Performance Materials

The Performance Materials division comprises Merck’s entire specialty chemicals business. It offers high-tech performance chemicals for applications in fields such as consumer electronics, lighting, coatings, printing technology, plastics, and cosmetics. Through the acquisition of AZ Electronic Materials (AZ), a leading supplier of high-tech materials for the electronics industry, the division was significantly strengthened in the highly differentiated premium segment of specialty chemical materials.

The Performance Materials division’s share of Group sales increased in the third quarter of 2014 to 20% and its share of EBITDA pre one-time items (excluding Corporate and Other) rose to 27%. The results of AZ have been included since May 2, 2014. After the combination with AZ, the EBITDA margin pre one-time items amounted to 42.2% of sales in the third quarter.

Performance Materials currently comprises four business units: Liquid Crystals (LC), Pigments & Cosmetics, Advanced Technologies, and AZ. LC generates more than half of divisional sales. Merck remains the global market and technology leader in liquid crystal mixtures, a highly consolidated market. In addition, high barriers to market entry exist due to the technological complexity of liquid crystals and the high quality requirements of customers and consumers. The seven largest LC display manufacturers are among the customers of the LC business. Performance Materials has the broadest product offering in the industry and offers, among other things, liquid crystals based on PS-VA and IPS technologies. This enables the division to meet individual customer needs and offer solutions for all display sizes, from smartphones and tablet computers, to large-area television screens.

By providing innovative research and development, the Advanced Technologies business unit bolsters the growth and sustainable competitiveness of the Performance Materials division. The business unit also manufactures and markets materials for organic light-emitting diodes (OLEDs), which are used in new lighting applications and display technologies.

The Pigments & Cosmetics business unit develops and markets a comprehensive product portfolio of effect pigments and functional materials. The pigments are primarily processed into automotive and industrial coatings, plastics, printing materials, laser marking, cosmetics, and counterfeit prevention applications. The product portfolio also includes high-quality cosmetic actives used, for example, in skin care products, sunscreens, and insect repellents.

In the integration phase, AZ will remain an independent business unit within the Performance Materials division; thereafter the AZ businesses will be transferred to a new business unit structure. Merck is on track with the integration of AZ. It expects all important integration measures to have been completed by the end of 2014. With annual sales of around US$ 730 million in 2013, AZ is a leading supplier of high-tech materials with a production focus in Asia, where the company achieves nearly 80% of its sales. AZ generates more than three-quarters of its sales with products that are the leaders in their respective markets. AZ materials are widely used in integrated circuits, flat-panel displays and light-emitting diodes. AZ is thus a key partner to leading global electronics manufacturers since the chemical technologies AZ provides enable them to enhance existing processes and to innovate new products.