Forecast for the chemical industry in general
The German Chemical Industry Association (VCI) forecasts global chemical output will grow by 3.9% in 2010. This comprises growth of 4.3% in the European Union, 2.5% in the United States, and 3.9% in Japan. As in 2009, India and China will rank in the upper third, however with lower growth rates of 4.7% and 5.9%, respectively. For Brazil, the VCI forecasts growth in chemical output of 5.8%.
The American Chemistry Council (ACC) estimates that output of the global chemical industry will increase by 4.6% in 2010 and by 5% in 2011. In the next two years, growth will primarily be driven by the emerging markets of Asia, Africa, the Middle East, eastern Europe and Latin America.
Forecast for the Liquid Crystals division
Merck’s Liquid Crystals division operates in the display technology market. 2008 marked the year in which more new televisions with LCD technology were sold than cathode-ray devices. According to the market research institute DisplaySearch, the dominance of LCD TVs is increasing further. They are expected to account for 79% of all televisions sold in 2010 and 84% in 2011. For 2010, DisplaySearch forecasts a growth rate of 18% for the LCD TV module market in terms of display area. An increase of 15% is estimated for all LC applications in 2010. On this basis, for the Liquid Crystals division we expect a rise in total revenues of between 5% and 10%. We anticipate, in particular, improved market penetration of our new technologies.The operating result is expected to increase by between 15% and 25%. Also in 2011, we expect growth in total revenues. For the division’s operating result, Merck expects a stable development in 2011.
Opportunities for the division beyond the outlined developments lie primarily in improved business of the display markets. As Merck is strongly positioned with its liquid crystals, a further upturn in business among display manufacturers will also quickly boost the division’s business performance. Being able to penetrate the market with our innovative PS-VA materials ahead of plan gives rise to additional business opportunities for the Liquid Crystals division. The most important risks regarding the developments outlined in the Report on Expected Developments lie in growing price pressure in these market segments.
Forecast for the Performance & Life Science Chemicals division
Merck expects total revenues of the Performance & Life Science Chemicals division to grow by between 3% and 8%. The operating result is expected to increase by between 15% and 20%. For 2011, Merck also expects growth in both total revenues and operating result.
In the course of 2009, the performance of the Performance & Life Science Chemicals division was impacted by the economic crisis. In this division, the opportunities and risks regarding future developments continue to depend significantly on the extent of economic recovery in the chemical industry as a whole. We see opportunities for most of the product portfolio when the pharmaceutical and chemical industries further strengthen their research activities. Consequently, scaling up from research to production would additionally increase the demand for our products. By contrast, the opportunities and risks in the Pigments business are more strongly related to general consumer patterns. Therefore, developments in this business will be significantly influenced by demand from the automotive industry and its recovery from the economic crisis. However, other pigment applications in demand by, for example, the cosmetics industry are also highly dependent on consumer patterns.
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