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Specialty Chemicals

Ready to unleash its full potential as a standalone company, the focus for Specialty Chemicals is on accelerating growth and creating value. Our strategy is focused on capturing profitable growth with our customers and continuing to deliver on targets and beyond with our continuous operational excellence drive. Post-separation, we will offer additional step-change growth opportunities to unlock further value.

Specialty Chemicals is a world class business, evidenced by our safety record and solid financial performance. Our unique portfolio, commitment to continuous improvement and strong customer relationships have helped us achieve high profitability and leadership positions throughout our businesses, with 80% of revenue coming from number one or two positions. Given our strong presence in high growth markets, discipline in execution and strong culture focused on results, we are well positioned for future success (see Supervisory Board Chairman’s statement for more details on the separation process).

Our strategy – Specialty Chemicals (graphic)

* Based on reported figures, excluding unallocated corporate costs and other carve-out adjustments which are expected to lead to downward adjustments of and . Exchange rates from April 2017.

Accelerating growth

Our key customers are winning in growth markets and we aim to grow with them. We are managing our margins to better adapt to changing raw material prices while analyzing our portfolio to fine-tune our products, customers and prices. Strong focus on commercializing our existing new product introduction pipeline, expanding our growing range of eco-premium solutions and co-developing products with customers will play a key role in accelerating our growth.

Continued focus on operational excellence

We have a strong track record of improving profitability. By maintaining our commitment to operational excellence, we will build on these achievements. Continuous and thorough analysis of our sites and production processes will debottleneck and free up resources to run our sites to their fullest potential. Embedding standardized processes, continuous improvement tools and clear targets throughout our organization will enable us to continue to improve our fixed and variable costs, while Integrated Business Planning will help us reduce working capital costs. This combination of operational excellence and operating leverage will result in higher margins and ensure attractive ROIs as per our 2020 guidance. The focus on further optimization goes hand in hand with our unwavering commitment to safety for our employees and the communities in which we operate, and our belief that focusing on sustainability is simply the smartest way to do business. We will work to maintain our leadership position in Health, Safety, Environment and Security performance and continue to drive the shift from fossil fuels to renewable sources of energy, such as wind power and biomass.

Investments to spur a step-change in growth

As a standalone company, we are well-positioned to make strategic investments with attractive returns tailored to the needs of our customers and the markets in which we operate. We have identified and prioritized investments for the next five years that will allow us to continue our success and grow post-separation. These opportunities range from capacity expansions in growth markets to collaborations with start-ups and universities designed to spur innovation. We also plan to further invest in the development of more eco-premium solutions. In addition to organic growth opportunities, we envisage bolt-on acquisitions in selected areas that will enable us to truly take our growth ambitions to the next level.

ROS (return on sales)

This is a key profitability measure and is calculated as EBIT as a percentage of revenue.

ROI (return on investment)

This is a key profitability measure and is calculated as EBIT as a percentage of average invested capital.