WACKER POLYMERS

Strategy

Keeping firmly on its strategic course, WACKER POLYMERS continues to grow its dispersions and dispersible polymer powders business profitably. The key is to develop regional production capacity for dispersions and polymer powders so that local and regional demand can be met both promptly and cost-effectively. We provide customers with intensive local support through our technical competence centers, where we develop tailor-made product solutions hand in hand with our customers. This enables us to apply our decades of expertise to satisfying the specific local needs of customers around the globe. In particular, WACKER POLYMERS aims to promote the substitution of styrene butadiene and styrene acrylate with VAE dispersions.

Double-Digit Sales Growth

The division posted substantial year-on-year sales growth, thanks mainly to the construction industry’s recovery and the substitution of other technologies with VAE dispersions in the carpet and packaging sectors. Sales rose 14.6 percent to €928.1 million (2010: €810.0 million). WACKER POLYMERS’ business was lifted by a strong increase in sales volumes for dispersions and dispersible polymer powders, and also by higher product prices. Exchange-rate effects had a minor negative impact on business. Sales volumes for almost all product groups were 12 percent up on the previous year. All regions saw a healthy rise in sales revenues. On the dispersions front, WACKER POLYMERS generated its highest sales growth in North America and China. As for dispersible polymer powders, growth rates were strongest in Europe and South America.

WACKER POLYMERS’ performance was particularly robust in the carpet and packaging markets, where customers are increasingly choosing WACKER VAE dispersions over styrene butadiene.

Higher prices for ethylene and vinyl acetate monomer (VAM) held back the division’s profitability in 2011. Compared to the previous year, the cost of ethylene rose by almost 20 percent and VAM by more than 30 percent. The division was unable to compensate for the increased cost burden by raising the prices of its own products. Despite the healthy increase in sales, EBITDA of €111.8 fell 8.8 percent short of the 2010 figure (€122.6 million). The EBITDA margin reached 12.0 percent and was down on the prior-year figure (2010: 15.1 percent).

Rise in Investments

Investments rose by €17.3 million to €30.4 million (2010: €13.1 million). Capital spending focused on expanding capacity at existing facilities and on enhancing the productivity of production operations.

WACKER POLYMERS will continue expanding the Nanjing production site until 2013. A new reactor with an annual capacity of 60,000 metric tons will be added to the existing VAE dispersion facilities. It will double capacity for VAE dispersions at Nanjing to 120,000 metric tons per year. The plant complex will then be one of the biggest of its kind in China.

The number of employees at the division rose slightly to 1,412 as of December 31, 2011 (December 31, 2010: 1,377).