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Course of business

Business development 2010

Following the exceptional developments that characterised the markets in 2009 (a slump in net sales due to the economic downturn in the first halfyear, but strongly increasing demand in the second half-year), 2010 proved to be a typical boom year in which the global markets returned to their normal yearly course. Global demand for consumer and capital goods developed very positively, with growth continuing to be led by the Asian markets (in particular China). Nonetheless, available levels of raw materials were not sufficient to keep up with the growing demand, which led to rising raw material prices.

The very favourable economic environment, expansion of the market position in the strongly growing Asian market and the successful realisation of planned new business led to a large increase in sales volumes at EMS. Net sales in the European Union and North America increased by around 25% each compared to the previous year, while net sales in Asia grew by approximately 60%. Despite a strong negative effect from foreign currencies, net sales reached a historic record level.

Net sales in Swiss francs were up 33.2% to CHF 1 596 million (1 198). In local currencies, the increase was 39.6%. The strong sales trend had a positive impact on the overall result: net operating income (EBIT) stood at CHF 282 million (222), an improvement of 27.0% compared to the previous year. EBITDA reached CHF 335 million (280). Owing to increasing raw material prices and the strong Swiss franc the EBIT margin fell slightly year on year from 18.5% to 17.6%, with the EBITDA margin down from 23.3% to 21.0%.

EMS has an innovative, high-margin specialty business. It will continue to pursue its successful strategy for expanding its specialties in the core area of Performance Polymers. To satisfy increasing customer demand, considerable investments will again be made in expanding production capacity in 2011. In order to continue successfully seizing opportunities in the important Asian market in future, the market organisation in Asia is being continually expanded.

For 2011, EMS anticipates further sharp increases in raw material prices and an unfavourable currency situation for EMS. The Asian markets will spearhead the demand for consumer and capital goods while the mature markets will continue to develop at a less rapid pace. Deferred transfer of increased raw material prices to customers and the negative currency situation for an export company such as EMS will burden the positive development of net sales and result. For this reason, EMS allocates particular priority to rapid and consistent adjustment of sales prices and ongoing efficiency improvements.

Net sales and operating income (EBIT) in 2011 are expected to be slightly above those of the prior year.