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Functional Chemicals

Our Functional Chemicals business continued to perform at a high level. Driven by a solid start in our more seasonal businesses, traction in our geographic expansion initiatives (Ningbo, China) and the continued commercial success with our key growth platforms, volume increased 7 percent over the first quarter of 2010. Overall, demand across our Functional Chemicals portfolio continues to be strong and our asset utilization remains high. Revenue increased 16 percent during the quarter as a result of the volume growth and increased prices. However, rising feedstock costs increased the pressure on margins and heightened the focus on our margin management discipline. Nevertheless, the broad volume growth underpinned a solid improvement in performance in the quarter. At the end of March, we announced a €60 million investment in Bermocoll cellulose derivatives (paint and building material thickeners) to construct a new facility at our Ningbo multi-site in China and to debottleneck an existing manufacturing site in Örnsköldsvik, Sweden. The two projects will increase capacity to close to 40,000 tons per annum and elevate AkzoNobel to a global leadership position.

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