Chemicals strongly affected by falling sales and negative currency effects 

Total revenues of the Chemicals business sector were € 2,123 million in 2008, corresponding to a decline of 1.3%. Negative currency effects due to the translation of weak currencies such as the U.S. dollar and the Korean won lowered our revenue growth rate of 4.7% by 6.0 percentage points. In the course of the year, and particularly in the fourth quarter, the economic downturn affected sales in our Chemicals business sector, with deliveries to manufacturers of goods used by consumers bearing the brunt.

At € 558 million, the operating result was 12% lower than in 2007. The business sector thus accounted for 46% of the Group operating result* compared with 60% in 2007. Return on sales amounted to 26.3%, compared with 29.3% in 2007. Research and development expenses rose by 4.4% to € 143 million.

Negative currency effects and the recession strongly impacted total revenues of the Liquid Crystals division. They declined by 4.2% to € 877 million; on a currency-adjusted basis the growth rate was 5.6%. Since Merck produces the basic materials in Darmstadt, but generates sales with customers in Asia and bills in local currencies, the unfavorable currency relationships directly impacted the operating result. Since the fourth quarter, the economic downturn has led to a sharp decline in sales. At € 391 million, the operating result was therefore 20% lower than in 2007. Return on sales declined to 44.6% compared to 53.1% in 2007.

The Performance & Life Science Chemicals division also suffered from negative currency effects as well as from the economic downturn in its effect pigments business. Total revenues were unchanged at € 1,246 million. However, on a currency-adjusted basis, growth amounted to 4.0%. The operating result rose by 15% to € 167 million. This is primarily due to the low level of 2007, which included one-time expenses for write-downs and restructuring measures. At 13.4%, return on sales was markedly higher than 2007, when it amounted to 11.7%.

_{*excluding the segment Corporate and Other}