Don't hurt yourself, my boy! Put it in the net, son! EFTA00598671 OUR CUSTOMER'S THINKINGI ...as ever, nobody notices the self-adhesive strip on the hockey stick, which defies the icy cold without losing its adhesive properties.