Key figures |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|
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Change |
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€ million |
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2020 |
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2019 |
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€ million |
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% |
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Net sales |
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3,380 |
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2,574 |
|
807 |
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31.3% |
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Operating result (EBIT)1 |
|
240 |
|
307 |
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-67 |
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-21.7% |
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Margin (% of net sales)1 |
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7.1% |
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11.9% |
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EBITDA1 |
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925 |
|
637 |
|
288 |
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45.2% |
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Margin (% of net sales)1 |
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27.4% |
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24.8% |
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EBITDA pre1 |
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1,024 |
|
803 |
|
221 |
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27.5% |
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Margin (% of net sales)1 |
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30.3% |
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31.2% |
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Business free cash flow1 |
|
847 |
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641 |
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206 |
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32.1% |
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Development of net sales and results of operations
In 2020, net sales of the Performance Materials business sector increased 31.3% to € 3,380 million (2019: € 2,574 million). The acquisitions of Versum Materials and Intermolecular contributed 35.4% to the growth of Performance Materials, but an organic decline of -3.2% and a negative exchange rate impact of -0.9% partially offset the acquisition effects.
The net sales in the individual quarters as well as the respective organic growth rates in 2020 are presented in the following graph:
Performance Materials
Net sales and organic growth1 by quarter2
€ million/organic growth in %
1 Not defined by International Financial Reporting Standards (IFRS).
2 Quarterly breakdown unaudited.
The Covid-19 pandemic caused a significant demand decrease in both Surface Solutions and Display Solutions in the second quarter of fiscal year 2020 and was a major factor for the organic sales growth development for fiscal year 2020.
The Semiconductor Solutions business unit was transformed through the acquisitions of Versum Materials and Intermolecular in the fourth quarter of 2019. As a result, the share of Performance Materials sales attributable to Semiconductor Solutions increased from 34% to 56%. Semiconductor Solutions now comprises two businesses, Semiconductor Materials and Delivery Systems & Services. Semiconductor Materials will continue to focus on the development and commercialization of material-based solutions for the semiconductor industry. Delivery Systems & Services focuses on developing and operating delivery systems for semiconductor manufacturers. Additionally, the unit offers services to support the equipment install base and safe handling of the specialty materials that flow through it. In Semiconductor Solutions, strong improvement in the underlying semiconductor markets helped drive organic growth of 14.3% for fiscal 2020. The organic growth was broad based across nearly all of the Semiconductor Materials businesses. Exchange rates negatively impacted net sales by -1.5%. Total growth in Semiconductor Solutions was mainly attributable to the acquisitions of Versum Materials and Intermolecular in the fourth quarter of 2019.
The Display Solutions business unit, consisting mainly of the businesses with liquid crystals, photoresists for display applications as well as OLED materials, recorded a sales decrease of -11.7% for fiscal year 2020, which was in total organically driven. The Covid-19 pandemic had a considerable impact on the development of net sales in 2020.
Net sales of the Surface Solutions business unit decreased by a total of -15.4% in fiscal year 2020. An organic decline of -13.5% was due to Covid-19 pandemic-driven demand decreases in the automotive, industrial and cosmetic markets. Foreign exchange effects contributed a further decrease of -1.9%.
Net sales by business unit1 |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
€ million |
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2020 |
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Share |
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Organic growth2 |
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Exchange rate effects |
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Acquisitions/ divestments |
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Total change |
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2019 |
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Share |
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Semiconductor Solutions |
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1,901 |
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56% |
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14.3% |
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-1.5% |
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>100.0% |
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>100.0% |
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878 |
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34% |
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Display Solutions |
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1,108 |
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33% |
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-11.7% |
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– |
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– |
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-11.7% |
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1,256 |
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49% |
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Surface Solutions |
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370 |
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11% |
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-13.5% |
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-1.9% |
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– |
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-15.4% |
|
438 |
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17% |
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Other |
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1 |
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– |
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-56.2% |
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0.1% |
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– |
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-56.1% |
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2 |
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– |
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Performance Materials |
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3,380 |
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100% |
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-3.2% |
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-0.9% |
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35.4% |
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31.3% |
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2,574 |
|
100% |
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Net sales of the Performance Materials business sector by region developed as follows:
Net sales by region |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
€ million |
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2020 |
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Share |
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Organic growth1 |
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Exchange rate effects |
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Acquisitions/ divestments |
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Total change |
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2019 |
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Share |
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Europe |
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250 |
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8% |
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-5.9% |
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-0.4% |
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21.5% |
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15.2% |
|
217 |
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9% |
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North America |
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484 |
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14% |
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2.2% |
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-3.1% |
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82.0% |
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81.2% |
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267 |
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10% |
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Asia-Pacific (APAC) |
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2,582 |
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76% |
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-3.6% |
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-0.4% |
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30.5% |
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26.5% |
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2,041 |
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79% |
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Latin America |
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28 |
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1% |
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0.2% |
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-15.3% |
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3.9% |
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-11.2% |
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32 |
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1% |
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Middle East and Africa (MEA) |
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37 |
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1% |
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-3.2% |
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-3.8% |
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>100.0% |
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>100.0% |
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17 |
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1% |
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Performance Materials |
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3,380 |
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100% |
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-3.2% |
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-0.9% |
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35.4% |
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31.3% |
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2,574 |
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100% |
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The following table presents the composition of EBITDA pre for 2020 in comparison with 2019. The IFRS figures have been modified to reflect the elimination of adjustments included in the respective functional costs.
Reconciliation EBITDA pre1 |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
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2020 |
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2019 |
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Change |
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€ million |
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IFRS |
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Elimination of adjustments |
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Pre1 |
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IFRS |
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Elimination of adjustments |
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Pre1 |
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Pre1 |
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Net sales |
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3,380 |
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– |
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3,380 |
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2,574 |
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– |
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2,574 |
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31.3% |
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Cost of sales |
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-2,007 |
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40 |
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-1,966 |
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-1,437 |
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51 |
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-1,386 |
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41.9% |
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Gross profit |
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1,374 |
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40 |
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1,414 |
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1,137 |
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51 |
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1,188 |
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19.0% |
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Marketing and selling expenses |
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-539 |
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9 |
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-530 |
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-329 |
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6 |
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-323 |
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64.0% |
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Administration expenses |
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-162 |
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17 |
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-144 |
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-118 |
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11 |
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-107 |
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34.7% |
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Research and development costs |
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-274 |
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2 |
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-272 |
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-267 |
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26 |
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-241 |
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12.9% |
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Impairment losses and reversals of impairment losses on financial assets (net) |
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– |
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– |
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– |
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– |
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– |
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– |
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– |
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Other operating income and expenses |
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-160 |
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154 |
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-5 |
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-116 |
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80 |
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-37 |
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-85.3% |
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Operating result (EBIT)1 |
|
240 |
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|
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|
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307 |
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Depreciation/amortization/ impairment losses/reversals of impairment losses |
|
684 |
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-123 |
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561 |
|
330 |
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-7 |
|
323 |
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74.0% |
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EBITDA1 |
|
925 |
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|
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|
637 |
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Restructuring expenses |
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31 |
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-31 |
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– |
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61 |
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-61 |
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– |
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Integration expenses/IT expenses |
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47 |
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-47 |
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– |
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23 |
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-23 |
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– |
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Gains (-)/losses (+) on the divestment of businesses |
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1 |
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-1 |
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– |
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– |
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– |
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– |
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Acquisition-related adjustments |
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21 |
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-21 |
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– |
|
82 |
|
-82 |
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– |
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Other adjustments |
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– |
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– |
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– |
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– |
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– |
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– |
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EBITDA pre1 |
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1,024 |
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– |
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1,024 |
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803 |
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– |
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803 |
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27.5% |
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of which: organic growth1 |
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-7.5% |
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of which: exchange rate effects |
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-1.3% |
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of which: acquisitions/divestments |
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36.3% |
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Adjusted gross profit of the Performance Materials business sector rose by 19.0% to € 1,414 million in fiscal 2020 (2019: € 1,188 million). The main driver for the increase was the acquisition of Versum Materials in the fourth quarter of 2019. The adjusted gross margin declined to 41.8% in 2020 (2019: 46.2%), primarily owing to the consolidation of the lower-margin Versum Materials business and the additional depreciation and amortization associated with acquisition accounting (purchase price allocation). Not including adjustments, the operating result (EBIT) decreased by € 67 million to € 240 million in 2020 (2019: € 307 million). The decrease was attributable to additional amortization and impairments partially offset by the additional EBIT provided by the Versum Materials acquisition.
The rise in marketing and selling expenses, administrative expenses and research and development costs was due to the additional costs of the Versum Materials and Intermolecular organizations. The successful implementation of the “Bright Future” transformation program reduced the underlying research and development costs of the legacy business – excluding the increase associated with the acquisitions of Versum Materials and Intermolecular. EBITDA pre of the business sector grew by 27.5% to € 1,024 million (2019: € 803 million) as the additional EBITDA pre from the acquisitions (36.3%) more than offset the decline in organic EBITDA pre (-7.5%) and negative foreign exchange effects (-1.3%). At 30.3%, the EBITDA pre margin in 2020 was down from the prior-year figure (2019: 31.2%).
The development of EBITDA pre in the individual quarters in comparison with 2019 is presented in the following overview:
Performance Materials
EBITDA pre1 and change by quarter2
€ million/change in %
1 Not defined by International Financial Reporting Standards (IFRS).
2 Quarterly breakdown unaudited.
Development of business free cash flow
The business free cash flow of the Performance Materials business sector rose by € 206 million or 32.1% to € 847 million in 2020 (2019: € 641 million). Higher EBITDA pre from the acquisition of Versum Materials and lower inventories and receivables exceeded higher investments.
Business free cash flow1 |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
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Change |
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€ million |
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2020 |
|
2019 |
|
€ million |
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% |
||||||
EBITDA pre1 |
|
1,024 |
|
803 |
|
221 |
|
27.5% |
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Investments in property, plant and equipment, software as well as advance payments for intangible assets |
|
-245 |
|
-158 |
|
-86 |
|
54.6% |
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Changes in inventories |
|
55 |
|
-251 |
|
306 |
|
>100.0% |
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Changes in trade accounts receivable as well as receivables from royalties and licenses |
|
49 |
|
-88 |
|
137 |
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>100.0% |
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Lease payments2 |
|
-18 |
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-11 |
|
-7 |
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60.9% |
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Elimination first-time consolidations of Versum/ Intermolecular |
|
-19 |
|
346 |
|
-365 |
|
>100.0% |
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Business free cash flow1 |
|
847 |
|
641 |
|
206 |
|
32.1% |
||||||
|
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The development of business free cash flow in the individual quarters in comparison with 2019 is presented in the following overview:
Performance Materials
Business free cash flow1 and change by quarter2
€ million/change in %
1 Not defined by International Financial Reporting Standards (IFRS).
2 Quarterly breakdown unaudited.