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Performance Materials

Economic performance

Revenues for Performance Materials were down 3% year on year. Recurring EBIT increased by 12% reflecting a higher contribution from Element Six Abrasives and as a result of cost reduction measures that were initiated in 2013.

In Building Products, revenues and sales volumes were roughly stable year on year, while profitability improved as cost saving and production efficiency measures that were launched in 2013 and implemented in the course of 2014 had a positive impact on earnings. Revenues were up in Europe, helped by a comparatively milder winter. Demand for zinc building materials in the markets outside Europe contracted due to delays in the launch of new projects in the Asia-Pacific region. Product premiums were pushed down by increased competition in the more mature European markets combined with a higher zinc price. The product mix remained generally stable year on year, with sales of the higher added-value surface-treated products making up a substantial share of the business.

In Electroplating, revenues were roughly stable year on year. Revenues for precious metal electrolytes for decorative applications were well up, benefitting from the continued strong demand for gold-copper compounds used to produce pink gold for jewellery and lifestyle applications. Revenues for technical applications were lower than in 2013, when demand for silver plating solutions used in high performance LEDs in China was particularly high. Sales volumes and revenues for platinized products for the plating industry, such as anodes for the plating of chrome, as well as precious metal products used in the production of printed circuit boards were up. The business unit entered into a joint venture with Jianmen Changxin Technology Co. Ltd. in Jiangmen, China, which will allow Umicore to serve its growing Chinese customer base with its surface treatment products and services.

Revenues and sales volumes in Platinum Engineered Materials were slightly lower compared to 2013. Demand for platinum equipment used in display glass manufacturing and technical glass applications was stable while demand from the optical glass segment was subdued. In the Performance Catalysts business, sales were lower due to the unstable political situation in Ukraine and its impact on fertilizer production.  In December the business launched a new gauze, MPAC, which enables customers to improve product yield, reduce PGM use, increase campaign times and, in certain conditions, lower greenhouse gas emissions.

Revenues in Technical Materials were down year on year due to overall lower sales volumes, particularly in Brazil and China. Sales volumes of contact and power technology materials for medium voltage applications felt the impact of the slow-down in electrical infrastructure projects in China. Order levels for contact materials for low voltage applications were stable, with weak demand from Brazil being compensated by higher demand from North America and Europe. Overall demand for brazing products remained subdued.

In Zinc Chemicals revenues were higher year on year. Despite the tight availability of zinc-containing galvanising residues which impacted recycling margins, earnings recovered on the back of higher sales and benefited from recent cost reduction measures. Sales volumes of fine zinc powders showed an improvement due to a pick-up in Asian demand for powders used in anti-corrosive paint. The new plant for the production of high grade fine zinc powders and the recycling of zinc residues in Changsha, China, is set to commence production in the second half of 2015. Sales volumes of zinc powders used in primary batteries were well up, while zinc oxide sales volumes also increased, particularly for feed grade products. In May the Eijsden plant (The Netherlands) received the CEP-certification by the European Directorate for the Quality of Medicines and Healthcare (EDQM) and also successfully passed its first US Food and Drug Administration (FDA) audit to qualify its products for use in pharmaceutical applications in the US.

In Element Six Abrasives (40% Umicore stake) revenues were well up, driven by strong sales in Oil and Gas-drilling and Precision Machining due to market share gains in fairly stable markets. Sales volumes benefited from increased investments in product innovation and a successful positioning of Element Six Abrasives’ diamond-based products and know-how in the oil & gas and precision machining markets. Revenues from carbide-based products were down in highly challenging markets. Demand for mining products was subdued throughout the year reflecting weak activity in that market. Overall earnings were up significantly, benefiting from an improved product mix and operational efficiency improvements.