ChemSolutions

On the customer side, we saw most of the industries we serve undergoing a recovery. Many became stable and there were also examples of significant revenue increases. For example, demand was stimulated in the feed industry. There were also some weakening tendencies in evidence – the leather industry being one such case. Our de-icing business also saw a disappointing first quarter due to weather conditions, contrasting a great deal with the situation in 2010.

In terms of raw materials costs, we saw a large degree of movement in 2011, which created challenges for the segment early in the year. We were forced to implement price increase initiatives in order to stabilize our margins, which eventually began to recover in Q4, slightly later than expected. We also observed that the raw materials situation in the food business created a competitive disadvantage for us geographically, as there was a fundamental shift in competitiveness for production in the EU versus the United States.

 

The segment was responsible for some very interesting developments during 2011. We continued working with Provian, a meat preservation agent, and successfully broadened its launch to a global scale. We successfully introduced a dust-free calcium propionate for bread preservation, and developed several solutions for the leather and textile industries with the aim of sustainable business development.

In addition, we have increased our market share in areas that represent strong past performance. In the pharmaceuticals industry, for example, we continued our quality initiative, showing high sales of active pharmaceutical ingredients. These sales are the result of a newly fine-tuned customer offering rather than the introduction of any new products as such.

 

The megatrends of population growth and increasing wealth in urban centers continued to influence our focus on feed additives, allowing our customers to cope with exponential increases to the demand for meat, as well as on our diabetes treatment agent in pharmaceuticals, which provides assistance with one of urbanization’s least desirable effects. APAC was a particularly strong growth area in these respects, and we expect that it will continue to be for the foreseeable future.

 

Our sustainability efforts are centered on examining our customers’ as well as their customers’ processes, to make the entire value chain more sustainable.

Within our own operations, the most important sustainability-related trend is our replacement of oil-based processes with bio equivalents, one of the primary objectives of our SWEET research and development program. Bio-based synthesis of propionic acid, a substance required for our bread preservation agents, is one such future case, which we see as a state-of-the-art initiative in the coming decade.

 

Taking our customers’ environmental footprints into account, we also have numerous initiatives in place. One potent example is our planned development to supplant the use of chromium in the leather industries, as this substance is commonly used at present and has a critical toxicological and ecological profile.

 

We aim to introduce several new products in 2012, which will focus on pharmaceuticals as well as the food and feed sectors. These will help us to target our customers’ needs more effectively. We expect to see most markets stabilizing during the coming months, and do not anticipate a significant downturn thanks to their limited exposure to the predominant climate of economic concern. However, leather, textiles, and some industrial markets may remain a question mark, and our de-icing business is, of course, largely dependent on factors outside of our control.