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Bayer MaterialScience: focus on growth, innovation and efficiency

Bayer MaterialScience AG : 15 June, 2004  (Company News)
Bayer MaterialScience AG will showcase its numerous innovations and a new mission at K 2004 in D
'Our portfolio comprises highly promising growth products, excellent technologies and a well-stocked innovation pipeline. We are looking forward to delivering that message at 'K 2004',' said Dr. Hagen Noerenberg, Chairman of the Board of Management of Bayer MaterialScience, at a press conference with 150 journalists in Cologne. To remain the customer's number one choice in the future, the company plans to invest some EUR 3 billion worldwide between 2004 and 2006: EUR 2.1 billion in constructing and maintaining facilities and EUR 900 million in research and development, including customer-oriented developments. 'This investment illustrates our confidence in the business of high-performance materials,' said Noerenberg. Bayer MaterialScience achieved sales of EUR 7.5 billion in 2003 and employs 18,000 employees worldwide.

The Board of Management of Bayer MaterialScience has announced three key objectives for the coming years – improving efficiency, developing growth areas and strengthening the innovation pipeline. Noerenberg said, 'We are confident that we will be able to achieve an EBITDA margin – the operating result before depreciation and amortization – of 18 percent by 2006.' In the first quarter of 2004, the EBITDA margin stood at 15 percent. Moreover, the company plans to achieve an annual volume growth of five percent up to 2006. “These are very ambitious, but achievable goals,” said Noerenberg.

According to the Bayer MaterialScience Chairman, the results from the first quarter of 2004 have been pleasing. 'Adjusting for currency fluctuations and portfolio changes, we achieved an increase of 8.2 percent in sales over the same period last year. And the operating result improved by 37.8 percent to EUR 135 million.' However, the margin situation remains unsatisfactory mainly as a result of the greatly increased cost of raw materials. 'We must improve our margins to ensure long-term growth and innovation. That's why we have announced price increases for many of our products,' said Noerenberg. The company also focuses on an intelligent purchasing and contract management.

Innovation and efficiency as a driving force for profitable growth

By focussing on innovative growth markets and high-tech processes, Bayer MaterialScience sees itself ideally equipped to tackle the future. Take, for example, the company's expertise when it comes to innovation. Some 20 percent of the company's sales today are generated by products less than five years old, and this figure is on the increase. On average, one new patent is registered every working day. Furthermore, Bayer MaterialScience invests approx. EUR 300 million each year in research and development, including customer-oriented developments. Innovation and proximity to the customer are also to be intensified by external growth. 'For example, we would like to continue to strengthen our network of systems houses in the future,' said Noerenberg. Systems houses are providers of ready-to-use polyurethane raw material systems.

At the same time, the company's efficiency programs are proving to be successful. Net savings of EUR 230 million were achieved last year alone - partly through reorganization and by consolidating production plants, but also by optimizing processes. One of many examples is the innovative process for producing chlorine at the Brunsbüttel site. The process uses 30 percent less electrical energy, offering both environmental benefits and a clear competitive advantage. 'However, we must still continue our efforts to further improve our cost structures,' said Noerenberg.

Complementing customer growth with new levels of capacity

Bayer MaterialScience aims to anticipate and respond to worldwide growth in its customer industries, such as electrical/electronics, construction, automotive and furniture, with new and expanded production facilities. In the last year alone, several major projects were successfully completed. Noerenberg said, 'Together with Lyondell, we invested EUR 600 million in a facility for the production of propylene oxide/styrene monomer near Rotterdam, which went on stream a short while ago. We also dedicated a EUR 200 million plant in Dormagen for the production of toluene diamine or TDA. And in Leverkusen, we recently started up a new EUR 48 million facility for the production of HDI, a key raw material for the formulation of surface coatings.'

The focus of future investments in new plants will be in Asia, more specifically at the Caojing site in China. At this site near Shanghai, three major projects with a total investment volume of approx. US$ 1.8 billion are to be implemented over the next five years for manufacturing coating raw materials, Makrolon® polycarbonate and the polyurethane raw materials MDI and TDI. Moreover, there are also plans to increase capacity in existing plants in line with market conditions. For example, MDI capacities in the Baytown, Tarragona, and Brunsbüttel sites will be increased by a total of 120,000 tons per annum. With this increase, Bayer MaterialScience would have a total MDI capacity of some 920,000 tons per year.

'VisionWorks' - Bayer MaterialScience at K 2004

Bayer MaterialScience AG will present itself at the K 2004 in Hall 6 with a total exhibition space of around 1,000 square meters. The company’s exhibit theme will be 'VisionWorks'. This new slogan is a 'translation' of the name Bayer MaterialScience. Noerenberg said, 'The name Bayer MaterialScience stands for the materials we develop. And it also stands for the knowledge we work with. We have the know-how and the materials to turn visions into reality. All this, reduced to a common denominator, is our mission: 'VisionWorks'.'

The Bayer MaterialScience trade fair presence at K 2004 will focus on the three areas 'Best Ideas', 'Best Practices' and 'Best Services'. 'With 'Best Ideas', we will be presenting our ideas and visions for the future, some of which extend far beyond our current portfolio. Their realization will make an important contribution to the success of Bayer MaterialScience and its customers,' said Ian Paterson, Member of the Board of Management of Bayer MaterialScience and responsible for marketing and innovation, speaking at the press conference in Cologne.

The ability to store ever increasing volumes of data securely and transporting that data easily is an area with strong potential. Bayer MaterialScience has developed a new storage material that enables data to be stored on Makrofol® ID polycarbonate film by means of holography. Memory sticks, check card formats or programmable keys with holographic film are still visionary applications. However, there could well be market demand for them in the future.

'Best Practices' groups together proven products, applications and technologies for a wide variety of consumer industries. Polycarbonate optical storage media such as CDs and DVDs, thermal insulation in refrigerators using polyurethane rigid foam, aqueous automotive paints based on high-quality coating raw materials and ski boots made from transparent thermoplastic polyurethane are just a few examples from the Bayer MaterialScience portfolio.

Highly promising new developments

'Best practices' also covers a range of recent innovations. 'The future has already begun in the field of automotive glazing,' said Paterson. The rear side windows and panorama roof in various Smart car models are already manufactured from Makrolon® polycarbonate. 'Thanks to the great freedom Makrolon® gives designers, it opens up whole new perspectives for cutting-edge automobile designs. Many additional functions can be integrated into the plastic components. That's why we believe there is a massive market potential for this application.'

Lightweight but extremely strong composite sandwich elements represent another innovative development. In this technology, which is brilliant in its simplicity, glass-fiber mats are combined with a paper honeycomb structure, impregnated on both sides with Baypreg® polyurethane spray system, and formed in a mold at high temperature. Tabletops, parcel shelves and even snowboards are all made in this way.

Thanks to a new transparent and wear-resistant grade of the thermoplastic polyurethane, Desmopan®, dazzling new optical effects can be added to sports equipment. Graphics or logos can be made to stand out much more effectively. The material has been used to create “see-through” ski boots that offer a unique look.

Bayer MaterialScience is increasingly exploiting the opportunities afforded by nanotechnology when developing innovative products. Nanotechnology can be utilized to develop materials with completely new properties and functions, which offer far better performance than do conventional products – or even show the required properties. One example is coating raw materials with nano-scale structures that increase the scratch-resistance of the clear top coat on automobiles.

Customized service offerings

'In the 'Best Services' area, we will present a comprehensive package of services that our customers both want and expect,' said Ian Paterson. The focus here is on technical support for customers. State-of-the-art technical facilities are available in key regions of the world where customers can, to cite just one example, optimize their processes for manufacturing CDs and DVDs under production conditions. In Bayer’s Color Competence Center, customers can benefit from expert support in dyeing plastics using newly developed technologies grouped together under the brand name FantasiaTM. And last but not least, the new Thermoplastics Testing Center at Bayer's Krefeld-Uerdingen plant is a modern service center capable of performing more than 200 different tests on plastics.
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