Slight recovery in demand at year-end
In 2009, the Pigments business was marked by weak global demand particularly in the automotive industry. With effect pigments for automotive coatings, Merck is an important supplier to the industry. Total revenues of effect pigments for the cosmetics industry also declined substantially. However, signs of recovery in the Pigments business and a return to higher production levels began to emerge in the third quarter – a development that continued in the fourth quarter. Owing to the decline in demand, Merck introduced reduced working hours in May for around 300 employees at the pigment production site in Gernsheim and transferred them internally to other production areas. We also significantly cut back pigment production at the plants in Savannah, Georgia in the United States, Onahama in Japan and Songjiang in China. As the order situation improved, we considerably scaled back the use of reduced working hours in the course of the year and completely discontinued it at year-end. Although total revenues declined overall by 10% to € 238 million and sales, particularly in Europe, fell by 20% to € 92 million in 2009, an increasing recovery in demand was noticeable as of the third quarter.
Weak demand for consumer goods and continuing consumer uncertainty also affected the business with pigments for plastics, print products and cosmetic products. Against this background, we continue to focus our innovation efforts on profitable pigments such as Candurin® pigments for coating foods and pharmaceuticals, and on the Pyrisma™ line of products, which covers a wide color range and offers intense effects.
Acquisition of one of the leading suppliers of effect pigments in China
We captured new growth opportunities by acquiring Suzhou Taizhu Technology Development, a leading supplier of effect pigments in China, with a growing, profitable business. As a result, we have further expanded our position in the fast-growing Chinese market. The extended range of products now enables us to more actively target the mid-range value-for-money price segment. This is a fast-growing segment between the premium-price segment, which we had already been addressing, and the low-price segment of the respective countries.
New cosmetic applications
In 2009, Merck significantly expanded its portfolio in both cosmetic functional fillers and in the core business of pearl luster pigments. We entered into a licensing agreement with the Australian company Antaria for the exclusive worldwide rights to the plate-like alumina technology. The technology is used by Antaria in Alusion®, a functional filler that gives cosmetics soft focus properties, among others.
Expansion of the functional pigments business
In order to expand our activities, we acquired the Micabs® laser pigments business from the Dutch chemical company DSM. This move gives us access to new technologies for the manufacture of laser marking products and complements our Lazerflair® pigments with the Micabs® brand.
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