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Letter from the Management Board
Dear Ladies and Gentlemen,
For the ALTANA Group, 2018 showed different dynamics in the course of the year. In the first half of the year, we were able to pick up on the momentum of the strong year 2017 and continue our dynamic growth, which was accompanied by an appealing margin development despite rising raw-materials prices. In the second half of the year, however, the demand became palpably more subdued, primarily due to the significant slow-down of the economy in important markets for us, including the automotive industry, the Middle East, and China. At the same time, we were confronted with substantially growing margin pressure due to the acceleration of raw-materials price increases.
Nevertheless, in 2018 we achieved our growth and sales targets in our divisions and thus for ALTANA as a whole, and we did so although our business environment became more and more challenging in the course of the year. However, our earnings in 2018 lagged behind our strong earnings in the previous year due to declining contribution margins. The EBITDA margin reached our long-term target range of 18 to 20 percent.
Our outlook for 2019 is influenced by a macroeconomic environment characterized by ongoing uncertainty. The geopolitical framework conditions and trade disputes have dampened consumption and investment expectations in many countries. In this environment, ALTANA must set the right priorities in order to remain on the path to sustainable profitable growth even in troubled waters. A look back at 2018 strengthens our conviction that by striking a balance between cost discipline and meaningful investments in our future we can take the right path. Among other things, we made high-level investments in property, plant and equipment by expanding our capacities in the additives segment in Gonzales, USA, and in Shanghai, China. In the period under review, we also made substantial investments that decisively enabled the Israeli company Landa Digital Printing to take further steps on the way to marketing its innovative and revolutionary printing solutions. With our participation in Velox, another startup in the digital printing sector, we also essentially strengthened our network in the field of promising technologies. Moreover, we significantly stepped up expenditure for research and development once again and are making consistent progress in the digitalization of the ALTANA Group.
We also made significant progress in the implementation of our Keep Changing Agenda. For example, we successfully completed the action field “Take the lead in sustainability.” Today, sustainability is becoming increasingly important as a competitive factor. The prerequisite for this is that sustainability is no longer viewed solely as environmental protection but, in keeping with our conviction, as a triad of economy, ecology, and social responsibility. To leverage the opportunities resulting from sustainability for ALTANA, we decisively strengthened the sustainability management at our sites by establishing systematic sustainability criteria in relevant decision-making processes and with the help of many lighthouse projects around the globe. As a result, sustainability is no longer only an ambitious goal for us, but a fixed component of our business and working life. The importance of sustainability in our corporate action is also illustrated by the fact that as a member of the UN Global Compact ALTANA actively supports the objectives of this important initiative for company management.
Our environmental key performance indicators almost all underwent a positive development in the period under review. In terms of key accident figures, ALTANA also improved over the previous year. However, the targets we set ourselves for the reporting year could only be partially achieved. In order to further improve the results, in the future we will make the safety culture a stronger focus of our action.
In the spirit of “We are ALTANA,” in 2018 we as the ALTANA Group once again did everything possible to create added value for our customers and employees, for our owner and society as a whole. This is shown by the articles in the magazine section of our corporate report. This time the spectrum of examples ranges from innovative solutions and unique effect pigments for the automotive and consumer goods industry, to investments in sustainable growth at our sites and sophisticated solutions for
e-mobility, to systematic talent management concepts and educational mentorships for socially disadvantaged children. They all illustrate our aim to promote cooperation with each other and the interaction of different talents, gifts, and abilities in the best possible way for first-class customer loyalty, innovative top performances, and sustainable solutions. For in the end it is the people at ALTANA who make the difference, and they are therefore the most important recipe for success for our company.
It remains of overriding importance for us to find the right mixture of continuity and change, which is necessary for a productive development of the ALTANA Group. In the process, we have every possibility to transform the challenges that lie ahead into new opportunities and possibilities with technological innovations and our unmistakable corporate culture, based on our own financial strength as a company.
We would like to warmly thank our employees for their contribution to the success and development of ALTANA in the 2018 fiscal year. Thanks also go to the members of the Supervisory Board for their constructive accompaniment and their trust in ALTANA’s work.
Dr. Christoph Schlünken