In the third quarter, the global economy has not stabilized as expected. While Latin America continued on a solid growth path and North America remained stable, the downturn in Europe spread from the Southern countries across the continent. At the same time, the major economies in Asia/Pacific and Middle East & Africa started to soften.

At group level, volumes decreased 5% year-on-year. Although volume reductions affected most businesses, the Catalysis & Energy, Functional Materials, Industrial & Consumer Specialties and Masterbatches Business Units performed solidly in this environment and are on track to achieve their full-year targets.

The Oil & Mining Services Business Unit continued to grow double-digit in local currencies. On the other hand, the particularly pronounced weakness in the electronics, coatings and increasingly in the automotive industries severely affected the Additives and Pigments Business Units. Leather Services, Textile Chemicals and Paper Specialties recovered from the low previous-year's levels and posted robust single-digit sales growth in local currencies.

At 26.3%, the gross margin was higher than the previous year's 26.1%. Sales prices decreased sequentially by 1% but raw material costs also weakened significantly. Year-on-year, prices increased by 2% while raw material costs decreased by 1%. The positive contribution from pricing was partially offset by unabsorbed production costs due to lower volumes, and an unfavorable product mix development.

In addition, the contribution from new production capacities for battery materials and flame retardants was much lower than expected earlier. Under the current economic conditions, a slower market adoption of these new innovative products and technologies has been observed, therefore leading to low capacity utilization rates in those two plants.

The EBITDA before exceptional items contracted to CHF 201 million from CHF 216 million in Q3 2012. Therefore the EBITDA margin before exceptionals stood at 10.5% compared to 11.6% in the previous-year period.

While the underlying EBITDA of the Business Units was stable, the lower margin was the result of higher SG&A costs that were mainly related to the integration of Süd-Chemie, a lower positive contribution from one-time items and higher R&D costs, including start-up costs for the bioethanol plant near Munich.

Restructuring and impairment costs were lower at CHF 9 million versus CHF 23 million in the third quarter 2011 and were mostly related to the integration of Süd-Chemie. Net income fell to CHF 49 million from CHF 81 million in the same period one year ago, mainly due to foreign exchange rate effects in the financial result and slightly higher financing costs.