Management Report
9.3 MaterialScience
Research and Development
MaterialScience spent €176 million on research and development (not including joint development activities with customers) in the first nine months of 2011, including €55 million in the third quarter. This investment went mainly to explore new areas of application and improve process technologies and products.
Capital expenditures, acquisitions and cooperations
MaterialScience continuously invests in new production capacities to safeguard its competitive position.
For example, MaterialScience plans to greatly expand the production of isocyanates – raw materials for foams and coatings – in Europe and Asia. At the site in Brunsbüttel, Germany, it intends to enlarge a facility for diphenylmethane diisocyanate (MDI), a key precursor for rigid polyurethane foam. At a cost of some €100 million, the annual capacity is to be more than doubled to 420,000 tons. Start-up is planned for 2015/2016.
The manufacture of toluene diisocyanate (TDI) – one of the main raw materials for flexible polyurethane foam – is to be discontinued in Brunsbüttel and the entire European production consolidated at the site in Dormagen, Germany. MaterialScience plans to construct a new large-scale TDI facility in Dormagen with a capacity of 300,000 tons per year at a cost of about €150 million. It is planned to bring this facility on stream in 2014. Applications for the necessary permits have already been submitted to the authorities.
At the site in Caojing near Shanghai, China, MaterialScience plans to invest €65 million in the construction of a new production facility for the coating raw material isophorone diisocyanate (IPDI). Production is due to start in 2015. The project is part of an extensive program of further expansion planned in China in which roughly €1 billion will be invested.
At the U.S. site in Baytown, Texas, MaterialScience plans to invest some US$120 million in the coming years, mainly to improve process technologies and energy efficiencies at the facilities for MDI, TDI and the high-tech plastic polycarbonate (PC) and increase the capacity of the MDI facility.
At the site in Krefeld, Germany, MaterialScience plans to increase polycarbonate production capacity in stages by a total of 70,000 tons over the next four years, bringing it to 400,000 tons. This project has a volume of about €90 million.
Emerging markets
In the emerging markets, MaterialScience improved sales by 9.8% (Fx adj.) in the first nine months of 2011 to €3,450 million, including €1,173 million (Fx adj. +8.4%) in the third quarter. The strongest growth in the third quarter was registered in the Latin America/Africa/Middle East region, particularly in Brazil, Mexico and Turkey. Business also developed well in Eastern Europe, with significant sales gains in Poland, the Czech Republic and Russia. Growth rates in the Asia/Pacific region varied, however. In Thailand sales fell compared to the strong prior-year period, while business in the other Asian countries continued to develop positively, with the highest growth rates in Taiwan and Singapore. The emerging markets’ share of MaterialScience sales in the first nine months and the third quarter of 2011 was 41.9% and 42.4%, respectively.
MaterialScience has participated in Asia/Pacific’s dynamic growth for many years, investing billions of euros in the region.