Half-Year Financial Report 2023

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Report on Economic Position – Performance of the Segments

Solutions & Specialties

Solutions & Specialties key data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2nd quarter
2022

 

2nd quarter
2023

 

Change

 

1st half
2022

 

1st half
2023

 

Change

Sales (external)

 

€2,165 million

 

€1,872 million

 

–13.5%

 

€4,387 million

 

€3,755 million

 

–14.4%

Intersegment sales1

 

€8 million

 

€7 million

 

–12.5%

 

€17 million

 

€15 million

 

–11.8%

Sales (total)

 

€2,173 million

 

€1,879 million

 

–13.5%

 

€4,404 million

 

€3,770 million

 

–14.4%

Change in sales (external)

 

 

 

 

 

 

 

 

 

 

 

 

Volume

 

–7.3%

 

–4.7%

 

 

 

–4.4%

 

–10.1%

 

 

Price

 

11.8%

 

–6.6%

 

 

 

15.2%

 

–3.5%

 

 

Currency

 

6.5%

 

–2.2%

 

 

 

6.3%

 

–0.8%

 

 

Portfolio

 

0.0%

 

0.0%

 

 

 

9.0%

 

0.0%

 

 

Sales by region (external)

 

 

 

 

 

 

 

 

 

 

 

 

EMLA

 

€851 million

 

€736 million

 

–13.5%

 

€1,724 million

 

€1,491 million

 

–13.5%

NA

 

€563 million

 

€487 million

 

–13.5%

 

€1,064 million

 

€972 million

 

–8.6%

APAC

 

€751 million

 

€649 million

 

–13.6%

 

€1,599 million

 

€1,292 million

 

–19.2%

EBITDA2

 

€213 million

 

€221 million

 

3.8%

 

€437 million

 

€386 million

 

–11.7%

EBIT2

 

€139 million

 

€149 million

 

7.2%

 

€291 million

 

€212 million

 

–27.1%

Cash flows from operating activities3

 

(€83 million)

 

€205 million

 

.

 

(€184 million)

 

€200 million

 

.

Cash outflows for additions to property, plant, equipment and intangible assets

 

€56 million

 

€55 million

 

–1.8%

 

€101 million

 

€98 million

 

–3.0%

Free operating cash flow3

 

(€139 million)

 

€150 million

 

.

 

(€285 million)

 

€102 million

 

.

1

In accordance with internal reporting to the Board of Management since July 1, 2022, these figures also include sales recognized in the amount of cost of goods sold. To ensure comparability, the segment data is presented on a consistent basis.

2

EBITDA and EBIT include the effect on earnings of intersegment sales.

3

An imputed tax rate of 25% has been used since the Annual Report 2022 to calculate income taxes paid by the reportable segments; see the Notes to the Consolidated Financial Statements in the Annual Report 2022, note 4 “Segment and Regional Reporting.” The tax rate for the reference value has not changed.

Second Quarter of 2023

Sales in the Solutions & Specialties segment were down 13.5% to €1,872 million in the second quarter of 2023 (previous year: €2,165 million). A drop in the selling price level and a decline in volumes sold had a negative effect of 6.6% and 4.7% on sales respectively. This is attributable to the weak demand situation worldwide in the second quarter of 2023, as against the advantageous competitive situation in the prior-year quarter. At the same time, exchange rate movements had a negative effect on sales of 2.2%.

In the EMLA region, sales fell by 13.5% to €736 million (previous year: €851 million). In particular, a demand-induced decline in volumes sold had a significant negative effect on sales, while a drop in the selling price level had a slightly negative impact on sales. In contrast, exchange rate movements had no notable effect on sales. Sales in the NA region were also down by 13.5% to €487 million (previous year: €563 million). The main reason is a drop in volumes sold due to weak demand, which had a significant adverse impact on sales. Lower average selling prices had an additional, slightly negative effect on sales. The exchange rate trend had a neutral effect on sales overall. In the APAC region, sales decreased by 13.6% to €649 million (previous year: €751 million). This was predominantly due to a decline in the selling price level as well as exchange rate movements, both of which had a significant negative effect on sales. An increase in volumes sold, on the other hand, drove sales significantly upward, on the back of a recovery after the logistics bottlenecks in China in the prior-year quarter.

In the second quarter of 2023, the Solutions & Specialties segment’s EBITDA was up 3.8% on the prior-year quarter, rising to €221 million (previous year: €213 million). This was driven in particular by the beneficial effect of lower fixed costs. At the same time, the sale of the additive manufacturing business to Stratasys, a U.S.-Israeli manufacturer of 3D printers and 3D production systems, had a positive effect on earnings in an amount of €35 million. This was offset by a reduction in volumes sold and exchange rate movements, both of which had a reducing effect on earnings. Another negative factor was the decline in margins, although lower raw material and energy prices almost fully offset reduced selling prices.

EBIT was up 7.2% to €149 million (previous year: €139 million).

Free operating cash flow amounted to €150 million (previous year: €–139 million), largely driven by higher funds tied up in working capital in the prior-year quarter. This was set against cash freed up in the current quarter, which had a positive impact. The main reason was the payment of short-term variable compensation for fiscal 2021 in the prior-year quarter as well as changes in inventories. No short-term variable compensation was paid for fiscal 2022.

Solutions & Specialties
Quarterly Sales

€ million

Solutions & Specialties Quarterly Sales (bar chart)

Solutions & Specialties
Quarterly EBITDA

€ million

Solutions & Specialties Quarterly EBITDA (bar chart)

First Half of 2023

Sales in the Solutions & Specialties segment decreased by 14.4% to €3,755 million (previous year: €4,387 million) in the first half of 2023, which was weighed down overall by weak demand worldwide. A reduction in volumes sold and lower average selling prices both led sales lower, with a respective effect of 10.1% and 3.5%. In addition, exchange rate movements had a negative effect on sales of 0.8%.

EBITDA in the Solutions & Specialties segment was 11.7% lower than in the prior-year period, declining to €386 million in the first half of 2023 (previous year: €437 million), mainly due to a decrease in volumes sold. In contrast, the margins had a beneficial impact on EBITDA, since lower raw material and energy prices more than offset the decline in the selling price level. At the same time, lower fixed costs and the sale of the additive manufacturing business to Stratasys, a U.S.-Israeli manufacturer of 3D printers and 3D production systems, had a positive effect on earnings.

EBIT fell 27.1% to €212 million (previous year: €291 million).

Free operating cash flow stood at €102 million (previous year: €–285 million). The main contributors to this development were higher funds tied up in working capital, due especially to the payment of short-term variable compensation for fiscal 2021 in the second quarter of 2022, as well as changes in inventories. The decline in EBITDA had an offsetting effect.

APAC
Comprises all countries in the Asia and Pacific region.
EBIT / Earnings Before Interest and Taxes
Income after income taxes plus financial result and income tax expense.
EBITDA / Earnings Before Interest, Taxes, Depreciation, and Amortization
EBIT plus depreciation and amortization of property, plant, equipment, and intangible assets.
EMLA
Comprises all countries in Europe, the Middle East, Latin America (excluding Mexico), and Africa.
FOCF / Free Operating Cash Flow
Operating cash flows (pursuant to IAS 7) less cash outflows for additions to property, plant, equipment and intangible assets.
NA / North America
Region comprising Canada, Mexico, and the United States.